<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997
FILE NOS. 33-
811-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
AND
[X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
ATLAS INSURANCE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
794 DAVIS STREET
SAN LEANDRO, CALIFORNIA 94577
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 297-7444
LARRY E. LACASSE
794 DAVIS STREET
SAN LEANDRO, CALIFORNIA 94577
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
MICHAEL GLAZER, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
-----------------
The Registrant hereby elects to register an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment Company Act of
1940, as amended.
-----------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable following effective date.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
ATLAS INSURANCE TRUST
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND
THIS REGISTRATION STATEMENT
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
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<S> <C>
1. Cover Page Cover Page
2. Synopsis Portfolio at a glance; What is
the Portfolio's investment
objective and strategies?
3. Condensed Financial Not Applicable
Information
4. General Description of What Companies are affiliated
Registrant with the Trust?; What is the
Portfolio's investment objective
and strategies?; What are the
Portfolio's investment
limitations?; How is the
Portfolio administered?; Appendix
5. Management of the Trust What are the Portfolio's fees and
expenses?; What Companies are
affiliated with the Trust?; How
is the Portfolio administered?;
Appendix
6. Capital Stock and Other How is the Portfolio
Securities administered?; What is the
Trust's capital structure?
7. Purchase of Securities Portfolio at a glance; What
Being Offered Companies are affiliated with the
Trust?; How is the Portfolio
administered?; How is the
Portfolio's net asset value
determined?; How are the
Portfolio's shares purchased and
redeemed?
8. Redemption or Repurchase How is the Portfolio's net asset
value determined?; How are the
Portfolio's shares purchased and
redeemed?
9. Legal Proceedings Not Applicable
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Not Applicable
History
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- ---------------------------- ---------------------------------
<S> <C>
13. Investment Objectives Description of Certain Securities
and Policies and Investment Policies;
Fundamental Investment
Restrictions; Portfolio Turnover
14. Management of the Trust Management of the Trust;
Investment Management and Other
Services
15. Control Persons and Management of the Trust;
Principal Holders of Investment Management and Other
Securities Services
16. Investment Advisory and Investment Management and Other
Other Services Services; Additional Information
17. Brokerage Allocation Execution of Portfolio
Transactions
18. Capital Stock and Other See Part A, Item 6
Securities
19. Purchase, Redemption and Determination of Net Asset Value;
Pricing of Securities Redemption in Kind
Being Offered
20. Tax Status Taxes
21. Underwriters Investment Management and Other
Services
22. Calculation of Perfor- Investment Results
mance Data
23. Financial Statements Financial Statements
ITEM IN PART C
- --------------
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
</TABLE>
Signatures
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<PAGE>
PART A
ATLAS INSURANCE TRUST
-------------------------------------
PROSPECTUS
-------------------------------------
<PAGE>
ATLAS ANNUITIES
ATLAS INSURANCE TRUST
794 DAVIS STREET
SAN LEANDRO, CA 94577
1-800-933-ATLAS (1-800-933-2852)
ATLAS INSURANCE TRUST
Atlas Insurance Trust (the "Trust") is an open-end, management investment
company, or mutual fund, offering a choice of investment portfolios or funds
to investors through the purchase of the Atlas Portfolio Builder variable
annuity contracts issued by PFL Life Insurance Company ("PFL Life"). The Trust
currently consists of one investment portfolio, the Atlas Balanced Growth
Portfolio (the "Portfolio"). The Portfolio invests in up to eight underlying
Atlas Funds representing different combinations of equity, fixed income, and
money market securities and reflecting varying degrees of investment risk and
potential reward.
Please read this Prospectus dated , 1997 before investing and keep it
for future reference. It provides important information about the Trust and
the Portfolio and will help you decide whether the Portfolio is appropriate
for you. A Statement of Additional Information (the "SAI") further describing
the Trust and the Portfolio, dated , 1997 was filed with the Securities
and Exchange Commission and is incorporated into this Prospectus by reference.
A copy of a current SAI is available without charge by calling or writing the
Trust.
The Atlas Portfolio Builder variable annuity contracts are described in a
separate prospectus issued by PFL Life which should be read in conjunction
with this prospectus.
ATLAS SECURITIES, INC. (DBA ATLAS FUNDS DISTRIBUTORS, INC. IN ARIZONA), THE
DISTRIBUTOR OF THE TRUST'S SHARES, IS NOT A SAVINGS AND LOAN ASSOCIATION OR A
BANK. TRUST SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF A SAVINGS AND LOAN
ASSOCIATION OR A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL ENTITY INCLUDING THE SECURITIES INVESTOR
PROTECTION CORPORATION. TRUST SHARES ARE NOT INSURED OR GUARANTEED BY ANY
PRIVATE INSURANCE COMPANY. THE VALUE OF SHARES OF THE PORTFOLIO WILL VARY IN
RESPONSE TO MARKET CONDITIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-1-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PORTFOLIO AT A GLANCE..................................................... 3
WHAT IS THE PORTFOLIO'S INVESTMENT OBJECTIVE AND STRATEGIES?.............. 4
WHAT ARE THE PORTFOLIO'S FEES AND EXPENSES?............................... 8
WHAT ARE THE OBJECTIVES AND CHARACTERISTICS OF THE UNDERLYING ATLAS
FUNDS?.................................................................. 10
WHAT ARE THE PORTFOLIO'S INVESTMENT LIMITATIONS?.......................... 12
WHAT COMPANIES ARE AFFILIATED WITH THE TRUST?............................. 12
HOW IS THE PORTFOLIO ADMINISTERED?........................................ 13
WHAT IS THE TRUST'S CAPITAL STRUCTURE?.................................... 13
HOW IS THE PORTFOLIO'S NET ASSET VALUE DETERMINED?........................ 14
HOW ARE THE PORTFOLIO'S SHARES PURCHASED AND REDEEMED?.................... 14
HOW DOES THE PORTFOLIO HANDLE DIVIDENDS AND TAXES?........................ 14
APPENDIX I--WHAT ARE THE UNDERLYING ATLAS FUNDS' INVESTMENT POLICIES AND
PRACTICES?.............................................................. 16
APPENDIX II--DESCRIPTION OF RATINGS....................................... 25
</TABLE>
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<PAGE>
PORTFOLIO AT A GLANCE
INVESTMENT OBJECTIVE
The ATLAS BALANCED GROWTH PORTFOLIO seeks long-term growth of capital, and
moderate current income. The Portfolio is designed to provide broad one-stop
diversification among equity, fixed income, and money market securities. The
Portfolio is suitable for investors seeking a reasonable level of stock-market
exposure, but who are not comfortable taking the substantial market risk of a
more aggressive investment program. Of course there can be no assurance that
the Portfolio's investment objective will be achieved.
STRATEGY
The Portfolio diversifies its assets within set limits among eight
underlying Atlas Funds. Allocation decisions reflect Atlas Advisers, Inc.'s
("Advisers") outlook for the economy, financial markets, and the relative
valuations of the underlying Atlas Funds.
The Portfolio's strategy of investing in other mutual funds results in
greater expenses than you would incur if you invested in the underlying Atlas
Funds directly. However, the underlying Atlas Funds are not available through
the purchase of variable annuity contracts.
RISK CONSIDERATIONS
Like most mutual funds, an investment in the Portfolio involves risk,
principally stock market risk and interest rate risk. STOCK MARKET RISK is the
possibility that stock prices in general will decline over short or extended
periods. Stock markets tend to be cyclical with periods when stock prices
generally rise or fall. The Portfolio also will have varying exposure to
foreign stock markets, which are generally thought to be riskier than domestic
markets. INTEREST RATE RISK is the possibility that bond prices will decline
over short or long periods due primarily to changes in market interest rates.
The ATLAS BALANCED GROWTH PORTFOLIO will have greatest exposure to stock
market risk because of its significant investment in those Atlas Funds that
focus on equity securities. It will have lower exposure to interest rate risk
because of the smaller investment exposure it will have in those Atlas Funds
that focus on or make a significant investment in fixed income securities.
Investors in the Portfolio should be prepared for share price volatility and
the possibility of losing money. Before investing, you should carefully
consider the risks explained in more detail in "What are some of the
Portfolio's potential risks?"
INVESTMENT MANAGER:
Advisers, a Golden West Financial Corporation subsidiary and an affiliate of
World Savings and Loan Association ("World"), was organized solely to manage
Atlas mutual fund investments and began its operations on January 10, 1990.
Advisers has retained professionals with substantial
-3-
<PAGE>
fund experience. Advisers has day-to-day responsibility for managing the
Portfolio and for developing and executing the Portfolio's investment program.
HOW TO INVEST:
Call 1-800-933-ATLAS (1-800-933-2852) and speak to an Atlas Investment
Representative or meet with one in person at most World branches. Just call 1-
800-933-ATLAS for more information on this Person-to-Person program or to make
an appointment. You can also pick up Atlas Annuities literature at any World
branch. The Portfolio is currently offered exclusively by Atlas Securities,
Inc. (the "Distributor").
When you purchase an Atlas Portfolio Builder variable annuity contract, you
may allocate all or a portion of your premium payments to the Portfolio as an
investment option under such contract. The Atlas Portfolio Builder, in turn,
places orders to purchase and redeem shares of the Portfolio based on the
amount of premium payments to be invested and surrender and transfer requests
to be effected on that date.
WHAT IS THE PORTFOLIO'S INVESTMENT OBJECTIVE AND STRATEGIES?
The investment objective of the Atlas Balanced Growth Portfolio is to seek
long-term growth of capital with moderate current income. In pursuit of its
objective, the Portfolio will allocate its assets among a group of the
following eight diversified underlying Atlas Funds: Atlas U.S. Treasury Money
(the "Money Fund"), Atlas U.S. Government and Mortgage Securities (the
"Government Fund"), Atlas Strategic Income (the "Strategic Income Fund"), the
Atlas Balanced (the "Balanced Fund"), Atlas Growth and Income (the "Growth and
Income Fund"), Atlas Strategic Growth (the "Strategic Growth Fund"), Atlas
Global Growth (the "Global Growth Fund"), and Atlas Emerging Growth (the
"Emerging Growth Fund"). The Government and Strategic Income Funds will be
referred to herein as the "Atlas Bond Funds", and the Balanced, Growth and
Income, Strategic Growth, Global Growth, and Emerging Growth will be referred
to as the "Atlas Stock Funds". The Portfolio will diversify within set limits
based on Advisers' outlook for the economy, financial markets, and relative
market valuation of each underlying fund. The amounts allocated to each
underlying Atlas Fund will vary within the ranges specified below.
<TABLE>
<CAPTION>
INVESTMENT RANGE
FOR THE
ATLAS FUND PORTFOLIO
---------- ----------------
<S> <C>
Money Fund.................................................... 0-25%
Government Fund............................................... 0-25%
Strategic Income Fund......................................... 0-25%
Balanced Fund................................................. 10-40%
Growth and Income Fund........................................ 10-40%
Strategic Growth Fund......................................... 10-40%
Global Growth Fund............................................ 10-40%
Emerging Growth Fund.......................................... 10-40%
</TABLE>
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<PAGE>
ASSET ALLOCATION FRAMEWORK
Asset allocation amongst equity, fixed income, and cash and money market
securities is the most critical investment decision an investor makes.
Determining the investments to make to implement an asset allocation strategy
can be an arduous and time-consuming process. The Portfolio provides investors
with an easy way to achieve broad diversification among asset classes with a
single investment.
In order to achieve its investment objective, the Portfolio allocates its
assets among the underlying Atlas Funds, reflecting varying degrees of
potential investment risk and reward. Under normal market conditions, the
ATLAS BALANCED GROWTH PORTFOLIO expects to allocate its assets through its
varying investment in the eight underlying Atlas Funds so as to maintain an
allocation of approximately 40-75% Stock Funds, 10-30% Bond Funds, and 0-20%
Money Funds and cash.
It is important to understand that, because each of the underlying Atlas
Stock Funds may invest a varying portion of its assets in fixed income
securites, and because each of the underlying Atlas Funds may invest a varying
portion of assets in money market securites, allocations to underlying Atlas
Funds do not necessarily correspond with a percentage investment in a
particular type of security by an underlying Atlas Fund. For example, a 50%
allocation of the Portfolio's assets to the Atlas Stock Funds would result in
less than 50% of the Portfolio's assets exposed to market risk.
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<PAGE>
WHAT ARE SOME OF THE PORTFOLIO'S POTENTIAL RISKS?
The Portfolio's share price will fluctuate with changing market conditions
as the share prices of the underlying Atlas Funds rise or fall. The risks are
generally the same as with other mutual funds:
. Market risk: the market value of equity securities (which constitute the
primary investment of the Portfolio) will fluctuate with changing market
and economic conditions.
. Interest rate risk: the market value of fixed income securities can be
expected to vary inversely in response to changes in interest rates.
. Credit risk: the possibility exists that individual debt securities held
by the underlying Atlas Funds could default or have their credit ratings
downgraded, potentially reducing such fund's share price and income
level. This risk is even greater with high-yield ("junk") bonds, whose
issuers are more vulnerable to business setbacks and to economic
changes, such as a recession, that might impair their ability to make
timely interest and principal payments.
. Prepayment risk: with mortgage-backed securities, there is a chance
that, when interest rates are falling, homeowners will accelerate
principal payments on mortgages and the underlying Atlas Fund will be
forced to reinvest prepayments in lower yielding securities. Also
prepayments can result in losses to investors in mortgage securities
that were originally purchased at a price above par.
. Currency risk: the risk that weak foreign currencies versus the U.S.
dollar could result in losses for U.S. investors in foreign securities.
A significant portion of the total assets of the Portfolio may also be
exposed to the risks of foreign investing, including currency risk, as
previously defined. The economies, markets, and political structures of some
countries in which certain of the underlying Atlas Funds can invest, such as
underdeveloped or emerging market countries, do not compare favorably with the
U.S. and other mature economies in terms of wealth and stability. Therefore,
investments in these countries will be riskier and more subject to erratic and
abrupt price movements.
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<PAGE>
WHAT ARE SOME OF THE PORTFOLIO'S POTENTIAL REWARDS?
The Portfolio offers a professionally managed allocation of assets among a
broad range of underlying Atlas Funds. By investing in a variety of underlying
Atlas Funds, the Portfolio's performance could benefit from the diversified
returns of many types of securities.
The Portfolio invests in Atlas Funds holding domestic and foreign stocks,
small-, mid- and large-cap stocks, and growth and value stocks. To a lesser
extent, the Portfolio can invest in Atlas Funds holding high-quality domestic
and foreign corporate and government bonds, high-yield bonds and convertible
securities. The diversified nature of the Portfolio's investments should
cushion declines in falling markets, especially when the bond and stock
markets move in opposite directions, or when U.S. and foreign markets are not
closely correlated.
The theory of diversification holds that investors can reduce their overall
risk by spreading assets among a variety of investments. Each type of
investment follows a cycle of its own and responds differently to changes in
the economy and the marketplace. A decline in one investment can be balanced
by returns in other investments that are stable or rising. Therefore, a major
benefit of the Portfolio is the potential for attractive long-term returns
with reduced volatility.
HOW CAN I DECIDE WHETHER THE PORTFOLIO IS RIGHT FOR ME?
If you seek broad diversification in a single investment and a reasonable
level of stock-market exposure in an effort to achieve long-term capital
appreciation, the ATLAS BALANCED GROWTH PORTFOLIO could be an appropriate part
of your overall investment strategy. The Portfolio is suitable for investors
who are not willing to take the substantial market risks of a more aggressive
investment program, but can accept the possibility of share price declines.
If you have any questions or wish to schedule an appointment with an Atlas
Investment Representative to learn more about the Portfolio, just call 1-800-
933-ATLAS (1-800-933-2852) for assistance.
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<PAGE>
WHAT ARE THE PORTFOLIO'S FEES AND EXPENSES?
The Portfolio pays Advisers a fee for investment management and
administrative services for facilitating and overseeing all aspects of its
operations and establishing and implementing its investment program. Such fee
is at an annual rate of 0.25% of the Portfolio's average daily net assets.
Like other mutual funds, the Portfolio is responsible for its own operating
expenses in addition to Advisers' fee including, but not limited to: transfer
agent, custodian, legal, and auditing fees and expenses; compensation of
Trustees who are not interested persons of Advisers; taxes, if any; costs and
expenses of calculating its daily net asset value, accounting, bookkeeping,
and recordkeeping required under the 1940 Act; insurance premiums; trade
association dues; fees and expenses of registering and maintaining
registration of its shares for sale under federal and applicable state
securities laws; all costs associated with shareholders' meetings and the
preparation and dissemination of proxy materials which are appropriately
allocable to the Portfolio; printing and mailing prospectuses, statements of
additional information, and reports to existing shareholders; and other
expenses relating to the Portfolio's operations. ADVISERS HAS AGREED TO REDUCE
ITS FEE AND ASSUME EXPENSES OF THE PORTFOLIO TO THE EXTENT NECESSARY TO LIMIT
THE PORTFOLIO'S TOTAL DIRECT OPERATING EXPENSES TO 1.00% THROUGH AT LEAST
APRIL 30, 1998.
The Portfolio will also indirectly bear its pro rata share of fees and
expenses incurred by the underlying Atlas Funds and the investment return of
the Portfolio will be net of the expenses of the underlying Atlas Funds. The
following chart provides the expense ratios for each of the underlying Atlas
Funds in which the Portfolio will invest (based on information as of ,
1997). Where applicable, expense ratios are restated to reflect current fees
that are expected to be in effect during the Portfolio's first year of
operations.
<TABLE>
<CAPTION>
EXPENSE
UNDERLYING ATLAS FUND RATIO
--------------------- -------
<S> <C>
Money Fund..............................................................
Government Fund.........................................................
Strategic Income Fund...................................................
Balanced Fund ..........................................................
Growth and Income Fund .................................................
Strategic Growth Fund ..................................................
Global Growth Fund .....................................................
Emerging Growth Fund ...................................................
</TABLE>
Based on the foregoing, the range of the average weighted expense ratio for
the Portfolio is expected to be % to %. A range is provided since the
average assets of the Portfolio invested in each of the underlying Atlas Funds
will fluctuate.
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
WHAT ARE THE OBJECTIVES AND CHARACTERISTICS OF THE UNDERLYING ATLAS FUNDS?
The objectives and major characteristics of the underlying Atlas Funds are
as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
U.S. TREASURY AND MORTGAGE STRATEGIC
MONEY FUND(1) SECURITIES FUND INCOME FUND
------------- ----------------- ------------
<S> <C> <C> <C>
Investment Strategy and Risk Seeks yield Seeks liquidity Seeks high
Consideration combined with and higher pre- current
maximum tax yield than income. In
safety, short-term addition to
liquidity, investments may interest
and provide. Subject rate and
preservation to interest rate prepayment
of principal and prepayment risk,
through a risk subject to
stable share the special
price risks
involved
with foreign
investing,
use of
derivatives
and high-
yield,
lower-rated
securities.
Investment Objectives(2) A high level A high level of A high level
of current current income of current
income consistent with income
consistent prudent consistent
with maximum investment with prudent
safety, management and risk
liquidity and preservation of management
stability of capital and
principal, preservation
exempt from of capital
state income
tax in most
states
Portfolio Securities(3) Short-term Intermediate and U.S.
obligations long-term U.S. Government
directly Government securities,
issued by the obligations and debt
U.S. Treasury mortgage related securities
securities issued of foreign
by U.S. governments
Government and
agencies or companies,
instrumentalities and lower-
or private rated, high-
issuers yield debt
securities
of U.S.
companies
Quality of Debt Securities(4) Highest Quality--three Full Range--
Quality-- highest rating All rating
supported by quality grades, quality
the full such as Moody's grades, such
faith and (Aaa, Aa, A) or as Moody's
credit of the S&P (AAA, AA, A); (Aaa, Aa, A,
U.S. primarily highest Baa, Ba, B,
Government quality Caa, Ca, C,
D) or S&P
(AAA, AA, A,
BBB, BB, B,
CCC, CC, C,
D)
</TABLE>
- -----------
(1) There can be no assurance that a stable net asset value will always be
achieved.
(2) These investment objectives are fundamental and cannot be changed without
shareholder approval.
(3) Please read Appendix I for a more detailed description of securities and
strategies.
-10-
<PAGE>
<TABLE>
<CAPTION>
BALANCED GROWTH AND STRATEGIC GLOBAL EMERGING
FUND INCOME FUND GROWTH FUND GROWTH FUND GROWTH FUND
- ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Seeks a Seeks growth Seeks growth Seeks growth
balance of of capital, of capital of capital
capital with some only. Subject only. Subject
growth and current to market to market
high current income. risk. risk and the
income. Subject to special risks
Subject to market risk. involved with
market risk substantial
and interest foreign
rate risk. investing.
Subject to
market risk.
Long-term Long-term Long-term Long-term
capital capital capital capital
growth and a growth and growth, growth,
high level some current without without
of current income consideration consideration
income consistent of current of current
consistent with prudent income, income,
with prudent investment consistent consistent
investment management with prudent with prudent
management investment investment
and management management
preservation
of capital
Common and Common and Common and Common and
preferred preferred preferred preferred
stocks, stocks and stocks and stocks and
convertible convertible convertible convertible
securities securities securities securities of
and bonds selected selected U.S. and
primarily solely for foreign
for their their companies
appreciation appreciation
potential potential
and, in many
instances,
for their
dividend
paying
ability
Investment Grade--four highest rating Full Range --
quality grades such as Moody's (Aaa, Aa, A, All rating
Baa) or S&P (AAA, AA, A, BBB) quality
grades, such
as Moody's
(Aaa, Aa, A,
Baa, Ba, B,
Caa, Ca, C,
D) or S&P
(AAA, AA, A,
BBB, BB, B,
CCC, CC, C, D)
</TABLE>
(4) Based on ratings of nationally recognized credit rating agencies such as
Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") or, if not rated, of comparable quality in the opinion
of the Adviser, or Subadviser if applicable. Applies only to debt
securities. Rating agencies do not rate equity securities. Please read the
Appendix II for a more detailed description of quality standards.
