As filed with the Securities and Exchange Commission on December 20, 2000
Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. ___ [ ] Post-Effective Amendment No.___
LEGG MASON GLOBAL TRUST, INC.
(Exact Name of Registrant as Specified in Charter)
100 Light Street
Baltimore, MD 21202
(Address of Principal Executive Offices)
(410) 539-0000
(Registrant's Area Code and Telephone Number)
Marc R. Duffy, Esq.
Legg Mason Wood Walker, Inc.
100 Light Street
Baltimore, MD 21202
(Name and Address of Agent for Service)
Copies to:
Arthur J. Brown, Esq.
Valerie M. Baruch, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9367
Approximate Date of Proposed Public Offering: as soon as practicable
after this Registration Statement becomes effective under the Securities Act of
1933.
It is proposed that this filing will become effective on January 22,
2001 , pursuant to Rule 488.
Title of securities being registered: Class A, Primary Class and
Institutional Class shares of capital stock, par value $0.001 per share, of the
series of the Registrant designated as Legg Mason Europe Fund.
No filing fee is required because of reliance on Section 24(f) under
the Investment Company Act of 1940, as amended.
<PAGE>
LEGG MASON GLOBAL TRUST, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
2
<PAGE>
LEGG MASON GLOBAL TRUST, INC.
PART A
<PAGE>
BARTLETT VALUE INTERNATIONAL FUND
(A SERIES OF BARTLETT CAPITAL TRUST)
January 26, 2001
Dear Bartlett Value International Fund Shareholder:
The attached proxy materials describe a proposal that Bartlett Value
International Fund ("Bartlett International Fund") merge into Legg Mason Europe
Fund, a series of Legg Mason Global Trust, Inc. If the proposal is approved and
implemented, each shareholder of Bartlett International Fund will automatically
become a shareholder of Legg Mason Europe Fund.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL. The board
believes that combining the two Funds will benefit Bartlett International Fund's
shareholders by providing them with a portfolio that has a similar investment
objective and a different but similar investment strategy. The shareholders of
Bartlett International Fund will be invested in a fund with a substantially
larger asset base and lower overall expenses. The attached proxy materials
provide more information about the proposed reorganization and the two Funds.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will help prevent costly follow-up mail and telephone solicitation.
After reviewing the attached materials, please complete, date and sign your
proxy card and mail it in the enclosed return envelope today. As an alternative
to using the paper proxy card to vote, you may vote by facsimile or in person.
Very truly yours,
Edward A. Taber, III
President
Bartlett Capital Trust/Bartlett Value
International Fund
2
<PAGE>
BARTLETT VALUE INTERNATIONAL FUND
(A SERIES OF BARTLETT CAPITAL TRUST)
_________________
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MARCH 9, 2001
_________________
To the Shareholders:
A special meeting of shareholders of Bartlett Value International Fund
("Bartlett International Fund"), a series of Bartlett Capital Trust, will be
held on March 9, 2001 at 10:00 a.m., at the offices of Bartlett International
Fund at 100 Light Street, Baltimore, Maryland 21202, for the following purposes:
(1) To approve an Agreement and Plan of Reorganization and Termination
under which Legg Mason Europe Fund, a series of Legg Mason Global Trust, Inc.,
would acquire all the assets of Bartlett International Fund in exchange solely
for shares of Legg Mason Europe Fund and the assumption by Legg Mason Europe
Fund of all of Bartlett International Fund's liabilities, followed by the
distribution of those shares to the shareholders of Bartlett International Fund,
all as described in the accompanying Prospectus/Proxy Statement; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournment thereof if
you owned shares of Bartlett International Fund at the close of business on
January 26, 2001. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE. As an
alternative to using the paper proxy card to vote, you may vote by facsimile or
in person.
By order of the board of trustees,
Marie K. Karpinski
Secretary
January 26, 2001
<PAGE>
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card,
sign and date the card, and return it in the envelope provided. IF YOU SIGN,
DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL
BE VOTED "FOR" THE PROPOSAL DESCRIBED ABOVE. In order to avoid the additional
expense of further solicitation, we ask your cooperation in mailing your proxy
card promptly. As an alternative to using the paper proxy card to vote, you may
vote by mail, by facsimile machine, or in person. Shares that are registered in
your name may be voted by faxing your completed proxy card(s) to 1-___-____. If
we do not receive your completed proxy cards after several weeks, we or someone
on our behalf may contact you.
Unless proxy cards submitted by corporations and partnerships are signed by the
appropriate persons as indicated in the voting instructions on the proxy card,
they will not be voted.
--------------------------------------------------------------------------------
2
<PAGE>
LEGG MASON EUROPE FUND
(A SERIES OF LEGG MASON GLOBAL TRUST, INC.)
BARTLETT VALUE INTERNATIONAL FUND
(A SERIES OF BARTLETT CAPITAL TRUST)
100 LIGHT STREET
BALTIMORE, MD 21202
(410) 539-0000
PROSPECTUS/PROXY STATEMENT
JANUARY 26, 2001
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished
to shareholders of Bartlett Value International Fund ("Bartlett International
Fund"), a series of Bartlett Capital Trust, in connection with the solicitation
of proxies by its board of trustees for use at a special meeting of its
shareholders to be held on March 9, 2001 at 10:00 a.m., Eastern time, and at any
adjournment thereof, if it is adjourned for any reason.
As more fully described in this Proxy Statement, the purpose of the
meeting is to vote on a proposed reorganization in which Legg Mason Europe Fund,
a series of Legg Mason Global Trust, Inc. ("Global Trust"), would acquire all
the assets of Bartlett International Fund, in exchange solely for shares of Legg
Mason Europe Fund and the assumption by Legg Mason Europe Fund of all the
liabilities of Bartlett International Fund. Those shares of Legg Mason Europe
Fund would then be distributed to the shareholders of Bartlett International
Fund, so that each shareholder would receive a number of full and fractional
shares of Legg Mason Europe Fund having an aggregate value that, on the
effective date of the Reorganization, would equal the aggregate net asset value
of the shareholder's shares of Bartlett International Fund. (These transactions
are referred to collectively as the "Reorganization"). As soon as practicable
following the distribution of shares, Bartlett International Fund would be
terminated.
Legg Mason Europe Fund is a diversified series of Global Trust, which
is an open-end management investment company. Whereas Legg Mason Europe Fund's
investment objective is to seek long-term growth of capital by investing
substantially all of its assets in equity securities in Europe, Bartlett
International Fund's investment objective is to seek capital appreciation by
investing in equity securities located anywhere outside the United States.
Income is a secondary consideration. The Funds are advised by separate advisers,
each of which uses different strategies to achieve the respective Fund's
investment objectives.
This Proxy Statement, which should be retained for future reference,
sets forth concisely information about the Reorganization and Legg Mason Europe
Fund that a shareholder should know before voting on the Reorganization.
A Statement of Additional Information, dated January 26, 2001, relating
to the Reorganization and including historical financial statements
("Reorganization Statement of Additional Information"), has been filed with the
<PAGE>
Securities and Exchange Commission ("SEC") and is incorporated herein by this
reference (that is, the Reorganization Statement of Additional Information is
legally a part of this Proxy Statement). A Primary Class and Class A Shares
Prospectus and an Institutional* Class Shares Prospectus for Legg Mason Europe
Fund, each dated April 28, 2000 and a Class A and Class C Shares Prospectus and
a Class Y Shares Prospectus for Bartlett International Fund, each dated April
28, 2000, have been filed with the SEC and also are incorporated herein by this
reference. Management's discussion of the performance of Legg Mason Europe Fund,
which is included in its Annual Report to Shareholders for the fiscal year ended
December 31, 1999, is attached as Appendix C to this Proxy Statement/Prospectus.
A Statement of Additional Information for Legg Mason Europe Fund, dated
April 28, 2000, and that Fund's Annual Report to Class A and Primary Class
shareholders and Annual Report to Institutional Class shareholders for the
fiscal year ended December 31, 1999 and Semi-Annual Report to Class A and
Primary Class shareholders and Semi-Annual Report to Institutional Class
shareholders for the period ended June 30, 2000, have each been filed with the
SEC and are incorporated by reference to the Reorganization Statement of
Additional Information. A Statement of Additional Information for Bartlett
International Fund, also dated April 28, 2000, and that Fund's Annual Report to
Class A and Class C shareholders and Annual Report to Class Y shareholders for
the fiscal year ended December 31, 1999 and Semi-Annual Report to Class A and
Class C shareholders and Semi-Annual Report to Class Y shareholders for the
period ended June 30, 2000, have each been filed with the SEC and are also
incorporated by reference to the Reorganization Statement of Additional
Information.
The Legg Mason Europe Fund and Bartlett International Fund documents
incorporated by reference herein and in the Reorganization Statement of
Additional Information and additional information about the Funds has been filed
with the SEC and may be obtained without charge, and further inquiries may be
made, by writing to Legg Mason Wood Walker, Inc., 100 Light Street, P.O. Box
1476, Baltimore, Maryland 21203-1476, or by calling toll-free 1-800-822-5544.
The SEC maintains a website (http://www.sec.gov) that contains material
incorporated by reference, together with other information regarding Legg Mason
Europe Fund and Bartlett International Fund. Copies of such material may also be
obtained, after paying a duplicating fee, from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, DC 20549, or by electronic request at the following
e-mail address: [email protected].
THE SEC HAS NOT APPROVED OR DISAPPROVED THE SHARES OF LEGG MASON EUROPE
FUND BEING OFFERED IN THE REORGANIZATION, OR DETERMINED WHETHER THIS PROXY
STATEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
* In November 2000, the Navigator Class of Legg Mason Europe Fund was renamed
the Institutional Class.
ii
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
SECTION TITLE PAGE
VOTING INFORMATION..........................................................................1
THE REORGANIZATION..........................................................................3
SYNOPSIS....................................................................................3
The Proposed Reorganization............................................................3
Comparative Fee Table..................................................................4
Example of Effect on Fund Expenses.....................................................5
Investment Objectives and Policies.....................................................6
Forms of Organization..................................................................7
Investment Adviser.....................................................................7
Distributor............................................................................8
Fund Directors and Officers............................................................9
Operations of Legg Mason Europe Fund Following the Reorganization......................9
Performance...........................................................................10
Purchases and Redemptions.............................................................12
Exchanges.............................................................................12
Dividends and Other Distributions.....................................................13
Federal Income Tax Consequences of the Reorganization.................................13
COMPARISON OF PRINCIPAL RISK FACTORS.......................................................13
THE PROPOSED TRANSACTION...................................................................16
Reorganization Plan...................................................................16
Reasons for the Reorganization........................................................17
Description of Securities to be Issued................................................18
Temporary Waiver of Investment Restrictions...........................................19
Federal Income Tax Considerations.....................................................19
Capitalization........................................................................20
Additional Information about Legg Mason Europe Fund - Financial Highlights............21
OTHER BUSINESS.............................................................................25
MISCELLANEOUS..............................................................................25
Available Information.................................................................25
Legal Matters.........................................................................25
Experts...............................................................................25
APPENDIX A: Principal Shareholders.......................................................A-1
APPENDIX B: Agreement and Plan of Reorganization and Termination.........................B-1
APPENDIX C: Management's Discussion of Fund Performance (Legg Mason Europe Fund).........C-1
APPENDIX D: Comparison of Investment Objectives and Limitations of
Bartlett International Fund and Legg Mason Europe Fund..............................D-1
APPENDIX E: Form of Proxy................................................................E-1
</TABLE>
iii
<PAGE>
BARTLETT VALUE INTERNATIONAL FUND
(a series of Bartlett Capital Trust)
-----------
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MARCH 9, 2001
-----------
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished
to shareholders of Bartlett Value International Fund ("Bartlett International
Fund"), a series of Bartlett Capital Trust, in connection with the solicitation
of proxies from its shareholders by the board of trustees of Bartlett Capital
Trust ("Board") for use at a special meeting of shareholders to be held on March
9, 2001, and at any adjournment thereof ("Meeting"). This Proxy Statement will
first be mailed to shareholders on or about January 26, 2001.
A majority of Bartlett International Fund's shares outstanding on
January 26, 2001 ("Record Date"), represented in person or by proxy, shall
constitute a quorum and must be present for the transaction of business at the
Meeting. If a quorum is not present at the Meeting or a quorum is present but
sufficient votes to approve the proposal are not received or for any other legal
reason, the persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR the proposal in favor of such an
adjournment and will vote those proxies required to be voted AGAINST the
proposal against such adjournment.
Broker non-votes are shares held in "street name" for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against the proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve the proposal.
The individuals named as proxies on the enclosed proxy card will vote
in accordance with your directions as indicated on the proxy card, if your proxy
card is received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of the proposal. In
addition, if you sign, date and return the proxy card, but give no voting
1
<PAGE>
instructions, the duly appointed proxies may, in their discretion, vote upon any
other matters that come before the Meeting. The proxy card may be revoked by
giving another proxy or by letter or telegram revoking the initial proxy. To be
effective, revocation must be received by Bartlett Capital Trust prior to the
Meeting and must indicate your name and account number. If you attend the
Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby
canceling any proxy previously given. Proxies voted by facsimile may be revoked
at any time before they are voted in the same manner that proxies voted by mail
may be revoked.
As of January 22, 2001, Bartlett International Fund had _____________
shares of beneficial interest outstanding, which were composed of the following
classes: __________ Class A shares, __________ Class C shares, and __________
Class Y shares. Shareholder Communications Corp., 17 State Street, 22nd Floor,
New York, New York 10004 has been retained to aid in the solicitation of
proxies. The costs of retaining Shareholder Communications Corp. which are
anticipated to be approximately $_________, and other expenses incurred in
connection with the solicitation of proxies and the holding of the Meeting, will
be borne by Legg Mason Wood Walker, Inc. ("Legg Mason"), or one of its
affiliates and not by either Bartlett International Fund or Legg Mason Europe
Fund (each a "Fund").
[Except as set forth in Appendix A, as of January 22, 2001, each Fund
does not know of any person who owns beneficially 5% or more of the shares of
any class of that Fund. As of that same date, the trustees and officers of
Bartlett Capital Trust, as a group, own in the aggregate less than 1% of the
shares of Bartlett International Fund.]
REQUIRED VOTE. Approval of the proposal requires the affirmative vote
of a majority of the outstanding voting securities of Bartlett International
Fund as defined in the 1940 Act. This means that the proposal must be approved
by the lesser of (1) 67% or more of the Fund's shares present at the Meeting if
the owners of more than 50% of its outstanding shares are present in person or
by proxy or (2) more than 50% of its outstanding shares. Each outstanding full
share of Bartlett International Fund is entitled to one vote, and each
outstanding fractional share thereof is entitled to a proportionate fractional
share of one vote. If the proposal is not approved by the requisite vote of
shareholders of Bartlett International Fund, the Board of Trustees of Bartlett
Capital Trust will determine what action to take.
2
<PAGE>
THE REORGANIZATION
PROPOSAL. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION
AND TERMINATION ("REORGANIZATION PLAN") UNDER WHICH LEGG
MASON EUROPE FUND WOULD ACQUIRE ALL THE ASSETS OF BARTLETT
INTERNATIONAL FUND IN EXCHANGE SOLELY FOR SHARES OF LEGG
MASON EUROPE FUND AND THE ASSUMPTION BY LEGG MASON EUROPE
FUND OF ALL OF BARTLETT INTERNATIONAL FUND'S LIABILITIES,
FOLLOWED BY THE DISTRIBUTION OF THOSE SHARES TO THE
SHAREHOLDERS OF BARTLETT INTERNATIONAL FUND
("REORGANIZATION").
SYNOPSIS
The following is a summary of certain information contained elsewhere
in this Proxy Statement, the Prospectuses of each Fund (which are incorporated
herein by reference) and the Statement of Additional Information of each Fund
(which are incorporated by reference into the Reorganization Statement of
Additional Information), and the Reorganization Plan. A copy of the form of the
Reorganization Plan is attached as Appendix B to this Proxy Statement. As
discussed more fully below, the Board believes that the Reorganization will
benefit Bartlett International Fund's shareholders. The Funds are essentially
compatible in terms of their investment objectives, policies, strategies and
limitations.
THE PROPOSED REORGANIZATION
The Board considered and approved the Reorganization Plan at a meeting
held on October 30, 2000. The Reorganization Plan provides for the acquisition
of all the assets of Bartlett International Fund by Legg Mason Europe Fund, in
exchange solely for shares of common stock of Legg Mason Europe Fund and the
assumption by Legg Mason Europe Fund of all the liabilities of Bartlett
International Fund. Bartlett International Fund then will distribute those
shares of Legg Mason Europe Fund to its shareholders, so that each Bartlett
International Fund shareholder will receive the number of full and fractional
shares that is equal in aggregate value to the value of the shareholder's
holdings in Bartlett International Fund as of the day the Reorganization is
completed. Bartlett International Fund will be terminated as soon as practicable
thereafter.
If the Reorganization Plan is approved by Bartlett International Fund
shareholders, shareholders of each class of Bartlett International Fund will
receive in the Reorganization shares of the comparable class of Legg Mason
Europe Fund. That is, Class A shareholders of Bartlett International Fund will
receive Class A shares of Legg Mason Europe Fund, Class C shareholders of
Bartlett International Fund will receive Primary Class shares of Legg Mason
Europe Fund, and Class Y shareholders of Bartlett International Fund will
receive Institutional Class shares of Legg Mason Europe Fund.
The Reorganization will occur as of the close of business on March 30,
2001, or at a later date when the Reorganization is approved and all
contingencies have been met ("Closing Date").
3
<PAGE>
For the reasons set forth below under "The Proposed Transaction -
Reasons for the Reorganization," the Board, including its trustees who are not
"interested persons," as that term is defined in the Investment Company Act of
1940, as amended ("1940 Act"), of Bartlett Capital Trust, or Legg Mason Global
Trust, Inc. ("Global Trust") ("Independent Trustees"), has determined that the
Reorganization is in the best interests of Bartlett International Fund and that
the interests of Bartlett International Fund's shareholders will not be diluted
as a result of the Reorganization. Accordingly, the Board recommends approval of
the Reorganization. In addition, the board of directors of Global Trust,
including its directors who are not "interested persons," as that term is
defined in the 1940 Act, of Bartlett Capital Trust or Global Trust has
determined that the Reorganization is in the best interests of Legg Mason Europe
Fund and that the interests of Legg Mason Europe Fund's shareholders will not be
diluted as a result of the Reorganization.
COMPARATIVE FEE TABLE
As shown in the tables below, the expense ratios of the Class A, Class
C and Class Y shares of Bartlett International Fund are generally higher than
the expense ratios of the comparable classes of Legg Mason Europe Fund shares.
Although these expense ratios are historical only, the terms of the contracts
that Legg Mason Europe Fund has with its service providers and that Fund's
higher asset levels warrant an expectation of lower costs for the combined Fund.
Annualized current fees and expenses incurred by each Fund for the
fiscal year ended December 31, 2000, and PRO FORMA fees for Legg Mason Europe
Fund after the Reorganization are shown below.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
LEGG MASON BARTLETT VALUE PRO FORMA
EUROPE FUND INTERNATIONAL FUND COMBINED FUND
------------------------------- -------------------------- -------------------------
Primary Institutional Primary Institutional
Class A Class Class Class A Class C Class Y Class A Class Class
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum sales 4.75% none none 4.75% none none 4.75% none none
charge imposed
on purchases of
shares
Deferred Sales none(a) none none none(a) 1.00%(b) none none(a) none none
Charge
</TABLE>
4
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) (AS
A % OF NET ASSETS) (AFTER FEE WAIVERS OR EXPENSE REIMBURSEMENTS, IF ANY)
<TABLE>
<CAPTION>
LEGG MASON BARTLETT VALUE PRO FORMA
EUROPE FUND(d) INTERNATIONAL FUND(c) COMBINED FUND
----------------------------- --------------------------- ---------------------------
Primary Institutional Primary Institutional
Class A Class Class Class A Class C Class Y Class A Class Class
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.00% 1.00% 1.00%
Rule 12b-1 fees 0.25% 1.00% none 0.25% 1.00% none 0.25% 1.00% none
Other expenses % % % % % % % % %
--- --- --- --- --- --- --- --- ---
Total fund % % % % % % % % %
operating
expenses (net of
waivers)
</TABLE>
(a) A CDSC of 1% of the net asset value of Class A shares of the Fund is
imposed on redemptions of shares purchased pursuant to the front-end sales
charge waiver on purchases of $1 million or more of Class A shares made
within one year of the purchase date.
(b) A CDSC of 1% of net asset value at the time of purchase or sale,
whichever is less, may be charged on redemptions of Bartlett International
Fund Class C shares made within one year of the purchase date. A sales
charge will not be imposed on purchases or redemptions occurring as a result
of the Reorganization.
(c) Bartlett, as investment adviser, has voluntarily agreed to waive fees so
that expenses of Class A shares, Class C shares, and Class Y shares
(exclusive of taxes, interest, brokerage and extraordinary expenses) do not
exceed annual rates of 1.80%, 2.55% and 1.55%, respectively, of the Fund's
average daily net assets attributable to that particular class. These
voluntary waivers will continue until April 30, 2001 and may be terminated
at any time. With these waivers, for the fiscal year ended December 31,
2000, annualized management fees and total fund operating expenses were ___%
and ___%, respectively, for Class A shares, ___% and ___%, respectively, for
Class C shares, and ___% and ____%, respectively, for Class Y shares.