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<PAGE>
WHAT ARE THE PORTFOLIO'S INVESTMENT LIMITATIONS?
The Portfolio operates under the following limitations:
DIVERSIFICATION. The Portfolio is a "nondiversified" investment company for
purposes of the 1940 Act because it invests in the securities of a limited
number of mutual funds. However, the underlying Atlas Funds themselves are
diversified investment companies. The Portfolio intends to qualify as a
diversified investment company for the purposes of Subchapter M of the
Internal Revenue Code.
FUNDAMENTAL INVESTMENT POLICIES. As a matter of fundamental policy, the
Portfolio will not: (i) invest more than 25% of its total assets in any one
industry, except for investment companies which are members of the Atlas
family of funds; and (ii) borrow money, except temporarily to facilitate
redemption requests, in amounts exceeding 30% of the Portfolio's total assets
valued at market.
OTHER RESTRICTIONS. As a matter of operating policy the Portfolio will limit
its investment in illiquid assets, such as restricted securities or repurchase
agreements and time deposits with more than seven days to maturity, to no more
than 10% of total assets. Additional investment restrictions are described in
the Trust's Statement of Additional Information.
WHAT COMPANIES ARE AFFILIATED WITH THE TRUST?
Atlas Insurance Trust (the "Trust") was organized by Golden West Financial
Corporation ("Golden West Financial"). Golden West Financial is a New York
Stock Exchange listed savings and loan holding company, headquartered in
Oakland, California, with assets at December 31, 1996 in excess of $
billion. The Trust has engaged Atlas Advisers, Inc. ("Advisers") and Atlas
Securities, Inc. (the "Distributor"), two wholly owned subsidiaries of Golden
West Financial, to provide investment advice and distribution services to the
Portfolio. Advisers and the Distributor provide similar services to the Atlas
Funds.
Advisers is a registered investment adviser. Advisers has overall
responsibility for the investment advisory services provided to the Portfolio,
including formulating the Portfolio's investment policies, analyzing market
conditions, providing portfolio management services to the Portfolio, and
monitoring and evaluating services provided to the Portfolio by others.
The Distributor is a broker-dealer registered with the Securities and
Exchange Commission ("SEC") and maintains membership with the National
Association of Securities Dealers. It is the principal underwriter and sole
distributor of the Trust's shares. Advisers and the Distributor have
contracted with World Savings and Loan Association ("World Savings" or
"World"), Golden West Financial's principal operating subsidiary, for certain
services and facilities to be used in the conduct of mutual fund operations.
The Distributor has established Atlas Investment
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<PAGE>
Centers in Arizona, California, Colorado, Florida, Kansas, New Jersey and
Texas branches of World Savings, a federally chartered institution with
branches in 7 states, as of December 31, 1996. NEITHER THE TRUST, THE ATLAS
FUNDS, ADVISERS, NOR THE DISTRIBUTOR IS A SAVINGS AND LOAN ASSOCIATION OR A
BANK, AND THE PORTFOLIO'S SHARES ARE NOT INSURED OR GUARANTEED BY ANY
GOVERNMENT OR PRIVATE INSURANCE COMPANY.
HOW IS THE PORTFOLIO ADMINISTERED?
The Board of Trustees supervises the business activities of the Trust, which
include the hiring and supervision of professionals to administer the
Portfolio, approval of contracts, election of officers, and approval of
auditor selection and reports. The Trustees bring to the Portfolio extensive
experience in investments, financial services management, economics, and
accounting. Their primary responsibility in overseeing the Portfolio is to
serve the investors' best interests. You will find information about each
Trustee's background in the SAI.
ADVISERS provides portfolio management services to the Portfolio, the Atlas
U.S. Treasury Money Fund and the Atlas U.S. Government and Mortgage Securities
Fund and, with respect to the other underlying Atlas Funds, supervises the
provision of similar services by OppenheimerFunds, Inc. located at Two World
Trade Center, New York, New York 10048. Advisers is responsible for providing
or overseeing all aspects of the Portfolio's day-to-day operations and
implementing the Portfolio's investment programs. Advisers has retained
investment professionals with substantial experience in managing institutional
and individual investments.
THE DISTRIBUTOR. The shares of the Portfolio are distributed by Atlas
Securities, Inc. (the "Distributor"), which serves as the principal
underwriter of the Portfolio's shares.
WHAT IS THE TRUST'S CAPITAL STRUCTURE?
The Trust was organized as a business trust under the laws of Delaware on
October , 1996. The Trust may issue an unlimited number of shares of
beneficial interest all having no par value. Since the Trust may offer
multiple investment Portfolios, it is known as a "series company." Shares of a
Portfolio have equal noncumulative voting rights and equal rights with respect
to dividends, assets and liquidation of such Portfolio. Shares are fully paid
and nonassessable when issued, and have no preemptive or conversion rights.
The Trust is not required to hold annual shareholders' meetings and does not
intend to do so. However, it will hold special meetings as required or deemed
desirable for such purposes as electing trustees, changing fundamental
policies or approving an investment advisory contract. If shares of more than
one Portfolio are outstanding, shareholders will vote by Portfolio and not in
the aggregate except when voting in the aggregate is required under the 1940
Act, such as for the election of trustees. The Board of Trustees may authorize
the issuance of additional Portfolios if deemed desirable, each with its own
investment objective, policies and restrictions.
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HOW IS THE PORTFOLIO'S NET ASSET VALUE DETERMINED?
The net asset value per share for the Portfolio is determined as of the
regular close of the New York Stock Exchange (generally 4:00 p.m. Eastern
time) on each day that the Exchange is open for trading. The net asset value
per share is determined by dividing the total market value of the Portfolio's
investments and other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. This determination is made by appraising
the Portfolio's underlying investments (i.e., the underlying Atlas Funds) at
the price of each such Fund determined at the close of the Exchange.
HOW ARE THE PORTFOLIO'S SHARES PURCHASED AND REDEEMED?
PFL Life places orders to purchase and redeem shares of the Portfolio based
on, among other things, the amount of premium payments to be invested and
surrender and transfer requests to be effected on that day pursuant to
variable annuity contracts. The shares of the Portfolio are purchased and
redeemed at the net asset value of the Portfolio's shares as computed on the
business day (a day that the Exchange is open for trading) immediately
preceding the receipt of an order in proper form.
Although it is not expected to do so, the Trust may, from time to time,
temporarily suspend the offering of shares of the Portfolio. During the period
of such suspension, shareholders of the Portfolio are normally permitted to
continue to purchase additional shares and to have dividends reinvested.
No fee is charged shareholders when they purchase or redeem Portfolio
shares.
HOW DOES THE PORTFOLIO HANDLE DIVIDENDS AND TAXES?
DIVIDENDS. The Trust normally follows the practice of declaring and
distributing substantially all the net investment income and any net short-
term and long-term capital gains of the Portfolio at least annually.
TAXES. Under the current Internal Revenue Code ("Code"), PFL Life is taxed
as a life insurance company and the operation of its separate account is taxed
as part of its total operations. Under current interpretations of existing
federal income tax law, investment income and capital gains of separate
accounts are not subject to federal income tax to the extent applied to
increase the values of variable annuity contracts. Tax consequences to
variable annuity contract holders are described in the separate prospectus
issued by PFL Life.
The Portfolio intends to qualify as a regulated investment company under
subchapter M of the Code. As a result, with respect to any fiscal year in
which the Portfolio distributes all its net investment income and net realized
capital gains, the Portfolio will not be subject to federal income tax.
Subchapter M includes other requirements relating to the diversification of
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investments. Subchapter M's diversification requirements are in addition to
diversification requirements under Section 817(h) of the Code and the 1940
Act. Each applicable law's diversification requirement could require the sale
of assets of the Portfolio, which could have an adverse impact on the net
asset value of the Portfolio.
Because the Trust is established as an investment medium for variable
annuity contracts, Section 817(h) of the Code imposes additional
diversification requirements on the Portfolio. These requirements generally
are that as of the end of each quarter or within 30 days thereafter, no more
than 55% of the value of the total assets of the Portfolio may be represented
by any one investment; no more than 70% by any two investments; no more than
80% by any three investments; and no more than 90% by any four investments.
For these purposes, each underlying Atlas Fund is treated as a single
investment.
The preceding is a brief summary of certain of the relevant tax
considerations. The Statement of Additional Information includes a more
detailed discussion. This discussion is not intended, even as supplemented by
the State of Additional Information, as a complete explanation or a substitute
for careful tax planning and consultation with individual tax advisers.
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APPENDIX I--
WHAT ARE THE UNDERLYING
ATLAS FUNDS' INVESTMENT POLICIES AND PRACTICES?
In pursuing their investment objectives and strategies, each of the
underlying Atlas Funds is permitted to engage in a wide range of investment
policies. Certain of these policies are described in the following paragraphs
and further information about the underlying Atlas Funds is contained in the
Statement of Additional Information as well as the prospectus of such Funds.
Because the Portfolio invests in the underlying Atlas Funds, shareholders of
the Portfolio will be affected by these investment policies in direct
proportion to the amount of assets the Portfolio allocates to the underlying
Funds pursuing such policies.
The ATLAS U.S. TREASURY MONEY FUND maximizes safety by investing in debt
securities issued by the U.S. Treasury. These securities, the only securities
in which this Fund will invest, are guaranteed as to principal and interest by
the full faith and credit of the U.S. Government and are of the highest
possible credit quality. Though such securities involve little risk of loss of
principal, if held to maturity, like any debt obligation they are subject to
variations in market value due to fluctuations in interest rates. The Money
Fund reduces this market risk by investing only in securities maturing in 13
months or less and by maintaining an average weighted maturity of 90 days or
less.
The ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND will, under normal
market conditions, invest at least 80% of its assets in U.S. Government
securities, mortgage securities, and in repurchase agreements collateralized
by mortgage securities. U.S. Government securities are issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, and include mortgage-
backed securities issued by the Government National Mortgage Association
("GNMA"), Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") (please see the Appendix). At least 50% of this
Fund's assets will be invested in U.S. Government securities (including GNMA
government securities, and FNMA and FHLMC government agency mortgage
securities) and at least 25% of its assets will be invested in mortgage
securities (including U.S. Government and government agency mortgage
securities, and privately issued mortgage related and mortgage-backed
securities).
The ATLAS STRATEGIC INCOME FUND will, under normal market conditions, invest
in each of three market sectors: (1) U.S. Government securities, (2) debt
securities of foreign governments and companies, and (3) lower-rated, high-
yield debt securities of U.S. companies. From time to time the amounts the
Fund invests in each sector will be adjusted.
By investing in all three sectors, this Fund seeks to reduce the volatility
of fluctuations in its net asset value per share, because the overall
securities price and interest rate movements in each of the different sectors
are not necessarily correlated with each other. Changes in one sector may
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be offset by changes in another sector that moves in a different direction.
Therefore, this strategy may help reduce some of the risks from negative
market movements and interest rate changes in any one sector. However, the
Fund may invest up to 100% of its assets in any one sector if its Subadviser
believes that in doing so the Fund can achieve its objective without undue
risk to the Fund's assets.
When investing this Fund's assets, the Subadviser considers many factors,
including general economic conditions in the U.S. and abroad, prevailing
interest rates, and the relative yields of U.S. and foreign securities. While
the Fund may seek to earn income by writing covered call options, market price
movements may make it disadvantageous to do so. The Fund may also try to hedge
against losses by using hedging strategies described below. When market
conditions are unstable, the Fund may invest substantial amounts of its assets
in money market instruments for defensive purposes. These strategies are
described in greater detail in the Statement of Additional Information.
The ATLAS BALANCED FUND will, under normal market conditions, invest
primarily in a combination of income-producing equity securities (defined as
common stocks, preferred stocks, and securities having the investment
characteristics of common stock, such as securities convertible into common
stock). To achieve its additional objective of conserving principal while
seeking moderate capital appreciation, the Fund will invest in securities of
the type described above thought by the Fund's Subadviser to provide
opportunities for growth without undue risk. The proportion of this Fund's
assets invested in the particular types of securities described above will
vary from time to time, with emphasis on income producing equity securities
but with at least 25% of assets invested in fixed income senior debt.
The ATLAS GROWTH AND INCOME FUND will, under normal market conditions,
invest at least 65% of its assets in equity securities (as previously defined)
expected to grow at a rate that outperforms the general market over the long-
term. Many of these securities will pay dividends. Companies will be evaluated
by the Fund's Subadviser based on a variety of factors including: quality of
management, undervalued assets, or higher projected earnings growth relative
to recognized market benchmark indicators such as the Standard & Poor's 500
composite index of companies.
The ATLAS STRATEGIC GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) considered by the
Fund's Subadviser to have better-than-expected earnings prospects and below-
normal valuations. Current income is not a consideration in selecting
portfolio securities.
The ATLAS GLOBAL GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) of corporations of
growth-oriented companies that are traded in markets of at least three
different countries (which may include the United States). These securities
tend to be issued by companies that may be developing new products or
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services, or expanding into new markets for their products. The Fund may
invest in securities of smaller, less well-known companies as well as those of
large, well-known companies. Current income is not a consideration in
selecting portfolio securities.
The Fund's Subadviser currently employs an investment strategy in selecting
foreign and domestic securities that considers the effects of worldwide trends
on the growth of various business sectors. These trends or "global themes"
currently include telecommunications expansion, emerging consumer markets,
infra-structure development, natural resource use and development, corporate
restructuring, capital market development in foreign countries, health care
expansion, and global integration. These trends, which may affect the growth
of companies having business in these sectors, may suggest opportunities for
investing the Fund's assets. The Subadviser does not invest a fixed or
specific amount of the Fund's assets in any one sector, and these themes or
this approach may change over time.
The Fund may also seek to take advantage of changes in the business cycle by
investing in companies that are sensitive to those changes as well as in
"special situations" the Subadviser believes present opportunities for capital
growth. For example, when a country's economy is expanding, companies in the
financial services and consumer products industries may be in a position to
benefit from changes in the business cycle and may present long-term growth
opportunities.
The Atlas Emerging Growth Fund will . . .
Each Stock Fund may seek investment opportunities among securities of
smaller, less well known ("unseasoned") companies as well as securities of
large, well known companies. Each Stock Fund may also invest in investment
grade bonds and notes issued by U.S. and foreign governments and corporations,
and money market securities.
Each of the Stock Funds may invest in corporate and taxable government debt
securities and money market instruments. As a temporary defensive strategy,
each Stock Fund may also invest up to 100% of its assets in debt securities or
money market instruments when market conditions make pursuing the Fund's basic
investment strategy inconsistent with the best interests of its shareholders.
WHAT ARE THE UNDERLYING ATLAS FUNDS INVESTMENT PRACTICES?
LENDING OF PORTFOLIO SECURITIES. Like other mutual funds, the underlying
Atlas Funds may lend securities to broker-dealers, other institutions, or
other persons to earn additional income. The principal risk is the potential
insolvency of the broker-dealer or other borrower. In this event, the
underlying Atlas Funds could experience delays in recovering its securities
and possibly capital losses.
FOREIGN SECURITIES. The Portfolio will invest in certain underlying Atlas
Funds that invest all or a portion of their assets in foreign securities.
These investments in foreign securities, include nondollar-denominated
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securities traded outside of the U.S. and dollar-denominated securities of
foreign issuers. Such investments increase the Portfolio's diversification and
may enhance return, but they also involve some special risks such as exposure
to potentially adverse local political and economic developments;
nationalization and exchange controls; potentially lower liquidity and higher
volatility; possible problems arising from accounting, disclosure, settlement,
and regulatory practices that differ from U.S. standards; and the chance that
fluctuations in foreign exchange rates will decrease the investment's value
(favorable changes can increase its value). To the extent the underlying Atlas
Funds invest in developing countries, these risks are increased.
DERIVATIVE INVESTMENTS. The Strategic Income and Emerging Growth Funds can
invest in a number of different kinds of "derivative investments." These Funds
may use some types of derivatives for hedging purposes, and may invest in
others because they offer the potential for increased income and principal
value. In general, a "derivative investment" is a specially-designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index or currency. In the
broadest sense, derivative investments include exchange-traded options and
futures contracts which the other underlying Atlas Funds may also utilize.
One risk of investing in derivative investments is that the company issuing
the instrument might not pay the amount due on the maturity of the instrument.
There is also the risk that the underlying investment or security might not
perform the way the Subadviser expected it to perform. The performance of
derivative investments may also be influenced by interest rate changes in the
U.S. and abroad. All of these risks can mean that the Fund will realize less
income than expected from its investments, which will affect that Fund's share
price. Certain derivative investments held by a Fund may trade in the over-
the-counter markets and may be illiquid. If that is the case, the Fund's
investment in them will be limited.
Another type of derivative the Atlas Strategic Income and Emerging Growth
Funds may invest in is an "index-linked" note. On the maturity of this type of
debt security, payment is made based on the performance of an underlying
index, rather than based on a set principal amount for a typical note. Another
derivative investment the Funds may invest in is a currency-indexed security.
These are typically short-term or intermediate-term debt securities. Their
value at maturity or the interest rates at which they pay income are
determined by the change in value of the U.S. dollar against one or more
foreign currencies or an index. In some cases, these securities may pay an
amount at maturity based on a multiple of the amount of the relative currency
movements. This variety of index security offers the potential for greater
income but at a greater risk of loss.
Other derivative investments the Atlas Strategic Income and Emerging Growth
Funds may invest in include "debt exchangeable for common stock" of an issuer
or "equity-linked debt securities" of an issuer. At maturity, such debt
security is exchanged for common stock of the
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issuer or is payable in an amount based on the price of the issuer's common
stock at the time of maturity. In either case there is a risk that the amount
payable at maturity will be less than the principal amount of the debt
(because the price of the issuer's common stock is not as high as was
expected).
OPTIONS AND FUTURES STRATEGIES. The underlying Atlas Funds, other than the
Treasury Money Fund, may engage in options on securities, options on futures
and futures contract strategies to hedge their investments against changes in
interest rates, securities prices and foreign currencies, to manage cash flow,
to attempt to enhance income, or as a temporary substitute for purchases or
sales of actual securities. They will not engage in such transactions for
speculation. Their ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations and there can be no
assurance that any of these strategies will succeed.
The underlying Atlas Funds may purchase, sell, or write call and put options
and futures contracts on securities, financial indices, and foreign
currencies. The underlying Atlas Funds may also enter into foreign currency
exchange contracts to hedge specific transactions or portfolio positions
against changes in currency exchange rates. These strategies involve risks and
transaction costs to which the Funds would otherwise not be subject. If the
Adviser's or a Subadviser's prediction of the direction of market movements in
the underlying instruments or indices is inaccurate, the Fund involved may be
left in a worse position than if such strategies were not used.
A more thorough description of these investment practices and their
associated risks is contained in the current Statement of Additional
Information. The underlying Atlas Funds will not use leverage in futures,
options on futures and options on securities transactions, and are not
commodity pools. When required by SEC guidelines, each Fund will maintain a
segregated account with the Custodian with sufficient cash, U.S. Government
securities or other highly liquid, high grade securities to cover its
potential futures and options obligations.
REVERSE REPURCHASE AND DOLLAR REVERSE REPURCHASE AGREEMENTS. May be entered
into by the underlying Atlas Funds. A reverse repurchase agreement is the sale
of a security by a Fund and its agreement to repurchase the security at a
specified time and price. In addition, the Government and Strategic Income
Funds may enter into similar transactions, known as dollar reverse repurchase
agreements, with respect to mortgage-backed securities. Dollar reverse
repurchase agreements differ from reverse repurchase agreements only with
respect to the securities repurchased by a Fund, which are substantially
similar but not identical to the securities the Fund sold. Each underlying
Fund will maintain in a segregated account with the Custodian cash, U.S.
Government securities or other appropriate liquid, securities in an amount
sufficient to cover its obligations under these agreements with broker-dealers
(but no collateral is required on such agreements with banks).
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Under the 1940 Act, these agreements are considered borrowings by a Fund.
Accordingly, each underlying Fund will limit its investments in such
agreements, together with any bank borrowings, to no more than one-third of
each underlying Fund's total assets. Reverse repurchase and dollar reverse
repurchase agreements create leverage, which is speculative, and increase a
Fund's investment risk. If the income and gains on securities purchased with
the proceeds of these agreements exceed the costs of the agreements, an
underlying Fund's earnings or net asset value will increase faster than
otherwise would be the case; conversely if the income and gains fail to exceed
the costs, earnings or net asset value would decline faster than otherwise
would be the case.
REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS. May be engaged in by the
Government and Strategic Income Funds. These Funds may purchase mortgage-
backed securities together with an agreement to sell similar securities at a
future date. Such reverse dollar reverse repurchase agreements are subject to
the same risks and restrictions as repurchase agreements. Cash, U.S.
Government securities or other liquid securities will be segregated to meet
these obligations when due. The Funds will not engage in these transactions in
an amount that exceeds one-third of each of their assets.
SPECIAL RISKS OF LOWER-RATED SECURITIES. In seeking high current income, the
Atlas Strategic Income Fund may invest in higher-yielding, lower-rated debt
securities. There is no restriction on the amount of that Fund's assets that
could be invested in these types of securities. The Atlas Global Growth and
[Small Company] Funds may also invest in lower-rated securities, but to a much
more limited extent. Lower-rated debt securities are those rated below
"investment grade," such as debt securities that have a rating lower than
"Baa" by Moody's Investors Services, Inc. "Moody's") or "BBB" by Standard &
Poor's Corporation ("S&P"). These securities may be rated as low as "C" or "D"
or may be in default at the time of purchase.
High yield, lower-grade securities, whether rated or unrated, have
speculative characteristics. Lower-grade securities have special risks that
make them riskier investments than investment grade securities. They may be
subject to greater market fluctuations and risk of loss of income and
principal than lower yielding, investment grade securities. There may be less
of a market for them and therefore they may be harder to sell at an acceptable
price. There is a relatively greater possibility that the issuer's earnings
may be insufficient to make the payments of interest due on the bonds. The
issuer's low creditworthiness may increase the potential for its insolvency.
These risks mean that the Funds may not achieve the expected income from
lower-grade securities, and that the Funds' net asset value per share may be
affected by declines in value of these securities.
MORTGAGE-BACKED SECURITIES. The Government Fund and the Strategic Income
Fund may invest substantially in mortgage-backed securities issued by GNMA,
FNMA, and FHLMC. Mortgage-backed
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securities are backed by a pool of mortgage loans and provide a monthly
payment of principal and interest, which is passed through as payments are
made on the underlying mortgages. Additional payments may be made from
unscheduled repayments of principal due to refinancing, sale or foreclosure of
the underlying property.
If interest rates decline, these prepayments tend to increase due to
refinancing of mortgages. Therefore, the average life, or effective maturity
of mortgage-backed securities is normally shorter than the typical 30-year
maturity of the underlying mortgages. Since the prepayment rate varies with
market conditions, it is not possible to accurately anticipate what the
average maturity of the portfolio will be. The yield of the Funds will be
affected by reinvestment of prepayments at higher or lower rates than the
original investment. Also, to the extent the Funds purchase mortgage
securities at a premium, prepayments will result in some loss to the extent of
the premium. Like other debt securities, mortgage related securities' values,
including government related mortgage securities, fluctuate inversely in
response to interest rates.
Prompt payment of principal and interest on GNMA certificates is backed by
the full faith and credit of the United States. FNMA guaranteed pass-through
certificates and FHLMC participation certificates are supported by the credit
of the issuing agency. The U.S. Government is not legally obligated to provide
financial support to FNMA and FHLMC, but may do so in its discretion.
Privately issued mortgage related bonds and mortgage-backed securities are
issued by financial institutions such as commercial banks, thrift
institutions, mortgage bankers and securities broker-dealers. Mortgage related
bonds are general obligation, fixed-income securities collateralized by
mortgages. These securities include collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") as authorized
under the Internal Revenue Code. CMOs are a type of bond secured by an
underlying pool of mortgages or mortgage pass-through certificates that are
structured to direct payments on underlying collateral to different series or
classes of the obligations. CMO's may be issued by a U.S. Government agency
such as FHLMC and collateralized by U.S. Government or government agency
mortgage securities, or by private issuers and collateralized by U.S.
Government and/or government agency mortgage securities or by privately issued
mortgage securities.
The U.S. Government and the Strategic Income Funds may invest in other
mortgage related debt obligations secured by mortgages on commercial or
residential properties and may purchase securities known as "strips." Strips
are securities from which the unmatured interest coupons have been "stripped"
from the principal portion and sold separately. The Funds may invest in the
principal portion or in the interest coupons of U.S. Government and mortgage
securities or in receipts or certificates representing interests in stripped
securities or interest coupons. The principal portion of a stripped security
pays no interest to its holder during
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its life, and its value consists of the difference between its face value at
maturity and its acquisition price. Mortgage-backed securities strips are
subject to increased volatility in price due to interest rate changes, the
risk that the security will be less liquid during demand or supply imbalances,
and the risk that, due to unscheduled prepayments, the maturity date will be
shorter than anticipated and reinvestment of the proceeds may only be possible
at a lower yield. As with any debt obligation, the value of U.S. Government
and mortgage securities will fluctuate with changes in interest rates or
market perceptions of the creditworthiness of the issuer.
HOW ARE THE INVESTMENTS OF THE UNDERLYING ATLAS FUNDS MANAGED?
Advisers provides portfolio management services to the Atlas U.S. Treasury
Money Fund and the Atlas U.S. Government and Mortgage Securities Fund, and
supervises the provision of similar services to the other underlying Atlas
Funds by OppenheimerFunds, Inc., (the "Subadviser").
Roberta A. Conger, Group Senior Vice President and Treasurer of World
Savings, and Tim Stare, Vice President of World Savings, are the persons
primarily responsible for the day-to-day management of the portfolios of the
Government Fund and the Money Fund. Ms. Conger has more than 25 years
experience as a trader and portfolio manager of fixed-income securities,
including the last 11 years involved in managing the investments of Golden
West Financial's over $2 billion portfolio of mortgage-backed and mortgage-
related securities, money market instruments, bonds, other debt obligations,
and U.S. Government securities. Mr. Stare has over 20 years experience as a
trader and portfolio manager of fixed-income securities, including the last
six years managing the investment portfolios for World Savings and Golden West
Financial.
The Subadviser is owned by Oppenheimer Acquisition Corp., a holding company
owned in part by senior management of the Subadviser and ultimately controlled
by Massachusetts Mutual Life Insurance Company, a mutual life insurance
company which also advises pension plans and investment companies. As of
December 31, 1996, the Subadviser and its affiliates advised U.S. investment
companies with aggregate assets in excess of $29 billion, of which
approximately $11 billion was invested in equity funds.
Arthur P. Steinmetz and David P. Negri have been the individuals primarily
responsible for the day-to-day management of the Atlas Strategic Income Fund
since that Fund's inception of operations on July 1, 1996. During the past
five years, Mr. Steinmetz, a Senior Vice President and Portfolio Manager of
the Subadviser, and Mr. Negri, a Vice President and Portfolio Manager of the
Subadviser have each served as officers and portfolio managers of various
funds managed by the Subadviser.
John P. Doney, Vice President and Portfolio Manager of the Stock Funds'
Subadviser, has been the person primarily responsible for the day-to-day
management of the Atlas Balanced Fund since the Fund's inception
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of operations on October 1, 1993. During the past five years, Mr. Doney has
served as portfolio manager of various funds managed by the Subadviser.
The Portfolio Managers of the Atlas Growth and Income Fund are Bruce
Bartlett and Diane L. Sobin. They have been the persons principally
responsible for the day-to-day management of that Fund since July 5, 1995.
During the past five years, Mr. Bartlett, a Vice President and Portfolio
Manager of the Subadviser, was previously a Vice President and Senior
Portfolio Manager with First of America Investment Corporation. During the
past five years, Ms. Sobin, a Vice President and Portfolio Manager of the
Subadviser, was previously a Vice President and Senior Portfolio Manager with
Dean Witter InterCapital, Inc.
Robert C. Doll, Jr., Executive Vice President, Director of Equity
Investments, and Portfolio Manager of the Subadviser, has been the person
primarily responsible for the day-to-day management of the Atlas Strategic
Growth Fund since the Fund's inception of operations on October 1, 1993.
During the past five years, Mr. Doll has served as officer and portfolio
manager of various funds managed by the Subadviser.
William L. Wilby has been the person primarily responsible for the day-to-
day management of the Atlas Global Growth Fund since that Fund's inception of
operations on April , 1996. During the past five years, Mr. Wilby, a Senior
Vice President and Portfolio Manager of the Subadviser, has served as an
officer and portfolio manager for other funds managed by the Subadviser, prior
to which he was an international investment strategist at Brown Brothers,
Harriman & Co. and a Managing Director and Portfolio Manager at AIG Global
Investors.
Jay W. Tracey, III, Vice President and Portfolio Manager of the Subadviser,
has been the person primarily responsible for the day-to-day management of the
Atlas Emerging Growth Fund since that Fund's inception of operations on ,
1997. During the past five years, Mr. Tracey has served as an officer and
portfolio manager for other funds managed by the Subadviser. Mr. Tracey also
served as a managing director of Buckingham Capital Management. Prior to
joining the Subadviser, Mr. Tracey was a Senior Vice President of Founders
Asset Management Inc., prior to which he was a securities analyst and
portfolio manager for Berger Associates, Inc.
The Subadviser may be removed by Advisers at any time, in which event,
Advisers would directly manage the Fund or another Subadviser would be engaged
for that purpose.
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APPENDIX II:
DESCRIPTION OF RATINGS
In general, the ratings of Moody's Investors Services, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"), and the other nationally recognized
statistical rating organizations, represent the opinions of these agencies as
to the quality of securities which they rate. It should be emphasized,
however, that such ratings are relative and subjective and are not absolute
standards of quality. Consequently, debt securities with the same maturity,
coupon and rating may have different yields, while debt securities of the same
maturity and coupon with different ratings may have the same yield. These
ratings will be used by the Funds as initial criteria for the selection of
portfolio securities, but the Funds will also rely upon the independent advice
of the Adviser and their respective Subadvisers (if any) to evaluate potential
investments. The Appendix to this Statement of Additional Information contains
further information concerning the ratings of Moody's and S&P and their
significance. Subsequent to its purchase by a Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require sale of such securities by
the Fund, but the Adviser will consider such event in its determination of
whether the Fund should continue to hold the securities. To the extent that
the rating given by Moody's or S&P for securities may change as a result of
changes in such organizations or their rating systems, the Funds will attempt
to use comparable ratings as standards for its investments in accordance with
the investment policies contained in this Prospectus and in the Statement of
Additional Information.
MOODY'S INVESTORS SERVICE, INC. describes its ratings for debt securities as
follows:
BONDS--
AAA. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are not likely to
impair the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater magnitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.
A. Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate
-25-
<PAGE>
but elements may be present which suggest a susceptibility to impairment some
time in the future.
BAA. Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be overly moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
CA. Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTES AND VARIABLE RATE OBLIGATIONS--
MIG 1/VMIG 1. The MIG 1 (or VMIG 1 for an issue with a variable rate demand
feature) designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad-
based access to the market for refinancings.
MIG 2/VMIG 2. The MIG 2 (or VMIG 1 for an issue with a variable rate demand
feature) designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group.
COMMERCIAL PAPER--
PRIME-1. Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
--Leading market positions in well established industries.
--High rates of return on funds employed.
-26-
<PAGE>
--Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
--Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
--Well established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2. Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
STANDARD & POOR'S CORPORATION describes its ratings for debt securities as
follows:
BONDS--
AAA. Bonds which are rated AAA have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.
AA. Bonds which are rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A. Bonds which are rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB. Bonds which are rated BBB are regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
BB, B, CCC AND CC. Bonds which are rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C AND D. The rating C is reserved for income bonds on which no interest is
being paid. Bonds rated D are in default and payment of interest and/or
repayment of principal is in arrears.
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<PAGE>
NOTES--
SP-1. The SP-1 rating denotes a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2. The SP-2 rating denotes a satisfactory capacity to pay principal and
interest.
COMMERCIAL PAPER--
A-1. The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2. The A-2 designation indicates a capacity for timely payment on issues
so designated is strong; however, the relative degree of safety is not as high
as for issues designated A-1.
-28-
<PAGE>
PART B
ATLAS INSURANCE TRUST
-------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-------------------------------------
<PAGE>
ATLAS INSURANCE TRUST
794 DAVIS STREET
SAN LEANDRO, CALIFORNIA 94577
1-800-933-ATLAS (1-800-933-2852)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("Statement"), which may be amended
from time to time, concerning Atlas Insurance Trust (the "Trust") is not a
Prospectus for the Trust. This Statement supplements the Prospectus dated
, 1997 and investors should read it in conjunction with that Prospectus.
A copy of the Prospectus, which may be amended from time to time, is available
without charge by writing or calling the Trust at the address or telephone
number printed above.
The date of this Statement of Additional Information is , 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Certain Securities and Investment Policies.................. B-3
Fundamental Investment Restrictions........................................ B-26
Portfolio Turnover......................................................... B-28
Management of the Trust.................................................... B-30
Investment Management and Other Services................................... B-32
Execution of Portfolio Transactions........................................ B-33
Determination of Net Asset Value........................................... B-33
Taxes...................................................................... B-37
Additional Information..................................................... B-38
Investment Results......................................................... B-38
Financial Statements....................................................... B-41
Appendix--Industry Classifications......................................... B-42
</TABLE>
-B-2-
<PAGE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT POLICIES
The investment objectives and policies of the Atlas Balanced Growth
Portfolio and the underlying Atlas Funds are described in the Prospectus.
Supplemental information about those policies is set forth below. As set forth
in the Prospectus, the Portfolio invests in the underlying Atlas Funds. As a
result, shareholders of the Portfolio will be affected by the policies of such
funds in direct proportion to the amount of assets the Portfolio allocates to
the Funds pursuing such policies. Certain capitalized terms used in this
Statement are defined in the Prospectus.
Investment Risks.
The various risks associated with an investment in the Portfolio are
described in the Prospectus. Like other mutual funds that invest primarily in
equity securities, an investment in the Portfolio involves stock market risk
and to a lesser extent and interest rate risk. Specific risks encountered by
the underlying Atlas Funds are described in the following paragraphs.
With the exception of U.S. Government Securities, the debt securities the
Atlas Strategic Income Fund invests in will have one or more types of
investment risk: credit risk, interest rate risk or foreign exchange risk.
Credit risk relates to the ability of the issuer to meet interest or principal
payments or both as they become due. Generally, higher yielding bonds are
subject to credit risk to a greater extent than higher quality bonds. Interest
rate risk refers to the fluctuations in value of debt securities resulting
solely from the inverse relationship between price and yield of outstanding
debt securities. An increase in prevailing interest rates will generally
reduce the market value of debt securities, and a decline in interest rates
will tend to increase their value. In addition, debt securities with longer
maturities, which tend to produce higher yields, are subject to potentially
greater capital appreciation and depreciation than obligations with shorter
maturities. Fluctuations in the market value of debt securities subsequent to
their acquisition will not affect the interest payable on those securities,
and thus the cash income from such securities, but will be reflected in the
valuations of these securities used to compute the Fund's net asset values.
Foreign exchange rate risk refers to the change in value of the currency in
which a foreign security the Fund holds is denominated against the U.S.
dollar.
Special Risks--High Yield Securities. As stated in the Prospectus, the
corporate debt securities, in which the Atlas Strategic Income Fund will
principally invest may be in the lower rating categories. The Fund may invest
in securities rated as low as "C" by Moody's or "D" by Standard & Poor's. The
Fund's Subadviser will not rely solely on the ratings assigned by rating
services and may invest, without limitation in unrated securities which offer,
in the opinion of the Subadviser, comparable yields and risks as those rated
securities in which the Fund may invest.
-B-3-
<PAGE>
Risks of high yield securities may include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting
from changes in prevailing interest rates, (iii) subordination to the prior
claims of banks and other senior lenders, (iv) the operation of mandatory
sinking fund or call/redemption provisions during periods of declining
interest rates that could cause the Fund to be able to reinvest premature
redemption proceeds only in lower yielding portfolio securities, (v) the
possibility that earnings of the issuer may be insufficient to meet its debt
service, and (vi) the issuer's low creditworthiness and potential for
insolvency during periods of rising interest rates and economic downturn. As a
result of the limited liquidity of high yield securities, their prices have at
times experienced significant and rapid decline when a substantial number of
holders decided to sell. A decline is also likely in the high yield bond
market during an economic downturn. An economic downturn or an increase in
interest rates could severely disrupt the market for high yield bonds and
adversely affect the value of outstanding bonds and the ability of the issuers
to repay principal and interest.
Repurchase Agreements.
Each underlying Atlas Fund, except the U.S. Treasury Money Fund, may engage
in repurchase agreement transactions on portfolio securities with member banks
of the Federal Reserve System or with certain dealers listed on the Federal
Reserve Bank of New York's list of reporting dealers. Under the terms of a
typical repurchase agreement, a Fund would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Fund to resell,
the obligation at an agreed upon price and time, thereby determining the yield
during the Funds' holding period. This arrangement results in a fixed rate of
return that is not subject to market fluctuations during the Fund's holding
period. The value of the underlying securities will be monitored by the
Adviser or by a Fund's Subadviser to ensure that it at least equals at all
times the total amount of the repurchase obligation, including interest.
A Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert these rights. The
Adviser, or the Subadviser if applicable, acting under the supervision of the
Board of Directors of the Atlas Funds, reviews, on an ongoing basis, the
creditworthiness and the values of the collateral of those banks and dealers
with which a Fund enters into repurchase agreements to evaluate potential
risks.
A repurchase agreement is considered to be a loan collateralized by the
underlying securities under the 1940 Act.
-B-4-
<PAGE>
When-Issued and Delayed Delivery Transactions.
In order to secure yields or prices deemed advantageous at the time, all
underlying Atlas Funds may purchase or sell securities on a "when-issued" or
"delayed delivery" basis. The Funds will not enter into such a transaction for
the purpose of leverage. In such transactions delivery of the securities
occurs beyond the normal settlement periods (generally within two months but
not more than 120 days), but no payment or delivery is made by, and no
interest accrues to, the Fund prior to the actual delivery or payment by the
other party to the transaction. To the extent that assets of a Fund are not
invested prior to the settlement of a purchase of securities, the Fund will
earn no income; however, it is intended that each Fund will be fully invested
to the extent practicable. While when-issued or delayed delivery securities
may be sold prior to the settlement date, a Fund will purchase such securities
for the purpose of actually acquiring them unless a sale appears desirable for
investment reasons.
At the time an underlying Atlas Fund makes the commitment to purchase a
security on a when-issued or delayed delivery basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. The Funds do not believe that the net asset value or income of their
portfolios will be adversely affected by their purchase of securities on a
when-issued or delayed delivery basis.
Due to fluctuations in the value of securities purchased on a when-issued or
delayed delivery basis, the yields obtained on such securities may be higher
or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers. Similarly, the sale of
securities on a firm commitment basis can involve the risk that the prices
available in the market when delivery is made may actually be higher than
those obtained in the transaction itself.
When an underlying Atlas Fund engages in when-issued or delayed
transactions, it relies on the buyer or seller, as the case may be, to
consummate the transaction. Failure of the buyer or seller to do so may result
in the Fund losing the opportunity to obtain a price and yield considered to
be advantageous. A Fund will establish a segregated account consisting of
cash, U.S. Government Securities or other high-grade debt obligations in an
amount equal to the amount of its when-issued or firm commitment obligation.
Such segregated securities either will mature or, if necessary, be sold on or
before the settlement date.
When-issued transactions and forward commitments allow a Fund a technique to
use against anticipated changes in interest rates and prices. For instance, in
periods of rising interest rates and falling prices, a Fund might sell
securities in its portfolio on a forward commitment basis to attempt to limit
its exposure to anticipated falling prices. In periods of falling interest
rates and rising prices, a Fund might sell portfolio securities and purchase
the same or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.
-B-5-
<PAGE>
Dollar Reverse Repurchase and Reverse Dollar Reverse Repurchase Agreements.
The Atlas U.S. Government and Mortgage Securities Fund and the Atlas
Strategic Income Fund may engage in dollar reverse repurchase and reverse
dollar reverse repurchase agreements with respect to mortgage-backed
securities. These agreements involve the purchase or sale by the Fund of
securities that are substantially similar to those sold or purchased by the
Fund upon the initiation of the transaction, as the case may be. For this
purpose, "substantially similar" means that the securities are issued by the
same U.S. Government agency or instrumentality, have the same original term to
maturity, and have the same original rate of interest, but may be backed by
different pools of mortgage obligations. Dollar reverse repurchase agreements
are subject to the same risks and restrictions as described in the Prospectus
with respect to reverse repurchase agreements. Reverse dollar reverse
repurchase agreements are subject to the same risks and restrictions as
described in "Repurchase Agreements" above with respect to repurchase
agreements.
Options on Securities, Indices and Currencies (all Underlying Atlas Funds,
except the Atlas U.S. Treasury Money Fund, are eligible to use the following
options).
1. PURCHASING PUT AND CALL OPTIONS ON SECURITIES.
By purchasing a put option, a Fund obtains the right (but not the
obligation) to sell the option's underlying security to the writer of the
option at a fixed strike price. The option may give the Fund the right to sell
only on the option's expiration date, or may be exercisable at any time up to
and including that date. In return for this right, the Fund pays the writer
the current market price for the option (known as an option premium).
A Fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Fund exercises
the option, it completes the sale of the underlying security at the strike
price. The Fund may also terminate a put option position by effecting a
"closing transaction" (i.e. selling an option of the same series as the option
previously purchased) in the secondary market at its current price, if a
liquid secondary market exists.
Put options may be used by a Fund to hedge against losses on sales of
securities. If securities prices fall, the value of the put option would be
expected to rise and offset all or a portion of the Fund's resulting losses in
its securities holdings. However, option premiums tend to decrease over time
as the expiration date nears. Therefore, because of the cost of the option
premium and transaction costs, the Fund would expect to suffer a loss in the
put option if prices do not decline sufficiently to offset the deterioration
in the value of the option premium. At the same time, because the maximum the
Fund has at risk is option premium, purchasing put
-B-6-
<PAGE>
options offers potential profit from an increase in the value of the
securities hedged.
A Fund may also purchase options whether or not it holds such securities in
its portfolio. Buying a put option on an investment it does not own permits a
Fund either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not
exercised, the put will become worthless on its expiration date. In the event
of a decline in the securities market, the Fund could exercise or sell the put
at a profit to attempt to offset some or all of its loss on its portfolio
securities.