(d) The manager has voluntarily agreed to waive fees so that expenses
(exclusive of taxes, interest, brokerage and extraordinary expenses) do not
exceed the following annual rates of 1.85%, 2.60% and 1.60%, respectively,
of the Fund's average daily net assets attributable to Class A, Primary
Class and Institutional Class shares. [No fee waivers were necessary for the
Fund for the fiscal year ended December 31, 2000.] These voluntary waivers
will continue until April 30, 2002 and may be terminated at any time.
EXAMPLE OF EFFECT ON FUND EXPENSES
The Example is intended to help you compare the cost of investing in
Bartlett International Fund with the cost of investing in Legg Mason Europe
Fund, as it presently exists, and the cost of investing in Legg Mason Europe
Fund, assuming the Reorganization has been completed.
The Example assumes that you invest $10,000 in the specified Fund for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year, that all dividends and other distributions are reinvested and that
the Fund's operating expenses are those shown in the tables above. Although your
actual costs may be higher or lower, based on these assumptions, your costs
would be:
5
<PAGE>
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
BARTLETT INTERNATIONAL FUND:
Class A $ $ $ $
Class C $ $ $ $
(assuming no redemption)
Class Y $ $ $ $
LEGG MASON EUROPE FUND: $ $ $ $
Class A $ $ $ $
Primary Class shares $ $ $ $
Institutional Class shares $ $ $ $
COMBINED FUND (PRO FORMA): $ $ $ $
Class A $ $ $ $
Primary Class shares $ $ $ $
Institutional Class shares $ $ $ $
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
The two Funds have similar investment objectives, policies, and
limitations. The Funds, however, are advised by separate advisers, each of which
uses different strategies to achieve the respective Fund's investment
objectives. In addition, whereas Bartlett International seeks to achieve its
objective by investing substantially all of its assets in equity securities of
issuers located anywhere outside of the United States, Legg Mason Europe Fund
seeks to achieve its objective by investing substantially all of its assets in
equity securities only in Europe. Bartlett International's investment objective
is to seek capital appreciation by investing primarily in foreign equity
securities believed by Bartlett to be attractively priced relative to their
intrinsic value. Income is a secondary consideration. Legg Mason Europe Fund's
investment objective is to seek long-term growth of capital with no stated
consideration of income as an objective.
Bartlett invests using a bottom-up, value-based investment strategy.
Its approach to equity investment is to screen equities for valuations based
upon earnings, cash flow, book value and dividend multiples that fall into the
lower half of the global stock universe. Only companies with strong balance
sheets and proven track records are included. It then performs a more intense
financial and company evaluation to select those stocks with superior outlooks.
Finally, it evaluates the economic, political and market environment in which
the company operates, as well as potential currency risk. Bartlett's goal of
individual stock selection and portfolio construction is to produce a portfolio
with above average potential for growth and financial strength, albeit with
attractive valuations. Lombard Odier International Portfolio Management Limited
("Lombard Odier"), using certain growth style analyses, focuses on relatively
larger capitalized issuers with good earnings, growth potential and strong
management.
As of [June 30, 2000], the majority of each fund's assets were invested
in equity securities of European issuers. Close to [60%] of the Bartlett
International's portfolio consists of equity securities of European issuers.
6
<PAGE>
After Japan, where [18%] of the portfolio was invested, the Fund's next largest
positions were held in France and the United Kingdom, which constituted
approximately [16%] and [14%] of the portfolio, respectively. As of [December
31, 2000], over [90%] of Legg Mason Europe Fund's portfolio was invested in
equity securities of European issuers. The Fund's largest positions also were
held in France and the United Kingdom, which constituted approximately [15%] and
[33%] of the portfolio, respectively.
Both Funds are similarly diversified in terms of the number of issuers
and countries in which they are invested. Overall, Bartlett International has a
portfolio that includes fewer than [fifty positions in twenty countries.] With
the exception of the positions held in Japan, France and the United Kingdom, for
the most part the Fund has three or fewer holdings in each country. With the
limited number of holdings in the portfolio, most represent one percent or more
of the total value of the portfolio. Legg Mason Europe Fund holds [forty
positions in ten countries] most of which, like Bartlett International's
holdings, represent one percent or more of the total value of the portfolio.
Legg Mason Europe Fund had assets in excess of [$125 million] as of
December 31, 2000 while Bartlett International Fund had assets of only about
[$41 million.] Legg Mason Europe's Fund's expense ratio was about [___%] for
Class C (Primary Class) at that date, while Bartlett International's expense
ratio was about [___%.] Incompatible securities of Bartlett International,
consisting primarily of non-European issuers, are expected to be sold off prior
to or shortly after the Reorganization. A chart comparing the stated policies,
including less significant policies, and the objectives of each Fund is attached
as Appendix D hereto.
FORMS OF ORGANIZATION
Legg Mason Europe Fund is a series of Global Trust, an open-end,
diversified investment company that was organized as a Maryland corporation on
December 31, 1992. That Fund currently offers three classes of shares: Class A
shares, Primary Class shares and Institutional Class shares.
Bartlett International Fund is a series of Bartlett Capital Trust, an
open-end, diversified investment company that was established as a business
trust under the laws of Massachusetts by an Agreement and Declaration of Trust
dated October 31, 1982. That Fund currently offers three classes of shares:
Class A shares, Class C shares, and Class Y shares.
Neither Bartlett Capital Trust nor Global Trust is required to (nor
does it) hold annual shareholder meetings. Neither Fund issues share
certificates.
INVESTMENT ADVISER
Bartlett, a wholly owned subsidiary of Legg Mason, Inc., currently
serves as the investment adviser to Bartlett International Fund. If the proposal
is approved by Bartlett International Fund shareholders, the current investment
manager and investment adviser for Legg Mason Europe Fund, Fund Adviser and
Lombard Odier, respectively, would continue to serve in those capacities for
Europe Fund. Bartlett is not and would not be investment adviser to the
acquiring fund. Fund Adviser, which is also a wholly owned subsidiary of Legg
Mason, Inc., has been providing management services to Legg Mason Europe Fund
since October 1999, and Lombard Odier, an indirect wholly owned subsidiary of
7
<PAGE>
Lombard Odier & Cie, a Swiss private bank, has been providing investment
advisory services to Legg Mason Europe Fund since its inception. Fund Adviser
and Lombard Odier act as manager or adviser to investment companies with
aggregate assets of over $23 billion and $________, respectively. Bartlett
International Fund has a single portfolio manager with only minor, non-dedicated
assistance of one junior analyst, both employed by Bartlett. Legg Mason Europe
Fund has a portfolio manager, an assistant manager and a team of over ___
European market analysts, all employed by Lombard Odier. Global assets under
management at Lombard Odier exceed $_______, whereas Bartlett has global assets
of only $______ under management.
Bartlett International Fund pays Bartlett a fee, subject to any fee
waiver arrangements in place, computed daily and paid monthly at the annual rate
of 1.25% of Bartlett International Fund's net assets. Bartlett has agreed to
waive fees until April 30, 2001 to the extent that the Fund's expenses exceed
the following annual rates of average daily net assets: Class A - 1.80%, Class C
- 2.55% and Class Y - 1.55%. If the Reorganization is not approved by Bartlett
International Fund shareholders, Bartlett does not expect to continue to waive
fees after April 30, 2001, and Fund expenses could be higher.
Fund Adviser serves as the manager of Legg Mason Europe Fund and
receives for its services a management fee, calculated daily and payable
monthly, at an annual rate equal to 1.00% of the Fund's average daily net
assets. Fund Adviser pays Lombard Odier a monthly fee of 60% of the fee it
receives from the Fund. Fund Adviser has voluntarily agreed to waive its fees,
to the extent that Legg Mason Europe Fund's total annual operating expenses
attributable to Class A shares, Primary Class shares and Institutional Class
shares (exclusive of taxes, interest, brokerage and extraordinary expenses)
exceed 1.85%, 2.60% and 1.60% of the Fund's average daily net assets
attributable to that particular class, respectively until April 30, 2002. For
the fiscal year ended December 31, 2000, the Fund paid Fund Adviser management
fees in the amount of $______.
DISTRIBUTOR
Bartlett International Fund's distributor, Legg Mason Financial
Partners, Inc., and Legg Mason Europe Fund's distributor, Legg Mason Wood
Walker, Inc. ("Legg Mason"), are both wholly owned subsidiaries of Legg Mason,
Inc. Legg Mason will continue to distribute shares of Europe Fund after the
Reorganization. The access to Legg Mason's vastly larger marketing resources,
among other things, could enable the combined Fund to be serviced and marketed
more efficiently, which could result in a future increase in assets and
shareholders.
Legg Mason acts as distributor of Legg Mason Europe Fund's shares
pursuant to an Underwriting Agreement with Global Trust. The Underwriting
Agreement obligates Legg Mason to promote the sale of Fund shares and to pay
certain expenses in connection with its distribution efforts, including the
printing and distribution of prospectuses and periodic reports used in
connection with the offering to prospective investors (after the prospectuses
and reports have been prepared, set in type and mailed to existing shareholders
at the Fund's expense) and for supplementary sales literature and advertising
costs.
8
<PAGE>
Legg Mason Europe Fund has adopted a Distribution and Shareholder
Services Plan ("Plan") pertaining to Class A shares ("Class A Plan") and a Plan
pertaining to Primary Class shares ("Primary Class Plan"). Each Plan, among
other things, permits the Fund to pay Legg Mason, from assets attributable to
the Fund's Primary Class shares or Class A shares, fees for its services related
to sales and distribution of Class A shares or Primary Class shares,
respectively, and the provision of ongoing services to holders of those shares.
Distribution activities for which such payments may be made include, but are not
limited to, compensation to persons who engage in or support distribution and
redemption of shares, printing of prospectuses and reports for persons other
than existing shareholders, advertising, preparation and distribution of sales
literature, overhead, travel and telephone expenses all with respect to the
class of shares paying the fee only.
As compensation for its services and expenses, pursuant to the Primary
Class Plan, Legg Mason receives from Legg Mason Europe Fund an annual
distribution fee equivalent to 0.75% of its average daily net assets
attributable to Primary Class shares and a service fee equivalent to 0.25% of
its average daily net assets attributable to Primary Class shares in accordance
with the Primary Class Plan. The distribution and service fees are calculated
daily and paid monthly.
For Legg Mason's services in connection with Class A shares, Legg Mason
receives from Legg Mason Europe Fund an annual service fee equivalent to 0.25%
of its average daily net assets attributable to Class A shares in accordance
with the Class A Plan. The service fee is calculated daily and paid monthly.
OTHER FUND SERVICE PROVIDERS
The Funds have the same transfer and shareholder servicing agent
(Boston Financial Data Services), the same custodian (State Street Bank and
Trust Company) and the same independent accountants (PricewaterhouseCoopers
LLP). Upon completion of the Reorganization, those entities will continue to
provide services to the combined Fund.
FUND DIRECTORS AND OFFICERS
Global Trust's directors will continue to serve in that capacity for
the reorganized Fund. For a complete description of the directors and officers
of Global Trust, including a description of each director's principal occupation
for the past five years and compensation paid to each director, see the April
28, 2000, Statement of Additional Information for Legg Mason Europe Fund,
incorporated by reference into the Reorganization Statement of Additional
Information.
OPERATIONS OF LEGG MASON EUROPE FUND FOLLOWING THE REORGANIZATION
While a majority of the assets of Bartlett International are securities
of European issuers, the Fund also holds other foreign securities. Accordingly,
Bartlett International's securities holdings which represent non-European
issuers generally will be sold prior to or shortly after the Reorganization. It
is expected that the Reorganization would not result in material brokerage or
other transactional costs to Legg Mason Europe Fund or the realization by it of
a significant amount of net capital gains as a result of the disposition of
portfolio securities.
9
<PAGE>
Prior to the Reorganization, Bartlett International Fund will sell
most, if not all, of any assets that may not be held by Legg Mason Europe Fund.
The proceeds of such sales will be held in temporary investments or reinvested
in assets that qualify to be held by Legg Mason Europe Fund. The possible need
for Bartlett International Fund to dispose of assets prior to the Reorganization
could result in selling securities at a disadvantageous time and could result in
its realizing losses that would not otherwise have been realized. Alternatively,
these sales could result in Bartlett International Fund's realizing gains that
would not otherwise have been realized, which would be included in a
distribution to its shareholders just prior to the Reorganization. In any event,
these sales of assets and any new purchases will involve brokerage and other
transactional expenses to Bartlett International Fund.
PERFORMANCE
Legg Mason Europe Fund has three authorized classes of shares: Class A
shares, Primary Class shares and Institutional Class shares. The information
provided below is for Class A shares, which is the class with the longest
history. Each class is subject to different expenses and a different sales
charge structure. The information below provides an indication of the risks of
investing in the fund by showing changes in the fund's performance from year to
year. Annual returns assume reinvestment of dividends and distributions.
Historical performance of a fund does not necessarily indicate what will happen
in the future.
Legg Mason Europe Fund Class A Shares -
Year by Year Total Return as of December 31 of Each Year (%)
------------------------------------------------------------
[Bar chart with the following values to be inserted]
CALENDAR YEAR TOTAL RETURN
------------- ------------
1990 -20.56%
1991 7.07%
1992 -7.17
1993 29.91%
1994 -4.23%
1995 19.90%
1996 31.53%
1997 17.52%
1998 41.85%
1999 25.41%
2000 ______%
QUARTER ENDED TOTAL RETURN
------------- ------------
Best quarter _______%
Worst quarter _______%
Set forth below are the average annual total returns for the periods
indicated for the two Funds, by class. The tables also compare each Fund's
returns to returns of a broad-based market index. The comparative indices are
unmanaged and therefore, do not include any sales charges or expenses. The two
Funds have historically used different indices - The Morgan Stanley Capital
10
<PAGE>
International (MSCI) Europe Index for Legg Mason Europe Fund and the Morgan
Stanley Capital International Europe, Australia, Far East (MSCI EAFE) Index for
Bartlett International Fund. Past performance is not a guarantee of future
results.
<TABLE>
<CAPTION>
LEGG MASON EUROPE FUND
Class A Primary Institutional MSCI Europe
Shares Class Shares Class Shares Index
------ ------------ ------------ -----
<S> <C> <C> <C> <C>
1 Year Ended December 31, 2000 ____%*/ ____% ____% ____%
____%
5 Years Ended December 31, 2000 ____%*/ n/a n/a ____%
____%
10 Years Ended December 31, 2000 ____%*/ n/a n/a ____%
____%
Life of Class ____%(a)*/ ____%(b) ____%(c) ____%(g)
____%(d)
</TABLE>
BARTLETT INTERNATIONAL FUND
<TABLE>
<CAPTION>
Class A Class C Class Y MSCI EAFE
Shares Shares Shares Index
------ ------ ------ -----
<S> <C> <C> <C> <C>
1 Year Ended December 31, 2000 ____%*/ ____% ____% ____%
____%
5 Years Ended December 31, 2000 ____%*/ n/a n/a ____%
____%
10 Years Ended December 31, 1999 ____%/ n/a n/a ____%
____%
Life of Class ____%*/ ____%(e) ____%(f) ____%(h)
</TABLE>
____%(d)
* The first number reflects the total return information on Class A shares
excluding the maximum 4.75% sales charge which became effective July 21, 1997.
The second number reflects return information including the sales charge.
(a) Inception Date - August 19, 1986
(b) Inception Date - July 23, 1997
(c) Inception Date - August 21, 1997
(d) Inception Date - October 6, 1989
(e) Inception Date - July 23, 1997
(f) Inception Date - August 15, 1997
(g) For comparison with Class A shares, the index's return shown in the table is
for the period August 31, 1986 to December 31, 2000. For comparison with Primary
Class shares, the index's return for the period July 31, 1997 to December 31,
2000 was ____%. For comparison with Institutional Class shares, the index's
return for the period August 31, 1997 to December 31, 2000 was __%.
(h) For Class A, the index's return shown in the table is for the period
September 30, 1989 to December 31, 2000. For the Class C, the index's return of
____% is for the period July 31, 1997 to December 31, 2000. For comparison with
Class Y shares, the index's return for the period August 15, 1997 to December
31, 2000 was ____%.
11
<PAGE>
PURCHASES AND REDEMPTIONS
PURCHASES. Bartlett International Fund Class A and Class C shares, and
Legg Mason Europe Fund Class A shares and Primary Class shares may be purchased
through brokers affiliated with Legg Mason, through unaffiliated brokers that
have entered into an agreement with Legg Mason, or through automatic investment
plans. Bartlett International Fund Class Y shares and Legg Mason Europe Fund
Institutional Class shares each may be purchased by qualified institutional
investors either directly from that Fund's distributor or through an
institutional intermediary. Shares of each Fund are sold on a continuous basis
at a price based on the net asset value ("NAV") per share next determined after
receipt of a purchase order in good form (plus any front-end sales charge
applicable to Class A shares). Purchase orders received before the close of the
New York Stock Exchange (the "Exchange") (normally 4:00 p.m., Eastern time) will
be processed at the Fund's net asset value as of the close of the Exchange on
that day, plus any sales charge. Orders received after the close of the Exchange
will be processed at the Fund's net asset value (plus any applicable sales
charge) as of the close of the Exchange on the next day that the Exchange is
open. For a more complete discussion of share purchases, see the respective "How
to Invest" sections in the Bartlett International Fund Prospectuses and in the
Legg Mason Europe Fund Prospectuses.
REDEMPTIONS. Shares of all classes of both Funds may be redeemed by
telephone, by mail, or by the Funds' Systematic Withdrawal Plan. Redemptions are
made at the NAV per share of each Fund next determined after a request in proper
form is received. For Bartlett International Fund, a CDSC of 1% of the shares'
NAV at the time of purchase or sale, whichever is less, may be charged on
redemptions made within one year of the purchase date of shares purchased
pursuant to the front-end sales charge waiver for purchases of $1 million or
more. Normally, proceeds from redemptions of Class A, C and Y shares of Bartlett
International Fund will settle in customers' brokerage accounts two business
days after the trade date. Proceeds from redemptions of Primary Class and Class
A shares of Legg Mason Europe Fund will generally be received by customers
within a week. Proceeds from redemptions of Legg Mason Europe Fund Institutional
Class shares are normally electronically deposited in a specified bank account
or mailed the next business day after the trade date. However, each Fund
reserves the right to take up to seven days to make payment upon redemption if,
in the judgment of that Fund's investment adviser, the Fund could be adversely
affected by immediate payment. For a more complete discussion of share
redemption procedures, see the respective "How to Sell Your Shares" sections in
the Bartlett International Fund Prospectuses and in the Legg Mason Europe Fund
Prospectuses.
Redemptions of Bartlett International Fund shares may be effected
through the Closing Date.
EXCHANGES
Shares of Legg Mason Europe Fund may be exchanged for the corresponding
class of shares of any of the other Legg Mason Funds, provided these funds are
eligible for sale in your state of residence. Institutional Class shares of Legg
12
<PAGE>
Mason Europe Fund may also be exchanged for shares of the Legg Mason Money
Market Funds. A contingent deferred sales charge may apply to the redemption of
Class A shares acquired through an exchange. Shares of Bartlett International
Fund may be exchanged for the corresponding class of shares of the other
Bartlett Fund or Legg Mason Cash Reserve Trust, provided these funds are
eligible for sale in your state of residence. For a more complete discussion of
each Fund's exchange policies, see "Services for Investors - Exchange Privilege"
in the Legg Mason Europe Fund Prospectuses and "Services for Investors" in
Bartlett International Fund's prospectuses.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund earns investment income in the form of dividends on
investments, substantially all of which is distributed in the form of dividends
to its shareholders. Bartlett International Fund declares and pays dividends
from net investment income on a quarterly basis and dividends from net
short-term gains annually. Legg Mason Europe Fund declares and pays dividends
from net investment income annually. Dividends are automatically reinvested in
the same class of shares of the distributing Fund unless otherwise requested.
Each Fund also realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on these
sales exceed total losses (including losses carried forward from previous
years), the Fund has capital gain net income. Net realized capital gains, if
any, together with net gains realized on foreign currency transactions, if any,
are distributed to each Fund's shareholders at the end of the taxable year in
which the gains are realized. Capital and foreign currency gain distributions
are automatically reinvested in the same class of shares of the distributing
Fund on the payable date unless otherwise requested.
On or immediately before the Closing Date, Bartlett International Fund
will declare as a distribution substantially all of its net investment income
and realized net capital gain, if any, through that date, and distribute that
amount plus any previously declared but unpaid distributions, in order to
continue to maintain its tax status as a regulated investment company.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The Funds will receive an opinion of their counsel, Kirkpatrick &
Lockhart LLP, to the effect that the Reorganization will qualify as a tax-free
reorganization within the meaning of section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended ("Code"). Accordingly, neither Fund nor their
shareholders will recognize any gain or loss as a result of the Reorganization.
See "The Proposed Transaction - Federal Income Tax Considerations," below. If
Bartlett International Fund sells securities prior to the Closing Date, there
may be net recognized gains or losses to that Fund. Any net recognized gains
would increase the amount of any distribution made to shareholders of Bartlett
International Fund prior to the Closing Date.
COMPARISON OF PRINCIPAL RISK FACTORS
An investment in Legg Mason Europe Fund is subject to specific risks
arising from the types of securities in which the Fund invests and general risks
arising from investing in any mutual fund. There is no assurance that the Fund
13
<PAGE>
will meet its investment objective; investors could lose money by investing in
the Fund. As with all mutual funds, an investment in either of these funds is
not insured by or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Because Bartlett International Fund's investment
objective and policies are similar to those of Legg Mason Europe Fund, an
investment in Legg Mason Europe Fund is subject to many of the same specific
risks as an investment in Bartlett International Fund. Additional risks
particular to Legg Mason Europe Fund, including risks associated with investing
primarily in the securities of European issuers, are noted below. The principal
specific risks associated with investing in Legg Mason Europe Fund include:
CONCENTRATION AND RISKS OF INVESTING PRIMARILY IN THE SECURITIES OF
EUROPEAN ISSUERS. The Fund invests primarily in the securities of European
issuers. A fund concentrating a significant portion of its investment in a
single region will be more susceptible to factors adversely affecting issuers
within that region than would a less concentrated portfolio of securities.