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying security at the option's strike
price. By purchasing a call option, a Fund would attempt to participate in
potential price increases of the underlying security, but with risk limited to
the cost of the option if securities prices fell. At the same time, the Fund
can expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option. The value of debt securities underlying calls
purchased by the Atlas Strategic Income Fund will not exceed the value of the
portion of the Fund's portfolio invested in cash or cash equivalents (i.e.,
securities with maturities of less than one year).
2. WRITING PUT AND CALL OPTIONS ON SECURITIES.
When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Fund assumes the obligation to pay the strike price for the option's
underlying security if the other party to the option chooses to exercise it.
As long as the obligation of the Fund as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through whom such option was
sold, requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may be
required to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its obligation as the
writer of the put. Prior to exercise, the Fund may seek to terminate its
position in a put option by effecting a closing purchase transaction with
respect to the option in the secondary market (i.e. buying an option of the
same series as the option previously written) at its current price. If the
secondary market is not liquid for an option the Fund has written, however,
the Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its obligation.
A Fund may write a put option as an alternative to purchasing a security. If
the security's price rises, the Fund would expect the put to
-B-7-
<PAGE>
lapse unexercised and to profit from a written put option, although its gain
would be limited to the amount of the premium it received. If the security's
price remains the same over time, it is likely that the Fund will also profit,
because it should be able to close out the option at a lower price. If the
security's price falls, the Fund would expect to suffer a loss. If the put is
exercised, the Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the market value
of the investment at that time. This loss should be less than the loss the
Fund would have experienced from purchasing the underlying security directly
(assuming the secondary market for the put option and the underlying security
are equally liquid) because the premium received for writing the option should
mitigate the effect of the price decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing covered call options generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, the Fund would seek to mitigate the effects of a price
decline. At the same time, the Fund would give up some ability to participate
in security price increases when writing call options.
3. SECURITIES INDEX OPTION TRANSACTIONS.
A Fund may buy or sell a securities index option at a fixed price. No
securities actually change hands in these transactions. Instead, changes in
the underlying index's value are settled in cash. The cash settlement amounts
are based on the difference between the index's current value and the value
contemplated by the contract. Most securities index options are based on
broad-based indices reflecting the prices of a broad variety of securities,
such as the Standard & Poor's 500 Composite Stock Price Index. Some index
options are based on narrower industry averages or market segments.
The Trust expects that an underlying Atlas Fund's options transaction will
normally involve broad-based indices, though it is not limited to these
indices. Since the value of index options depends primarily on the value of
their underlying indexes, the performance of broad-based indices will
generally reflect broad changes in securities prices. A Fund, however, can
invest in many different types of securities, including securities that are
not included in the underlying indices of the options available to the Fund.
In addition, a Fund's investments may be more or less heavily weighted in
securities of particular types of issuers, or securities of issuers in
particular industries, than the indexes underlying its index options
positions. Therefore, while a Fund's index options should provide exposure to
changes in value of its portfolio securities (or protection against declines
in their value in the case of hedging transactions), it is likely that the
price changes of the Fund's index options positions will not match the price
changes of the Fund's other investments.
-B-8-
<PAGE>
4. COMBINED OPTION POSITIONS.
A Fund may purchase and write options in combination to adjust the risk and
return characteristics of the overall position. For example, a Fund may
purchase a put option and write a call option on the same underlying security,
in order to construct a combined position with risk and return characteristics
similar to those of selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and buying a
call option at a lower price, in order to reduce the risk of the written call
option in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close than single options transactions.
Combined option positions will be subject to the same overall percentage
limitation as other option strategies.
5. RISKS OF TRANSACTIONS IN OPTIONS.
An option position may be closed out only on an exchange or market which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market will exist at any particular time for
options purchased or written by a Fund. For some options no secondary market
on an exchange may exist at all. In such event, it might not be possible to
effect closing transactions in particular options, with the result that a Fund
would have to exercise its options in order to realize any profit and would
incur brokerage commissions upon the exercise of call options and upon the
subsequent disposition of underlying securities acquired through the exercise
of call options or upon the purchase of underlying securities for the exercise
of put options. If a Fund as a covered call option writer is unable to effect
a closing purchase transaction in a secondary market, it will not be able to
sell the underlying security until the option expires or the Fund delivered
the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volumes; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or series of
options), in which event the secondary market on that exchange (or in the
class or series of options) would cease to exist, although outstanding options
on that exchange that had been issued by a clearing corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms. There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of any of the clearing corporations inadequate, and thereby
-B-9-
<PAGE>
result in the institution by an exchange of special procedures which may
interfere with the timely execution of customers' orders.
In addition, options on indices are subject to certain risks that are not
present with other options. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
instrument, whether a Fund will realize a gain or loss on the purchase or sale
of an option on an index depends upon movements in the level of prices in the
market generally or in an industry or market segment rather than movements in
the price of a particular instrument. In addition, index prices may be
distorted or interrupted if trading of certain instruments included in the
index is interrupted. If this occurred, a Fund would not be able to close out
options which had been purchased or written by it and, if restrictions on
exercise were imposed, may be unable to exercise an option being held, which
could result in substantial losses to a Fund. However, it is the Funds' policy
to purchase or write options only on indices which include a sufficient number
of securities so that the likelihood of a trading halt in the index is
minimized.
The Funds may buy and sell over-the-counter puts and calls on securities and
as well as listed options. Unlike listed option positions, positions in over-
the-counter options may be closed out only with the other party to the options
transaction. Such options transactions are subject to the additional risks
that a Fund may be unable to close out a transaction with the other party when
it wishes to do so, and that the other party to the transaction may default
without the protection against default afforded by exchange clearing
corporations with respect to listed options. The eligible Funds will enter
into unlisted option transactions only with securities dealers which the
Adviser or the Subadviser believes to be of high credit standing and to
maintain a liquid market for such options. Under certain conditions, the
premiums a Fund pays for unlisted options and the value of securities used to
cover such options written by the Fund are considered to be invested in
illiquid assets for purposes of the investment restriction applicable to
illiquid investments.
Futures Contracts and Options on Futures Contracts.
All underlying Atlas Funds, except the U.S. Treasury Money Fund, are
eligible to use the following transactions:
1. INTEREST RATE FUTURES TRANSACTIONS.
The underlying Atlas Funds may purchase or sell interest rate futures
contracts in hedging transactions. When a Fund purchases a futures contract,
it agrees to purchase the underlying instrument at a specified future date and
price. When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date and price.
No consideration is paid or received by a Fund upon the purchase or sale of
a futures contract. Initially, a Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately
-B-10-
<PAGE>
5% of the contract amount (this amount is subject to change by the board of
trade on which the contract is traded and members of such board of trade may
charge a higher amount). This amount is known as "initial margin" and is
returned to a Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied by the Fund.
Subsequent payments, known as "variation margin," to and from the Fund or
the broker, as the case may be, must be made daily as the price of securities
underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable. These daily payments
to account for valuation changes are a process known as "marking-to-market."
If a Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it may be disadvantageous to do
so. The party that has a gain may be entitled to receive all or a part of this
amount. At any time prior to the expiration of a futures contract, a Fund may
elect to close the position by taking an opposite position, which will operate
to terminate the Fund's existing position in the contract.
Initial and variation margin payments are similar to good faith deposits or
performance bonds, unlike margin extended by a securities broker, and do not
constitute purchasing securities on margin for purposes of the Fund's
investment limitation. In the event of the bankruptcy of a futures commission
merchant ("FCM") that holds margin on behalf of the Fund, the Fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers. The Adviser, or Subadviser if
applicable, will attempt to minimize this risk by careful monitoring of the
creditworthiness of the FCMs with which the Fund does business.
The purpose of the acquisition or sale of a futures contract by an
underlying Fund is to protect that Fund from fluctuations in rates on
securities without actually buying or selling the securities. The value of
portfolio securities will exceed the value of the futures contracts sold by
the Fund, and an increase in the value of the futures contracts could only
mitigate--but not totally offset--the decline in the value of the portfolio.
Interest rate futures contracts are currently traded on the Chicago Board of
Trade and the International Monetary Market of the Chicago Mercantile Exchange
(CME) and the New York Futures Exchange. Among the securities on which
interest rate futures contracts are currently based are long-term U.S.
Treasury bonds, U.S. Treasury notes, GNMA pass-through securities, three-month
U.S. Treasury bills, municipal bond futures and ninety-day commercial paper.
2. SECURITIES INDEX FUTURES CONTRACTS.
When a Fund purchases a securities index futures contract, it agrees to
purchase the underlying index at a specified future date and price. When a
Fund sells a securities index futures contract, it agrees to sell the
underlying index at a specified future date and price.
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The majority of index futures are closed out by entering into an offsetting
purchase or sale transaction in the same contract on the exchange where they
are traded, rather than being held for the life of the contract. Futures
contracts are closed out at their current prices, which may result in a gain
or loss. If a Fund holds an index futures contract until the delivery date, it
will pay or receive a cash settlement amount based on the difference between
the index's closing price and the settlement price agreed upon when the
contract was initiated.
A Fund may purchase securities index futures contracts in an attempt to
remain fully invested in the securities market. For example, if a Fund had
cash and short-term securities on hand that it wished to invest in common
stocks, but at the same time it wished to maintain a highly liquid position in
order to be prepared to meet redemption requests or other obligations, it
could purchase a stock index futures contract in order to participate in
changes in stock prices. A Fund may also purchase futures contracts as an
alternative to purchasing actual securities. For example, if a Fund intended
to purchase stocks but had not yet done so, it could purchase a stock index
futures contract in order to lock in current stock prices while deciding on
particular investments. This strategy is sometimes known as an anticipatory
hedge. In these strategies the Fund would use futures contracts to attempt to
achieve an overall return similar to the return from the stocks included in
the underlying index, while taking advantage of potentially greater liquidity
that futures contracts may offer. Although the Fund would hold cash and liquid
debt securities in a segregated account with a value sufficient to cover its
open futures obligations, the segregated assets would be available to the Fund
immediately upon closing out the futures position, while settlement of
securities transactions can take several days.
When a Fund wishes to sell securities, it may sell securities index futures
contracts to hedge against securities market declines until the sale can be
completed. For example, if a Fund anticipated a decline in common stock prices
at a time when it anticipated selling common stocks, it could sell a futures
index contract in order to lock in current market prices. If stock prices
subsequently fell, the futures contract's value would be expected to rise and
offset all or a portion of the anticipated loss in the common stocks the Fund
had hedged in anticipation of selling them. The success of this type of
strategy depends to a great extent on the degree of correlation between the
index futures contract and the securities hedged. Of course, if prices
subsequently rose, the futures contract's value could be expected to fall and
offset all or a portion of the benefit to the Fund.
3. OPTIONS ON FUTURES CONTRACTS.
An option on a futures contract is an agreement to buy or sell the futures
contract. Exercise of the option results in ownership of a position in the
futures contract. Options on futures contracts may be purchased and sold by a
Fund in the same manner as options on securities. Options on futures contracts
may also be written by a Fund in the same manner as
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securities options, except that the writer must make margin payments to a
futures commission merchant ("FCM") as described above with respect to futures
contracts. The holder or writer of an option may terminate his position by
selling or purchasing an option of the same series. There is no guarantee that
such closing transactions can be effected.
4. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND OPTIONS ON FUTURES.
There are risks in connection with the use of futures contracts as a hedging
device. Successful use of futures contracts by a Fund is subject to the
ability of the Adviser, or Subadviser if applicable, to forecast movements in
the direction of interest rates. These forecasts may involve skills and
techniques that may be different from those involved in the management of the
Funds. In addition, even a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected trends in interest rates.
As noted above, price changes of the Fund's futures and options on futures
positions may not be well correlated with price changes of its other
investments because of differences between the underlying indices and the
types of securities the Fund invests in. For example, if the Fund sold a
broad-based index futures contract to hedge against a stock market decline
while the Fund completed a sale of specific securities in its portfolio, it is
possible that the price of the securities could move differently from the
broad market average represented by the index futures contract, resulting in
an imperfect hedge and potentially in losses to the Fund.
Index futures prices can also diverge from the prices of their underlying
indexes, even if the underlying instruments match the Fund's investments well.
Futures prices are affected by such factors as current and anticipated short-
term interest rates, changes in volatility of the underlying index, and the
time remaining until expiration of the contract, which may not affect security
prices the same way. Imperfect correlation between the Fund's investments and
its futures positions may also result from differing levels of demand in the
futures markets and the securities markets, from structural differences in how
futures and securities are traded, or from imposition of daily price
fluctuation limits for futures contracts. The Fund may purchase or sell
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in order to attempt to compensate for
differences in historical volatility between the futures contract and the
securities, although this may not be successful in all cases. If price changes
in the Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce anticipated gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of up to seven days for
some types of securities, the futures markets can provide liquidity
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superior to that of the securities markets in many cases. Nevertheless, there
is no assurance a liquid secondary market will exist for any particular
futures contract at any particular time. In addition, futures exchanges may
establish daily price fluctuation limits for futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit in
a given day. On volatile trading days when the price fluctuation limit is
reached, it may be impossible for the Fund to enter into new positions or
close out existing positions. Trading in index futures can also be halted if
trading in the underlying index stocks is halted. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable futures
positions, and potentially could require the Fund to continue to hold a
futures position until the delivery date, regardless of potential losses. If
the Fund must continue to hold a futures position, its access to other assets
held to cover the position could also be impaired.
Options on futures are subject to risks similar to those described above
with respect to futures contracts, including the risk of imperfect correlation
between the option and a Fund's other investments and the risk that there
might not be a liquid secondary market for the option. In the case of options
on futures contracts, there is also a risk of imperfect correlation between
the option and the underlying futures contract. Options on futures are also
subject to the risks of an illiquid secondary market, particularly in
strategies involving writing options which the Fund cannot terminate by
exercise. In general, options with strike prices close to their underlying
securities' current value will have the highest trading volume, while options
with strike prices further away may be less liquid. The liquidity of options
on futures may also be affected if exchanges impose trading halts,
particularly when markets are volatile.
5. LIMITATIONS ON TRANSACTIONS IN FUTURES AND OPTIONS ON FUTURES.
Pursuant to Section 4.5 of the regulations under the Commodity Exchange Act,
the eligible underlying Atlas Funds are subject to the following limitations
in order that they not be deemed a "commodity pool operator":
(a) The Funds will use futures contracts and related options solely for
bona fide hedging purposes within the meaning of Commodity Futures Trading
Commission regulations; provided that a Fund may hold long positions in
futures contracts and related options that do not fall within the
definition of bona fide hedging transactions in an amount not in excess of
the limitation in paragraph (b); and
(b) The Funds will not enter into any futures contract or option on a
futures contract if, as a result, the sum of initial margin deposits on
futures contracts and related options and premiums paid for options on
futures contracts a Fund has purchased, after taking into account
unrealized profits and losses on such contracts, would exceed 5% of the
Fund's total assets.
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In addition, the Funds do not intend to enter into futures contracts or
options on a futures contract that are not traded on exchanges or boards of
trade.
These limitations on the underlying Atlas Funds' investments in futures
contracts and options, and the underlying Funds' policies regarding futures
contracts and options discussed elsewhere in this Statement of Additional
Information, are not fundamental policies and may be changed as permitted by
the appropriate regulatory agencies.
Various exchanges and regulatory authorities have undertaken reviews of
options and futures trading in light of market volatility. Among the possible
actions that have been presented are proposals to adopt new or more stringent
daily price fluctuation limits for futures or options transactions, and
proposals to increase the margin requirements for various types of strategies.
It is impossible to predict what actions, if any, will result from these
reviews at this time.
Asset Coverage for Futures and Options Positions.
An underlying Atlas Fund eligible to participate in futures and options will
not use leverage in its options and futures strategies. In the case of
strategies entered into as a hedge, the Fund will hold securities or other
options or futures positions whose values are expected to offset its
obligations under the hedge strategies. A Fund will not enter into an option
or futures position that exposes the Fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or other
options or futures contracts or (ii) cash, receivables and other liquid
securities with a value sufficient to cover its potential obligations.
An underlying Atlas Fund will comply with guidelines established by the
Securities and Exchange Commission with respect to coverage of options and
futures strategies by mutual funds and, if the guidelines so require, will set
aside cash and liquid securities in a segregated account with its custodian
bank in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is open, unless they are replaced
with similar securities. As a result, there is a possibility that segregation
of a large percentage of the Fund's assets could impede portfolio management
or the Fund's ability to meet redemption requests or other current
obligations.
Interest Rate Swaps.
The Atlas U.S. Government and Mortgage Securities Fund and the Atlas
Strategic Income Fund may engage in interest rate swaps. As indicated in the
Prospectus, an interest rate swap is a contract between two entities
("counterparties") to exchange interest payments (of the same currency)
between the parties. In the most common interest rate swap structure, one
counterparty agrees to make floating rate payments to the other counterparty,
which in turn makes fixed rate payments to the first counterparty. Interest
payments are determined by applying the
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respective interest rates to an agreed upon amount, referred to as the
"notional principal amount." In many such transactions, the floating rate
payments are tied to the London Interbank Offered Rate ("LIBOR"), which is the
offered rate for short-term eurodollar deposits between major international
banks. As there is no exchange of principal amounts, an interest rate swap is
not an investment or a borrowing.
Swap Options.
The Atlas U.S. Government and Mortgage Securities Fund and the Atlas
Strategic Income Fund may invest in swap options. A swap option is a contract
that gives a counterparty the right (but not the obligation) to enter into a
new swap agreement or to shorten, extend, cancel or otherwise change an
existing swap agreement, at some designated future time on specified terms. It
is different from a forward swap, which is a commitment to enter into a swap
that starts at some future date with specified rates. A swap option may be
structured European-style (exercisable on the pre-specified date) or American-
style (exercisable during a designated period). The buyer of the right to pay
fixed rate payments pursuant to a swap option is said to own a put. The buyer
of the right to receive fixed rate payments pursuant to a swap option is said
to own a call.
Caps and Floors.
The Atlas U.S. Government and Mortgage Securities Fund and the Atlas
Strategic Income Fund may also purchase or sell interest rate caps and floors.
An interest rate cap is a right to receive periodic cash payments over the
life of the cap equal to the difference between any higher actual level of
interest rates in the future and a specified strike (or "cap") level. The cap
buyer purchases protection for a floating rate move above the strike. An
interest rate floor is the right to receive periodic cash payments over the
life of the floor equal to the difference between any lower actual level of
interest rates in the future and a specified strike (or "floor") level. The
floor buyer purchases protection for a floating rate move below the strike.
The strikes are typically based on the three-month LIBOR (although other
indices are available) and are measured quarterly.
Risks Associated with Swaps.
The risks associated with interest rate swaps and interest rate caps and
floors are similar to those described previously with respect to over-the-
counter options. In connection with such transactions, the underlying Atlas
Fund involved relies on the other party to the transaction to perform its
obligations pursuant to the underlying agreement. If there were a default by
the other party to the transaction, the underlying Atlas Fund would have
contractual remedies pursuant to the agreement, but could incur delays in
obtaining the expected benefit of the transaction or loss of such benefit. In
the event of insolvency of the other party, the Fund might be unable to obtain
its expected benefit. In addition, while a Fund will seek to enter into such
transactions only with parties which are capable of entering into closing
transactions with the Fund, there can be no assurance
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that a Fund will be able to close out such a transaction with the other party,
or obtain an offsetting position with any other party, at any time prior to
the end of the term of the underlying agreement. This may impair a Fund's
ability to enter into other transactions at a time when doing so might be
advantageous.
Foreign Securities.
Each underlying Atlas Fund (other than the U.S. Treasury Money Fund and the
U.S. Government and Mortgage Securities Fund) may invest varying amounts of
its assets in foreign securities which offer potential benefits not available
from investing solely in securities of domestic issuers, such as the
opportunity to invest in the securities of foreign issuers that appear to
offer growth potential, or to invest in foreign countries with economic
policies or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by investing in securities in foreign stock
markets that do not move in a manner parallel to U.S. markets. In buying
foreign securities, each Fund may convert U.S. dollars into foreign currency,
but only in connection with currency futures and forward contracts and to
effect securities transactions on foreign securities exchanges and not to hold
such currency as an investment.
Because an underlying Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and its
income available for distribution. In addition, although a portion of a Fund's
investment income may be received or realized in foreign currencies, the Fund
will be required to compute and distribute its income in U.S. dollars, and
absorb the cost of currency fluctuations. Subsequent foreign currency losses
may result in a Fund having previously distributed more income in a particular
period than was available from investment income, which could result in a
return of capital to shareholders. A Fund's portfolio of foreign securities
may include those of a number of foreign countries or, depending upon market
conditions, those of a single country.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in domestic securities
of issuers traded in the U.S.: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to changes in
currency rates and control regulations (e.g., currency blockage); transaction
charges for currency exchange; lack of public information about foreign
issuers; lack of uniform accounting, auditing and financial reporting
standards comparable to those applicable to U.S. issuers; less volume on
foreign exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of foreign
issuers, stock exchange and brokers than in the U.S.; greater difficulties in
commencing lawsuits against foreign issuers; higher brokerage commission rates
and custodial costs than in the U.S.; increased risks of delays in settlement
of portfolio transactions or loss of certificates of portfolio
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securities; possibilities in some countries of expropriation or
nationalization of assets, confiscatory taxation, political, financial or
social instability or adverse diplomatic developments; and differences between
the U.S. economy and foreign economies. In the past, U.S. Government policies
have discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such restrictions may
be re-imposed.
The underlying Atlas Funds may invest in foreign securities that impose
restrictions on transfer within the United States or to United States persons.
Although securities subject to such transfer restrictions may be marketable
abroad, they may be less liquid than foreign securities of the same class that
are not subject to such restrictions. Each Fund accordingly treats these
foreign securities as subject to the 10% overall limitation on investment in
illiquid securities.