European issuers are subject to special risks in that region, including
risks related to the introduction of the Euro and the potential for difficulties
in its acceptance and the emergence of more unified economic and financial
governance in the European Monetary Union countries.
MARKET RISK. The Fund invests primarily in foreign equity securities.
Prices of equity securities generally fluctuate more than those of other
securities, such as debt securities. The Fund may experience a substantial or
complete loss on an individual stock. Market risk may affect a single issuer,
industry or section of the economy or may affect the market as a whole.
FOREIGN SECURITIES RISK. The Fund's investments in foreign securities
(including those denominated in U.S. dollars) involve certain risks not
typically associated with investments in domestic issuers. The values of foreign
securities are subject to economic and political developments in the countries
and regions where the companies operate, such as changes in economic or monetary
policies, and to changes in exchange rates. Values may also be affected by
foreign tax laws and restrictions on receiving the investment proceeds from a
foreign country. Some foreign governments have defaulted on principal and
interest payments.
In general, less information is publicly available about foreign
companies than about U.S. companies. Foreign companies are generally not subject
to the same accounting, auditing and financial reporting standards as are U.S.
companies. Transactions in foreign securities may be subject to less efficient
settlement practices, including extended clearance and settlement periods.
Foreign stock markets may be less liquid and less regulated than U.S. stock
markets.
Some securities issued by foreign governments or their subdivisions,
agencies and instrumentalities may not be backed by the full faith and credit of
the foreign government. Even where a security is backed by the full faith and
credit of a foreign government, it may be difficult for the Fund to pursue its
rights against a foreign government in that country's courts.
EMERGING MARKETS RISK. The risks of foreign investment are greater for
investments in emerging markets. Emerging market countries typically have
economic and political systems that are less fully developed, and can be
14
<PAGE>
expected to be less stable than those of more advanced countries. Low trading
volumes may result in a lack of liquidity and in price volatility. Emerging
market countries may have policies that restrict investment by foreigners, or
that prevent foreign investors from withdrawing their money at will.
Because the Fund may invest a significant amount of its total assets in
emerging market securities, investors should be able to tolerate sudden,
sometimes substantial fluctuations in the value of their investments. An
investment in any fund that invests in emerging market securities should be
considered speculative.
CURRENCY RISK. Because the Fund invests significantly in securities
denominated in foreign currencies, the Fund may incur currency conversion costs,
and may be affected favorably or unfavorably by changes in the rates of exchange
between those currencies and the U.S. dollar. Currency exchange rates can be
volatile and affected by, among other factors, the general economics of a
country, the actions of the U.S. and foreign governments or central banks, the
imposition of currency controls, and speculation. A security may be denominated
in a currency that is different from the currency where the issuer is domiciled.
The Fund may from time to time hedge a portion of its currency risk,
using currency futures, forwards, or options. However, these instruments may not
always work as intended, and in specific cases the Fund may be worse off than if
it had not used a hedging instrument. For most emerging market currencies, there
are not suitable hedging instruments available.
The conversion of European currencies into the Euro began on January 1,
1999, and is expected to continue into 2002. Full implementation of the Euro may
be delayed and difficulties with the conversion may significantly impact
European capital markets resulting in increased volatility in world capital
markets. Individual issuers may suffer substantial losses if they or their
suppliers are not adequately prepared for the transition.
RISKS OF FIXED-INCOME SECURITIES. Legg Mason Europe Fund may invest up
to 35% of its total assets in fixed-income securities. Fixed income securities
are subject to interest rate risk, which is the possibility that the market
prices of the funds' investments may decline due to an increase in market
interest rates. Generally, the longer the maturity of a fixed-income security,
the greater is the effect on its value when rates change. Fixed income
securities are also subject to credit risk, i.e., the risk that an issuer of
securities will be unable to pay principal and interest when due, or that the
value of the security will suffer because investors believe the issuer is less
able to pay. This is broadly gauged by the credit ratings of the securities in
which each fund invests. However, ratings are only the opinions of the agencies
issuing them and are not absolute guarantees as to quality.
INVESTMENT MODELS. The proprietary model used by the adviser to
evaluate securities markets is based on the adviser's understanding of the
interplay of market factors and does not assure successful investment. The
markets, or the prices of individual securities, may be affected by factors not
foreseen in developing the model.
PORTFOLIO TURNOVER. The Fund may have an annual portfolio turnover rate
in excess of 100%. High turnover rates can result in increased trading costs and
15
<PAGE>
THE PROPOSED TRANSACTION
higher levels of realized capital gains. For the years ended December 31, 2000
and 1999, Europe Fund's portfolio turnover rates were___% and 93%, respectively.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction will be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, which is attached as
Appendix B to this Proxy Statement.
The Reorganization Plan provides for (a) the acquisition by Legg Mason
Europe Fund on the Closing Date of all the assets of Bartlett International Fund
in exchange solely for Legg Mason Europe Fund shares and the assumption by Legg
Mason Europe Fund of all of Bartlett International Fund's liabilities and (b)
the distribution of those Legg Mason Europe Fund shares to the shareholders of
Bartlett International Fund.
The assets of Bartlett International Fund to be acquired by Legg Mason
Europe Fund include all cash, cash equivalents, securities, receivables, claims
and rights of action, rights to register shares under applicable securities
laws, books and records, deferred and prepaid expenses shown as assets on
Bartlett International Fund's books, and all other property owned by Bartlett
International Fund. Legg Mason Europe Fund will assume all of Bartlett
International Fund's liabilities, debts, obligations and duties of whatever kind
or nature; provided, however, that Bartlett International Fund will use its best
efforts to discharge all of its known liabilities before the Closing Date. Legg
Mason Europe Fund will deliver its shares to Bartlett International Fund, which
will distribute the shares to Bartlett International Fund's shareholders.
The value of Bartlett International Fund's assets to be acquired by
Legg Mason Europe Fund and the NAV per share of the Legg Mason Europe Fund
shares to be exchanged for those assets will be determined as of the close of
regular trading on the Exchange on the Closing Date ("Valuation Time"), using
the valuation procedures described in each Fund's then-current Prospectus and
Statement of Additional Information. Bartlett International Fund's net value
shall be the value of its assets to be acquired by Legg Mason Europe Fund, less
the amount of its liabilities, as of the Valuation Time.
On, or as soon as practicable after, the Closing Date, Bartlett
International Fund will distribute the Legg Mason Europe Fund shares it receives
PRO RATA to its shareholders of record as of the effective time of the
Reorganization, so that each Bartlett International Fund shareholder will
receive a number of full and fractional Legg Mason Europe Fund shares of the
corresponding class equal in aggregate value to the shareholder's holdings in
Bartlett International Fund (i.e., the account for a shareholder of Class A,
Class C or Class Y shares of Bartlett International Fund will be credited with
the respective PRO RATA number of Class A, Primary Class shares or Institutional
Class shares of Legg Mason Europe Fund due that shareholder). Bartlett
International Fund will be terminated as soon as practicable after the share
distribution. The shares will be distributed by opening accounts on the books of
Legg Mason Europe Fund in the names of Bartlett International Fund shareholders
16
<PAGE>
and by transferring to those accounts the shares previously credited to the
account of Bartlett International Fund on those books. Fractional shares in Legg
Mason Europe Fund will be rounded to the third decimal place.
Because Legg Mason Europe Fund shares will be issued at NAV in exchange
for the net assets of Bartlett International Fund, the aggregate value of Legg
Mason Europe Fund shares issued to Bartlett International Fund shareholders will
equal the aggregate value of Bartlett International Fund shares. The NAV per
share of each class of Legg Mason Europe Fund will be unchanged by the
transaction. Thus, the Reorganization will not result in a dilution of any
shareholder's interest.
Any transfer taxes payable upon the issuance of Legg Mason Europe Fund
shares in a name other than that of the registered Bartlett International Fund
shareholder will be paid by the person to whom those shares are to be issued as
a condition of the transfer. Any reporting responsibility of Bartlett
International Fund to a public authority will continue to be its responsibility
until it is dissolved.
The consummation of the Reorganization is subject to a number of
conditions set forth in the Reorganization Plan, some of which may be waived by
either Fund. In addition, the Reorganization Plan may be amended in any mutually
agreeable manner, except that no amendment may be made subsequent to the Meeting
that has a material adverse effect on the interests of shareholders of either
Fund.
All costs of either Fund pertaining to the Reorganization will be borne
by Legg Mason or one of its affiliates.
REASONS FOR THE REORGANIZATION
Bartlett International Fund assets have declined substantially over the
past three year period ending December 31, 2000 from approximately [$84 million]
to [$41 million.] During that same time period, Legg Mason Europe Fund's assets
increased from [$82 million] to [$121 million] and the Legg Mason Family of
Funds has grown to over [$23 billion.] The Reorganization is being proposed
because of the anticipated benefits by merging into a Fund with a similar
investment objective and policies that also can provide better prospects for
economies of scale, i.e. lower cost, for each class of shares and whose past
performance generally has been better.(1)
-------------------------
(1) Although each class of Bartlett International Fund outperformed each
comparable class of Legg Mason Europe Fund for the year ending December 31,
1999, over the life of each class of those two Funds, Legg Mason Europe Fund
shares significantly outperformed each comparable class of Bartlett
International Fund.
17
<PAGE>
In approving the Reorganization, the Board of Bartlett International
Fund, including a majority of its Independent Trustees, considered a number of
factors, including the following:
(1) the compatibility of the Fund's investment objectives, policies
and restrictions and the compatibility of the assets being
acquired to those already held by Legg Mason Europe Fund;
(2) the effect of the Reorganization on expected investment
performance;
(3) the effect of the Reorganization on the expense ratio of each
class of the Fund relative to its current expense ratio;
(4) the costs to be incurred by the Fund as a result of the
Reorganization, which will be borne by Legg Mason or one of its
affiliates;
(5) the tax consequences of the Reorganization;
(6) possible alternatives to the Reorganization; and
(7) the potential benefits of the transaction to other persons,
including Bartlett, Fund Adviser, Legg Mason, and Legg Mason
Financial Partners, Inc. ("LMFP").
The Reorganization was recommended to the Board of Bartlett Capital
Trust by Bartlett and LMFP at a meeting held on October 30, 2000. In considering
the Reorganization, the Board especially noted the fact that over the past few
years the Bartlett International Fund has continued to lose assets and has not
substantially improved its performance. The Board also considered Bartlett's
advice that the Reorganization should provide experienced portfolio management
and a lower cost structure for shareholders.
The Board also noted that the Reorganization will also generate
possible tax costs to shareholders caused by gains realized on the portfolio
realignment. Nevertheless, given the long-term benefits, including the expense
savings to shareholders and potential investment performance advantages, the
Board, as well as Bartlett and LMFP, believe that the Reorganization would be in
the best interests of the Fund and its shareholders.
DESCRIPTION OF SECURITIES TO BE ISSUED
Global Trust is registered with the SEC as an open-end management
investment company. It has authorized common stock (par value $0.001 per share),
including 375,000,000 shares allocated to Legg Mason Europe Fund, of which
125,000,000 shares are allocated to Class A, 125,000,000 shares are allocated to
Primary Class and 125,000,000 shares are allocated to Institutional Class.
Shares of Legg Mason Europe Fund entitle their holders to one vote per full
share and fractional votes for fractional shares held.
Legg Mason Europe Fund does not hold annual meetings of shareholders.
There normally will be no meetings of shareholders for the purpose of electing
directors unless fewer than a majority of the directors holding office have been
elected by shareholders, at which time the directors then in office will call a
18
<PAGE>
shareholders' meeting for the election of directors. The directors will call
meetings of shareholders for action by shareholder vote as may be required by
the 1940 Act or Global Trust's Articles of Incorporation or Bylaws, or at their
discretion.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Bartlett International
Fund, which prohibit it from acquiring more than a stated percentage of
ownership of another company or industry, might be construed as restricting its
ability to carry out the Reorganization. By approving the Reorganization Plan,
Bartlett International Fund shareholders will be agreeing to waive, only for the
purpose of the Reorganization, those fundamental investment restrictions that
could prohibit or otherwise impede the transaction.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Bartlett International Fund's assets for Legg Mason
Europe Fund shares and Legg Mason Europe Fund's assumption of Bartlett
International Fund's liabilities is intended to qualify for federal income tax
purposes as a tax-free reorganization under section 368(a)(1)(C) of the Code.
The Funds will receive an opinion of their counsel, Kirkpatrick & Lockhart LLP,
substantially to the effect that -
(1) Legg Mason Europe Fund's acquisition of Bartlett
International Fund's assets in exchange solely for Legg Mason Europe
Fund shares and Legg Mason Europe Fund's assumption of Bartlett
International Fund's liabilities, followed by Bartlett International
Fund's distribution of those shares PRO RATA to its shareholders
constructively in exchange for their Bartlett International Fund
shares, will qualify as a reorganization within the meaning of section
368(a)(1)(C) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(2) Bartlett International Fund will recognize no gain or loss
on the transfer to Legg Mason Europe Fund of its assets in exchange
solely for Legg Mason Europe Fund shares and Legg Mason Europe Fund's
assumption of Bartlett International Fund's liabilities or on the
subsequent distribution of those shares to Bartlett International
Fund's shareholders in constructive exchange for their Bartlett
International Fund shares;
(3) Legg Mason Europe Fund will recognize no gain or loss on
its receipt of the transferred assets in exchange solely for its shares
and its assumption of Bartlett International Fund's liabilities;
(4) Legg Mason Europe Fund's basis in the transferred assets
will be the same as the basis therein in Bartlett International Fund's
hands immediately before the Reorganization, and Legg Mason Europe
Fund's holding period for those assets will include Bartlett
International Fund's holding period therefor;
(5) A Bartlett International Fund shareholder will recognize
no gain or loss on the constructive exchange of all its Bartlett
International Fund shares solely for Legg Mason Europe Fund shares
pursuant to the Reorganization; and
19
<PAGE>
(6) A Bartlett International Fund shareholder's aggregate
basis in the Legg Mason Europe Fund shares it receives in the
Reorganization will be the same as the aggregate basis in its Bartlett
International Fund shares it constructively surrenders in exchange for
those Legg Mason Europe Fund shares, and its holding period for those
Legg Mason Europe Fund shares will include its holding period for those
Bartlett International Fund shares, provided the shareholder holds them
as capital assets by the shareholder on the Closing Date.
The tax opinion will state that no opinion is expressed as to the
effect of the Reorganization on either Fund or any Bartlett International Fund
shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting.
Shareholders of Bartlett International Fund should consult their tax
advisers regarding the effect, if any, of the Reorganization in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Reorganization, those shareholders also
should consult their tax advisers about state and local tax consequences, if
any, of the Reorganization.
CAPITALIZATION
The following table shows the capitalization (unaudited) of each Fund
as of September 30, 2000, and on a PRO FORMA combined basis as of September 30,
2000, giving effect to the Reorganization (amounts are in thousands):
<TABLE>
<CAPTION>
Bartlett Legg Mason Pro Forma
Value International Europe Fund Combined
---------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Net Assets
Class A $ 29,598,631 $ 54,060,882 $ 83,659,513
Class C/Primary $ 2,924,944 $ 53,762,179 $ 56,687,123
Class Y/Institutional(A) $ 2,298,852 $ 390,083 $ 2,688,935
---------------------- ----------------------- ----------------------
Total $ 34,822,427 $ 108,213,144 $ 143,035,571
====================== ======================= ======================
Net Asset Value Per Share
Class A $ 12.93 $ 23.48 $ 23.48
Class C/Primary $ 12.66 $ 22.73 $ 22.73
Class Y/Institutional(A) $ 12.89 $ 23.61 $ 23.61
Shares Outstanding
Class A 2,288,867 2,302,530 3,563,119
Class C/Primary 230,990 2,365,717 2,494,399
Class Y/Institutional(A) 178,292 16,519 113,887
</TABLE>
-----------------
(A) Formerly Navigator Class
20
<PAGE>
ADDITIONAL INFORMATION ABOUT LEGG MASON EUROPE FUND - FINANCIAL HIGHLIGHTS
The table below provides selected per share data and ratios for one
share of Legg Mason Europe Fund for each of the periods shown. This information
is supplemented by the financial statements and accompanying notes in Legg Mason
Europe Fund's Annual Report to Shareholders for the fiscal year ended December
31, 1999 and in Legg Mason Europe Fund's Semi-Annual Report to shareholders for
the period ended June 30, 2000. The financial statements and notes for the
fiscal years ended December 31, 1999 and earlier shown below have been audited
by PricewaterhouseCoopers LLP, independent accountants, whose report is included
in the Annual Report to Shareholders.
<TABLE>
LEGG MASON EUROPE FUND (D)
<CAPTION>
Income from
Investment Operations
-------------------------------------------------------
Net Realized &
Unrealized Gain
(Loss) On
Investments,
Options, Futures
and Foreign Total From
Net Asset Value, Net Investment Currency Investment
Beginning of Year Income (Loss) Transactions Operations
---------------------------- --------------------- --------------- ------------------- ----------------
<S> <C> <C> <C> <C>
PRIMARY CLASS
Six Months Ended
June 30, 2000* $ 27.90 $ (.14) $ (1.90) $ (2.04)
Years Ended Dec. 31,
1999 24.39 (.29)(a) 5.97 5.68
1998 20.86 .11 (b) 8.09 8.20
1997(c) 26.56 (.10)(b) .23 0.13
CLASS A (d)
Six Months Ended
June 30, 2000* $ 28.61 $ (.07) $ (1.92) $ (1.99)
Years Ended Dec. 31,
1999 24.77 (.09)(a) 6.10 6.01
1998 20.97 .02 (e) 8.52 8.54
1997 24.24 (.05)(e) 4.11 4.06
1996 21.13 .02 6.34 6.36
1995 17.68 .01 3.50 3.51
INSTITUTIONAL CLASS (f)
Six Months Ended
June 30, 2000* $ 28.73 $ (.02) $ (1.96) $ (1.98)
Years Ended Dec. 31,
1999 24.78 (.03) 6.15 6.12
1998 21.01 .22 (g) 8.37 8.59
1997 (h) 25.61 (.04)(g) 1.27 1.23
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Distributions
-------------------------------------------------------------------------------------------------
In Excess of In Excess of
From Net Net From Net Net Realized Net Asset
Investment Investment Realized Gain Gain on Total Value, End
Income Income on Investments Investments Distribution of Year
-------------------------- ---------- ------------ -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY CLASS
Six Months Ended
June 30, 2000* $ -- $ -- $ (1.47) $ -- $ (1.47) $ 24.39
Years Ended Dec. 31,
1999 (.07) -- (2.10) -- (2.17) 27.90
1998 (.36) -- (4.31) -- (4.67) 24.39
1997 (c) -- -- (5.83) -- (5.83) 20.86
CLASS A (d)
Six Months Ended
June 30, 2000* $ -- $ -- $ (1.47) $ -- $ (1.47) $ 25.15
Years Ended Dec. 31,
1999 (.07) -- (2.10) -- (2.17) 28.61
1998 (.43) -- (4.31) -- (4.74) 24.77
1997 -- -- (7.33) -- (7.33) 20.97
1996 -- -- (3.25) -- (3.25) 24.24
1995 (.06) -- -- -- (.06) 21.13
INSTITUTIONAL CLASS (f)
Six Months Ended
June 30, 2000* $ -- $ -- $ (1.47) $ -- $ (1.47) $ 25.28
Years Ended Dec. 31,
1999 (.07) -- (2.10) -- (2.17) 28.73
1998 (.51) -- (4.31) -- (4.82) 24.78
1997 (h) -- -- (5.83) -- (5.83) 21.01
</TABLE>
<TABLE>
LEGG MASON EUROPE FUND
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Investment
Expenses to Income to Portfolio Net Assets,
Total Return Average Net Average Net Turnover Rate End of Year
(%) Assets (%) Assets (%) (%) (thousands -- $)
------------ ---------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
PRIMARY CLASS
Six Months Ended
June 30, 2000* (7.56)(i) 2.53(j) (1.18)(j) 165(j) 59,614
Years Ended Dec. 31,
1999 24.44 2.58 (1.15) 93 56,871
1998 40.48 2.51(b) (1.15)(b) 103 32,325
1997 (c) .68(i) 2.50(b)(j) (1.79)(b)(j) 123(j) 302
22
<PAGE>
LEGG MASON EUROPE FUND
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Investment
Expenses to Income to Portfolio Net Assets,
Total Return Average Net Average Net Turnover Rate End of Year
(%) Assets (%) Assets (%) (%) (thousands -- $)
------------ ---------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
CLASS A (d)
Six Months Ended
June 30, 2000* (7.20)(i) 1.75(j) (.48)(j) 165(j) 60,922
Years Ended Dec. 31,
1999 25.41 1.79 (.38) 93 78,429
1998 41.85 1.81(e) (.10)(e) 103 57,406
1997 17.52 1.90(e) (.12)(e) 123 52,253
1996 31.53 2.00 .10 109 70,991
1995 19.90 2.10 .10 148 62,249
INSTITUTIONAL CLASS (f)
Six Months Ended
June 30, 2000* (7.13)(i) 1.49(j) (0.13)(j) 165(j) 412
Years Ended Dec. 31,
1999 25.49 1.52 (0.10) 93 389
1998 42.5 1.55(g) 1.31(g) 103 247
1997 (h) 4.9(i) 1.31(g)(j) (0.60)(g)(j) 123 8,025
</TABLE>
(a) Computed using average monthly shares outstanding.