Debt Securities of Foreign Governments and Companies.
As stated in the Prospectus, the Atlas Strategic Income Fund may invest in
debt obligations and other securities (which may be denominated in U.S.
dollars or non-U.S. currencies) issued or guaranteed by foreign corporations,
certain "supranational entities" (described below) and foreign governments or
their agencies or instrumentalities, and in debt obligations and other
securities issued by U.S. corporations denominated in non-U.S. currencies. The
types of foreign debt obligations and other securities in which the Fund may
invest are the same types of debt obligations identified under "Debt
Securities of U.S. Companies," below.
The percentage of the Strategic Income Fund's assets that will be allocated
to foreign securities will vary depending on the relative yields of foreign
and U.S. securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries and
the relationship of such countries' currency to the U.S. dollar. These factors
are judged on the basis of fundamental economic criteria (e.g., relative
inflation levels and trends, growth rate forecasts, balance of payments
status, and economic policies) as well as technical and political data.
The Strategic Income Fund may invest in U.S. dollar-denominated foreign
securities referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount bonds and
are generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations that have the same maturity as the Brady
Bonds. However, the Fund may also invest in uncollateralized Brady Bonds.
Brady Bonds are generally viewed as having three or four valuation components:
(i) any collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of principal at maturity
(these uncollateralized amounts constitute what is referred to as the
"residual risk" of such bonds). In the event of a default with respect to
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collateralized Brady Bonds as a result of which the payment obligations of the
issuer are accelerated, the zero coupon U.S. Treasury securities held as
collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The collateral
will be held by the collateral agent to the scheduled maturity of the
defaulted Brady Bonds, which will continue to be outstanding, at which time
the face amount of the collateral will equal the principal payments which
would have then been due on the Brady Bonds in the normal course. In addition,
in light of the residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, investments in Brady Bonds
are to be viewed as speculative.
The obligations of foreign governmental entities may or may not be supported
by the full faith and credit of a foreign government. Obligations of
"supranational entities" include those of international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and of international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the "World Bank"), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American Development Bank.
The governmental members, or "stockholders," usually make initial capital
contributions to the supranational entity and in many cases are committed to
make additional capital contributions if the supranational entity is unable to
repay its borrowings. Each supranational entity's lending activities are
limited to a percentage of its total capital (including "callable capital"
contributed by members at the entity's call), reserves and net income. There
is no assurance that foreign governments will be able or willing to honor
their commitments.
Foreign Currency Exchange Transactions.
Since investments in companies whose principal business activities are
located outside of the United States will frequently involve currencies of
foreign countries, and since a portion of the assets of each underlying Atlas
Fund (other than the U.S. Treasury Money Fund and the U.S. Government and
Mortgage Securities Fund) may temporarily be held in bank deposits in foreign
currencies during the completion of investment programs, the value of the
assets of a Fund as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations. Although each Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. A Fund may conduct its foreign currency
exchange transactions on a spot (i.e. cash) basis at the spot rate prevailing
in the foreign currency exchange market or through entering into contracts to
purchase or sell foreign currencies at a future date (i.e., a "forward foreign
currency" contract or "forward" contract). It will convert currency on a spot
basis from time to time, and investors should be aware of the costs of
currency conversion. Although foreign
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exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer. The
underlying Funds do not intend to speculate in foreign currency exchange rates
or forward contracts.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted
directly between currency traders, usually large commercial banks, and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.
When an underlying Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to "lock in" the
U.S. dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign
currency involved in the underlying security transaction, the Fund will be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.
When the Adviser, or a Fund's Subadviser, believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
U.S. dollars, the amount of foreign currency approximating the value of some
or all of a Fund's securities denominated in such foreign currency. The
precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of short-term
hedging strategy is highly uncertain. A Fund will not enter into such forward
contracts or maintain a net exposure to such contracts where the consummation
of the contracts would obligate such Fund to deliver an amount of foreign
currency in excess of the value of the Fund's securities or other assets
denominated in that currency. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated in the longer term
investment decisions made with regard to overall diversification strategies.
However, the Company believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests
of a Fund will be served.
A Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the security and make delivery of the foreign currency, or it may
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retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount
of the foreign currency.
If a Fund retains the security and engages in an offsetting transaction, the
Fund will incur a gain or loss to the extent that there has been movement in
forward contract prices. If a Fund engages in an offsetting transaction, it
may subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between a Fund
entering into a forward contract for the sale of the foreign currency and the
date it enters into an offsetting contract for the purchase of the foreign
currency, the Fund will realize a gain to the extent the price of the currency
it has agreed to sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Fund will suffer a loss to the
extent that the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.
It is impossible to forecast with precision the market value of securities
at the expiration of the contract. Accordingly, it may be necessary for a Fund
to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision
is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the security if its market value exceeds
the amount of foreign currency the Fund is obligated to deliver.
Each underlying Atlas Fund may also enter into a forward contract to sell a
foreign currency denominated in a currency other than that in which the
underlying security is denominated. This is done in the expectation that there
is a greater correlation between the foreign currency of the forward contract
and the foreign currency of the underlying investment than between the U.S.
dollar and the foreign currency of the underlying investment. This technique
is referred to as "cross hedging." The success of cross hedging is dependent
on many factors, including the ability of the Subadviser to correctly identify
and monitor the correlation between foreign currencies and the U.S. dollar. To
the extent that the correlation is not identical, the Fund may experience
losses or gains on both the underlying security and the cross currency hedge.
Each underlying Atlas Fund's dealings in forward foreign currency contracts
will be limited to the transactions described herein. Of course, a Fund is not
required to enter into such transactions with regard to its foreign currency
denominated securities and will not do so unless deemed appropriate by the
Adviser or Subadviser. It also should be realized that this method of
protecting the value of the Fund's securities against a decline in the value
of a currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange
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which one can achieve at some future point in time. Additionally, although
such contracts tend to minimize the risk of loss due to a decline in the value
of the hedged currency, they tend to limit any potential gain which might
result should the value of such currency increase.
The cost to a Fund of engaging in forward contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because forward contracts are usually entered into
on a principal basis, no fees or commissions are involved. Because such
contracts are not traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a forward contract.
Loans of Portfolio Securities.
Each underlying Atlas Fund may lend its portfolio securities, subject to the
restrictions stated in the Prospectus, to attempt to increase a Fund's income
to distribute to shareholders or for liquidity purposes. Under applicable
regulatory requirements (which are subject to change), the loan collateral
must, on each business day, at least equal the market value of the loaned
securities and must consist of cash, bank letters of credit or U.S. Government
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter. The Fund receives an amount equal to the dividends or interest on
loaned securities and also receives one or more of (a) negotiated loan fees,
(b) interest on securities used as collateral or (c) interest on short-term
debt securities purchased with such loan collateral; either type of interest
may be shared with the borrower. The Fund may also pay reasonable finder's,
custodian and administrative fees and will not lend its portfolio securities
to any officer, director, employee or affiliate of the Atlas Funds, the
Adviser or the Subadviser. The terms of each Fund's loans must meet applicable
tests under the Internal Revenue Code and permit the Fund to reacquire loaned
securities on five business days' notice or in time to vote on any important
matter.
Borrowing.
From time to time, the Atlas Global Growth Fund, Atlas Strategic Income
Fund, the Atlas Strategic Growth Fund and the Atlas Emerging Growth Fund may
each increase its ownership of securities by borrowing from banks on an
unsecured basis and investing the borrowed funds, subject to the restrictions
stated in the Prospectus. Any such borrowing will be made only from banks, and
pursuant to the requirements of the 1940 Act, will be made only to the extent
that the value of the Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings including the proposed
borrowing. If the value of the Fund's assets so computed should fail to meet
the 300% asset coverage requirement, the Fund is required within three days to
reduce its bank debt to the extent necessary to meet such requirements and may
have to sell a portion of its investments at a time when independent
investment
-B-22-
<PAGE>
judgment would not dictate such sale. Interest on money borrowed is an expense
the Fund would not otherwise incur, so that it may have little or no net
investment income during periods of substantial borrowings. Borrowing for
investment increases both investment opportunity and risk. Since substantially
all of a Fund's assets fluctuate in value whereas borrowing obligations are
fixed, when the Fund has outstanding borrowings, its net asset value per share
will tend to increase and decrease more when its portfolio assets fluctuate in
value than would otherwise be the case.
Illiquid and Restricted Securities.
The expenses of registration of restricted securities that are illiquid
(excluding securities that may be resold by a Fund pursuant to Rule 144A as
explained in the Prospectus) may be negotiated by a Fund at the time such
securities are purchased by the Fund. When such registration is required
before such securities may be sold, a considerable period may elapse between a
decision to sell the securities and the time when the Fund would be permitted
to sell them. Thus, the Fund would bear the risks of any downward price
fluctuation during that period. A Stock Fund also may acquire securities
through private placements. Such securities may have contractual restrictions
on their resale, which might prevent their resale by the Fund at a time when
such sale would be desirable and might lower the amount realizable upon the
sale of such securities.
Zero Coupon Securities.
The underlying Atlas Funds (other than the U.S. Treasury Money Fund) may
invest in zero coupon securities issued by the U.S. Treasury or by
corporations. Zero coupon Treasury securities are: (i) U.S. Treasury notes and
bonds which have been stripped of their unmatured interest coupons and
receipts; or (ii) certificates representing interests in such stripped debt
obligations or coupons. Corporate and municipal zero coupon securities are:
(i) notes or debentures that do not pay current interest and are issued at
substantial discounts from par value, or (ii) notes or debenture that pay no
current interest until a stated date one or more years in the future, after
which the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance. Such zero
coupon securities, in addition to being subject to the risks identified below
are subject to the risk of the issuer's failure to pay interest and repay
principal in accordance with the terms of the obligation.
Because a zero coupon security pays no interest to its holder during its
life or for a substantial period of time, it usually trades at a deep discount
from its face or par value and will be subject to a greater fluctuations in
market value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. Because a
Fund accrues taxable income from these securities without receiving cash, such
Fund may be required to sell portfolio securities in order to pay a dividend
depending upon the proportion of shareholders who
-B-23-
<PAGE>
elect to receive dividends in cash rather than reinvesting dividends in
additional shares of the Fund. A Fund might also sell portfolio securities to
maintain portfolio liquidity. In either case, cash distributed or held by a
Fund and not reinvested in Fund shares will hinder the Fund in seeking current
income.
Debt Securities of U.S. Companies.
The Atlas Strategic Income Fund's investments in fixed-income securities
issued by domestic companies and other issuers may include debt obligations
(bonds, debentures, notes, mortgage-backed and asset-backed securities and
CMOs) together with preferred stocks.
The risks attendant to investing in high-yielding, lower-rated bonds are
described above. If a sinking fund or callable bond held by the Fund is
selling at a premium (or discount) and the issuer exercises the call or makes
a mandatory sinking fund payment, the Fund would realize a loss (or gain) in
market value; the income from the reinvestment of the proceeds would be
determined by current market conditions, and investment of that income may
occur at times when rates are generally lower than those on the called bond.
Preferred Stocks.
The underlying Atlas Stock Funds may invest in preferred stocks. Preferred
stock, unlike common stock, offers a stated dividend rate payable from the
corporation's earnings. Such preferred stock dividends may be cumulative or
non-cumulative, participating, or auction rate. If interest rates rise, the
fixed dividend on preferred stocks may be less attractive, causing the price
of preferred stocks to decline. Preferred stock may have mandatory sinking
fund provisions, as well as call/redemption provisions prior to maturity, a
negative feature when interest rates decline. Dividends on some preferred
stock may be "cumulative," requiring all or a portion of prior unpaid
dividends to be paid. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that
it may be entitled to a dividend exceeding the stated dividend in certain
cases. The rights of preferred stocks on distribution of a corporation's
assets in the event of a liquidation are generally subordinate to the rights
associated with a corporation's debt securities.
Participation Interests.
The Atlas Strategic Income Fund may invest in participation interests,
subject to the limitation, described in "Illiquid and Restricted Securities"
in the Prospectus, on investments by the Fund in illiquid investments.
Participation interests represent an undivided interest in or assignment of a
loan made by the issuing financial institution. No more than 5% of the Fund's
net assets can be invested in participation interests of the same issuing
bank. Participation interests are primarily dependent upon the financial
strength of the borrowing corporation, which is obligated to make
-B-24-
<PAGE>
payments of principal and interest on the loan, and there is a risk that such
borrowers may have difficulty making payments. Such borrowers may have senior
securities as low as "C" by Moody's or "D" by Standard & Poor's. In the event
the borrower fails to pay scheduled interest or principal payments, the Fund
could experience a reduction in its income and might experience a decline in
the net asset value of its shares. In the event of a failure by the financial
institution to perform its obligation in connection with the participation
agreement, the Fund might incur certain costs and delays in realizing payment
or may suffer a loss of principal and/or interest. The Fund's Subadviser has
set certain creditworthiness standards for issuers of loan participation and
monitors their creditworthiness. These same standards apply to participation
interests in loans to foreign companies.
Asset-Backed Securities.
These securities, issued by trusts and special purpose corporations, are
backed by pools of assets, primarily automobile and credit-card receivables
and home equity loans, which pass through the payments on the underlying
obligations to the security holders (less servicing fees paid to the
originator or fees for any credit enhancement). The value of an asset-backed
security is affected by changes in the market's perception of the asset
backing the security, the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution providing any
credit enhancement, and is also affected if any credit enhancement has been
exhausted. Payments of principal and interest passed through to holders of
asset-backed securities are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee by
another entity or having a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally applies to
only a fraction of the asset-backed security's par value until exhausted. If
the credit enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are not made
with respect to the underlying loans, the Fund may experience losses or delays
in receiving payment. The risks of investing in asset-backed securities are
ultimately dependent upon payment of consumer loans by the individual
borrowers. As a purchaser of an asset-backed security, the Fund would
generally have no recourse to the entity that originated the loans in the
event of default by a borrower. The underlying loans are subject to
prepayments, which shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as described above
for prepayments of a pool of mortgage loans and underlying mortgage-backed
securities. However, asset-backed securities do not have the benefit of the
same security interest in the underlying collateral as do mortgage-backed
securities.
Short Sales Against-the-Box.
In such short sales, while the short position is open, the underlying Atlas
Stock Funds must own an equal amount of such securities, or by
-B-25-
<PAGE>
virtue of ownership of securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold short. Short
sales against-the-box may be made to defer, for Federal income tax purposes,
recognition of gain or loss on the sale of securities "in the box" until the
short position is closed out.
Floating Rate and Variable Rate Obligations and Participation Interests.
The underlying Atlas Funds may purchase floating rate and variable rate
obligations, including participation interests therein. Floating rate or
variable rate obligations provide that the rate of interest is set as a
specific percentage of a designated base rate (such as the prime rate at a
major commercial bank) or is reset on a regular basis by a bank or investment
banking firm to a market rate. At specified times, the owner can demand
payment of the obligation at par plus accrued interest. Variable rate
obligations provide for a specified periodic adjustment in the interest rate,
while floating rate obligations have an interest rate which changes whenever
there is a change in the external interest rate.
Frequently banks provide letters of credit or other credit support or
liquidity arrangements to secure these obligations. The quality of the
underlying creditor or of the bank, as the case may be, must, as determined by
the Investment Adviser, be equivalent to the quality standard prescribed for
the Funds. The maturity of floating and variable rate obligations is equal to
the period during which a particular rate is in effect, or, if longer, the
period required to demand payment of the obligation.
The Funds may invest in participation interests purchased from banks in
floating rate or variable rate obligations owned by banks. A participation
interest gives the purchaser an undivided interest in the obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the obligation, and provides a demand repayment feature. Each
participation is backed by an irrevocable letter of credit or guarantee of a
bank (which may be the bank issuing the participation interest or another
bank). A Fund holding a participation interest has the right to sell the
instrument back to the issuing bank or draw on the letter of credit on demand
for all or any part of the Fund's participation interest in the underlying
obligation, plus accrued interest.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Portfolio has adopted the following fundamental investment policies and
investment restrictions in addition to the policies and restrictions discussed
in the Prospectus. The policies and restrictions listed below cannot be
changed without approval by the holders of a "majority of the outstanding
voting securities" of the Portfolio (which is defined in the Investment
Company Act of 1940 ["1940 Act"]) to mean the lesser of (i) 67% or more of the
outstanding voting securities of a Portfolio present at a meeting, if the
holders of more than 50% of the outstanding voting
-B-26-
<PAGE>
securities are present in person or by proxy, or (ii) more than 50% of the
outstanding voting securities. These restrictions provide that the Portfolio
may not:
(1) Purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities, or
investments in the underlying Atlas Funds or other registered investment
companies) if with respect to 75% of the Portfolio's assets, as a result,
more than 5% of the value of such assets of the Portfolio would be
invested in the securities of any one issuer or the Portfolio's ownership
would be more than 10% of the outstanding voting securities of such
issuer.
(2) Purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase
and as a result thereof, the value of the Portfolio's investments in that
industry would exceed 25% of the current value of the Portfolio's total
assets, provided that there is no limitation with respect to investments
in (i) other investment companies; (ii) obligations of the United States
Government, its agencies or instrumentalities; and (iii) the obligations
of domestic banks. For purposes of this policy, the Portfolio has adopted
the industry classification set forth in the Appendix to this Statement of
Additional Information which may be amended from time to time without
shareholder approval.
(3) Invest in companies for the purpose of exercising control or
management.
(4) Purchase or sell real estate or real estate limited partnership
interests; provided that the Portfolio may invest in an underlying Atlas
Fund that invests in readily marketable securities secured by real estate
or interests therein or issued by companies that invest in real estate or
interests therein.
(5) Purchase or sell commodities or commodities contracts or interests
in oil, gas or other mineral exploration or development programs,
provided, however, that the Portfolio may invest in an underlying Atlas
Fund that may purchase and sell interest rate futures contracts and
related options, and may purchase and sell stock index futures contracts
and related options and purchase or sell forward foreign currency
contracts.
(6) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets; provided that this restriction shall not
apply to the transfer of securities in connection with a permissible
borrowing. For purposes of this restriction, (a) the deposit of assets in
escrow or a segregated account in connection with the writing of covered
put or call options, the purchase of securities on a when-issued or
delayed-delivery basis, or the undertaking of another investment technique
utilizing a cover or segregated account arrangement by an underlying Atlas
Fund, and (b) collateral arrangements with respect to (i) the purchase and
sale of options on securities and options on indexes and (ii) initial or
variation margin for
-B-27-
<PAGE>
futures contracts by an underlying Atlas Fund will not be deemed to be
pledges of the Portfolio's assets.
(7) Purchase securities on margin or effect short sales, except that the
Portfolio may invest in an underlying Atlas Fund that may obtain such
short-term credits as may be necessary for the clearance of purchases or
sales of securities, and may make margin payments in connection with
futures contracts and related options and the underlying Atlas Stock Funds
may effect short sales against-the-box.
(8) Engage in the business of underwriting securities issued by others,
except to the extent that it may be deemed to be an underwriter, under the
federal securities laws, in connection with the disposition of the
Portfolio's securities.
(9) Make loans to any person or firm; provided, however, that the
acquisition for investment of a portion of an issue of publicly
distributed bonds, debentures, notes or other evidences of indebtedness of
any corporation or government shall not be construed to be the making of a
loan; and provided further that a Portfolio may enter into repurchase
agreements and may make loans of portfolio securities.
(10) Purchase from or sell portfolio securities to its officers,
directors or other "interested persons" (as defined in the 1940 Act)
(other than otherwise unaffiliated brokers and the underlying Atlas Funds)
of the Portfolio or of the Trust.
(11) Borrow money, except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Portfolio's total assets. The
Portfolio will not purchase securities if such borrowings are outstanding
in excess of 5% of the value of the Portfolio's total assets. In the event
that the asset coverage for the Portfolio's borrowings falls below 300%,
the Portfolio will reduce, within three days (excluding Sundays and
holidays), the amount of its borrowings in order to provide for 300% asset
coverage.
If a percentage restriction on investment or utilization of assets in a
fundamental policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of
securities resulting from changing market values will not be considered a
violation of Portfolio investment policies or restrictions.
PORTFOLIO TURNOVER
For reporting purposes, the Portfolio calculates its portfolio turnover rate
by dividing the lesser of purchases or sales of portfolio securities for the
fiscal year by the monthly average of the value of the portfolio securities
owned by the Portfolio during the fiscal year. In determining portfolio
turnover, the Portfolio excludes all securities whose maturities at the time
of acquisition were one year or less. A 100% portfolio turnover rate would
occur, for example, if all of the securities in the Portfolio (other
-B-28-
<PAGE>
than short-term money market securities) were replaced once during the fiscal
year.
The Portfolio's turnover is expected to be less than 100%. The Portfolio
will purchase or sell securities to: (i) accommodate purchases and sales of
the Portfolio's shares; (ii) change the percentages of the Portfolio's assets
invested in each of the underlying Atlas Funds in response to market
conditions; (iii) maintain or modify the allocation of the Portfolio's assets
among the underlying Atlas Funds within the percentage limits described in the
Prospectus.
-B-29-
<PAGE>
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and officers of Atlas Insurance Trust (the "Trust"), their
business addresses and principal occupations during the past five years are:
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATIONS
NAME AND ADDRESS HELD AND BUSINESS EXPERIENCE
---------------- -------------- ------------------------
<S> <C> <C>
Marion O. Sandler(1)(4)................ Trustee, Chairman of the Board
1901 Harrison Street President and and Chief Executive Of-
Oakland, CA 94612 Chief ficer of Atlas Assets,
Executive Inc. ("Atlas Funds"),
Officer Executive Officer World
Savings and Loan Associ-
ation ("World Savings"),
and Golden West Finan-
cial Corporation
("GWFC"). President and
Chief Executive Officer
of Atlas Advisers, Inc.