(b) Net of fees waived pursuant to a voluntary expense limitation of 2.50%
until April 30, 1998; and 2.60% until April 30, 2001. If no fees had been
waived, the annualized ratio of expenses to average daily net assets for
each year would have been as follows: 1998, 2.59%; 1997, 2.68%.
(c) For the period July 23, 1997 (commencement of operations of this class) to
December 31, 1997.
(d) The financial information for Europe Fund Class A shares for the years
ended December 31, 1995 and 1996, is for the Worldwide Value Fund, Bartlett
Europe Fund's and Legg Mason Europe Fund's predecessor. The financial
information for the year ended December 31, 1997, is for Bartlett Europe
Fund and Worldwide Value Fund. The financial information for the year ended
December 31, 1998, is for the Bartlett Europe Fund. The financial
information for the year ended December 31, 1999, is for the Legg Mason
Europe Fund and the Bartlett Europe Fund.
(e) The expense ratio shown reflects both the operations of Worldwide Value
Fund, Bartlett Europe Fund's predecessor, prior to its merger with Bartlett
Europe Fund on July 21, 1997, and Bartlett Europe Fund's operations through
December 31, 1997. For the period July 21 to December 31, 1997, the Fund's
annualized expense ratio was 1.71%, net of fees waived pursuant to a
voluntary expense limitation of 1.75% until April 30, 1998; and 1.85% until
April 30, 2001. If no fees had been waived, the annualized ratio of
expenses to average daily net assets for each year would have been as
follows: 1998, 1.89%; 1997, 2.08%.
(f) The financial information for Europe Fund Institutional Class (formerly the
Europe Fund Navigator Class) for the years ended December 31, 1997 and
1998, is for Bartlett Europe Fund Class Y. The financial information for
the year ended December 31, 1999, is for the Legg Mason Europe Fund and the
Bartlett Europe Fund Class Y.
(g) Net of fees waived pursuant to a voluntary expense limitation of 1.50%
until April 30, 1998; and 1.60% until April 30, 2001. If no fees had been
waived, the annualized ratio of expenses to average daily net assets for
each year would have been as follows: 1998, 1.63%; 1997, 1.49%.
23
<PAGE>
(h) For the period August 21, 1997 (commencement of operations of this class)
to December 31, 1997.
(i) Not annualized.
(j) Annualized.
* Unaudited financial information for the period January 1, 2000 to June 30,
2000.
24
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" THE PROPOSAL
-------------------------
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
If, however, any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
designated in the proxies.
MISCELLANEOUS
AVAILABLE INFORMATION
Global Trust and Bartlett Capital Trust are each subject to the
information requirements of the Securities Exchange Act of 1934 and the 1940 Act
and in accordance therewith each files reports and other information with the
SEC. Reports, proxy statements, registration statements and other information
may be inspected without charge and copied at the Public Reference Room
maintained by the SEC at 450 Fifth Street, N.W., Washington, DC 20549, and at
the following regional offices of the SEC: 7 World Trade Center, Suite 1300, New
York, NY 10048, and 500 West Madison Street, 14th floor, Chicago, IL 60661.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1-202-942-8090. The SEC maintains an internet web site at
http://www.sec.gov that contains information regarding Global Trust and Bartlett
Capital Trust, and other registrants that file electronically with the SEC.
Copies of such material may also be obtained, after paying a duplicating fee,
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, DC, 20549, or by
electronic request at the following e-mail address: [email protected].
LEGAL MATTERS
Certain legal matters in connection with the issuance of Legg Mason
Europe Fund shares as part of the Reorganization will be passed upon by Legg
Mason Europe Fund's counsel, Kirkpatrick & Lockhart LLP.
EXPERTS
The audited financial statements of Legg Mason Europe Fund and Bartlett
International Fund, incorporated by reference into the Reorganization Statement
of Additional Information and incorporated by reference or included in their
respective Statements of Additional Information, have been audited by
PricewaterhouseCoopers LLP, independent accountants for the Funds, whose reports
thereon are included in the Funds' Annual Reports to Shareholders for the fiscal
year ended December 31, 1999. The financial statements audited by
PricewaterhouseCoopers LLP have been incorporated by reference into the
Reorganization Statement of Additional Information in reliance on their reports
given on their authority as experts in auditing and accounting matters.
25
<PAGE>
APPENDIX A
----------
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of each Fund's
outstanding equity securities as of ______ __, 2001 by each beneficial owner of
5% or more of a Fund's outstanding equity securities to the extent either Fund
is aware of any 5% owners.
Legg Mason Europe Fund
Name and Address Nature of Amount Percent
---------------- Ownership ------ -------
---------
Bartlett Value International Fund
Nature of
Name and Address Ownership Amount Percent
---------------- --------- ------ -------
A-1
<PAGE>
APPENDIX B
----------
AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
("Agreement") is made as of _____________ __, 2001, between BARTLETT CAPITAL
TRUST, a Massachusetts business trust ("Trust"), on behalf of Bartlett Value
International Fund, a segregated portfolio of assets ("series") thereof
("Target"), and LEGG MASON GLOBAL TRUST, INC., a Maryland corporation
("Corporation"), on behalf its Legg Mason Europe Fund series ("Acquiring Fund").
(Target and Acquiring Fund are sometimes referred to herein individually as a
"Fund" and collectively as the "Funds," and Trust and Corporation are sometimes
referred to herein individually as an "Investment Company" and collectively as
the "Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by either Fund
are made and shall be taken or undertaken by Corporation on behalf of Acquiring
Fund and by Trust on behalf of Target.
The Investment Companies wish to effect a reorganization described in
section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"),
and intend this Agreement to be, and adopt it as, a "plan of reorganization"
within the meaning of the regulations under the Code ("Regulations"). The
reorganization will involve the transfer to Acquiring Fund of Target's assets in
exchange solely for voting shares of common stock of Acquiring Fund, par value
$0.001 per share ("Acquiring Fund Shares"), and the assumption by Acquiring Fund
of Target's liabilities, followed by the constructive distribution of the
Acquiring Fund Shares PRO rata to the holders of shares of beneficial interest
in Target ("Target Shares") in exchange therefor, all on the terms and
conditions set forth herein. The foregoing transactions are referred to herein
collectively as the "Reorganization."
The Target Shares are divided into three classes, designated Class A,
Class C, and Class Y shares ("Class A Target Shares," "Class C Target Shares,"
and "Class Y Target Shares," respectively). The Acquiring Fund Shares also are
divided into three classes, designated Class A, Primary Class, and Institutional
Class shares ("Class A Acquiring Fund Shares," "Primary Class Acquiring Fund
Shares," and "Institutional Class Acquiring Fund Shares," respectively). Each
class of Acquiring Fund Shares is substantially similar to the corresponding
class of Target Shares -- the Funds' Class A Shares correspond to each other,
Class C Target Shares correspond to Primary Class Acquiring Fund Shares, and
Class Y Target Shares correspond to Institutional Class Acquiring Fund Shares --
except that Class C Target Shares are subject to a contingent deferred sales
charge, while Primary Class Acquiring Fund Shares are not subject to such a
charge.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION
1.1. Target agrees to assign, sell, convey, transfer, and
deliver all of its assets described in paragraph 1.2 ("Assets") to Acquiring
Fund. Acquiring Fund agrees in exchange therefor --
(a) to issue and deliver to Target the number of full and
fractional (rounded to the third decimal place) (i) Class A Acquiring
Fund Shares determined by dividing the net value of Target (computed
B-1
<PAGE>
as set forth in paragraph 2.1) ("Target Value") attributable to the
Class A Target Shares by the net asset value ("NAV") of a Class A
Acquiring Fund Share (computed as set forth in paragraph 2.2), (ii)
Primary Class Acquiring Fund Shares determined by dividing the Target
Value attributable to the Class C Target Shares by the NAV of a
Primary Class Acquiring Fund Share (as so computed), and (iii)
Institutional Class Acquiring Fund Shares determined by dividing the
Target Value attributable to the Class Y Target Shares by the NAV of
an Institutional Class Acquiring Fund Share (as so computed), and
(b) to assume all of Target's liabilities described in
paragraph 1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), claims and rights of
action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Target's books, and
other property owned by Target at the Effective Time (as defined in paragraph
3.1).
1.3. The Liabilities shall include all of Target's liabilities,
debts, obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary course
of business, whether or not determinable at the Effective Time, and whether or
not specifically referred to in this Agreement. Notwithstanding the foregoing,
Target agrees to use its best efforts to discharge all its known Liabilities
before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall
declare and pay to its shareholders a dividend and/or other distribution in an
amount large enough so that it will have distributed substantially all (and in
any event not less than 90%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and substantially all of its
realized net capital gain, if any, for the current taxable year through the
Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares it receives
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. Such distribution shall be
accomplished by Corporation's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring such
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO rata number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder, by class (I.E., the
account for a Shareholder of Class A Target Shares shall be credited with the
respective PRO RATA number of Class A Acquiring Fund Shares due that
Shareholder, the account for a Shareholder of Class C Target Shares shall be
credited with the respective PRO RATA number of Primary Class Acquiring Fund
Shares due that Shareholder, and the account for a Shareholder of Class Y Target
Shares shall be credited with the respective PRO RATA number of Institutional
Class Acquiring Fund Shares due that Shareholder). All outstanding Target
Shares, including any represented by certificates, shall simultaneously be
canceled on Target's share transfer books. Acquiring Fund shall not issue
B-2
<PAGE>
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.6. As soon as reasonably practicable after distribution of the
Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six
months after the Effective Time, Target shall be terminated as a series of Trust
and any further actions shall be taken in connection therewith as required by
applicable law.
1.7. Any reporting responsibility of Target to a public authority is
and shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund
Shares in a name other than that of the registered holder on Target's books of
the Target Shares constructively exchanged therefor shall be paid by the person
to whom such Acquiring Fund Shares are to be issued, as a condition of such
transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(a), Target's net value shall be
(a) the value of the Assets computed as of the close of regular trading on the
New York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"),
using the valuation procedures set forth in Target's then-current prospectuses
and statement of additional information ("SAI"), less (b) the amount of the
Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV per share of each
class of Acquiring Fund Shares shall be computed as of the Valuation Time, using
the valuation procedures set forth in Acquiring Fund's then-current prospectuses
and SAI.
2.3. All computations pursuant to paragraph 2.1 shall be made by or
under the direction of Bartlett & Co. All computations pursuant to paragraph 2.2
shall be made by or under the direction of Legg Mason Fund Adviser, Inc.
("LMFA").
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at Corporation's principal office
on or about March 30, 2001, or at such other place and/or on such other date as
to which the Investment Companies may agree. All acts taking place at the
Closing shall be deemed to take place simultaneously as of the close of business
on the date thereof or at such other time as to which the Investment Companies
may agree ("Effective Time"). If, immediately before the Valuation Time, (a) the
NYSE is closed to trading or trading thereon is restricted or (b) trading or the
reporting of trading on the NYSE or elsewhere is disrupted, so that accurate
appraisal of the net value of Target and the NAV per share of each class of
Acquiring Fund Shares is impracticable, the Effective Time shall be postponed
until the first business day after the day when such trading shall have been
fully resumed and such reporting shall have been restored.
3.2. Trust's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
B-3
<PAGE>
including all portfolio securities, transferred by Target to Acquiring Fund, as
reflected on Acquiring Fund's books immediately following the Closing, does or
will conform to such information on Target's books immediately before the
Closing. Trust's custodian shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets held by the custodian will be
transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes
in conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for payment
has been made.
3.3. Trust shall deliver to Corporation at the Closing a list of the
names and addresses of the Shareholders and the number of outstanding Target
Shares (by class) owned by each Shareholder, all as of the Effective Time,
certified by Trust's Secretary or Assistant Secretary. Corporation's transfer
agent shall deliver at the Closing a certificate as to the opening on Acquiring
Fund's share transfer books of accounts in the Shareholders' names. Corporation
shall issue and deliver a confirmation to Trust evidencing the Acquiring Fund
Shares to be credited to Target at the Effective Time or provide evidence
satisfactory to Trust that such Acquiring Fund Shares have been credited to
Target's account on Acquiring Fund's books. At the Closing, each party shall
deliver to the other bills of sale, checks, assignments, stock certificates,
receipts, or other documents the other party or its counsel reasonably requests.
3.4. Each Investment Company shall deliver to the other at the
Closing a certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the Effective
Time, to the effect that the representations and warranties it made in this
Agreement are true and correct at the Effective Time except as they may be
affected by the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Target represents and warrants as follows:
4.1.1. Trust is a trust operating under a written
declaration of trust, the beneficial interest in which is divided
into transferable shares ("Business Trust"), that is duly organized
and validly existing under the laws of the Commonwealth of
Massachusetts; and a copy of its Amended and Restated Agreement and
Declaration of Trust ("Declaration of Trust") is on file with the
Secretary of the Commonwealth of Massachusetts;
4.1.2. Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration is in full force and
effect;
4.1.3. Target is a duly established and designated series
of Trust;
4.1.4. At the Closing, Target will have good and
marketable title to the Assets and full right, power, and authority
to sell, assign, transfer, and deliver the Assets free of any liens
or other encumbrances (except securities that are subject to
"securities loans" as referred to in section 851(b)(2) of the Code);
and on delivery and payment for the Assets, Acquiring Fund will
acquire good and marketable title thereto;
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4.1.5. Target's current prospectuses and SAI conform in
all material respects to the applicable requirements of the
Securities Act of 1933, as amended ("1933 Act"), and the 1940 Act and
the rules and regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
4.1.6. Target is not in violation of, and the execution
and delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Massachusetts
law or any provision of the Declaration of Trust or Trust's By-Laws
or of any agreement, instrument, lease, or other undertaking to which
Target is a party or by which it is bound or result in the
acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Target is a party
or by which it is bound, except as otherwise disclosed in writing to
and accepted by Corporation;
4.1.7. Except as otherwise disclosed in writing to and
accepted by Corporation, all material contracts and other commitments
of or applicable to Target (other than this Agreement and investment
contracts, including options, futures, and forward contracts) will be
terminated, or provision for discharge of any liabilities of Target
thereunder will be made, at or prior to the Effective Time, without
either Fund's incurring any liability or penalty with respect thereto
and without diminishing or releasing any rights Target may have had
with respect to actions taken or omitted or to be taken by any other
party thereto prior to the Closing;
4.1.8. Except as otherwise disclosed in writing to and
accepted by Corporation, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is
presently pending or (to Trust's knowledge) threatened against Trust
with respect to Target or any of its properties or assets that, if
adversely determined, would materially and adversely affect Target's
financial condition or the conduct of its business; Trust knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially or adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
4.1.9. The execution, delivery, and performance of this
Agreement have been duly authorized as of the date hereof by all
necessary action on the part of Trust's board of trustees, which has
made the determinations required by Rule 17a-8(a) under the 1940 Act;
and, subject to approval by Target's shareholders, this Agreement
constitutes a valid and legally binding obligation of Target,
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
4.1.10. At the Effective Time, the performance of this
Agreement shall have been duly authorized by all necessary action by
Target's shareholders;
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4.1.11. No governmental consents, approvals,
authorizations, or filings are required under the 1933 Act, the
Securities Exchange Act of 1934, as amended ("1934 Act"), or the 1940
Act for the execution or performance of this Agreement by Trust,
except for (a) the filing with the Securities and Exchange Commission
("SEC") of a registration statement by Corporation on Form N-14
relating to the Acquiring Fund Shares issuable hereunder, and any
supplement or amendment thereto ("Registration Statement"), including
therein a prospectus/proxy statement ("Proxy Statement"), and (b)
such consents, approvals, authorizations, and filings as have been
made or received or as may be required subsequent to the Effective
Time;
4.1.12. On the effective date of the Registration
Statement, at the time of the Shareholders' Meeting (as defined in
paragraph 5.2), and at the Effective Time, the Proxy Statement will
(a) comply in all material respects with the applicable provisions of
the 1933 Act, the 1934 Act, and the 1940 Act and the regulations
thereunder and (b) not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading;
provided that the foregoing shall not apply to statements in or
omissions from the Proxy Statement made in reliance on and in
conformity with information furnished by Corporation for use therein;
4.1.13. The Liabilities were incurred by Target in the
ordinary course of its business; and there are no Liabilities other
than Liabilities disclosed or provided for in Trust's financial
statements referred to in paragraph 4.1.19 and Liabilities incurred
by Target in the ordinary course of its business subsequent to June
30, 2000, or otherwise disclosed to Corporation, none of which has
been materially adverse to the business, assets, or results of
Target's operations;
4.1.14. Target is a "fund" as defined in section 851(g)(2)
of the Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable
year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; the
Assets shall be invested at all times through the Effective Time in a
manner that ensures compliance with the foregoing; and Target has no
earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it;
4.1.15. Target is not under the jurisdiction of a court in
a "title 11 or similar case" (within the meaning of section
368(a)(3)(A) of the Code);
4.1.16. Not more than 25% of the value of Target's total
assets (excluding cash, cash items, and U.S. government securities)
is invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the stock
and securities of five or fewer issuers;
4.1.17 During the five-year period ending at the Effective
Time, (a) neither Target nor any person "related" (as defined in
section 1.368-1(e)(3) of the Regulations) to Target will have
acquired Target Shares with consideration other than Acquiring Fund
Shares or Target Shares, except for shares redeemed in the ordinary
course of Target's business as a series of an open-end investment
company as required by section 22(e) of the 1940 Act, and (b) no
distributions will have been made with respect to Target Shares
(other than normal, regular dividend distributions made pursuant to
Target's historic dividend-paying practice), either directly or
through any transaction, agreement, or arrangement with any other
person, except for dividends qualifying for the deduction for
dividends paid (as defined in section 561 of the Code) referred to in
sections 852(a)(1) and 4982(c)(1)(A) of the Code;
4.1.18. Target's federal income tax returns, and all
applicable state and local tax returns, for all taxable years to and
including the taxable year ended December 31, 1999, have been timely
filed and all taxes payable pursuant to such returns have been timely
paid; and
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4.1.19. Trust's audited financial statements for the year
ended December 31, 1999, and unaudited financial statements for the
six months ended June 30, 2000, to be delivered to Corporation,
fairly represent Target's financial position as of each such date and
the results of its operations and changes in its net assets for the
periods then ended.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. Corporation is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Maryland; and its Articles of Incorporation are on file with the
Department of Assessments and Taxation of Maryland;
4.2.2. Corporation is duly registered as an open-end
management investment company under the 1940 Act, and such
registration is in full force and effect;
4.2.3. Acquiring Fund is a duly established and
designated series of Corporation;
4.2.4. No consideration other than Acquiring Fund Shares
(and Acquiring Fund's assumption of the Liabilities) will be issued
in exchange for the Assets in the Reorganization;
4.2.5. The Acquiring Fund Shares to be issued and
delivered to Target hereunder will, at the Effective Time, have been
duly authorized and, when issued and delivered as provided herein
(including the receipt of consideration in exchange therefor
exceeding their par value), will be duly and validly issued and
outstanding shares of Acquiring Fund, fully paid and non-assessable;
4.2.6. Acquiring Fund's current prospectuses and SAI
conform in all material respects to the applicable requirements of
the 1933 Act and the 1940 Act and the rules and regulations
thereunder and do not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
4.2.7. Acquiring Fund is not in violation of, and the
execution and delivery of this Agreement and consummation of the
transactions contemplated hereby will not conflict with or violate,
Maryland law or any provision of Corporation's Articles of
Incorporation or By-Laws or of any provision of any agreement,
instrument, lease, or other undertaking to which Acquiring Fund is a
party or by which it is bound or result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Acquiring Fund is a party or by which it
is bound, except as otherwise disclosed in writing to and accepted by
Trust;
4.2.8. Except as otherwise disclosed in writing to and
accepted by Trust, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is
presently pending or (to Corporation's knowledge) threatened against
Corporation with respect to Acquiring Fund or any of its properties
or assets that, if adversely determined, would materially and
adversely affect Acquiring Fund's financial condition or the conduct
of its business; Corporation knows of no facts that might form the
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basis for the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially or adversely affects its business or its ability to
consummate the transactions contemplated hereby;
4.2.9. The execution, delivery, and performance of this
Agreement have been duly authorized as of the date hereof by all
necessary action on the part of Corporation's board of directors
(together with Trust's board of trustees, the "Boards"), which has
made the determinations required by Rule 17a-8(a) under the 1940 Act;
and this Agreement constitutes a valid and legally binding obligation
of Acquiring Fund, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
4.2.10. No governmental consents, approvals,
authorizations, or filings are required under the 1933 Act, the 1934
Act, or the 1940 Act for the execution or performance of this
Agreement by Corporation, except for (a) the filing with the SEC of
the Registration Statement and a post-effective amendment to
Corporation's registration statement on Form N1-A and (b) such
consents, approvals, authorizations, and filings as have been made or
received or as may be required subsequent to the Effective Time;
4.2.11. On the effective date of the Registration
Statement, at the time of the Shareholders' Meeting, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934
Act, and the 1940 Act and the regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading; provided that the foregoing
shall not apply to statements in or omissions from the Proxy
Statement made in reliance on and in conformity with information
furnished by Trust for use therein;
4.2.12. Acquiring Fund is a "fund" as defined in section
851(g)(2) of the Code; it qualified for treatment as a RIC for each
past taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; Acquiring Fund intends to continue to meet all such
requirements for the next taxable year; and it has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M of the Code did not apply to it;
4.2.13. Acquiring Fund has no plan or intention to issue
additional Acquiring Fund Shares following the Reorganization except
for shares issued in the ordinary course of its business as a series
of an open-end investment company; nor is there any plan or intention
for Acquiring Fund, or any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to Acquiring Fund, to
acquire -- during the five-year period beginning at the Effective
Time, either directly or through any transaction, agreement, or
arrangement with any other person -- with consideration other than
Acquiring Fund Shares, any Acquiring Fund Shares issued to the
Shareholders pursuant to the Reorganization, except for redemptions
in the ordinary course of Acquiring Fund's business as an open-end
investment company as required by section 22(e) of the 1940 Act;
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4.2.14. Following the Reorganization, Acquiring Fund (a)
will continue Target's "historic business" (within the meaning of
section 1.368-1(d)(2) of the Regulations) and (b) will use a
significant portion of Target's "historic business assets" (within
the meaning of section 1.368-1(d)(3) of the Regulations) in a
business; moreover, Acquiring Fund (c) has no plan or intention to
sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC, and (d)
expects to retain substantially all the Assets in the same form as it
receives them in the Reorganization, unless and until subsequent
investment circumstances suggest the desirability of change or it
becomes necessary to make dispositions thereof to maintain such
status;
4.2.15. There is no plan or intention for Acquiring Fund
to be dissolved or merged into another corporation or a business
trust or any "fund" thereof (within the meaning of section 851(g)(2)
of the Code) following the Reorganization;
4.2.16. Immediately after the Reorganization, (a) not more
than 25% of the value of Acquiring Fund's total assets (excluding
cash, cash items, and U.S. government securities) will be invested in
the stock and securities of any one issuer and (b) not more than 50%
of the value of such assets will be invested in the stock and
securities of five or fewer issuers;
4.2.17. Acquiring Fund does not directly or indirectly
own, nor at the Effective Time will it directly or indirectly own,
nor has it directly or indirectly owned at any time during the past
five years, any shares of Target;
4.2.18. During the five-year period ending at the
Effective Time, neither Acquiring Fund nor any person "related"(as
defined in section 1.368-1(e)(3) of the Regulations) to Acquiring
Fund will have acquired Target Shares with consideration other than
Acquiring Fund Shares;
4.2.19. Acquiring Fund's federal income tax returns, and
all applicable state and local tax returns, for all taxable years to
and including the taxable year ended December 31, 1999, have been
timely filed and all taxes payable pursuant to such returns have been
timely paid;
4.2.20. Corporation's audited financial statements for the
year ended December 31, 1999, and unaudited financial statements for
the six months ended June 30, 2000, to be delivered to Trust, fairly
represent Acquiring Fund's financial position as of each such date
and the results of its operations and changes in its net assets for
the periods then ended; and
4.2.21. If the Reorganization is consummated, Acquiring
Fund will treat each Shareholder that receives Acquiring Fund Shares
in connection with the Reorganization as having made a minimum
initial purchase of such shares for the purpose of making additional
investments therein, regardless of the value of the shares so
received.
4.3. Each Fund represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares
received by each Shareholder will be approximately equal to the fair
market value of its Target Shares constructively surrendered in
exchange therefor;
4.3.2. Its management (a) is unaware of any plan or
intention of Shareholders to redeem, sell, or otherwise dispose of
(i) any portion of their Target Shares before the Reorganization to
any person "related" (within the meaning of section 1.368-1(e)(3) of
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the Regulations) to either Fund or (ii) any portion of the Acquiring
Fund Shares to be received by them in the Reorganization to any
person related (as so defined) to Acquiring Fund, (b) does not
anticipate dispositions of those Acquiring Fund Shares at the time of
or soon after the Reorganization to exceed the usual rate and
frequency of dispositions of shares of Target as a series of an
open-end investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result
of or at the time of the Reorganization will be DE MINIMIS, and (d)
does not anticipate that there will be extraordinary redemptions of
Acquiring Fund Shares immediately following the Reorganization;
4.3.3. The Shareholders will pay their own expenses, if
any, incurred in connection with the Reorganization;
4.3.4. The fair market value of the Assets on a going
concern basis will equal or exceed the Liabilities to be assumed by
Acquiring Fund and those to which the Assets are subject;
4.3.5. There is no intercompany indebtedness between the
Funds that was issued or acquired, or will be settled, at a discount;
4.3.6. Pursuant to the Reorganization, Target will
transfer to Acquiring Fund, and Acquiring Fund will acquire, at least
90% of the fair market value of the net assets, and at least 70% of
the fair market value of the gross assets, held by Target immediately
before the Reorganization. For the purposes of this representation,
any amounts used by Target to pay its Reorganization expenses and to
make redemptions and distributions immediately before the
Reorganization (except (a) redemptions in the ordinary course of its
business required by section 22(e) of the 1940 Act and (b) regular,
normal dividend distributions made to conform to its policy of
distributing all or substantially all of its income and gains to
avoid the obligation to pay federal income tax and/or the excise tax
under section 4982 of the Code) will be included as assets held
thereby immediately before the Reorganization;
4.3.7. None of the compensation received by any
Shareholder who is an employee of or service provider to Target will
be separate consideration for, or allocable to, any of the Target
Shares held by such Shareholder; none of the Acquiring Fund Shares
received by any such Shareholder will be separate consideration for,
or allocable to, any employment agreement, investment advisory
agreement, or other service agreement; and the consideration paid to
any such Shareholder will be for services actually rendered and will
be commensurate with amounts paid to third parties bargaining at
arm's-length for similar services;
4.3.8. Immediately after the Reorganization, the
Shareholders will not own shares constituting "control" (within the
meaning of section 304(c) of the Code) of Acquiring Fund;
4.3.9. Neither Fund will be reimbursed for any expenses
incurred by it or on its behalf in connection with the Reorganization
unless those expenses are solely and directly related to the
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Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization
Expenses"); and
4.3.10. The aggregate value of the acquisitions,
redemptions, and distributions limited by paragraphs 4.1.17, 4.2.13,
and 4.2.18 will not exceed 50% of the value (without giving effect to
such acquisitions, redemptions, and distributions) of the proprietary
interest in Target) at the Effective Time.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in
the ordinary course between the date hereof and the Closing, it being understood
that:
(a) such ordinary course will include declaring and paying
customary dividends and other distributions and such changes in
operations as are contemplated by each Fund's normal business
activities and
(b) each Fund will retain exclusive control of the
composition of its portfolio until the Closing; provided that (1)
Target shall not dispose of more than an insignificant portion of its
historic business assets (as defined above) during such period
without Acquiring Fund's prior consent and (2) if Target's
shareholders' approve this Agreement (and the transactions
contemplated hereby), then between the date of such approval and the
Closing, the Investment Companies shall coordinate the Funds'
respective portfolios so that the transfer of the Assets to Acquiring
Fund will not cause it to fail to be in compliance with all of its
investment policies and restrictions immediately after the Closing.
5.2. Target covenants to call a shareholders' meeting to consider and
act on this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby ("Shareholders' Meeting").
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist Corporation in obtaining
information Corporation reasonably requests concerning the beneficial ownership
of Target Shares.
5.5. Target covenants that its books and records (including all books
and records required to be maintained under the 1940 Act and the rules and
regulations thereunder) will be turned over to Corporation at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy
Statement in compliance with applicable federal securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause to
be taken such further action, as the other Fund may deem necessary or desirable
in order to vest in, and confirm to, (a) Acquiring Fund, title to and possession
of all the Assets, and (b) Target, title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and otherwise to carry out the intent and
purpose hereof.
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5.8. Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
such state securities laws it may deem appropriate in order to continue its
operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause
to be taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance
by the other Fund of all its obligations to be performed hereunder at or before
the Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall
have been duly adopted and approved by both Boards and shall have been approved
by Target's shareholders in accordance with applicable law.
6.2. All necessary filings shall have been made with the SEC and
state securities authorities, and no order or directive shall have been received
that any other or further action is required to permit the parties to carry out
the transactions contemplated hereby. The Registration Statement shall have
become effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an unfavorable
report with respect to the Reorganization under section 25(b) of the 1940 Act
nor instituted any proceedings seeking to enjoin consummation of the
transactions contemplated hereby under section 25(c) of the 1940 Act. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding
shall be pending before any court or governmental agency in which it is sought
to restrain or prohibit, or to obtain damages or other relief in connection
with, the transactions contemplated hereby.
6.4. Trust shall have received an opinion of Kirkpatrick & Lockhart
LLP ("Counsel") substantially to the effect that:
6.4.1. Acquiring Fund is a duly established series of
Corporation, a corporation duly organized, validly existing, and in
good standing under the laws of the State of Maryland with power
under its Articles of Incorporation to own all its properties and
assets and, to Counsel's knowledge, to carry on its business as
presently conducted;
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6.4.2. This Agreement (a) has been duly authorized, executed,
and delivered by Corporation on behalf of Acquiring Fund and (b)
assuming due authorization, execution, and delivery of this Agreement
by Trust on behalf of Target, is a valid and legally binding
obligation of Corporation with respect to Acquiring Fund, enforceable
in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors'
rights and by general principles of equity;
6.4.3. The Acquiring Fund Shares to be issued and distributed
to the Shareholders under this Agreement, assuming their due delivery
as contemplated by this Agreement and the receipt of consideration in
exchange therefor exceeding their par value, will be duly authorized
and validly issued and outstanding and fully paid and non-assessable;
6.4.4. The execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will
not, materially violate Corporation's Articles of Incorporation or
By-Laws or any provision of any agreement (known to Counsel, without
any independent inquiry or investigation) to which Corporation (with
respect to Acquiring Fund) is a party or by which it is bound or (to
Counsel's knowledge, without any independent inquiry or
investigation) result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree
to which Corporation (with respect to Acquiring Fund) is a party or
by which it is bound, except as set forth in such opinion or as
otherwise disclosed in writing to and accepted by Trust;
6.4.5. To Counsel's knowledge (without any independent inquiry
or investigation), no consent, approval, authorization, or order of
any court or governmental authority is required for the consummation
by Corporation on behalf of Acquiring Fund of the transactions
contemplated herein, except such as have been obtained under the 1933
Act, the 1934 Act, and the 1940 Act and such as may be required under
state securities laws;
6.4.6. Corporation is registered with the SEC as an investment
company, and to Counsel's knowledge no order has been issued or
proceeding instituted to suspend such registration; and
6.4.7. To Counsel's knowledge (without any independent inquiry
or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending
or threatened as to Corporation (with respect to Acquiring Fund) or
any of its properties or assets attributable or allocable to
Acquiring Fund and (b) Corporation (with respect to Acquiring Fund)
is not a party to or subject to the provisions of any order, decree,
or judgment of any court or governmental body that materially and
adversely affects Acquiring Fund's business, except as set forth in
such opinion or as otherwise disclosed in writing to and accepted by
Trust.
In rendering such opinion, Counsel may (1) rely, as to matters governed by the
laws of the State of Maryland, on an opinion of competent Maryland counsel, (2)
make assumptions regarding the authenticity, genuineness, and/or conformity of
documents and copies thereof without independent verification thereof, (3) limit
such opinion to applicable federal and state law, and (4) define the word
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"knowledge" and related terms to mean the knowledge of attorneys then with
Counsel who have devoted substantive attention to matters directly related to
this Agreement and the Reorganization.
6.5. Corporation shall have received an opinion of Counsel
substantially to the effect that:
6.5.1. Target is a duly established series of Trust, a
Business Trust duly organized and validly existing under the laws of
the Commonwealth of Massachusetts with power under the Declaration of
Trust to own all its properties and assets and, to Counsel's
knowledge, to carry on its business as presently conducted;
6.5.2. This Agreement (a) has been duly authorized,
executed, and delivered by Trust on behalf of Target and (b) assuming
due authorization, execution, and delivery of this Agreement by
Corporation on behalf of Acquiring Fund, is a valid and legally
binding obligation of Trust with respect to Target, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors'
rights and by general principles of equity;
6.5.3. The execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby
will not, materially violate the Declaration of Trust or Trust's
By-Laws or any provision of any agreement (known to Counsel, without
any independent inquiry or investigation) to which Trust (with
respect to Target) is a party or by which it is bound or (to
Counsel's knowledge, without any independent inquiry or
investigation) result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree
to which Trust (with respect to Target) is a party or by which it is
bound, except as set forth in such opinion or as otherwise disclosed
in writing to and accepted by Corporation;
6.5.4. To Counsel's knowledge (without any independent
inquiry or investigation), no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by Trust on behalf of Target of the transactions
contemplated herein, except such as have been obtained under the 1933
Act, the 1934 Act, and the 1940 Act and such as may be required under
state securities laws;
6.5.5. Trust is registered with the SEC as an investment
company, and to Counsel's knowledge no order has been issued or
proceeding instituted to suspend such registration; and
6.5.6. To Counsel's knowledge (without any independent
inquiry or investigation), (a) no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is pending or threatened as to Trust (with respect to Target) or
any of its properties or assets attributable or allocable to Target
and (b) Trust (with respect to Target) is not a party to or subject
to the provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects Target's
business, except as set forth in such opinion or as otherwise
disclosed in writing to and accepted by Corporation.
B-14
<PAGE>
In rendering such opinion, Counsel may (1) rely, as to matters governed by the
laws of the Commonwealth of Massachusetts, on an opinion of competent
Massachusetts counsel, (2) make assumptions regarding the authenticity,
genuineness, and/or conformity of documents and copies thereof without
independent verification thereof, (3) limit such opinion to applicable federal
and state law, and (4) define the word "knowledge" and related terms to mean the
knowledge of attorneys then with Counsel who have devoted substantive attention
to matters directly related to this Agreement and the Reorganization.
6.6. Each Investment Company shall have received an opinion of
Counsel, addressed to and in form and substance reasonably satisfactory to it,
as to the federal income tax consequences mentioned below ("Tax Opinion"). In
rendering the Tax Opinion, Counsel may rely as to factual matters, exclusively
and without independent verification, on the representations made in this
Agreement, which Counsel may treat as representations and warranties made to it,
and in separate letters addressed to Counsel and the certificates delivered
pursuant to paragraph 3.4. The Tax Opinion shall be substantially to the effect
that, based on the facts and assumptions stated therein and conditioned on
consummation of the Reorganization in accordance with this Agreement, for
federal income tax purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in
exchange solely for Acquiring Fund Shares and Acquiring Fund's
assumption of the Liabilities, followed by Target's distribution of
those shares PRO RATA to the Shareholders constructively in exchange
for their Target Shares, will qualify as a reorganization within the
meaning of section 368(a)(1)(C) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of section 368(b) of
the Code;
6.6.2. Target will recognize no gain or loss on the
transfer of the Assets to Acquiring Fund in exchange solely for
Acquiring Fund Shares and Acquiring Fund's assumption of the
Liabilities or on the subsequent distribution of those shares to the
Shareholders in constructive exchange for their Target Shares;
6.6.3. Acquiring Fund will recognize no gain or loss on
its receipt of the Assets in exchange solely for Acquiring Fund
Shares and its assumption of the Liabilities;
6.6.4. Acquiring Fund's basis in the Assets will be the
same as Target's basis therein immediately before the Reorganization,
and Acquiring Fund's holding period for the Assets will include
Target's holding period therefor;
6.6.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring
Fund Shares pursuant to the Reorganization; and
6.6.6. A Shareholder's aggregate basis in the Acquiring
Fund Shares it receives in the Reorganization will be the same as the
aggregate basis for its Target Shares it constructively surrenders in
exchange for those Acquiring Fund Shares, and its holding period for
those Acquiring Fund Shares will include its holding period for those
Target Shares, provided the Shareholder held them as capital assets
at the Effective Time.
Notwithstanding subparagraphs 6.6.2 and 6.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
B-15
<PAGE>
Shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting.
At any time before the Closing, either Investment Company may waive
any of the foregoing conditions (except that set forth in paragraph 6.1) if, in
the judgment of its Board, such waiver will not have a material adverse effect
on its Fund's shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
7.1. Each Investment Company represents and warrants to the
other that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
7.2. Except as otherwise provided herein, all the Reorganization
Expenses will be borne by LMFA or one of its affiliates.
8. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement between
the parties. The representations, warranties, and covenants contained herein or
in any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
9. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target's shareholders:
9.1. By either Fund (a) in the event of the other Fund's
material breach of any representation, warranty, or covenant contained herein to
be performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such condition will
not or cannot be met, or (c) if the Closing has not occurred on or before June
29, 2001; or
9.2. By the parties' mutual agreement.
In the event of termination under paragraphs 9.1(c) or 9.2, there shall be no
liability for damages on the part of either Fund, or the directors/trustees or
officers of either Investment Company, to the other Fund.
10. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following such
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
B-16
<PAGE>
11. MISCELLANEOUS
11.1. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Maryland; provided that, in
the case of any conflict between such laws and the federal securities laws, the
latter shall govern.
11.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
11.3 The parties acknowledge that Trust is a Business Trust. Notice
is hereby given that this instrument is executed on behalf of Trust's trustees
solely in their capacities as trustees, and not individually, and that Trust's
obligations under this instrument are not binding on or enforceable against any
of its trustees, officers, or shareholders but are only binding on and
enforceable against Targets' assets and property. Acquiring Fund agrees that, in
asserting any rights or claims under this Agreement, it shall look only to
Target's assets and property in settlement of such rights or claims and not to
such trustees or shareholders.
11.4. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each Investment
Company and delivered to the other party hereto. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
B-17
<PAGE>
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed and delivered by its duly authorized officers as of the day and year
first written above.
BARTLETT CAPITAL TRUST,
on behalf of its series,
Bartlett Value International Fund
By:
--------------------------------------
Marie K. Karpinski
Vice President
LEGG MASON GLOBAL TRUST, INC.,
on behalf of its series,
Legg Mason Europe Fund
By:
--------------------------------------
Marie K. Karpinski
Vice President
B-18
<PAGE>
APPENDIX C
----------
Legg Mason Europe Fund
Portfolio Managers' Comments, 12/31/99
The Fund had a relatively good year, outperforming the MSCI Europe
Index benchmark's return of +15.89% with its total return of +25.41% on Class A
shares.(1) The Fund benefited from an exposure to Europe's better managed and
performing businesses, measured on a global basis, including the likes of NOKIA
and VODAFONE AIRTOUCH, but also from those companies where evidence of tangible
restructuring was more obvious. While general concern has been expressed about
the lack of breadth in global markets generally, and particularly European
equity markets, the converse advantage is that good performing franchises have
been more obviously rewarded in share price terms rather than being lost in the
crowd. Nevertheless, the performance the Fund achieved has come from the overall
portfolio, rather than a concentration in a few individual holdings, and with
this in mind we remain confident in the Fund's future prospects.
Our last annual report ended on an optimistic note. World markets had
recovered from their third quarter 1998 debt-inspired lows, and panic had been
avoided. Concerted Central Bank easing initiated by the U.S. Federal Reserve,
and followed in the U.K. and Europe, appeared to have solved or at least
sidelined events that had previously taken on cataclysmic proportions. Investors
in Europe had the added excitement, although some would say burden, of the debut
of the Euro. The fanfare greeting the new currency, however, was to prove overly
enthusiastic, and since January the currency has only looked one way: down. The
weakness of the Euro was indicative of the problems that beset Europe for the
first six months of the year. Economic growth in Europe remained sluggish when
compared to the U.S., and the evidence of a slight recovery was overshadowed by
the strong rebounds in Asian economies and stock markets. The new European club
also experienced some teething troubles as individual countries sought to
promote their nationals to positions of prominence, causing some angst.
Despite the generally mixed picture, European equity markets continued
to make some headway during the first six months, although dollar returns were
trimmed by the declining currency. Relative returns were disappointing by
international comparisons. However, the bottom-up themes of restructuring and
mergers and acquisitions activity, which we have mentioned in previous reports,
continued to gather momentum. The newly created single marketplace forced
competition on some domestic franchises that had previously been protected by
national boundaries, while our largest corporates faced ever-toughening global
competition. Corporate restructuring was not just a fashionable theme to which
business leaders paid lip service, but an actual necessity. However, by the
second half of the year the picture was looking a little brighter. The early
signs of economic recovery, evident in the first half, were starting to come
through far more. The weaker currency, once seen as a negative, then started to
have a beneficial impact on the Fund's performance. The greater trading
competitiveness that virtual dollar parity afforded Europe's exporters
translated into better industrial production and confidence, while the consumer
side of the market continued in a more buoyant mood. Having entered the year
with interest rates on a downward trend and the threat of recession on the
agenda, we leave the millennium with rates firming and growth forecasts above
trend. The European markets responded to this better climate, moving strongly
ahead to record new highs at the end of the year.
As well as the generally better environment, the pace of corporate
restructuring increased significantly in the second half of the year with the
telecommunications sector and related areas leading the way. The first
significant deal involved Olivetti acquiring Telecom Italia through its
--------------------
(1) Excluding the maximum 4.75% sales charge. Return information for Primary
Class shares may be found in the appended plot points. Total return on
Institutional Class shares (formerly known as Navigator Class shares) was
+25.49%.