("Adviser") and Atlas
Securities, Inc. ("Dis-
tributor")
Barbara A. Bond(2)(3)(4)............... Trustee Director of the Atlas
Hood and Strong Funds, Certified Public
101 California Street Accountant/Tax Partner
San Francisco, CA 94111 of Hood and Strong
Russell W. Kettell(1)(4)............... Trustee Director of the Atlas
1901 Harrison Street Funds, President of GWFC
Oakland, CA 94612 and Senior Executive
Vice President of World
Savings
Daniel L. Rubinfeld(2)(3)(4)........... Trustee Director of the Atlas
School of Law, Boalt Hall Funds, Professor of Law
University of California and Economics at the
Berkeley, CA 94720 University of Califor-
nia, Berkeley
David J. Teece(2)(3)(4)................ Trustee Director of the Atlas
University of California Funds, Professor of
IMIO #1930 Business Administration
Haas School of Business S-402 at the University of
Berkeley, CA 94720 California Berkeley
Julius Louis Helvey(1)................. Group Senior
1901 Harrison Street Vice President Group Senior Vice Presi-
Oakland, CA 94612 and Chief dent of World Savings,
Financial GWFC, Atlas Funds, Ad-
Officer viser and Distributor
Larry E. LaCasse(1).................... Group Senior 1992 to present--Group
794 Davis Street Vice President Senior Vice President of
San Leandro, CA 94577 and Chief Atlas Funds, Adviser and
Operating Distributor; 1988 to
Officer Present--Chief Operating
Officer of the Adviser
and the Distributor;
1988-1991 Senior Vice
President of the Adviser
and the Distributor;
1988--Vice President of
American Capital Servic-
es, Inc.; 1986 to 1988--
Vice President of Ameri-
can Capital Marketing,
Inc.; 1984 to 1986--Vice
President of Corporate
Development at Financial
Network Investments
Corp.
</TABLE>
-B-30-
<PAGE>
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATIONS
NAME AND ADDRESS HELD AND BUSINESS EXPERIENCE
---------------- -------------- ------------------------
<S> <C> <C>
Edward L. Bisgaard(1).................. Vice 1989 to present--Vice
794 Davis Street President, President, Chief Ac-
San Leandro, CA 94577 Chief counting Officer and
Accounting Treasurer of Atlas
Officer and Fund's, Adviser and Dis-
Treasurer tributor; 1988 to 1989--
Chief Financial Officer
of Dunham & Greer In-
vestment Counsel; 1986
to 1988--General Partner
of R&R Tire and Auto
Service Center; 1979 to
1986--Vice President and
Manager of Fund Opera-
tions at Capital Re-
search & Management Com-
pany
Steven J. Gray(1)...................... Vice 1992 to present--Vice
794 Davis Street President, President, Chief Legal
San Leandro, CA 94577 Chief Legal Counsel and Secretary of
Counsel and Atlas Funds, Adviser and
Secretary Distributor; 1989 to
1992--Associate Attor-
ney, Investment Manage-
ment Group at the law
firms of Gaston & Snow
(1989-1990), Thelen,
Marrin, Johnson &
Bridges (1990-1992), and
Heller, Ehrman, White &
McAuliffe (1992); 1986
to 1989--Attorney for
Federal Home Loan Bank
Board; 1985 to 1986--Se-
nior Attorney and Vice
President C.R.I., Inc.;
1982 to 1985--Attorney,
United States Securities
and Exchange Commission
</TABLE>
- -----------
(1) Trustee or officer who is an "interested person" of the Company due to his
affiliation with the Company's investment manager.
(2) Member of the Contracts Committee.
(3) Member of the Audit Committee.
(4) Member of the Executive Committee.
As of , 1997, Golden West Financial Corporation, 1901 Harrison Street,
Oakland, CA 94612, a Delaware corporation and sole shareholder of the Adviser
and Distributor, owned beneficially and of record an aggregate of % of the
outstanding shares of the Atlas Asset Allocation--Balanced Growth Portfolio.
As of that date, officers and trustees as a group owned less than 1% of the
shares of the Portfolio.
The following table sets forth the aggregate compensation contemplated to be
paid by the Atlas Funds and the Trust for the Trust's first fiscal year ending
December 31, 1997 to the Directors of the Atlas Funds that are not affiliated
with the Investment Adviser (the same persons serve as the unaffiliated
Trustees of the Trust) and the aggregate compensation paid to such
Directors/Trustees for service on the Atlas Funds' Board and that of all other
funds in the "company complex", (including the Trust) as defined in Schedule
14A under the Securities Exchange Act of 1934:
-B-31-
<PAGE>
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED COMPANY AND
AGGREGATE ACCRUED AS ANNUAL COMPANY
COMPENSATION PART OF BENEFITS COMPLEX
FROM COMPANY COMPANY UPON PAID TO
NAME COMPLEX EXPENSES RETIREMENT DIRECTORS
---- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Barbara A. Bond................. $ None N/A $ ( )*
Daniel L. Rubinfeld............. None N/A ( )*
David J. Teece.................. None N/A ( )*
Marion O. Sandler............... None None N/A None
Russell W. Kettell.............. None None N/A None
</TABLE>
- -----------
* Indicates total number of funds in company complex.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Atlas Advisers, Inc. ("Advisers"), serves as the investment manager to the
Trust pursuant to an Investment Management Agreement dated , 1997 (the
"Management Agreement"), which was last approved by the Board of Trustees,
including a majority of the trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust, at a meeting held on , 1997.
The Management Agreement with respect to the Portfolio is for an initial
term of two years and may be renewed from year to year afterwards, provided
that any such renewal has been specifically approved at least annually by (i)
the majority (as defined in the 1940 Act) of the outstanding voting securities
of the Portfolio, or (ii) the vote of a majority of trustees who are not
parties to the Management Agreement or "interested persons" (as defined in the
1940 Act) of any such party, cast in person, at a meeting called for the
purpose of voting on such approval. The Management Agreement also provides
that either party thereto has the right with respect to any Portfolio to
terminate it without penalty, upon 60 days written notice to the other party,
and that the Management Agreement automatically terminates in the event of its
assignment (as defined in the 1940 Act).
The directors and officers of the Advisers are: Marion O. Sandler (Director,
President and Chief Executive Officer), James T. Judd (Director), Dirk S.
Adams (Director), Julius Louis Helvey (Group Senior Vice President and Chief
Financial Officer), Larry E. LaCasse (Group Senior Vice President and Chief
Operating Officer), Edward L. Bisgaard (Vice President, Chief Accounting
Officer and Treasurer), Steven J. Gray (Vice President, Chief Legal Counsel
and Secretary).
Principal Underwriting Agreement.
As described in the Prospectus, the Trust has adopted a Principal
Underwriting Agreement with Atlas Securities, Inc. (the "Distributor"), which
serves as the sole underwriter and distributor of the Portfolio's shares.
-B-32-
<PAGE>
EXECUTION OF PORTFOLIO TRANSACTIONS
The investment transactions of the Portfolio are expected to consist
exclusively of purchase and redemptions of shares of the underlying Atlas
Funds. Such purchases and redemptions will be effected directly with the
underlying Funds transfer agent, at the then current net asset values of the
underlying Funds, without the use of broker-dealers. Accordingly, the
Portfolio does not anticipate incurring any brokerage commissions.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Portfolio's shares which the Trust
calculates once daily as of the close of regular trading (normally 4:00 p.m.,
New York time) each business day the New York Stock Exchange ("NYSE") is open
for unrestricted trading. The NYSE is currently scheduled to be closed on New
Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas Day, and on the preceding Friday or
subsequent Monday when one of these holidays falls on a Saturday or Sunday.
The Portfolio's net asset value will be determined with reference to the net
assets values of the underlying Atlas Funds and the percentage the Portfolio's
assets allocated to each underlying Atlas Fund. The following information
pertains to the determination of net asset values for the underlying Atlas
Funds.
Bond Funds:
1. The underlying Atlas Funds value portfolio securities including U.S.
Treasury obligations, and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, certificates of deposit issued
by banks or savings and loan associations, commercial paper, corporate short-
term notes and other short term investments with original or remaining
maturities in excess of 60 days at the mean of representative quoted bid and
asked prices for such securities or, if such prices are not available, for
securities of comparable maturity, quality and type. In circumstances where
the Investment Manager deems it appropriate to do so, prices obtained for the
day of valuation from a bond pricing service will be used. The underlying Fund
amortizes to maturity all securities with 60 days or less to maturity based on
their cost to a Fund if acquired within 60 days of maturity or, if already
held by a Fund on the 60th day, based on the value determined on the 61st day.
2. The underlying Atlas Funds value long-term fixed-income obligations at
the mean of representative quoted bid or asked prices for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality and type. In circumstances where the Investment Manager
deems it appropriate to do so, prices obtained for the day of valuation from a
bond pricing service will be used.
3. The underlying Atlas Funds deem the maturities of variable or floating
rate instruments, or instruments which a Fund has the right to sell at par to
the issuer or dealer, to be the time remaining until the next interest rate
adjustment date or until they can be resold or redeemed at par.
-B-33-
<PAGE>
4. Where market quotations are not readily available, the underlying Atlas
Funds value securities (including restricted securities which are subject to
limitations as to their sale) at fair value pursuant to methods approved by
the Atlas Funds Board of Directors.
5. The fair value of any other assets is added to the value of securities,
as described above to arrive at total assets.
6. Each Fund's liabilities, including proper accruals of taxes and other
expense items, are deducted from total assets and a net asset figure is
obtained.
7. The net asset figure obtained as described above is then divided by the
total number of shares outstanding (excluding treasury shares), and the
result, rounded to the nearer cent, is the net asset value per share.
Money Market Fund:
It is Atlas Funds' policy to use its best efforts to maintain a constant per
share price for the U.S. Treasury "Money Fund" equal to $1.00.
The portfolio instruments of the Money Fund are valued on the basis of
amortized cost. This involves valuing an instrument at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which the value, as determined by amortized cost,
is higher or lower than the price a Fund would receive if it sold the
instrument.
The valuation of the Money Fund's portfolio instruments based upon their
amortized cost and simultaneous maintenance of each Fund's per share net asset
value at $1.00 are permitted by Rule 2a-7 under the 1940 Act.
Under this rule, the Money Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of one year or less, and invest only in securities
determined by the Board of Directors, and as required by the rule, to be of
high quality with minimal credit risks. High quality is defined as the top two
quality rating grades as rated by any two national statistical rating
organizations ("NRSRO"), or by one NRSRO if rated by only one, or if not rated
by an NRSRO, of comparable quality as determined by the Subadviser. The U.S.
Treasury Money Fund invests only in securities guaranteed by the full faith
and credit of the U.S. Government, that is, of the highest quality. In
accordance with the rule the Board of Directors has established procedures
designed to stabilize, to the extent reasonably practicable, each Fund's price
per share as computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of each Fund's portfolio holdings by the Board of
Directors, at such intervals as they may deem appropriate, to determine
whether the net asset value of a
-B-34-
<PAGE>
Fund calculated by using available market quotations or market equivalents
deviates from $1.00 per share based on amortized cost. The rule also provides
that the extent of any deviation between a Fund's net asset value based upon
available market quotations or market equivalents and $1.00 per share net
asset value based on amortized cost must be examined by the Directors. In the
event the Board of Directors determines that a deviation exists which may
result in material dilution or is otherwise unfair to investors or existing
shareholders, they must cause a Fund to take such corrective action as they
regard as necessary and appropriate, including: selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or paying distributions from capital
or capital gains; redeeming shares in kind; or establishing a net asset value
per share by using available market quotations.
The Stock Funds:
The underlying Atlas Stock Funds value their portfolio securities listed or
traded on an exchange, at their last sales price on the exchange where the
security is principally traded. Lacking any sales on a particular day, the
security is valued at the mean between the closing bid and asked prices on
that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices, based upon quotes furnished
by market makers for such securities. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date. These procedures need not be used to determine the value of debt
securities owned by the Fund if, in the opinion of the Board of Directors some
other method (e.g. the mean between closing over-the-counter bid and asked
prices in the case of debt instruments traded on an exchange) would more
accurately reflect their fair value. A security which is listed or traded on
more than one exchange is valued at the quotation of the exchange determined
by the Board of Directors to be the primary market for such security. Short-
term obligations are valued at amortized cost, which constitutes fair value as
determined by the Board. All other securities and other assets of the Fund are
appraised at their fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of the
Board.
For purposes of determining the net asset value per share of each underlying
Stock Fund, all assets and liabilities initially expressed in foreign
currencies are converted into U.S. dollars at the mean between the bid and
offer prices of such currencies against U.S. dollars last quoted by any major
bank and any changes in the value of forward contracts are included in the
determination of net asset value.
REDEMPTIONS IN KIND
It is possible that unusual conditions may arise in the future which would,
in the opinion of the Board of Trustees of the Trust, make it
-B-35-
<PAGE>
undesirable for the Portfolio to pay for all redemptions in cash. In such
cases, the Board may authorize payment to be made in portfolio securities or
other property of the Portfolio. The Trust would value securities delivered in
payment of redemptions at the same value assigned to such securities in
computing the net asset value per share. If the Trust so elects, however, it
must pay in cash all redemptions with respect to any shareholder during any
90-day period in an amount equal to the lesser of (i) $250,000 or (ii) 1% of
the net asset value of a Portfolio at the beginning of such period.
TAXES
The Portfolio intends to meet all the requirements and to elect the tax
status of a "regulated investment company" under the provisions of Subchapter
M of the Internal Revenue Code of 1986 (the "Code"). Each of the underlying
Atlas Fund have so qualified in the past and intend to continue to so qualify.
If the Portfolio distributes within specified times at least 90% of its
taxable and tax-exempt net investment income, it will be taxed only on that
portion, if any, which it retains.
To so qualify under Subchapter M, the Portfolio must derive at least 90% of
its gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock or securities or
foreign currencies, or other income derived with respect to its business of
investing in stock, securities or currencies. To qualify, the Portfolio must
also (a) derive less than 30% of its gross income (irrespective of losses)
from the sale or other disposition of stock or securities held less than three
months, and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the Portfolio's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities, limited, in
respect of any one issuer, to an amount not greater than 5% of the Portfolio's
assets and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies) or in two or more issuers which the
Portfolio controls and which are engaged in the same or similar trades or
businesses or related trades or businesses. The requirements for qualification
may cause a Portfolio to restrict the extent of its short-term trading or its
transactions in options or futures contracts.
Even though the Portfolio qualifies as a "regulated investment company," it
may be subject to certain federal excise taxes unless the Portfolio meets
certain additional distribution requirements. Under the Code, a nondeductible
excise tax of 4% is imposed on the excess of a regulated investment company's
"required distribution" for the calendar year ending within the regulated
investment company's taxable year over the "distributed amount" for such
calendar year. The term "required distribution" means the sum of (i) 98% of
ordinary income (generally net investment income) for the calendar year, (ii)
98% of capital gain net income
-B-36-
<PAGE>
(both long-term and short-term) for the one-year period ending on October 31
(as though the one-year period ending on October 31 were the regulated
investment company's taxable year), and (iii) the sum of any untaxed,
undistributed taxable net investment income and net capital gains of the
regulated investment company for prior periods. The term "distributed amount"
generally means the sum of (i) ordinary income and capital gain net income
actually distributed by a Portfolio in the current year and (ii) any amount on
which a Portfolio pays income tax for the year. The Portfolio intends to
continue to meet these distribution requirements to avoid the excise tax
liability.
ADDITIONAL INFORMATION
Independent Auditors.
The Trust Board of Trustees has appointed Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31, 1997.
Deloitte & Touche LLP will conduct the annual audit of the Trust, and will
assist in the preparation of the Portfolio's federal and state income tax
returns and consult with the Trust as to matters of accounting and federal and
state income taxation.
Legal Opinions.
The validity of the shares offered by the Prospectus has been passed upon by
Paul, Hastings, Janofsky & Walker LLP located at 555 South Flower Street, Los
Angeles, California 90071. Paul, Hastings, Janofsky & Walker LLP also acts as
legal counsel for the Trust's Adviser and Distributor.
INVESTMENT RESULTS
The Trust may from time to time quote or otherwise use total return
information for the Portfolio in advertisements, sales literature or in
reports furnished to current or prospective shareholders.
The average annual compound rate of return is computed by using the value at
the end of the period ("EV") of a hypothetical initial investment of $1,000
("P") over a period of years ("n") according to the following formula as
required by the Securities and Exchange Commission:
P (1+T)/n/ = EV
The formula assumes reinvestment of all dividends and distributions at net
asset value on the reinvestment date determined by the Board and a complete
redemption at the end of any period illustrated. The Portfolio will calculate
total return for one, five and ten-year periods after such a period has
elapsed. In addition, the Portfolio may provide lifetime average total return
figures.
In addition to average annual returns, the Portfolio may quote unaveraged or
cumulative total returns reflecting the simple change in
-B-37-
<PAGE>
value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series
of redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes in
share price) in order to illustrate the relationship of these factors and
their contributions to total return. Total returns, may be quoted numerically
or in a table, graph, or similar illustration. Performance information may be
compared to the record of the Standard & Poor's Daily Stock Price Index of 500
Common Stocks (S&P 500), the Dow Jones Industrial Average (DJIA), the cost of
living (measured by the Consumer Price Index, or CPI), and other widely
recognized benchmark indicators over the same period. Tabular comparisons,
hypothetical examples and explanatory illustrations may be used from
recognized sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds and
Inflation", which instead of comparing actual Portfolio performance,
demonstrate performance of stocks, bonds, indices, averages, government or
other securities, and other recognized benchmark economic and market
indicators such as the rate of inflation. The Portfolio may have the ability
to invest in securities not included in the S&P, DJIA or other indices and its
investment portfolio may or may not be similar in composition to the indices.
These indices and averages are based on the prices of unmanaged groups of
stocks, and, unlike fund total returns, their returns do not include the
effect of paying brokerage commissions and other costs of investing.
Comparisons.
The Trust may, from time to time, compare specific features of the Portfolio
to those available from comparable mutual funds. Advertisements or sales
literature of the Trust may compare the results of an investment in the
Portfolio with averages, rankings and indices, including, but not limited to
the following:
(1) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts
offer a guaranteed rate of return on principal, but no opportunity for
capital growth. During a portion of the averaging period, the maximum
rates paid on some savings deposits were fixed by law.
(2) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, and fuels, transportation fares, charges for
doctors' and dentists' services, prescription medicines, and other goods
and services that people buy for day-to-day living).
(3) Lipper Analytical Services, Inc., which ranks mutual funds by
overall performance, investment objectives and assets, and publishes
averages on broad based categories of mutual funds and indexes of
cumulative total returns for various periods.
The performance of the Portfolio's shares may be compared to those of other
mutual funds having similar objectives, expressed as an average or
-B-38-
<PAGE>
as a rating or ranking prepared by IBC/Donoghue Organization, Wiesenberger
Investment Company Service, Lipper Analytical Services, Inc., CDA Investment
Technologies, other recognized independent services which monitor the
performance of mutual funds or other economic or market indicators from
published sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds, Bills
and Inflation". Similar comparisons may be made with respect to various
benchmark securities, indices and averages which illustrate general market or
economic performance. These comparisons may be illustrated by means of tables
or of bar, pie, or mountain charts or other type of graphic illustration,
numerically, or by means of hypothetical examples and illustrations from
recognized sources. Performance will be calculated by relating net asset value
per share at the beginning of a period, assuming reinvestment of all gains,
distributions and dividends paid during the period, to the net asset value at
the end of the period.
Indices, averages and rankings prepared by the research departments of such
financial organizations as Salomon Brothers, Inc., Merrill Lynch, Pierce,
Fenner & Smith, Inc., Bear Stearns & Co., Inc., Ibbotson Associates and other
similar providers of financial research data, may be used, as well as
information provided by the Board of Governors of the Federal Reserve System.
Performance rankings, ratings, averages, indices and excerpts of comments,
descriptions and other references or reviews of the Portfolios, their
investment managers, policies, strategies, rankings, or other comparisons
appearing in magazines, newspapers, investment newsletters, and other
periodicals, including Money Magazine, Forbes, Fortune, Business Week, Wall
Street Journal, New York Times, Los Angeles Times, Dallas Morning News,
Barrons, Investors Daily, Mutual Fund Values, Facts, Changing Times, Ibbotson
Associates, and others may also be used.
FINANCIAL STATEMENTS
The following audited financial statement reflects the initial capital of
the Trust as of , 1997.
[To be filed by Amendment]
-B-39-
<PAGE>
APPENDIX
INDUSTRY CLASSIFICATIONS
Aerospace/Defense Food
Air Transportation Gas Utilities*
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Insurance
Building Materials Leasing & Factoring
Cable Television Leisure
Chemicals Manufacturing
Commercial Finance Metals/Mining
Computer Hardware Nondurable Household Goods
Computer Software Oil--Integrated
Conglomerates Paper
Consumer Finance Publishing/Printing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Stores Specialty Retailing
Drug Wholesalers Steel
Durable Household Goods Supermarkets
Education Telecommunications--Technology
Electric Utilities Telephone--Utility
Electrical Equipment Textile/Apparel
Electronics Tobacco
Energy Services & Producers Toys
Entertainment/Film Trucking
Environmental
- -----------
* For purposes of the Portfolio's investment policy not to concentrate in
securities of issuers in the same industry, gas utilities and gas
transmission utilities each will be considered a separate industry.