C-1
<PAGE>
subsidiary TECNOST. This proved to be the first in a series of landmark deals,
proving that the new market denied protection to domestic franchises. Later in
the year VODAFONE, which had already acquired Airtouch in the U.S., launched the
largest ever hostile bid to buy MANNESMANN in Germany. This was in response to
MANNESMANN's acquisition of Orange, the third-placed U.K. wireless operator,
with the strategic logic of creating the first truly global mobile telephony
group in this exciting area. Mobile telephony and the related areas are one of
the few sectors in which Europe excels. Witness the fact that at the year end
NOKIA, the Finnish handset mobile and infrastructure company, became Europe's
largest market capitalised company, and the mobile penetration model is lead by
the European example.
The financial sector proved a close second in terms of dealmaking.
Banco Santander proved to be the consolidator in the Iberian Peninsula, while
the battle still rages for the ownership of NATIONAL WESTMINSTER BANK in the
U.K. Both the ROYAL BANK OF SCOTLAND and the Bank of Scotland are jockeying for
ownership and the deal will be concluded in the New Year. This will continue to
be an ongoing theme throughout Europe, and the increasing openness of the market
will encourage international entrants into this exciting arena.
OUTLOOK
Looking into the next millennium, the picture in Europe looks
relatively robust. Growth appears to be back on course, and the markets are well
supported by the underlying theme of restructuring. European companies are still
some way behind their U.S. peer group in terms of efficiency, which in itself
should allow for further catch-up in terms of performance. Increasingly,
European companies are being recognised as leading players in a global landscape
rather than just their domestic location, and also the European investment map
is being defined more by sector than by country. We remain confident that our
concentration on Europe's quality growth situations will reward investors
further in performance terms, and that Europe's credentials as a diversifying
asset class for the dollar-based investor are intact.
Lombard Odier International Portfolio Management
February 4, 2000
C-2
<PAGE>
Legg Mason Europe Fund
Performance Information, Primary Class
Cumulative Average Annual
Total Return Total Return
One Year +24.44% +24.44%
Life of Class(2) +75.99 +26.06
Comparison Line Graph Plot Points:
Europe Fund
Primary Class MSCI Europe Index(3)
7/23/97 $10,000 $10,000
10,143 10,343
12/97 10,068 10,350
12,616 12,452
13,273 13,093
11,522 11,205
12/98 14,143 13,303
14,091 13,023
13,874 12,982
13,996 13,134
12/99 17,599 15,418
Performance Information, Class A(4)
Cumulative Total Return Average Annual Total Return
One Year +25.41%* +19.43% +25.41%* +19.43%
Five Years +229.71* +214.08 +26.95* +25.72
Ten Years +223.91* +208.58 +12.47* +11.93
* These figures reflect return information on Class A shares excluding the
maximum 4.75% sales charge which became effective July 21, 1997. The second
column in each section reflects return information including the sales charge.
-------------------
(2) Inception date: July 23, 1997.
(3) The Morgan Stanley Capital International (MSCI) Europe Index is a
broad-based, unmanaged index based on the share prices of common stocks in each
of fourteen European countries. Index returns are for the periods beginning July
31, 1997, for Primary Class, December 31, 1989, for Class A, and August 31,
1997, for Institutional Class shares.
(4) Prior to July 21, 1997, the Fund operated as a closed-end fund which
reinvested all dividends and distributions at an average reported sales price on
the New York Stock Exchange. The initial investment for Europe Fund Class A
shares is net of the 4.75% sales charge.
C-3
<PAGE>
Comparison Line Graph Plot Points:
Europe Fund
Class A MSCI Europe Index
12/89 $9,525 $10,000
8,842 9,872
9,587 10,757
7,650 8,909
7,568 9,615
8,518 10,084
8,969 9,410
8,544 10,553
12/91 8,102 10,876
8,108 10,533
8,748 11,528
8,021 10,897
7,521 10,364
8,073 11,041
8,148 11,239
8,906 12,229
12/93 9,771 13,399
9,522 13,198
9,140 13,022
9,415 13,579
9,357 13,705
9,564 14,551
10,310 15,468
10,861 16,118
12/95 11,219 16,668
12,505 17,287
13,365 17,740
13,631 18,417
14,757 20,183
15,446 21,167
16,475 23,060
17,516 24,969
12/97 17,344 24,987
21,807 30,060
22,999 31,607
19,999 27,050
24,602 32,116
24,553 31,438
24,231 31,340
24,491 31,706
12/99 30,853 37,220
C-4
<PAGE>
Performance Information, Institutional Class
Cumulative Average Annual
Total Return Total Return
One Year +25.49% +25.49%
Life of Class(5) +87.35 +30.41
Comparison Line Graph Plot Points:
Europe Fund MSCI Europe
Institutional Class Index(6)
8/21/97 $50,000 $50,000
52,690 54,850
12/97 52,382 54,890
65,862 66,035
69,468 69,430
60,468 59,420
12/98 74,649 70,545
74,438 69,060
73,435 68,845
74,279 69,650
12/99 93,675 81,760
--------
(5) Inception date: August 21, 1997.
(6) The Morgan Stanley Capital International (MSCI) Europe Index is a
broad-based, unmanaged index based on the share prices of common stocks in each
of fourteen European countries. Index returns are for the periods beginning
August 31, 1997.
C-5
<PAGE>
APPENDIX D
COMPARISON OF INVESTMENT OBJECTIVES AND LIMITATIONS OF
BARTLETT VALUE INTERNATIONAL FUND AND LEGG MASON EUROPE FUND
<TABLE>
<CAPTION>
<S> <C>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
INVESTMENT OBJECTIVE INVESTMENT OBJECTIVE
===================================================================================
Long-term growth of capital Capital appreciation
===================================================================================
Seeks to achieve objective by Seeks to achieve objective by investing
investing substantially all the Fund's primarily in foreign equity securities
assets in equity securities of believed to be attractively priced
European issuers that it believes relative to their intrinsic value.
offers above-average potential for Income is a secondary consideration.
capital appreciation.
===================================================================================
The sub-adviser focuses on relatively The adviser offers a bottom up, value
larger capitalized issuers with good based approach to international
earnings, growth potential and strong investment, with the goal of producing
management. investment returns that are consistently
above average while maintaining below
average levels of risk (as measured by
volatility).
===================================================================================
TYPES OF INVESTMENTS TYPES OF INVESTMENTS
===================================================================================
Under normal circumstances, Fund Under normal circumstances, Fund invests
invests substantially all of its substantially all of its assets in
assets in equity securities of equity securities of non-U.S. issuers.
European issuers.
===================================================================================
Such securities include common and Such securities generally include common
preferred stocks, convertible stocks, convertible bonds and preferred
securities, rights and warrants. stocks.
===================================================================================
Fund invests substantially all of its Fund may invest in countries in Europe,
assets in equity securities of the Far East, Latin America, Asia,
European issuers Africa, Canada, Australia, and other
geographic regions.
===================================================================================
D-1
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
TYPES OF INVESTMENTS TYPES OF INVESTMENTS
===================================================================================
A smaller portion of the Fund's assets Fund may, at times, invest more than 25%
may be invested in fixed income of its total assets invested in any
securities such as obligations of major industrial or developed country
foreign or domestic governments, when the adviser believes there is no
government agencies or municipalities country-specific risk.
and obligations of foreign or domestic
companies. For temporary defensive purposes, Fund
may invest substantially all of its
assets in one or two countries.
===================================================================================
U.S. GOVERNMENT OBLIGATIONS AND U.S. GOVERNMENT OBLIGATIONS AND RELATED
RELATED SECURITIES SECURITIES
===================================================================================
Fund may invest in U.S. government Same policy.
obligations and related participation
interests. In addition, Fund may
invest in custodial receipts that
evidence ownership of future interest
payments, principal payments or both
on certain U.S. government
obligations.
===================================================================================
REPURCHASE AGREEMENTS REPURCHASE AGREEMENTS
===================================================================================
When cash is temporarily available or When cash is temporarily available or
for temporary defensive purposes, Fund for temporary defensive purposes, Fund
may invest without limit in cash and may invest all or a portion of its
U.S. dollar denominated money market assets in money market instruments, cash
instruments, including repurchase equivalents, short-term government and
agreements of domestic issuers. corporate obligations or repurchase
agreements.
Fund may enter into repurchase
agreements with respect to securities
issued by the U.S. government, its
agencies and instrumentalities. Under
normal circumstances, no more than 25%
of the Fund's total assets will be
invested in repurchase agreements at
any time.
===================================================================================
D-2
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
OPTIONS, FUTURES AND OTHER STRATEGIES OPTIONS, FUTURES AND OTHER STRAEGIES
===================================================================================
Fund may invest in certain options, The adviser does not use derivatives or
futures contracts, options on futures hedge currencies in Value International.
contracts, forward currency contracts,
swaps, caps, floors, collars, indexed
securities and other derivative
instruments to attempt to enhance
income or yield or to attempt to hedge
its investments.
Fund may enter into futures contracts
and related options provided not more
than 5% of its net assets are required
as a futures contract deposit and/or
premium; in addition, the Fund may not
enter into futures contracts or
related options if, as a result, more
than 20% of the Fund's total assets
would be so invested.
===================================================================================
FORWARD COMMITMENTS, REVERSE FORWARD COMMITMENTS, REVERSE
REPURCHASE AGREEMENTS AND DOLLAR ROLLS REPURCHASE AGREEMENTS AND DOLLAR ROLLS
===================================================================================
No stated policy. Fund may purchase or sell securities on
a "forward commitment" basis, including
purchases on a "when-issued" basis, a
"when, as and if issued" basis and a "to
be announced" basis. Fund may invest no
more than 5% of its net assets in
forward commitments.
===================================================================================
ILLIQUID AND RESTRICTED INVESTMENTS ILLIQUID AND RESTRICTED INVESTMENTS
===================================================================================
Fund may invest up to 15% of its net Fund may invest up to 10% of its net
assets in illiquid investments. assets in illiquid investments.
===================================================================================
D-3
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
SECURITIES OF OTHER INVESTMENT COMPANIES SECURITIES OF OTHER INVESTMENT COMPANIES
===================================================================================
Fund may invest in the securities of Same policy.
other investment companies, only if it
(i) will not own more than 3% of the
total outstanding voting stock of any
investment company, (ii) does not
invest more than 5% of its total
assets in any one investment company
or (iii) does not invest more than 10%
of its total assets in investment
companies in general.
Fund may invest in any closed-end
investment company that holds foreign
equity securities in its portfolio.
===================================================================================
EMERGING MARKET SECURITIES EMERGING MARKET SECURITIES
===================================================================================
Fund may invest in securities of Same policy.
issuers based in emerging markets.
===================================================================================
DEBT SECURITIES DEBT SECURITIES
===================================================================================
Fund may invest in debt securities of Fund may invest in debt securities of
governmental or corporate issuers. governmental or corporate issuers.
Fund may invest in debt obligations
(such as corporate debt securities and
municipal obligations) in any rating
category of the recognized rating
services, including issues that are in
default, and may invest in unrated
debt obligations. The Fund does not
intend to invest more than 5% of its
net assets in securities rated below
investment grade.
===================================================================================
D-4
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
U.S. GOVERNMENT OBLIGATIONS AND U.S. GOVERNMENT OBLIGATIONS AND
RELATED SECURITIES RELATED SECURITIES
===================================================================================
Fund may invest in U.S. government Same policy.
obligations and related participation
interests. In addition, Fund may
invest in custodial receipts that
evidence ownership of future interest
payments, principal payments or both
on certain U.S. government
obligations.
===================================================================================
MUNICIPAL OBLIGATIONS MUNICIPAL OBLIGATIONS
===================================================================================
Fund may invest no more than 5% of its Same policy.
net assets in municipal obligations
(including participation interests).
===================================================================================
ZERO COUPON AND PAY-IN-KIND BONDS ZERO COUPON AND PAY-IN-KIND BONDS
===================================================================================
Fund may invest no more than 5% of its Same policy.
net assets in zero coupon bonds or
pay-in-kind bonds, respectively.
===================================================================================
FLOATING AND VARIABLE RATE OBLIGATIONS FLOATING AND VARIABLE RATE OBLIGATIONS
===================================================================================
Fund may invest no more than 5% of its Same policy.
net assets in floating and variable
rate obligations, respectively.
===================================================================================
MORTGAGE-RELATED SECURITIES MORTGAGE-RELATED SECURITIES
===================================================================================
Fund has a non-fundamental policy that Fund does not intend to invest in such
it will invest no more than 5% of its securities at this time. (Fund may not
net assets in mortgage-related invest directly in mortgages.)
securities. Such securities include
investments made directly in mortgages
secured by real estate.
===================================================================================
D-5
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
ASSET-BACKED AND RECEIVABLE-BACKED ASSET-BACKED AND RECEIVABLE-BACKED
SECURITIES SECURITIES
===================================================================================
No stated policy. Fund may invest no more than 5% of its
net assets in asset-backed securities
and receivable-backed securities.
===================================================================================
LOAN PARTICIPATION INTERESTS LOAN PARTICIPATION INTERESTS
===================================================================================
No stated policy. Fund may invest no more than 5% of its
assets in loan participation interests.
===================================================================================
FUNDAMENTAL INVESTMENT RESTRICTIONS FUNDAMENTAL INVESTMENT RESTRICTIONS
===================================================================================
BORROWING BORROWING
===================================================================================
Fund may not borrow money, except (a) Fund will not borrow money, except (a)
from a bank, provided that immediately from a bank, provided that immediately
after borrowing there is an asset after such borrowing there is an asset
coverage of 300% for all borrowings of coverage of 300% for all borrowings of
the Fund; or (b) from a bank or other the Fund; or (b) from a bank or other
persons for temporary purposes only, persons for temporary purposes only,
provided that such temporary provided that such temporary borrowings
borrowings are in an amount not are in an amount not exceeding 5% of the
exceeding 5% of the Fund's total Fund's total assets at the time when the
assets at the time when the borrowing borrowing is made. Fund will not borrow
is made. The Fund will not borrow money in excess of one-third of the
money in excess of 15% of the total Fund's total assets at the time when the
value of its assets (including the borrowing is made.
amount borrowed) less its liabilities
(not including its borrowings), and It is the intention of the Fund (which
will not purchase securities at any may be changed by the Trustees without
time when borrowings exceed 5% of its shareholder approval) that it will limit
total assets its borrowings to an amount not
exceeding 5% of the Fund's total assets
at the time when the borrowing is made.
===================================================================================
D-6
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
DIVERSIFICATION DIVERSIFICATION
===================================================================================
Fund may not purchase any security Fund will not purchase the securities of
(other than obligations of the U.S. any issuer if such purchase at the time
government, its agencies or thereof would cause less than 75% of the
instrumentalities), if as a result (a) value of its total assets to be invested
more than 25% of the value of the in cash and cash items (including
Fund's total assets would then be receivables), securities issued by the
invested in securities of any single U.S. government, its agencies or
issuer, or (b) as to 75% of the value instrumentalities and repurchase
of the Fund's total assets (i) more agreements with respect thereto,
than 5% of the value of the Fund's securities of other investment
total assets would then be invested in companies, other securities for the
securities of any single issuer, or purposes of this calculation limited in
(ii) the Fund would own more than 10% respect of any one issuer to an amount
of the voting securities of any single not greater in value than 5% of the
issuer. For purposes of this value of the total assets of the Fund
limitation, the Fund will treat both and to not more than 10% of the
the corporate borrower and the outstanding voting securities of such
financial intermediary as issuers of a issuer.
loan participation interest.
===================================================================================
SENIOR SECURITIES SENIOR SECURITIES
===================================================================================
Fund may not issue senior securities, Fund may not issue senior securities.
except to evidence borrowings This limitation is not applicable to
permitted by its fundamental activities that may be deemed to involve
limitation on borrowing. the issuance or sale of a senior
security by the Fund, provided that the
Fund's engagement in such activities is
consistent with or permitted by the 1940
Act, the rules and regulations
promulgated thereunder or
interpretations of the SEC or its staff.
===================================================================================
SHORT SALES SHORT SALES
===================================================================================
Fund may not make short sales of No stated policy.
securities or maintain a short position
in any security
===================================================================================
D-7
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
UNDERWRITING UNDERWRITING
===================================================================================
Fund may not act as an underwriter of Same policy.
securities issued by other persons.
This limitation is not applicable to
the extent that, in connection with
the disposition of portfolio
securities (including restricted
securities), the Fund may be deemed an
underwriter under certain federal
securities laws.
===================================================================================
REAL ESTATE REAL ESTATE
===================================================================================
Fund may not purchase, hold or deal in Fund may not purchase, hold or deal in
real estate. This limitation is not real estate. This limitation is not
applicable to investments in applicable to investments in securities
securities which are secured by or which are secured by or represent
represent interests in real estate or interests in real estate or to
to securities issued by companies, securities issued by companies,
including real estate investment including real estate investment trusts,
trusts, that invest in real estate or that invest in real estate or interests
interests in real estate. This in real estate. This limitation does not
limitation does not preclude the Fund preclude the Fund from investing in
from investing in mortgage-related mortgage-related securities, however
securities or investing directly in Fund may not invest directly in
mortgages. mortgages.
===================================================================================
COMMODITIES COMMODITIES
===================================================================================
Fund may not purchase, hold or deal in Same policy.
commodities or commodities futures
contracts except as described in the
statement of additional information.
This does not preclude the Fund from
investing in futures contracts, put
and call options on foreign currencies
or forward currency exchange
contracts.
===================================================================================
D-8
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
LOANS LOANS
===================================================================================
Fund may not lend money to persons Fund will not make loans to other
except through the use of publicly persons, except (a) by loaning portfolio
distributed debt obligations and the securities, (b) by engaging in
entering into of repurchase agreements repurchase agreements, or (c) by
consistent with its investment purchasing non-publicly offered debt
policies. securities. For purposes of this
limitation, the term "loans" shall not
No loans will be made if, as a result, include the purchase of a portion of an
the aggregate amount of such loans issue of publicly distributed bonds,
would exceed 25% of the Fund's total debentures or other securities.
assets.
===================================================================================
INDUSTRY CONCENTRATION INDUSTRY CONCENTRATION
===================================================================================
Fund may not invest 25% or more of its Same policy.
total assets in a particular industry.
This limitation is not applicable to
investments in obligations issued or
guaranteed by the U.S. government, its
agencies and instrumentalities or
repurchase agreements with respect
thereto.
===================================================================================
MORTGAGING, PLEDGING OR HYPOTHECATING MORTGAGING, PLEDGING OR HYPOTHECATING
===================================================================================
No stated policy. Fund will not mortgage, pledge,
hypothecate or in any manner transfer,
as security for indebtedness, any assets
of the Fund except as may be necessary
in connection with borrowings described
above. (Margin deposits, security
interests, liens and collateral
arrangements with respect to
transactions involving options, futures
contracts, short sales and other
permitted investments and techniques are
not deemed to be a mortgage, pledge or
hypothecation of assets for purposes of
this limitation.)
===================================================================================
D-9
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
MARGIN MARGIN
===================================================================================
Fund may not purchase securities or Same policy.
evidences of interest thereon on
"margin". This limitation is not
applicable to short term credit obtained
by the Fund for the clearance of
purchases and sales or redemption of
securities, or to arrangements with
respect to transactions involving
options, futures contracts, short sales
and other permitted investments and
techniques (including foreign currency
exchange contracts).
===================================================================================
RESTRICTED SECURITIES RESTRICTED SECURITIES
===================================================================================
Fund will not purchase securities for SEE "Illiquid and Restricted Investments"
which there are legal restrictions on above.
resale and other securities that are not
readily marketable if as a result of
such purchase more than 15% of the value
of the Fund's net assets would be
invested in such securities, provided
that securities that are not subject to
restrictions on resale in the country in
which they are principally traded are
not considered subject to this
restriction.
===================================================================================
OIL AND GAS PROGRAMS OIL AND GAS PROGRAMS
===================================================================================
Fund may not invest in oil, gas, mineral No stated policy.
exploration or development programs,
except that the Fund may invest in
issuers which invest in such programs.
===================================================================================
"UNSEASONED" COMPANIES "UNSEASONED" COMPANIES
===================================================================================
Fund may not purchase any security if as No stated policy.
a result the Fund would have more than
5% of its net assets invested in
securities of companies which together
with any predecessors have been in
continuous operation for less than three
years.
===================================================================================
D-10
<PAGE>
===================================================================================
LEGG MASON EUROPE FUND BARTLETT VALUE INTERNATIONAL FUND
===================================================================================
WARRANTS WARRANTS
===================================================================================
Fund may not invest more than 5% of its No stated policy.
net assets in warrants issued by U.S.
entities, provided that no more than 2%
of its net assets will be invested in
warrants that are not listed on the New
York Stock Exchange or American Stock
Exchange; except that these limitations
are not applicable to warrants issued by
non-U.S. issuers.
===================================================================================
</TABLE>
D-11
<PAGE>
APPENDIX E
----------
[Name and Address]
BARTLETT CAPITAL TRUST
BARTLETT VALUE INTERNATIONAL FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
March 9, 2001
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BARTLETT
CAPITAL TRUST ("TRUST") and relates to a proposal with respect to the Trust and
to Bartlett Value International Fund ("Fund"), a series of the Trust. The
undersigned hereby appoints as proxies Marc R. Duffy and Philip E. Sachs, and
each of them (with power of substitution), to vote all shares of common stock of
the undersigned in the Fund at the Special Meeting of Shareholders to be held at
10:00 a.m., Eastern time, on March 9, 2001, at the offices of the Fund and at
any adjournment thereof ("Meeting"), with all the power the undersigned would
have if personally present.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals relating to the Trust and the Fund WITH DISCRETIONARY POWER
TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY FACSIMILE, PLEASE SIGN AND DATE
THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR COMPLETED PROXY CARD TO
1-___-____.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[XXX] KEEP THIS PORTION FOR YOUR RECORDS
E-1
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BARTLETT CAPITAL TRUST
Bartlett Value International Fund.
Vote On Proposal FOR AGAINST ABSTAIN
1. Approval of an Agreement and Plan of / / / / / /
Reorganization and Termination under
which Legg Mason Europe Fund would
acquire all of the assets of Bartlett
Value International Fund in exchange
solely for shares of Legg Mason Europe
Fund and the assumption by Legg Mason
Europe Fund of all of Bartlett Value
International Fund's liabilities,
followed by the distribution of those
shares to the shareholders of Bartlett
Value International Fund.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY FACSIMILE, PLEASE SIGN AND DATE
THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR COMPLETED PROXY CARD TO
1-___-____.
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
---------------------------------------- -------------------------------
Signature Date
---------------------------------------- -------------------------------
Signature (Joint Owners) Date
E-2
<PAGE>
LEGG MASON GLOBAL TRUST, INC.
PART B
<PAGE>
LEGG MASON EUROPE FUND
(A SERIES OF LEGG MASON GLOBAL TRUST, INC.)
BARTLETT VALUE INTERNATIONAL FUND
(A SERIES OF BARTLETT CAPITAL TRUST)
100 LIGHT STREET
BALTIMORE MARYLAND 21202
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 26, 2001
This Statement of Additional Information relates specifically to the
proposed reorganization whereby Legg Mason Europe Fund would acquire the assets
of Bartlett Value International Fund ("Bartlett International Fund") in exchange
solely for shares of Legg Mason Europe Fund and the assumption by Legg Mason
Europe Fund of Bartlett International Fund's liabilities ("Reorganization").
This Statement of Additional Information consists of this cover page, the PRO
FORMA financial statements of Legg Mason Europe Fund (giving effect to the
Reorganization) and the following described documents, each of which is
incorporated by reference herein:
(1) The Statement of Additional Information of Legg Mason Europe Fund,
dated April 28, 2000. EDGAR accession number: 0000810868-00-000028.
(2) The Annual Report to Class A and Primary Class Shareholders of
Legg Mason Europe Fund for the fiscal year ended December 31, 1999. EDGAR
accession number: 0000950168-00-000474.
(3) The Annual Report to Institutional Class Shareholders of Legg
Mason Europe Fund for the fiscal year ended December 31, 1999. EDGAR accession
number: 0000950169-00-000191.
(4) The Semi-Annual Report to Class A and Primary Class shareholders
of Legg Mason Europe Fund for the period ended June 30, 2000. EDGAR accession
number: 0000950169-00-001098.
(5) The Semi-Annual Report to Institutional Class shareholders of Legg
Mason Europe Fund for the period ended June 30, 2000. EDGAR accession number:
0000950169-00-001116.
(6) The Statement of Additional Information of Bartlett International
Fund, dated April 28, 2000. EDGAR accession number: 0000810868-00-000037.
(7) The Annual Report to Class A and Class C shareholders of Bartlett
International Fund for the fiscal year ended December 31, 1999. EDGAR accession
number: 0000950169-00-000169.
B-1
<PAGE>
(8) The Annual Report to Class Y shareholders of Bartlett
International Fund for the fiscal year ended December 31, 1999. EDGAR accession
number: 0000950169-00-000169.
(9) The Semi-Annual Report to Class A and Class C shareholders of
Bartlett International Fund for the period ended June 30, 2000. EDGAR accession
number: 0000950169-00-001110.
(10) The Semi-Annual Report to Class Y shareholders of Bartlett
International Fund for the period ended June 30, 2000. EDGAR accession number:
0000950169-00-001110.
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Prospectus/Proxy Statement dated January
26, 2001 relating to the above-referenced matter.
B-2
<PAGE>
TABLE OF CONTENTS
Unaudited Proforma Combined Financial Statements of Legg Mason Europe Fund and
Bartlett International Fund..................................................B-4
B-3
<PAGE>
LEGG MASON EUROPE FUND
AND
BARTLETT INTERNATIONAL FUND
PROFORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
B-4
<PAGE>
<TABLE>
LEGG MASON EUROPE FUND
PRO FORMA
CAPITALIZATION AND RATIOS
September 30, 2000
(Unaudited)
<CAPTION>
Bartlett Legg Mason Pro Forma
Value International Europe Fund Combined
------------------- ------------- -------------
<S> <C> <C> <C>
Net Assets
Class A $ 29,598,631 $ 54,060,882 $ 83,659,513
Class C / Primary $ 2,924,944 $ 53,762,179 $ 56,687,123
Class Y/Institutional(A) $ 2,298,852 $ 390,083 $ 2,688,935
------------ ------------- -------------
Total $ 34,822,427 $ 108,213,144 $ 143,035,571
============ ============= =============
Net Asset Value Per Share
Class A $ 12.93 $ 23.48 $ 23.48
Class C/Primary $ 12.66 $ 22.73 $ 22.73
Class Y/Institutional(A) $ 12.89 $ 23.61 $ 23.61
Shares Outstanding
Class A 2,288,867 2,302,530 3,563,119
Class C/Primary 230,990 2,365,717 2,494,399
Class Y/Institutional(A) 178,292 16,519 113,887
Ratio of expenses to average net assets(B)
BEFORE FEE WAIVERS
Class A 2.16% 1.71% 1.65%
Class C/Primary 2.92% 2.49% 2.46%
Class Y/Institutional(A) 1.88% 1.45% 1.38%
AFTER FEE WAIVERS
Class A 1.80% 1.71% 1.65%
Class C/Primary 2.55% 2.49% 2.46%
Class Y/Institutional(A) 1.55% 1.45% 1.38%
-----------------
(A) Formerly Navigator Class
(B) Annualized
</TABLE>
B-5
<PAGE>
<TABLE>
LEGG MASON EUROPE FUND
PRO FORMA
CAPITALIZATION AND RATIOS
June 30, 2000
(Unaudited)
<CAPTION>
Bartlett Legg Mason Pro Forma
Value International Europe Fund Combined
------------------- ------------- -------------
<S> <C> <C> <C>
Net Assets
Class A $ 34,426,715 $ 60,921,670 $ 95,348,385
Class C / Primary $ 3,536,880 $ 59,613,850 $ 63,150,730
Class Y/Institutional(A) $ 3,054,291 $ 412,176 $ 3,466,467
------------ ------------- -------------
Total $ 41,017,886 $ 120,947,696 $ 161,965,582
============ ============= =============
Net Asset Value Per Share
Class A $ 13.98 $ 25.15 $ 25.15
Class C / Primary $ 13.69 $ 24.39 $ 24.39
Class Y/Institutional(A) $ 13.94 $ 25.28 $ 25.28
Shares Outstanding
Class A 2,462,832 2,422,479 3,791,334
Class C / Primary 258,440 2,444,144 2,589,158
Class Y/Institutional(A) 219,083 16,307 137,125
Ratio of expenses to average net assets(B)
BEFORE FEE WAIVERS
Class A 2.16% 1.75% 1.65%
Class C / Primary 2.92% 2.53% 2.46%
Class Y/Institutional(A) 1.86% 1.49% 1.38%
AFTER FEE WAIVERS
Class A 1.80% 1.75% 1.65%
Class C / Primary 2.55% 2.53% 2.46%
Class Y/Institutional(A) 1.55% 1.49% 1.38%
--------------
(A) Formerly Navigator Class
(B) Annualized
</TABLE>
B-6
<PAGE>
<TABLE>
LEGG MASON EUROPE FUND
PRO FORMA COMBINED
Statement of Assets and Liabilities
As of June 30, 2000
(Unaudited)
<CAPTION>
Bartlett Legg Mason Pro Forma Pro Forma
Value International Europe Fund Adjustments Combined
------------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at market value $ 40,506,590 $ 121,148,024 $ - $ 161,654,614
Cash 16,677 302,258 318,935
Receivable for Fund shares sold 393,393 1,069,056 1,462,449
Receivable for Securities sold - - -
Dividend and Interest receivable 144,961 330,542 475,503
Other Assets - 103,755 103,755
------------ ------------- ------------- -------------
Total Assets $ 41,061,621 $ 122,953,635 $ - $ 164,015,256
============ ============= ============= =============
LIABILITIES
Payable for Fund shares repurchased 24,897 992,358 1,017,255
Payable for Securities purchased - 686,016 686,016
Advisory and Distribution fees 31,317 168,203 199,520
Dividends payable 14,751 - 14,751
Accrued expenses and other liabilities (27,230) 159,362 132,132
------------ ------------- ------------- -------------
Total Liabilities 43,735 2,005,939 - 2,049,674
------------ ------------- ------------- -------------
Net Assets $ 41,017,886 $ 120,947,696 $ - $ 161,965,582
============ ============= ============= =============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 30,785,343 $ 97,444,840 $ 128,230,183
Over distributions of net investment
income (1,280,403) (773,922) (2,054,325)
Accumulated net realized gain/(loss)
on investments and foreign currency
transactions 4,094,001 4,416,112 8,510,113
Unrealized appreciation/(depreciation)
of investments and foreign currency
transactions 7,418,945 19,860,666 27,279,611
------------ ------------- ------------- -------------
NET ASSETS $ 41,017,886 $ 120,947,696 $ - $ 161,965,582
============ ============= ============= =============
OUTSTANDING SHARES
CLASS A 2,462,832 2,422,479 (1,093,977) 3,791,334
CLASS C / PRIMARY 258,440 2,444,144 (113,426) 2,589,158
CLASS Y / INSTITUTIONAL(A) 219,083 16,307 (98,265) 137,125
NET ASSET VALUE PER SHARE:
CLASS A $13.98 $25.15 $25.15
---------- ---------- ----------
CLASS C / PRIMARY $13.69 $24.39 $24.39
---------- ---------- ----------
CLASS Y / INSTITUTIONAL(A) $13.94 $25.28 $25.28
---------- ---------- ----------
(A) Formerly Navigator Class
</TABLE>
B-7
<PAGE>
<TABLE>
LEGG MASON EUROPE FUND
PRO FORMA COMBINED
Statement of Operations
For the Twelve Months Ended June 30, 2000
(Unaudited)
<CAPTION>
Bartlett Legg Mason Pro Forma Pro Forma
Value International Europe Fund Adjustments Combined
------------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income $ 966,000 $ 1,431,000 $ - $ 2,397,000
Interest Income 552,000 62,000 614,000
Less Foreign tax withheld (79,000) (131,000) (210,000)
------------ ------------- ------------- -------------
Total Income 1,439,000 1,362,000 2,801,000
------------ ------------- ------------- -------------
EXPENSES
Management fee 549,000 1,226,000 (111,714)(A) 1,663,286
Distribution and service fees 129,000 714,000 (1,508)(A) 841,492
Transfer agent and shareholder
servicing fee 22,000 80,000 (7,500)(B) 94,500
Audit and legal fees 65,000 51,000 (61,000)(B) 55,000
Custodian fee 133,000 290,000 (100,176)(B) 322,824
Directors' fees 33,000 21,000 (46,800)(C) 7,200
Organizational expense - 107,000 - 107,000
Registration fees 31,000 72,000 (31,000)(B) 72,000
Reports to shareholders 28,000 31,000 (10,438)(B) 48,562
Other expense 7,000 9,000 (13,200)(B) 2,800
------------ ------------- ------------- ------------
997,000 2,601,000 (383,336) 3,214,664
Less fees waived (187,000) - 187,000(A) -
------------ ------------- ------------- ------------
Total expense, net of waivers 810,000 2,601,000 (196,336) 3,214,664
------------ ------------- ------------- ------------
NET INVESTMENT INCOME/(LOSS) 629,000 (1,239,000) 196,336 (413,664)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Realized gain (loss) on investments and
foreign currency transactions 5,708,000 12,258,000 17,966,000
Change in unrealized appreciation/
(depreciation) of investments and
foreign currency transactions (676,000) 9,342,000 8,666,000
NET REALIZED AND UNREALIZED GAIN (LOSS) ------------ ------------- ------------- ------------
ON INVESTMENTS 5,032,000 21,600,000 26,632,000
------------ ------------- ------------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $5,661,000 $20,361,000 $196,336 $26,218,336
============ ============= ============= ============
(A) Based on contract in effect for the surviving fund.
(B) Decrease due to the elimination of duplicative expenses achieved by merging the funds.
(C) Based on director compensation plan for the surviving fund.
</TABLE>
B-8
<PAGE>
<TABLE>
LEGG MASON EUROPE FUND
Pro Forma Portfolio of Investments(B)
June 30, 2000
(Unaudited)
<CAPTION>
Bartlett LM Europe Pro Forma
% of Net Value International Fund Combined
Assets Shares/Par Market Value Shares/Par Market Value Shares/Par Market Value
-------- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS AND EQUITY INTERESTS 94.07%
ARGENTINA 0.25%
Telecom Argentina Stet -
France Telecom SA ADR 15,000 $412,500 15,000 $ 412,500
---------- -----------
412,500 412,500
AUSTRALIA 1.94%
Brambles Industries Ltd. 39,200 1,203,498 39,200 1,203,498
National Australia Bank ADR 14,225 1,177,119 14,225 1,177,119
The News Corporation
Limited ADR 14,100 768,450 14,100 768,450
---------- -----------
3,149,067 3,149,067
CANADA 0.59%
Nortel Networks Corporation 14,000 955,500 14,000 955,500
---------- -----------
955,500 955,500
FINLAND 3.72%
Nokia Oyj 118,104 $6,026,698 118,104 6,026,698
---------- -----------
6,026,698 6,026,698
FRANCE 15.55%
Air Liquide SA 17,963 2,342,592 17,963 2,342,592
Alcatel 40,800 2,675,987 40,800 2,675,987
Alcatel SA ADR 20,000 1,330,000 20,000 1,330,000
Aventis SA ADR 18,079 1,311,857 18,079 1,311,857
Axa 21,800 3,434,058 21,800 3,434,058
BNP Paribus SA 20,000 1,924,676 20,000 1,924,676
Cie de Saint Gobain 6,384 863,025 6,384 863,025
Compagnie Generale des
Etablissements Michelin 27,100 869,571 27,100 869,571
Dassault Systemses S.A. 23,900 2,229,254 23,900 2,229,254
Groupe Danone 46,000 1,239,125 46,000 1,239,125
STMicroelectronics 32,001 2,016,390 32,001 2,016,390
Total Fina Elf 10,800 829,575 10,800 829,575
Total Fina SA 26,894 4,123,520 26,894 4,123,520
---------- ----------- -----------
6,443,153 18,746,477 25,189,630
GERMANY 7.24%
Adidas-Salomon AG 43,840 2,425,025 43,840 2,425,025
Buderus AG 67,100 1,066,606 67,100 1,066,606
DaimlerChrysler AG 14,880 774,690 14,880 774,690
Deutsche Bank AG 30,040 2,472,147 30,040 2,472,147
Deutsche Lufthansa AG 50,500 1,167,221 50,500 1,167,221
Epcos AG 15,025 1,498,844 15,025 1,498,844(A)
Infineon Technologies AG 29,480 2,323,334 29,480 2,323,334(A)
---------- ----------- -----------
3,008,517 8,719,350 11,727,867
GREECE 1.00%
B-9
<PAGE>
LEGG MASON EUROPE FUND
Pro Forma Portfolio of Investments(B)
June 30, 2000
(Unaudited)
Bartlett LM Europe Pro Forma
% of Net Value International Fund Combined
Assets Shares/Par Market Value Shares/Par Market Value Shares/Par Market Value
-------- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alpha Credit Bank 41,253 1,627,531 41,253 1,627,531
------------ -----------
1,627,531 1,627,531
HONG KONG 0.46%
Jardine Strategic
Holdings Limited 250,000 747,500 250,000 747,500
---------- -----------
747,500 747,500
INDIA 0.13%
Morgan Stanley India
Investment Fund 17,300 207,600 17,300 207,600(A)
---------- -----------
207,600 207,600
IRELAND 0.59%
Allied Irish Banks plc ADR 53,600 951,400 53,600 951,400
---------- -----------
951,400 951,400
ITALY 4.72%
Bipop - Carire SpA 252,000 1,982,416 252,000 1,982,416
San Paolo - IMI SpA ADR 29,781 1,053,503 29,781 1,053,503
Seat Paine Gialle SpA 510,500 1,764,296 510,500 1,764,296
Tecnost SpA 752,583 2,838,041 752,583 2,838,041(A)
---------- ---------- -----------
1,053,503 6,584,753 7,638,256
JAPAN 4.42%
Canon, Inc. 22,000 1,094,765 22,000 1,094,765
Fujitsu Limited 35,000 1,210,593 35,000 1,210,593
Ito-Yokado Co., Ltd. ADR 5,700 353,044 5,700 353,044
Matsumotokiyoshi 7,000 733,613 7,000 733,613
Matsushita Electric Industrial
Company Ltd. 43,000 1,114,462 43,000 1,114,462
Rohm Company Ltd. 3,500 1,022,572 3,500 1,022,572
Secom Co., Ltd. 14,000 1,022,572 14,000 1,022,572
Terumo Corporation 18,000 609,019 18,000 609,019
--------- -----------
7,160,640 7,160,640
NETHERLANDS 6.09%
CNH Global N.V 78,750 728,438 78,750 728,438
Heineken NV 35,700 2,172,779 35,700 2,172,779
Koninklijke (Royal) Philips
Electronics N.V 12,000 570,000 12,000 570,000
Koninklijke (Royal) Philips
Electronics N.V 80,580 3,800,330 80,580 3,800,330
KPN NV 57,800 2,585,262 57,800 2,585,262
KPN NV - Rights 20,300 20,300 0
---------- ---------- -----------
1,298,438 8,558,371 9,856,809
NORWAY
Norsk Hydro ASA ADR 6,600 277,613 6,600 277,613
---------- -----------
277,613 277,613
PORTUGUAL 0.54%
Banco Comercial
Portugues, SA ADR 33,500 866,813 33,500 866,813
-------- -----------
866,813 866,813
B-10
<PAGE>
LEGG MASON EUROPE FUND
Pro Forma Portfolio of Investments(B)
June 30, 2000
(Unaudited)
Bartlett LM Europe Pro Forma
% of Net Value International Fund Combined
Assets Shares/Par Market Value Shares/Par Market Value Shares/Par Market Value
-------- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SINGAPORE 0.51%
Natsteel Ltd. 280,000 385,871 280,000 385,871
Singapore Telecomm 300,000 439,491 300,000 439,491
---------- -----------
825,362 825,362
SOUTH KOREA 0.63%
Korea Electric Power
Corporation ADR 18,000 331,875 18,000 331,875
Korea Fund, Inc. 20,125 283,008 20,125 283,008(A)
Pohang Iron & Steel
Company Ltd. ADR 17,100 410,400 17,100 410,400
---------- -----------
1,025,283 1,025,283
SPAIN 4.04%
Banco Santander Central
Hispano, SA 179,900 1,897,844 179,900 1,897,844
Endesa SA ADR 40,000 780,000 40,000 780,000
Repsol YPF, SA ADR 41,700 826,181 41,700 826,181
Telefonica S.A 141,352 3,036,349 141,352 3,036,349(A)
---------- ---------- -----------
1,606,181 4,934,193 6,540,374
SWEDEN 6.23%
Cardo AB 26,400 454,966 26,400 454,966
Pharmacia Corporation 15,040 777,380 15,040 777,380
Skandia Forsakrings AB 116,463 3,076,630 116,463 3,076,630
Telefonaktiebolaget LM Ericsson AB 292,137 5,779,808 292,137 5,779,808
---------- ----------- -----------
1,232,346 8,856,438 10,088,784
SWITZERLAND 6.33%
ABB Ltd. 15,709 1,880,207 15,709 1,880,207
Adecco SA 2,222 1,887,876 2,222 1,887,876
Credit Suisse Group 12,778 2,541,814 12,778 2,541,814
Novartis AG 800 1,267,210 800 1,267,210(A)
Serono SA 3,212 2,677,815 3,212 2,677,815
---------- ----------- -----------
1,267,210 8,987,712 10,254,922
TAIWAN 0.24%
Taiwan Fund Inc. 20,000 382,500 20,000 382,500
---------- -----------
382,500 382,500
UNITED KINGDOM 28.68%
3i Group PLC 124,410 2,558,246 124,410 2,558,246
ARM Holdings plc 177,640 1,903,012 177,640 1,903,012
Barclays PLC 84,650 2,104,418 84,650 2,104,418(A)
BP Amoco Plc 683,266 6,554,606 683,266 6,554,606
British Telecommunications plc ADR 4,000 529,000 4,000 529,000
Cable & Wireless plc 168,380 2,850,940 168,380 2,850,940
Cadbury Schweppes PLC ADR 45,000 1,181,250 45,000 1,181,250
Diageo plc ADR 30,241 1,075,445 30,241 1,075,445
Glaxo Wellcome plc 195,399 5,697,333 195,399 5,697,333
B-11
<PAGE>
LEGG MASON EUROPE FUND
Pro Forma Portfolio of Investments(B)
"June 30, 2000"
(Unaudited)
Bartlett LM Europe Pro Forma
% of Net Value International Fund Combined
Assets Shares/Par Market Value Shares/Par Market Value Shares/Par Market Value
-------- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Hays plc 471,566 2,629,345 471,566 2,629,345
Invensys plc 263,200 987,655 263,200 987,655
Logica plc 109,180 2,583,731 109,180 2,583,731
Pearson plc 82,710 2,628,118 82,710 2,628,118
Reuters Group PLC 118,120 2,014,257 118,120 2,014,257
Rio Tinto plc ADR 16,600 1,083,150 16,600 1,083,150
Tomkins PLC ADR 71,300 913,531 71,300 913,531
Vodafone AirTouch plc 1,828,105 7,385,500 1,828,105 7,385,500
WPP Group plc 120,770 1,763,413 120,770 1,763,413
---------- ---------- -----------
5,770,031 40,672,919 46,442,950
TOTAL COMMON STOCK AND EQUITY INTERESTS $38,641,157 $113,714,442 $152,355,599
CORPORATE BONDS AND NOTES 0.35%
Magna International 5.0% 10/15/02 550,000 565,433 550,000 565,433
---------- -----------
565,433 565,433
PREFERRED SHARES 4.59%
Marschollek, Lautenschlaeger
und Partner AG 4,750 2,349,494 4,750 2,349,494
Porsche AG 496 1,349,564 496 1,349,564
SAP AG 20,268 3,734,524 20,268 3,734,524
--------- -----------
7,433,582 7,433,582
REPURCHASE AGREEMENTS 0.80%
State Street Bank & Trust Co.