-B-40-
<PAGE>
PART C
ATLAS INSURANCE TRUST
-------------------------------------
OTHER INFORMATION
-------------------------------------
<PAGE>
ATLAS INSURANCE TRUST
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements--included in Part B:
Statement of Assets and Liabilities as of , 1997 *
Note to Statement of Assets and Liabilities *
Report of Independent Auditor *
(b) Exhibits--as required by Part C:
<TABLE>
<C> <S>
1. Agreement and Declaration of Trust
2. Bylaws for the Registrant.
3. Not Applicable.
4. Not Applicable.
5. Form of Investment Management Agreement between Atlas Advisers, Inc.
and Registrant.
6. Form of Principal Underwriting Agreement between Atlas Securities,
Inc. and Registrant.
7. Not Applicable.
8. Custodian Agreement between Investors Bank and Trust Company and
Registrant. *
9. A. Transfer Agency Agreement. *
B. Form of Participation Agreement between PFL Life Insurance Company
and Registrant. *
10. Opinion and Consent of Counsel. *
11. Consent of Independent Auditors. *
12. Not Applicable.
13. Letter of Understanding Relating to Initial Shares. *
14. Not Applicable.
15. Not Applicable.
16. Not Applicable
</TABLE>
- -----------
* To be filed by Amendment
-C-1-
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Listed below are the direct or indirect wholly-owned subsidiaries of Golden
West Financial Corporation.
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
---- -------------
<S> <C>
World Savings and Loan Association................................ *
World Savings Bank, FSB........................................... **
World Savings Bank, SSB........................................... Texas
Atlas Securities, Inc............................................. California
Atlas Advisers, Inc............................................... California
1901 Corporation.................................................. California
Commerce Invest Company of Shawnee, Inc........................... Kansas
World Mortgage Company............................................ Colorado
Golden West Savings Association Service, Co....................... California
First S&L Shares, Inc............................................. Colorado
</TABLE>
- -----------
* Federally chartered savings and loan association.
** Federally chartered savings bank.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD HOLDERS
AS OF THE DATE OF THIS
TITLE OF CLASS REGISTRATION STATEMENT
-------------- ------------------------
<S> <C>
Shares of Beneficial Interest..........................
Atlas Balanced Growth Portfolio........................ None
</TABLE>
-C-2-
<PAGE>
ITEM 27. INDEMNIFICATION
Article V of Registrant's Declaration of Trust, filed herewith as Exhibit 1,
provides for the indemnification of Registrant's trustees, officers, employees
and agents against liabilities incurred by them in connection with the defense
or disposition of any action or proceeding in which they may be involved or
with which they may be threatened, while in office or thereafter, by reason of
being or having been in such office, except with respect to matters as to
which it has been determined that they acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of their office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in said Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Series of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issues.
Registrant has obtained from a major insurance carrier a trustees's and
officers' liability policy covering certain types of errors and omissions. To
the extent permitted by the 1940 Act and Delaware law, the non-interested
Trustees may also be indemnified by the Trust with respect to errors and
omissions.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
A. Investment Adviser--Atlas Advisers, Inc.
See the material following the captions "What Companies are affiliated with
the Portfolio?" appearing as a portion of Part A hereof, and "Management of
the Trust" and "Investment Management and Other Services" appearing as a
portion of Part B hereof.
-C-3-
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter also acts as the principal
underwriter for Atlas Assets, Inc., 794 Davis Street, San Leandro, California
94577.
(b) Directors and officers of Atlas Securities, Inc., principal underwriter
of the Registrant:
<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH OFFICES WITH
PLACE OF BUSINESS UNDERWRITER REGISTRANT
------------------ ------------- -------------
<S> <C> <C>
Marion O. Sandler.................. Chairman, President Chairman, President
1901 Harrison Street and Chief Executive and Chief Executive
Oakland, CA 94612 Officer Officer
James T. Judd...................... Director N/A
1901 Harrison Street
Oakland, CA 94612
Dirk S. Adams...................... Director N/A
1901 Harrison Street
Oakland, CA 94612
Julius Louis Helvey................ Group Senior Vice Group Senior Vice
1901 Harrison Street President and Chief President and Chief
Oakland, CA 94612 Financial Officer Financial Officer
Larry E. LaCasse................... Group Senior Vice Group Senior Vice
794 Davis Street President and Chief President and Chief
San Leandro, CA 94577 Operating Officer Operating Officer
Edward L. Bisgaard................. Vice President, Chief Vice President, Chief
794 Davis Street Accounting Officer Accounting Officer
San Leandro, CA 94577 and Treasurer and Treasurer
W. Lawrence Key ................... Senior Vice N/A
794 Davis Street President-- National
San Leandro, CA 94577 Sales Manager
Steven J. Gray..................... Vice President, Chief Vice President, Chief
794 Davis Street Legal Counsel and Legal Counsel and
San Leandro, CA 94577 Secretary Secretary
</TABLE>
(c) None.
-C-4-
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Trust Custodian, Investors Bank and Trust Company, 89 South
Street, Boston, MA 02111.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-effective amendment
including financial statements which need not be certified, within four to six
months from the effective date of Registrant's 1933 Act Registration
Statement.
(b) The Registrant undertakes to furnish copies of its latest annual report
and semi-annual report, upon request and without charge, to every person to
whom a prospectus is delivered.
-C-5-
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THERETO DULY AUTHORIZED, IN THE CITY OF SAN LEANDRO, AND THE
STATE OF CALIFORNIA, ON THE 28TH DAY OF JANUARY, 1997.
Atlas Insurance Trust (Registrant)
By: /s/ Marion O. Sandler
----------------------------
MARION O. SANDLERCHAIRMAN, CHIEF
EXECUTIVE OFFICER AND PRESIDENT
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 DATE INDICATED.
SIGNATURE TITLE DATE
/s/ Marion O. Sandler Chief Executive January 28, 1997
- ---------------------------- Officer, President,
MARION O. SANDLER and Chairman
/s/ Julius Louis Helvey Chief Financial January 28, 1997
- ---------------------------- Officer and Group
JULIUS LOUIS HELVEY Senior Vice
President
/s/ Edward L. Bisgaar Chief Accounting January 28, 1997
- ---------------------------- Officer, Treasurer
EDWARD L. BISGAARD and Vice President
-C-6-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
------- ----
<C> <S>
1 Agreement and Declaration of Trust
2 By-Laws
5 Form of Investment Management Agreement
6 Form of Principal Underwriting Agreement
</TABLE>
-C-7-
<PAGE>
EXHIBIT 1
DECLARATION OF TRUST
OF
ATLAS INSURANCE TRUST
This DECLARATION OF TRUST of the Atlas Insurance Trust is made on January
27, 1997 by the parties signatory hereto, as trustees.
WHEREAS, the Trustees desire to form a business trust under the law of
Delaware for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the Trust assets be composed of cash,
securities and other assets contributed to the Trust by the holders of
interests in the Trust entitled to ownership rights in the Trust;
NOW, THEREFORE, the Trustees hereby declare that the Trustees will hold in
trust all cash, securities and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and manage and dispose of the
same for the benefit of the holders of interests in the Trust and subject to
the following terms and conditions.
ARTICLE I
The Trust
1.1 Name. The name of the trust created hereby (the "Trust") shall be "Atlas
Insurance Trust," and so far as may be practicable the Trustees shall conduct
the Trust's activities, execute all documents and sue or be sued under that
name, which name (and the word "Trust" wherever hereinafter used) shall not
refer to the Trustees in their individual capacities or to the officers,
agents, employees or holders of interest in the Trust. However, should the
Trustees determine that the use of the name of the Trust is not advisable,
they may select such other name for the Trust as they deem proper and the
Trust may hold its property and conduct its activities under such other name.
Any name change shall become effective upon the execution by a majority of the
then Trustees of an instrument setting forth the new name and the filing of a
certificate of amendment pursuant to Section 3810(b) of the DBTA. Any such
instrument shall not require the approval of the holders of interests in the
Trust, but shall have the status of an amendment to this Declaration.
1.2 Trust Purpose. The purpose of the Trust is to conduct, operate and carry
on the business of an open-end management investment company registered under
the 1940 Act. In furtherance of the foregoing, it shall be the purpose of the
Trust to do everything necessary, suitable, convenient or proper for the
conduct, promotion and attainment of any businesses and purposes which at any
time may be incidental or may appear conducive or expedient for the
accomplishment of the business of an open-end management investment company
registered under the 1940 Act and which may be engaged in or carried on by a
trust organized under the DBTA, and in connection therewith the Trust shall
have and may exercise all of the powers conferred by the laws of the State of
Delaware upon a Delaware business trust.
-1-
<PAGE>
1.3 Definitions. As used in this Declaration, the following terms shall have
the following meanings:
(a) "1940 Act" shall mean the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations thereunder, as adopted or
amended from time to time.
(b) "Affiliated Person," "Assignment" and "Interested Person" shall have the
meanings given such terms in the 1940 Act.
(c) "Administrator" shall mean any party furnishing services to the Trust
pursuant to any administrative services contract described in Section 4.1
hereof.
(d) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder, as adopted or amended
from time to time.
(f) "Commission" shall mean the Securities and Exchange Commission.
(g) "Declaration" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "Declaration," "hereof," "herein"
and "hereunder" shall be deemed to refer to the Declaration rather than the
article or section in which such words appear. This Declaration shall,
together with the By-Laws, constitute the governing instrument of the Trust
under the DBTA.
(h) "DBTA" shall mean the Delaware Business Trust Act, Delaware Code
Annotated title 12, Sections 3801 et seq., as amended from time to time.
(i) "Fiscal Year" shall mean an annual period as determined by the Trustees
unless otherwise provided by the Code or applicable regulations.
(j) "Holders" shall mean as of any particular time any or all holders of
record of Interests in the Trust or in Trust Property, as the case may be, at
such time.
(k) "Interest" shall mean a Holder's units of interest into which the
beneficial interest in the Trust and each series and class of the Trust shall
be divided from time to time.
(1) "Investment Adviser" shall mean any party furnishing services to the
Trust pursuant to any investment advisory contract described in Section 4.1
hereof.
(m) "Majority Interests Vote" shall mean the vote, at a meeting of the
Holders of Interests, of the lesser of (A) 67% or more of the Interests
present or represented at such meeting, provided the Holders of more than
-2-
<PAGE>
50% of the Interests are present or represented by proxy or (B) more than 50%
of the Interests.
(n) "Person" shall mean and include an individual, corporation, partnership,
trust, association, joint venture and other entity, whether or not a legal
entity, and a government and agencies and political subdivisions thereof.
(o) "Registration Statement" as of any particular time shall mean the
Registration Statement of the Trust which is effective at such time under the
1940 Act.
(p) "Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is
owned or held by or for the account of the Trust or the Trustees or any series
of the Trust established in accordance with Section 6.2.
(q) "Trustees" shall mean such persons who are indemnified as trustees of
the Trust on the signature page of this Declaration, so long as they shall
continue in office in accordance with the terms of this Declaration of Trust,
and all other persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this Declaration of
Trust and are then in office, in their capacity as trustees hereunder.
ARTICLE II
Trustees
2.1 Number and Qualification. The number of Trustees shall initially be one
and shall thereafter be fixed from time to time by written instrument signed
by majority of the Trustees so fixed then in office, provided, however, that
the number of Trustees shall in no event be less than one. A Trustee shall be
an individual at least 21 years of age who is not under legal disability.
(a) Any vacancy created by an increase in Trustees shall be filled by the
appointment or election of an individual having the qualifications described
in this Article as provided in Section 2.4. Any such appointment shall not
become effective, however, until the individual appointed or elected shall
have accepted in writing such appointment or election and agreed in writing to
be bound by the terms of the Declaration. No reduction in the number of
Trustees shall have the effect of removing any Trustee from office.
(b) Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided in Section 2.4 hereof, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this
Declaration.
2.2 Term and Election. Each Trustee named herein, or elected or appointed
prior to the first meeting of the Holders, shall (except in the
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<PAGE>
event of resignations or removals or vacancies pursuant to Section 2.3 or 2.4
hereof) hold office until his or her successor has been elected at such
meeting and has qualified to serve as Trustee. Beginning with the Trustees
elected at the first meeting of Holders, each Trustee shall hold office during
the lifetime of this Trust and until its termination as hereinafter provided
unless such Trustee resigns or is removed as provided in Section 2.3 below or
his term expires pursuant to Section 2.4 hereof.
2.3 Resignation and Removal. Any Trustee may resign (without need for prior
or subsequent accounting) by an instrument in writing signed by him or her and
delivered or mailed to the Chairman, if any, the President or the Secretary
and such resignation shall be effective upon such delivery, or at a later date
according to the terms of the instrument.
(a) Any of the Trustees may be removed with or without cause by the
affirmative vote of the Holders of two-thirds (2/3) of the Interests or
(provided the aggregate number of Trustees, after such removal and after
giving effect to any appointment made to fill the vacancy created by such
removal, shall not be less than the number required by Section 2.1 hereof)
with cause, by the action of two-thirds (2/3) of the remaining Trustees.
Removal with cause shall include, but not be limited to, the removal of a
Trustee due to physical or mental incapacity.
(b) Upon the resignation or removal of a Trustee, or his or her otherwise
ceasing to be a Trustee, he or she shall execute and deliver such documents as
the remaining Trustees shall require for the purpose of conveying to the Trust
or the remaining Trustees any Trust Property held in the name of the resigning
or removed Trustee. Upon the death of any Trustee or upon removal or
resignation due to any Trustee's incapacity to serve as trustee, his or her
legal representative shall execute and deliver on his or her behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4 Vacancies. The term of office of a Trustee shall terminate and a vacancy
shall occur in the event of the earliest to occur of the following: the
Trustee's attainment of age 72, death, resignation, adjudicated incompetence
or other incapacity to perform the duties of the office, or removal, of the
Trustee. A vacancy shall also occur in the event of an increase in the number
of trustees as provided in Section 2.1. No such vacancy shall operate to annul
this Declaration or to revoke any existing trust created pursuant to the terms
of this Declaration. In the case of a vacancy, the Holders of a plurality of
the Interests entitled to vote, acting at any meeting of the Holders held in
accordance with Article VIII hereof, or, to the extent permitted by the 1940
Act, a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected
by the Trustees or the Holders shall hold office as provided in this
Declaration. There shall be no cumulative voting by the Holders in the
election of Trustees.
2.5 Meetings. Meetings of the Trustees shall be held from time to time
within or without the State of Delaware upon the call of the Chairman,
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if any, the President, the Chief Operating Officer, the Secretary, an
Assistant Secretary or any two Trustees.
(a) Regular meetings of the Trustees may be held without call or notice at a
time and place fixed by the By-Laws or by resolution of the Trustees. Notice
of any other meeting shall be given not later than 72 hours preceding the
meeting by United States mail or by electronic transmission to each Trustee at
his business address as set forth in the records of the Trust or otherwise
given personally not less than 24 hours before the meeting but may be waived
in writing by any Trustee either before or after such meeting. The attendance
of a Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Trustee attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting has not been
lawfully called or convened.
(b) A quorum for all meetings of the Trustees shall be one-third of the
total number of Trustees, but (except at such time as there is only one
Trustee) no less than two Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consent of a majority of the Trustees, which written consent shall
be filed with the minutes of proceedings of the Trustees or any such
committee. If there be less than a quorum present at any meeting of the
Trustees, a majority of those present may adjourn the meeting until a quorum
shall have been obtained.
(c) Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be two or more of the members thereof, unless the Board shall
provide otherwise. Unless provided otherwise in this Declaration, any action
of any such committee may be taken at a meeting by vote of a majority of the
members present (a quorum being present) or without a meeting by written
consent of a majority of the members, which written consent shall be filed
with the minutes of proceedings of the Trustees or any such committee.
(d) With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or are otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5 and shall be entitled to vote to the extent permitted by the
1940 Act.
(e) All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting pursuant to
such communications system shall constitute presence in person at such
meeting, unless the 1940 Act specifically requires the Trustees to act "in
person," in which case such term shall be construed consistent with Commission
or staff releases or interpretations.
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2.6 Officers; Chairman of the Board. The Trustees shall, from time to time,
elect officers of the Trust, including a President, a Secretary and a
Treasurer. The Trustees shall elect or appoint a Trustee to act as Chairman of
the Board who shall preside at all meetings of the Trustees and carry out such
other duties as the Trustees shall designate. The Trustees may elect or
appoint or authorize the President to appoint such other officers or agents
with such powers as the Trustees may deem to be advisable. The President,
Secretary and Treasurer may, but need not, be a Trustee. Except as set forth
above, the Chairman of the Board and such officers of the Trust shall serve in
such capacity for such time and with such authority as the Trustees may, in
their discretion, so designate or as provided by in the By-Laws.
2.7 By-Laws. The Trustees may adopt and, from time to time, amend or repeal
the By-Laws for the conduct of the business of the Trust not inconsistent with
this Declaration and such By-Laws are hereby incorporated in this Declaration
by reference thereto.
ARTICLE III
Powers of Trustees
3.1 General. The Trustees shall have exclusive and absolute control over
management of the business and affairs of the Trust, but with such powers of
delegation as may be permitted by this Declaration and the DBTA. The Trustees
may perform such acts as in their sole discretion are proper for conducting
the business and affairs of the Trust. The enumeration of any specific power
herein shall not be construed as limiting the aforesaid power. Such powers of
the Trustee may be exercised without order of or recourse to any court.
3.2 Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire,
hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal
in or dispose of United States and foreign currencies and related instruments
including forward contracts, and securities, including common and preferred
stock, warrants, bonds, debentures, time notes and all other evidences of
indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, or by the United
States Government, any foreign government, or any agency, instrumentality or
political subdivision of the United States Government or any foreign
government, or international instrumentalities, or by any bank, savings
institution, corporation or other
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business entity organized under the laws of the United States or under foreign
laws; and to exercise any and all rights, powers and privileges of ownership
or interest in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and otherwise
act with respect thereto, with power to designate one or more persons, firms,
associations, or corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments; and the Trustees shall be
deemed to have the foregoing powers with respect to any additional securities
in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.
3.3 Legal Title. Legal title to all the Trust Property shall be vested in
the Trust as a separate legal entity under the DBTA, except that the Trustees
shall have the power to cause legal title to any Trust Property to be held by
or in the name of one or more of the Trustees or in the name of any other
Person on behalf of the Trust on such terms as the Trustees may determine.
In the event that title to any part of the Trust Property is vested in one
or more Trustees, the right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his or her due election and qualification. Upon the resignation,
removal or death of a Trustee he or she shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. To the extent permitted by law, such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
3.4 Sale of Interests. Subject to the more detailed provisions set forth in
Article VII, the Trustees shall have the power to permit persons to purchase
Interests and to add or reduce, in whole or in part, their Interest in the
Trust.
3.5 Borrow Money. The Trustees shall have power to borrow money or otherwise
obtain credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust, including the lending of
portfolio securities, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm,
association or corporation.
3.6 Delegation; Committees. The Trustees shall have the power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or
to officers, employees or agents of the Trust the doing of such things and the
execution of such instruments, either in the name of the Trust or the names of
the Trustees or otherwise, as the Trustees may deem expedient.
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3.7 Collection and Payment. The Trustees shall have power to collect all
property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims
relating to the Trust Property; to foreclose any security interest securing
any obligations, by virtue of which any property is owned to the Trust; and to
enter into releases, agreements and other instruments.
3.8 Expenses. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The
Trustees shall fix the compensation of all officers, employees and Trustees.
The Trustees may pay themselves such compensation for special services,
including legal and brokerage services, as they in good faith may deem
reasonable (subject to any limitations in the 1940 Act), and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust.
3.9 Miscellaneous Powers. The Trustees shall have the power to: (a) employ
or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c)
purchase, and pay for out of Trust Property, insurance policies (including,
but not limited to, fidelity bonding and errors and omission policies)
insuring the Investment Adviser, Administrator, distributor, Holders,
Trustees, officers, employees, agents, or independent contractors of the Trust
against all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such person in such capacity, whether or
not the Trust would have the power to indemnify such Person against liability;
(d) establish pension, profit-sharing and other retirement, incentive and
benefit plans for any Trustees, officers, employees and agents of the Trust;
(e) to the extent permitted by law, indemnify any Person with whom the Trust
has dealings, including the Investment Adviser, Administrator, distributor,
Holders, Trustees, officers, employees, agents or independent contractors of
the Trust, to such extent as the Trustees shall determine; (f) guarantee
indebtedness or contractual obligations of others; (g) determine and change
the Fiscal Year of the Trust and the method by which its accounts shall be
kept; and (h) adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
3.10 Further Powers. The Trustees shall have power to conduct the business
of the Trust and carry on its operations in any and all of its branches and
maintain offices, whether within or without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in
any foreign countries, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the
United States of America and of foreign countries, and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the
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interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made
by the Trustees in good faith shall be conclusive and shall be binding upon
the Trust and the Holders, past, present and future. In construing the
provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees shall not be required to obtain any
court order to deal with Trust Property.
ARTICLE IV
Investment Advisory, Administrative Services
and Placement Agent Arrangements
4.1 Investment Advisory and Other Arrangements. The Trustees may in their
discretion, from time to time, enter into contracts or agreements for
investment advisory services, administrative services (including transfer and
dividend disbursing agency services), distribution services, fiduciary
(including custodian) services, placement agent services, Holder servicing and
distribution services, or other services, whereby the other party to such
contract or agreement shall undertake to furnish the Trustees such services as
the Trustees shall, from time to time, consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any other provisions of this Declaration to the contrary, the
Trustees may authorize any Investment Adviser (subject to such general or
specific instructions as the Trustees may, from time to time, adopt) to effect
purchases, sales, loans or exchanges of Trust Property on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of any such
Investment Adviser (all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be binding upon the Trust.