3.5%, dated 6/30/00, to be repurchased
at $1,300 on 7/3/00
(Collateral: $1,440 Federal Home Loan
Bank Note, 5.823%
due 5/6/09, value $1,343)
1,300,000 1,300,000 1,300,000 1,300,000
--------- -----------
1,300,000 1,300,000
---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS AT MARKET 99.81% $40,506,590 $121,148,024 $161,654,614
----------- ------------ ------------
TOTAL INVESTMENTS AT COST 33,086,979 101,286,713 134,373,692
----------- ------------ ------------
-----------------------------------------
(A) Non Income Producing
(B) No adjustments are shown to the unaudited pro forma combined
portfolio of investments due to the fact that upon consumption of
the acquisitions, no securities would need to be sold in order for
the Acquiring Fund to comply with its Prospectus and SEC and IRS
guidelines and restrictions. However, the foregoing sentence shall
not restrict in any way the ability of the investment advisor of
any of the funds from buying or selling securities in the normal
course of such Fund's business and operations.
</TABLE>
B-12
<PAGE>
LEGG MASON EUROPE FUND
PRO FORMA COMBINED
Annual Fund Operating Expenses
AS OF JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Bartlett Value International Legg Mason Europe Fund Pro Forma Combined
----------------------------- ----------------------------------- -----------------------------------
Primary Institutional Primary Institutional
Class A Class C Class Y Class A Class Class(A) Class A Class Class(A)
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- -------- -------- --------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.25% 1.25% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Rule 12b-1 fees 0.25% 1.00% none 0.25% 1.00% none 0.25% 1.00% none
Other expenses 0.66% 0.67% 0.61% 0.50% 0.53% 0.49% 0.40% 0.46% 0.38%
------- ------- ------- ------- ------- ------- ------- ------- -------
Total fund
operating expenses 2.16% 2.92% 1.86% 1.75% 2.53% 1.49% 1.65% 2.46% 1.38%
======= ======= ======= ======= ======= ======= ======= ======= =======
Expense Limit 1.80% 2.55% 1.55% 1.85% 2.60% 1.60% 1.85% 2.60% 1.60%
(A) Formerly the Navigator Class
</TABLE>
B-13
<PAGE>
LEGG MASON EUROPE FUND
PRO FORMA NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1) DESCRIPTION OF THE FUND
The Legg Mason Europe Fund, ("Fund") a series of Legg Mason Global
Trust, Inc. ("Corporation"), is registered under the Investment Company Act of
1940, as amended, as an open-end, diversified investment company.
Europe Fund consists of three classes of shares: Class A, Primary Class
and Institutional Class. All shareholders bear the common expenses of the Funds
based on daily net assets of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses.
2) BASIS OF PRO FORMA PRESENTATION
The accompanying pro forma financial statements are presented to show
the effect of the proposed acquisition of Bartlett Value International, a series
of Bartlett Capital Trust ("Value International") by Europe Fund as if such
acquisition had taken place as of July 1, 1999. The information is based on
historical financial statement data giving effect to the pro forma adjustments.
Subject to approval of the Agreement and Plan of Reorganization and
Termination, the combination of Value International by Europe Fund will be
accounted for by a method of accounting for tax free mergers of investment
companies (sometimes referred to as the pooling without restatement method). The
acquisition would be accomplished by an acquisition of the net assets of Value
International in exchange for shares of the Fund at net asset value. The
statement of assets and liabilities and the related statement of operations of
Value International and the Fund have been combined as of and for the period
ended June 30, 2000.
The accompanying pro forma financial statements should be read in
conjunction with the financial statements and statements of net assets of the
Fund and Value International included in their respective semi-annual reports
dated June 30, 2000.
The following notes refer to the accompanying pro forma financial
statements as if the above mentioned acquisition of Value International and the
Fund had taken place as of July 1, 1999.
3) SIGNIFICANT ACCOUNTING POLICIES:
SECURITY VALUATION
The Fund's securities are valued on the basis of market quotations or,
lacking such quotations, at fair value as determined under the guidance of the
Board of Directors. Securities for which market quotations are readily available
B-14
<PAGE>
are valued at the last sale price of the day for a comparable position or, in
the absence of any such sales, the last available bid price for a comparable
position. Where a security is traded on more than one market, which may include
foreign markets, the securities are generally valued on the market considered by
the Fund's adviser to be the primary market. The Fund will value its foreign
securities in U.S. dollars on the basis of the then-prevailing exchange rates.
FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis:
(i) value of investment securities, assets and liabilities at the
closing daily rate of exchange; and
(ii) purchases and sales of investment securities, interest income
and expenses at the rate of exchange prevailing on the
respective dates of such transactions.
The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains or
losses.
INVESTMENT INCOME AND DISTRIBUTIONS TO SHAREHOLDERS
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized for financial reporting and federal income tax purposes.
Bond discounts, other than original issue and zero-coupon bonds, are not
amortized. Dividend income and distributions to shareholders are allocated at
the class level and are recorded on the ex-dividend date. Dividends from net
investment income, if available, will be paid annually. Net capital gain
distributions, which are calculated at the Fund level, are declared and paid
after the end of the tax year in which the gain is realized. Distributions are
determined in accordance with federal income tax regulations, which may differ
from those determined in accordance with generally accepted accounting
principles; accordingly, periodic reclassifications are made within the Fund's
capital accounts to reflect income and gains available for distribution under
federal income tax regulations.
SECURITY TRANSACTIONS
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on an identified cost basis
for both financial reporting and federal income tax purposes.
DEFERRED ORGANIZATIONAL EXPENSES
Deferred organizational expenses of the Fund aggregated $210,000 and
are being amortized on a straight-line basis over 5 years commencing on the date
operations began.
FEDERAL INCOME TAXES
No provision for federal income or excise taxes is required since the
Fund intends to continue to qualify as a regulated investment company and
distribute substantially all of its taxable income to its shareholders.
B-15
<PAGE>
FOREIGN TAXES
The Fund is subject to foreign income taxes imposed by certain
countries in which it invests. Foreign income taxes are accrued by the Fund and
withheld from dividend and interest income.
USE OF ESTIMATES
Preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
4) REPURCHASE AGREEMENTS:
All repurchase agreements are fully collateralized by obligations
issued by the U.S. Government or its agencies, and such collateral is in the
possession of the Fund's custodian. The value of such collateral includes
accrued interest. Risks arise from the possible delay in recovery or potential
loss of rights in the collateral should the issuer of the repurchase agreement
fail financially. The Fund's investment adviser reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
5) OPTIONS AND FUTURES:
Europe Fund may utilize options and futures. Options may be written
(sold) or purchased by the Fund. When the Fund purchases a put or call option,
the premium paid is recorded as an investment and its value is marked-to-market
daily. When the Fund writes a call or put option, an amount equal to the premium
received by the Fund is recorded as a liability and its value is
marked-to-market daily.
When options, whether written or purchased, expire, are exercised or
are closed (by entering into a closing purchase or sale transaction), the Fund
realizes a gain or loss as described in the chart below:
PURCHASED OPTION: IMPACT ON THE FUND:
The option expires Realize a loss in the amount
of the cost of the option.
--------------------------------------------------------------------------------
The option is closed Realize a gain or loss depending on
through a closing sale whether the proceeds from the closing
transaction sale transaction are greater
or less than the cost of the option.
--------------------------------------------------------------------------------
The Fund exercises a call option The cost of the security purchased
through the exercise of the option will
be increased by the premium originally
paid to purchase the option.
--------------------------------------------------------------------------------
The Fund exercises a put option Realize a gain or loss from the
sale of the underlying security.
The proceeds of that sale will be
reduced by the premium originally
paid to purchase the put option.
--------------------------------------------------------------------------------
B-16
<PAGE>
--------------------------------------------------------------------------------
WRITTEN OPTION: IMPACT ON THE FUND:
he option expires Realize a gain equal to the amount of
the premium received.
--------------------------------------------------------------------------------
The option is closed through a Realize a gain or loss without regard
closing purchase transaction to any unrealized gain or loss on the
underlying security and eliminate the
option liability. The Fund will realize
a loss in this transaction if the cost
of the closing purchase exceeds the
premium received when the option was
written.
--------------------------------------------------------------------------------
A written call option is exercised Realzie a gain or loss from the sale of
by the option purchaser the underlying security. The proceeds
of that sale will be increased by the
premium originally received when the
option was written.
--------------------------------------------------------------------------------
A written put option is exercised The amount of the premium originally
by the option purchaser received will reduce the cost of the
security that the Fund purchased when
the option was exercised.
--------------------------------------------------------------------------------
The risk associated with purchasing options is limited to the premium
originally paid. Options written by the Fund involve, to varying degrees, risk
of loss in excess of the option value reflected in the statement of net assets.
The risk in writing a covered call option is that the Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that the Fund
may incur a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is the risk the Fund may not be able
to enter into a closing transaction because of an illiquid secondary market or,
for over-the-counter options, because of the counterparty's inability to
perform.
Upon entering into a futures contract, the Fund is required to deposit
with the broker cash or cash equivalents in an amount equal to a certain
percentage of the contract amount. This is known as the "initial margin."
Subsequent payments ("variation margin") are made or received by the Fund each
day, depending on the daily fluctuation in the value of the contract. The daily
changes in contract value are recorded as unrealized gains or losses and the
Fund recognizes a realized gain or loss when the contract is closed. Futures
contracts are valued daily at the settlement price established by the board of
trade or exchange on which they are traded.
The Fund enters into futures contracts as a hedge against anticipated
changes in interest rates. There are several risks in connection with the use of
futures contracts as a hedging device. Futures contracts involve, to varying
degrees, the risk of loss in excess of amounts reflected in the financial
statements. The change in the value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in the value of the hedged instruments. In addition, there is the risk
that the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
6) FINANCIAL INSTRUMENTS:
Emerging Market Securities
The Fund has investments in securities denominated in the currencies of
emerging market countries, as well as in securities issued by companies located
B-18
<PAGE>
in emerging market countries. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
FORWARD CURRENCY EXCHANGE CONTRACTS
As part of its investment program, the Fund may utilize forward
currency exchange contracts. The nature and risks of these financial instruments
and the reasons for using them are set forth more fully in the Corporation's
prospectus and statement of additional information.
Forward foreign currency contracts are marked-to-market daily using
foreign currency exchange rates supplied by an independent pricing service. The
change in a contract's market value is recorded by the Fund as an unrealized
gain or loss. When a contract is closed or delivery is taken, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's securities, but it does
establish a rate of exchange that can be achieved in the future. These forward
foreign currency contracts involve market risk in excess amounts reflected in
the financial statements. Although forward foreign currency contracts used for
hedging purposes limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counter-parties to the contracts are unable to meet the terms of their
contracts. The Fund's adviser will enter into forward foreign currency contracts
only with the parties approved by the Board of Directors because there is a risk
of loss to the Fund if the counter-parties do not complete the transaction.
7) TRANSACTIONS WITH AFFILIATES:
Europe Fund has a management agreement with Legg Mason Fund Adviser,
Inc. ("LMFA"). Pursuant to the agreement, LMFA provides the Fund with management
and administrative services for which the Fund pays a fee, computed daily and
payable monthly, at an annual rate of the Fund's average daily net assets.
LMFA has agreed to waive the fees in any month to the extent the Fund's
expenses (exclusive of taxes, interest, brokerage and extraordinary expenses)
exceed during that month certain annual rates of the Fund's average daily net
assets as shown in the following chart:
--------------------------------------------------------------------------
Europe Fund Management Expense
Fee Limitation Expense Limitation Expiration
--------------------------------------------------------------------------
-Class A 1.00% 1.85% April 30, 2002
--------------------------------------------------------------------------
-Primary Class 1.00% 2.60% April 30, 2002
--------------------------------------------------------------------------
-Navigator Class 1.00% 1.60% April 30, 2002
--------------------------------------------------------------------------
Lombard Odier International Portfolio Management Limited ("Lombard
Odier") serves as investment adviser to Europe Fund. Lombard Odier is
responsible for the actual investment activity of the Fund. LMFA pays Lombard
Odier a fee for its services, computed daily and payable monthly, at an annual
rate equal to 60% of the fee received by LMFA.
B-18
<PAGE>
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the
New York Stock Exchange, serves as distributor. Legg Mason receives an annual
distribution fee and an annual service fee based on the average daily net
assets, computed daily and payable monthly as follows:
-------------------------------------------------------------
Europe Fund Distribution Fee Service Fee
-------------------------------------------------------------
-Class A N/A .25%
-------------------------------------------------------------
-Primary Class .75% .25%
-------------------------------------------------------------
-Navigator Class N/A N/A
-------------------------------------------------------------
LMFA and Legg Mason are corporate affiliates and wholly owned
subsidiaries of Legg Mason, Inc.
All costs incurred in connection with the Plan of Reorganization will
be borne by Legg Mason.
8) LINE OF CREDIT:
The Fund, along with certain other Legg Mason Funds, participates in a
$200 million line of credit ("Credit Agreement") to be utilized as an emergency
source of cash in the event of unanticipated, large redemption requests by
shareholders. Pursuant to the Credit Agreement, each participating Fund is
liable only for principal and interest payments related to borrowings made by
that Fund. Borrowings under the Credit Agreement bear interest at prevailing
short-term interest rates. The Funds had no borrowings under the Credit
Agreement during the pro forma periods presented.
B-19
<PAGE>
LEGG MASON GLOBAL TRUST, INC.
PART C
<PAGE>
OTHER INFORMATION
Item 15. Indemnification
---------------
This item is incorporated by reference to Item 25 of Part C of
Post-Effective Amendment No. 15 to the registration statement, SEC File No.
33-56672, filed April 30, 1999.
Item 16. Exhibits
(1) (a) Articles of Incorporation (4)
(b) Articles Supplementary (4)
(c) Articles of Amendment (4)
(d) Articles Supplementary (2)
(e) Articles of Amendment (4)
(f) Articles of Amendment (7)
(g) Articles of Amendment (9)
(h) Articles of Amendment -- filed herewith
(2) By-Laws (4)
(3) Voting trust agreement -- none
(4) Agreement and Plan of Reorganization and Termination is
attached hereto as Appendix B to the Prospectus/Proxy
statement
(5) Instruments defining the rights of shareholders -- none
(6) (a) Investment Advisory Agreement -- International Equity
Trust (1)
(b) Management Agreement -- International Equity
Trust (1)
(c) Amended Investment Advisory Agreement -- Global
Trust (4)
(d) (A) Investment Sub-Advisory Agreement -- Global
Income Trust (9)
(B) Sub-Administration Agreement -- Global Income
Trust (5)
(e) Management Agreement -- Global Income Trust (1)
(f) Investment Advisory Agreement -- Emerging Markets
Trust (3)
(g) Management Agreement -- Emerging Markets Trust (3)
(h) Investment Advisory and Administration Agreement --
Europe Fund (11)
(i) Sub-Advisory Agreement -- Europe Fund (11)
(7) Underwriting Agreement
(a) Global Income Trust (4)
(b) International Equity Trust (4)
(c) Emerging Markets Trust (3)
(d) Europe Fund (11)
(8) Bonus, profit sharing or pension plans -- none
<PAGE>
(9) (a) Custodian Agreement (4)
(b) Amendment to Custodian Agreement (4)
(10) (a) Plan pursuant to Rule 12b-1
(i) Global Income Trust (4)
(ii) International Equity Trust (4)
(iii) Emerging Markets Trust (3)
(iv) Europe Fund -- Class A Shares and Primary
Class shares (11)
(b) Rule 18f-3 Plan
(i) Rule 18f-3 Plan - Europe Fund (11)
(ii) Form of Rule 18f-3 Plan -- Global Income
Trust, International Equity Trust and
Emerging Markets Trust (8)
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
the legality of the securities being registered -- filed
herewith
(12) Opinion and consent of Kirkpatrick & Lockhart LLP
regarding certain tax matters in connection with Legg
Mason Europe Fund and Bartlett Value International
Fund reorganization - to be filed
(13) (a) Transfer Agency and Service Agreement (4)
(b) Credit Agreement (5)
(c) Credit Agreement Amendment (6)
(d) Amendment and Restatement of Credit Agreement (10)
(14) Accountant's consent -- filed herewith
(15) Financial statements omitted pursuant to Item 14(a)(1) -- none
(16) Manually signed copy of power of attorney -- filed herewith
(17) Additional Exhibits -- none
(1) Incorporated by reference to corresponding Exhibit of Post-Effective
Amendment No. 7 to the registration statement, SEC File No. 33-56672, filed
August 31, 1995.
(2) Incorporated by reference to corresponding Exhibit of Post-Effective
Amendment No. 8 to the registration statement, SEC File No. 33-56672, filed
February 16, 1996.
(3) Incorporated by reference to corresponding Exhibit of Post-Effective
Amendment No. 9 to the registration statement, SEC File No. 33-56672, filed
November 18, 1996.
(4) Incorporated by reference to corresponding Exhibit of Post-Effective
Amendment No. 12 to the registration statement, SEC File No. 33-56672, filed
April 30, 1997.
(5) Incorporated by reference to corresponding Exhibit of Post-Effective
Amendment No. 13 to the registration statement, SEC File No. 33-56672, filed
April 30, 1998.
<PAGE>
(6) Incorporated by reference to corresponding exhibit of Bartlett Capital
Trust's Registration Statement, Post-Effective Amendment No. 27, SEC File No.
2-80648, filed March 2, 1999.
(7) Incorporated by reference to corresponding exhibit of Post-Effective
Amendment No. 16 to the registration statement, SEC File No. 33-56672, filed
July 2, 1999.
(8) Incorporated by reference to corresponding exhibit of Post-Effective
Amendment No. 18 to the registration statement, SEC File No. 33-56672, filed
September 15, 1999.
(9) Incorporated by reference to corresponding exhibit of Post-Effective
Amendment No. 19 to the registration statement, SEC File No. 33-56672, filed
February 28, 2000.
(10) Incorporated by reference to corresponding exhibit of Post-Effective
Amendment No. 2 to the registration statement of Legg Mason Investment Trust,
Inc., SEC File No. 33-88715, filed March 28, 2000.
(11) Incorporated by reference to corresponding exhibit of Post-Effective
Amendment No. 20 to the registration statement, SEC File No. 33-56672, filed
April 28, 2000.
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public
re-offering of the securities registered through the use of
the prospectus which is a part of this Registration Statement
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of
1933, the re-offering prospectus will contain the information
called for by the applicable registration form for re-offering
by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part of
an amendment to the Registration Statement and will not be
used until the amendment is effective, and that, in
determining any liability under the Securities At of 1933,
each post-effective amendment shall be deemed to be a new
Registration Statement for the securities offered therein, and
the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
(3) Registrant hereby undertakes to file a post-effective
amendment to this Registration Statement on Form N-14,
containing an opinion of counsel supporting the tax
consequences of the reorganization described herein within a
reasonable time after receipt of such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, Legg Mason Global Trust, Inc., has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Baltimore and State of Maryland, on the 20th day of
December, 2000.
LEGG MASON GLOBAL TRUST, INC.
By: /s/ Marie K. Karpinski
----------------------------------
Marie K. Karpinski
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ John F. Curley, Jr. * Chairman of the Board December 20, 2000
-------------------------------- and Director
John F. Curley, Jr.
/s/ Edward A. Taber, III * President and Director December 20, 2000
--------------------------------
Edward A. Taber, III
/s/ Richard G. Gilmore * Director December 20, 2000
--------------------------------
Richard G. Gilmore
/s/ Arnold L. Lehman * Director December 20, 2000
--------------------------------
Arnold L. Lehman
/s/ Jill E. McGovern * Director December 20, 2000
--------------------------------
Jill E. McGovern
/s/ T. A. Rodgers * Director December 20, 2000
--------------------------------
T. A. Rodgers
/s/ G. Peter O'Brien * Director December 20, 2000
--------------------------------
G. Peter O'Brien
/s/ Nelson A. Diaz * Director December 20, 2000
--------------------------------
Nelson A. Diaz
/s/ Marie K. Karpinski Vice President December 20, 2000
---------------------- and Treasurer
Marie K. Karpinski
*Signature affixed by Marie K. Karpinski pursuant to a power of attorney dated
November 10, 2000, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(1)(h) - Articles of Amendment
(11) - Opinion and consent of Kirkpatrick & Lockhart LLP regarding
the legality of securities being registered.
(14) - Consent of PricewaterhouseCoopers LLP.
(16) - Manually signed copy of power of attorney.