4.2 Parties to Contract. Any contract or agreement of the character
described in Section 4.1 of this Article IV or in the By-Laws of the Trust may
be entered into with any Person, although one or more of the Trustees or
officers of the Trust or any Holder may be an officer, director, trustee,
shareholder, or member of such other party to the contract or agreement, and
no such contract or agreement shall be invalidated or rendered voidable by
reason of the existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of such contract or agreement or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract or agreement when entered into was reasonable and fair and
not inconsistent with the provisions of this Article IV or the By-Laws. Any
Trustee or officer of the Trust or any Holder may be the other party to
contracts or agreements entered into pursuant to Section 4.1 hereof or the By-
Laws of the Trust, and any Trustee or officer of the Trust or any Holder may
be financially interested or otherwise affiliated with Persons who are parties
to any or all of the contracts or agreements mentioned in this Section 4.2.
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ARTICLE V
Limitations of Liability
5.1 No Personal Liability of Trustees Officers, Employees, Agents. No
Trustee, officer, employee or agent of the Trust when acting in such capacity
shall be subject to any personal liability whatsoever, in his or her
individual capacity, to any Person, other than the Trust or its Holders, in
connection with Trust Property or the affairs of the Trust; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature against a Trustee, officer, employee or agent of the Trust arising
in connection with the affairs of the Trust. No Trustee, officer, employee or
agent of the Trust shall be liable to the Trust, Holders of Interests therein,
or to any Trustee, officer, employee, or agent thereof for any action or
failure to act (including, without limitation, the failure to compel in any
way any former or acting Trustee to redress any breach of trust) except for
his or her own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or her duties.
5.2 Indemnification of Trustees, Officers, Employees Agents. The Trust shall
indemnify each of its Trustees, officers, employees, and agents (including
Persons who serve at its request as directors, officers or trustees of another
organization in which it has any interest, as a shareholder, creditor or
otherwise) against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him or her in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, in which he or she may be involved or with which he or she may be
threatened, while in office or thereafter, by reason of his or her being or
having been such a Trustee, officer, employee or agent, except with respect to
any matter as to which he or she shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or reckless disregard of his
or her duties; provided, however, that as to any matter disposed of by a
compromise payment by such Person, pursuant to a consent decree or otherwise,
no indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office by the court or other
body approving the settlement or other disposition or by a reasonable
determination, based upon review of readily available facts (as opposed to a
full trial-type inquiry), that he or she did not engage in such conduct by a
reasonable determination, based upon a review of the facts, that such Person
was not liable by reason of such conduct, by (a) the vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as
defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding, or
(b) a written opinion from independent legal counsel approved by the Trustees.
The rights accruing to any Person under these provisions shall not exclude any
other right to which he or she may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted herein or
in Section 5.1 or to which
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he or she may be otherwise entitled except out of the Trust Property. The
Trustees may make advance payments in connection with indemnification under
this Section 5.2, provided that the indemnified Person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that he or she is not entitled to such indemnification.
5.3 Liability of Holders; Indemnification. The Trust shall indemnify and
hold each Holder harmless from and against any claim or liability to which
such Holder may become subject solely by reason of his or her being or having
been a Holder and not because of such Holder's acts or omissions or for some
other reason, and shall reimburse such Holder for all legal and other expenses
reasonably incurred by him or her in connection with any such claim or
liability (upon proper and timely request by the Holder); provided, however,
that no Holder shall be entitled to indemnification by any series established
in accordance with Section 6.2 unless such Holder is a Holder of Interests of
such series. The rights accruing to a Holder under this Section 5.3 shall not
exclude any other right to which such Holder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify
or reimburse a Holder in any appropriate situation even though not
specifically provided herein.
5.4 No Bond Required of Trustees. No Trustee shall, as such, be obligated to
give any bond or surety or other security for the performance of any of his or
her duties hereunder.
5.5 No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, or other Person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning
the validity of any transaction purporting to be made by the Trustees or by
said officer, employee or agent or be liable for the application of money or
property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate or other interest or undertaking of the Trust, and every other act
or thing whatsoever executed in connection with the Trust, shall be
conclusively taken to have been executed or done by the executors thereof only
in their capacity as Trustees, officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate or other interest
or undertaking of the Trust made by the Trustees or by any officer, employee
or agent of the Trust, in his or her capacity as such, shall contain an
appropriate recital to the effect that the Trustee, officer, employee and
agent of the Trust shall not personally be bound by or liable thereunder, nor
shall resort be had to their private property or the private property of the
Holders for the satisfaction of any obligation or claim thereunder, and
appropriate references shall be made therein to the Declaration, and may
contain any further recital which they may deem appropriate, but the omission
of such recital shall not operate to impose personal liability on any of the
Trustees, officers, employees or agents of the Trust. The Trustees may
maintain insurance for the protection of the Trust Property, Holders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem advisable.
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5.6 Reliance on Experts, Etc. Each Trustee and officer or employee of the
Trust shall, in the performance of his or her duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of
whether such counsel or expert may also be a Trustee.
5.7 Assent To Declaration. Every Holder, by virtue of having become a Holder
in accordance with the terms of this Declaration, shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto.
ARTICLE VI
Interests in the Trust
6.1 General Characteristics. (a) The Trustees shall have the power and
authority, without Holder approval, to issue Interests in one or more series
from time to time as they deem necessary or desirable. Each series shall be
separate from all other series in respect of the assets and liabilities
allocated to that series and shall represent a separate investment portfolio
of the Trust. The Trustees shall have exclusive power, without Holder
approval, to establish and designate such separate and distinct series, as set
forth in Section 6.2, and to fix and determine the relative rights and
preferences as between the Interests of the separate series as to right of
redemption, special and relative rights as to dividends and other
distributions and on liquidation, conversion rights, and conditions under
which the series shall have separate voting rights or no voting rights.
(b) The Trustees may, without Holder approval, divide Interests of any
series into two or more classes, Interests of each such class having such
preferences and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine as provided in
Section 6.3. The fact that a series shall have been initially established and
designated without any specific establishment or designation of classes, shall
not limit the authority of the Trustees to divide a series and establish and
designate separate classes thereof.
(c) The number of Interests authorized shall be unlimited, and the Interests
so authorized may be represented in part by fractional Interests. From time to
time, the Trustees may divide or combine the Interests of any series or class
into a greater or lesser number without thereby changing the proportionate
beneficial interests in the series or class. The Trustees may issue Interests
of any series or class thereof for such consideration and on such terms as
they may determine (or for no consideration if pursuant to an Interest
dividend or split-up), all without action or approval of the Holders. All
Interests when so issued on the terms determined by the Trustees shall be
fully paid and non-assessable. The Trustees may classify
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or reclassify any unissued Interests or any Interests previously issued and
reacquired of any series or class thereof into one or more series or classes
thereof that may be established and designated from time to time. The Trustees
may hold as treasury Interests, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Interests of any series or class thereof reacquired by the Trust.
6.2 Establishment of Series of Interests. (a) Without limiting the authority
of the Trustees set forth in Section 6.2(b) to establish and designate any
further series, the Trustees hereby establish and designate the Trust's
initial series, as follows:
Atlas Balanced Growth Portfolio
The provisions of this Article VI shall be applicable to the above
designated series and any further series that may from time to time be
established and designated by the Trustees as provided in Section 6.2(b).
(b) The establishment and designation of any series of Interests other than
those set forth above shall be effective upon the execution by a majority of
the then Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such series, or as
otherwise provided in such instrument. At any time that there are no Interests
outstanding of any particular series previously established and designated,
the Trustees may by an instrument executed by a majority of their number
abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration.
(c) Section 9.2 of this Agreement shall apply also with respect to each such
series as if such series were a separate trust.
6.3 Establishment of Classes. The division of any series into two or more
classes and the establishment and designation of such classes shall be
effective upon the execution by a majority of the then Trustees of an
Instrument setting forth such division, and the establishment, designation,
and relative rights and preferences of such classes, or as otherwise provided
in such instrument. The relative rights and preferences of the classes of any
series may differ in such respects as the Trustees may determine to be
appropriate, provided that such differences are set forth in the
aforementioned instrument. At any time that there are no Interests outstanding
of any particular class previously established and designated, the Trustees
may by an instrument executed by a majority of their number abolish that class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration.
6.4 Assets of Series. All consideration received by the Trust for the issue
or sale of Interests of a particular series together with all Trust Property
in which such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived
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from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that series for all purposes, subject
only to the rights of creditors of such series and except as may otherwise be
required by applicable tax laws, and shall be so recorded upon the books of
account of the Trust. Separate and distinct records shall be maintained for
each series and the assets associated with a series shall be held and
accounted for separately from the other assets of the Trust, or any other
series. In the event that there is any Trust Property, or any income,
earnings, profits, and proceeds thereof, funds, or payments which are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series established and designated
from time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such allocation by the Trustees
shall be conclusive and binding upon the Holders of all Interests for all
purposes.
6.5 Liabilities of Series. (a) The Trust Property belonging to each
particular series shall be charged with the liabilities of the Trust in
respect of that series and all expenses, costs, charges and reserves
attributable to that series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular series shall be allocated and charged by the
Trustees to and among any one or more of the series established and designated
from time to time in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the Holders of all Interests for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital,
and each such determination and allocation shall be conclusive and binding
upon the Holders.
(b) Without limitation of the foregoing provisions of this Section, but
subject to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges or reserves as herein provided, the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series shall be enforceable
against the assets of such series only, and not against the assets of any
other series. Notice of this limitation on interseries liabilities shall be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the DBTA, and upon the giving of such notice
in the certificate of trust, the statutory provisions of Section 3804 of the
DBTA relating to limitations on interseries liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each series. Every note, bond,
contract or other undertaking issued by or on behalf of a particular series
shall include a recitation limiting the obligation represented thereby to that
series and its assets.
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6.6 Dividends and Distributions. (a) Dividends and distributions on
Interests of a particular series or any class thereof may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or resolution adopted only once or with such
frequency as the Trustees may determine, to the Holders of Interests in that
series or class, from such of the income and capital gains, accrued or
realized, from the Trust Property belonging to that series, or in the case of
a class, belonging to that series and allocable to that class, as the Trustees
may determine, after providing for actual and accrued liabilities belonging to
that series. All dividends and distributions on Interests in a particular
series or class thereof shall be distributed pro rata to the Holders of
Interests in that series or class in proportion to the total outstanding
Interests in that series or class held by such Holders at the date and time of
record established for the payment of such dividends or distribution, except
to the extent otherwise required or permitted by the preferences and special
or relative rights and privileges of any series or class. Such dividends and
distributions may be made in cash or Interests of that series or class or a
combination thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election by each
Holder of the mode of the making of such dividend or distribution to that
Holder. Any such dividend or distribution paid in Interests will be paid at
the net asset value thereof as determined in accordance with Section 7.4.
(b) The Interests in a series or a class of the Trust shall represent
beneficial interests in the Trust Property belonging to such series or in the
case of a class, belonging to such series and allocable to such class. Each
Holder of Interests in a series or a class shall be entitled to receive its
pro rata share of distributions of income and capital gains made with respect
to such series or such class. Upon reduction or withdrawal of its Interests or
indemnification for liabilities incurred by reason of being or having been a
Holder of Interests in a series or a class, such Holder shall be paid solely
out of the funds and property of such series or in the case of a class, the
funds and property of such series and allocable to such class of the Trust.
Upon liquidation or termination of a series or class of the Trust, Holders of
Interests in such series or class shall be entitled to receive a pro rata
share of the Trust Property belonging to such series or in the case of a
class, belong to such series and allocable to such class.
6.7 Voting Rights. Notwithstanding any other provision hereof, on each
matter submitted to a vote of the Holders, each Holder shall be entitled to
one vote for each whole Interest standing in his name on the books of the
Trust, and each fractional Interest shall be entitled to a proportionate
fractional vote, irrespective of the series thereof or class thereof and all
Interests of all series and classes thereof shall vote together as a single
class; provided, however, that as to any matter (i) with respect to which a
separate vote of one or more series or classes thereof is permitted or
required by the 1940 Act or the provisions of the instrument establishing and
designating the series or class, such requirements as to a separate vote by
such series or class thereof shall apply in lieu of all Interests of all
series and classes thereof voting together; and (ii) as to any
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matter which affects only the interests of one or more particular series or
classes thereof, only the Holders of the one or more affected series or class
shall be entitled to vote, and each such series or class shall vote as a
separate class.
6.8 Record Dates. The Trustees may from time to time close the transfer
books or establish record dates and times for the purposes of determining the
Holders entitled to be treated as such, to the extent provided or referred to
in Section 8.6.
6.9 Transfer. All Interests of each particular series or class thereof shall
be transferable, but transfers of Interests of a particular series or class
thereof will be recorded on the Interest transfer records of the Trust
applicable to that series or class only at such times as Holders shall have
the right to require the Trust to redeem Interests of that series or class and
at such other times as may be permitted by the Trustees.
6.10 Equality. Except as provided herein or in the instrument designating
and establishing any class or series, all Interests of each particular series
or class thereof shall represent an equal proportionate interest in the assets
belonging to that series, or in the case of a class, belonging to that series
and allocable to that class, subject to the liabilities belonging to that
series, and each Interest of any particular series or classes shall be equal
to each other Interest of that series or class; but the provisions of this
sentence shall not restrict any distinctions permissible under Section 6.7
that may exist with respect to dividends and distributions on Interests of the
same series or class. The Trustees may from time to time divide or combine the
Interests of any particular series or class into a greater or lesser number of
Interests of that series or class without thereby changing the proportionate
beneficial interest in the assets belonging to that series or class or in any
way affecting the rights or Interests of any other series or class.
6.11 Fractions. Any fractional Interest of any series or class, if any such
fractional Interest is outstanding, shall carry proportionately all the rights
and obligations of a whole Interest of that series or class, including rights
and obligations with respect to voting, receipt of dividends and
distributions, redemption of Interests, and liquidation of the Trust.
6.12 Class Differences. Subject to Section 6.3, the relative rights and
preferences of the classes of any series may differ in such other respects as
the Trustees may determine to be appropriate in their sole discretion,
provided that such differences are set forth in the instrument establishing
and designating such classes and executed by a majority of the Trustees.
6.13 Conversion of Interests. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that Holders of
Interests of any series shall have the right to convert said Interests into
one or more other series in accordance with such requirements and procedures
as may be established by the Trustees. The
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Trustees shall also have the authority to provide that Holders of Interests of
any class of a particular series shall have the right to convert said
Interests into one or more other classes of that particular series or any
other series in accordance with such requirements and procedures as may be
established by the Trustees.
6.14 Investments in the Trust. The Trustees may accept investments in the
Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any distributor, principal underwriter,
custodian, transfer agent or other person to accept orders for the purchase of
Interests that conform to such authorized terms and to reject any purchase
orders for Interests whether or not conforming to such authorized terms.
6.15 Trustees and Officers as Holders. Any Trustee, officer or other agent
of the Trust, and any organization in which any such person is interested, may
acquire, own, hold and dispose of Interests of the Trust to the same extent as
if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
Interests from any such person or any such organization subject only to the
general limitations, restrictions or other provisions applicable to the sale
or purchase of Interests generally.
6.16 No Pre-emptive Rights; Derivative Suits. Holders shall have no pre-
emptive or other right to subscribe to any additional Interests or other
securities issued by the Trust. No action may be brought by a Holder on behalf
of the Trust unless Holders owning no less than 10% of the then outstanding
Interests, or series or class thereof, join in the bringing of such action. A
Holder of Interests in a particular series or a particular class of the Trust
shall not be entitled to participate in a derivative or class action lawsuit
on behalf of any other series or any other class or on behalf of the Holders
of Interests in any other series or any other class of the Trust.
6.17 No Appraisal Rights. Holders shall have no right to demand payment for
their Interests or to any other rights of dissenting Holders in the event the
Trust participates in any transaction which would give rise to appraisal or
dissenters' rights by a stockholder of a corporation organized under the
General Corporation Law of Delaware, or otherwise.
6.18 Status of Interests and Limitation of Personal Liability. Interests
shall be deemed to be personal property giving only the rights provided in
this Declaration. Every Holder by virtue of acquiring Interests shall be held
to have expressly assented and agreed to the terms hereof and to be bound
hereby. The death, incapacity, dissolution, termination or bankruptcy of a
Holder during the continuance of the Trust shall not operate to dissolve or
terminate the Trust or any series thereof nor entitle the representative of
such Holder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but shall entitle the representative of
such Holder only to the rights of such Holder under this Trust. Ownership of
Interests shall not entitle the Holder to any title in or
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to the whole or any part of the Trust Property or right to call for a
partition or division of the same or for an accounting, nor shall the
ownership of Interests constitute the Holders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust, shall have any
power to bind personally any Holder, nor except as specifically provided
herein to call upon any Holder for the payment of any sum of money or
assessment whatsoever other than such as the Holder may at any time personally
agree to pay.
ARTICLE VII
Purchases and Redemptions
7.1 Purchases. The Trustees, in their discretion, may, from time to time,
without a vote of the Holders, permit the purchase of Interests by such party
or parties (or increase in the Interests of a Holder) and for such type of
consideration, including, without limitation, cash or property, at such time
or times (including, without limitation, each business day), and on such terms
as the Trustees may deem best, and may in such manner acquire other assets
(including, without limitation, the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses.
7.2 Redemption by Holder. (a) Each Holder of Interests of the Trust or any
series or class thereof, shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of his
or her Interests of the Trust, or series or class thereof, at a redemption
price equal to the net asset value per Interest of the Trust or series or
class thereof, next determined in accordance with Section 7.4 hereof after the
Interests are properly tendered for redemption, subject to any contingent
deferred sales charge or redemption charge in effect at the time of
redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may, subject to the requirements of the 1940 Act, make
payment wholly or partly in securities or other assets belonging to the Trust
or series or class thereof of which the Interests being redeemed are part at
the value of such securities or assets used in such determination of net asset
value.
(b) Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the Holders of Interests of the
Trust, or series or class thereof, to require the Trust to redeem Interests of
the Trust, or of any series or class thereof, during any period or at any time
when and to the extent permissible under the 1940 Act.
7.3 Redemption by Trust. Each Interest of the Trust, or series or class
thereof, that has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if such Interest
was then being redeemed by the Holder pursuant to
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Section 7.2 hereof: (i) at any time, if the Trustees determine in their sole
discretion and by majority vote that it is in the best interests of the Trust,
or any series or class thereof, to abolish any series or class of the Trust,
or (ii) upon such other conditions as may from time to time be determined by
the Trustees and set forth in the then current Prospectus of the Trust with
respect to maintenance of Holder accounts of a minimum amount. Upon such
redemption the Holders of the Interests so redeemed shall have no further
right with respect thereto other than to receive payment of such redemption
price.
7.4 Net Asset Value. (a) The net asset value per Interest of any series
shall be (i) in the case of a series whose Interests are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
series (being the value of the assets belonging to that series less the
liabilities belonging to that series) by the total number of Interests of that
series outstanding, and (ii) in the case of a class of Interests of a series
whose Interests are divided into classes, the quotient obtained by dividing
the value of the net assets of that series allocable to such class (being the
value of the assets belonging to that series allocable to such class less the
liabilities allocable to such class) by the total number of Interests of such
class outstanding; all determined in accordance with the methods and
procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
(b) The Trustees may determine to maintain the net asset value per Interest
of any series or any class at a designated constant dollar amount and in
connection therewith may adopt procedures consistent with the 1940 Act for
continuing declarations of income attributable to that series or that class as
dividends payable in additional Interests of that series at the designated
constant dollar amount and for the handling of any losses attributable to that
series or that class. Such procedures may provide that in the event of any
loss each Holder shall be deemed to have contributed to the capital of the
Trust attributable to that series his or her pro rata portion of the total
number of Interests required to be cancelled in order to permit the net asset
value per Interest of that series or class to be maintained, after reflecting
such loss, at the designated constant dollar amount. Each Holder of the Trust
shall be deemed to have agreed, by his or her investment in any series or
class with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence in
the event of any such loss.
ARTICLE VIII
Holders
8.1 Rights of Holders. The right to conduct any business hereinbefore
described is vested exclusively in the Trustees, and the Holders shall have no
rights under this Declaration or with respect to the Trust Property other than
the beneficial interest conferred by their Interests and the voting rights
accorded to them under this Declaration.
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8.2 Register of Interests. A register shall be kept by the Trust under the
direction of the Trustees which shall contain the names and addresses of the
Holders and Interests held by each Holder. Each such register shall be
conclusive as to the identity of the Holders of the Trust and the Persons who
shall be entitled to payments of distributions or otherwise to exercise or
enjoy the rights of Holders. No Holder shall be entitled to receive payment of
any distribution, nor to have notice given to it as herein provided, until it
has given its address to such officer or agent of the Trustees as shall keep
the said register for entry thereon. No certificates certifying the ownership
of interests need be issued except the Trustees may otherwise determine from
time to time.
8.3 Notices. Any and all notices to which any Holder hereunder may be
entitled and any and all communications shall be deemed duly served or given
if presented personally to a Holder, left at his or her residence or usual
place of business or sent via United States mail or by electronic transmission
to a Holder at his or her address as it is registered with the Trust, as
provided in Section 8.2. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the Holder at his or her
address as it is registered with the Trust, as provided in Section 8.2, with
postage thereon prepaid.
8.4 Meetings of Holders. Meetings of the Holders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request of Holders holding, in the aggregate, not less than 10% of the
Interests (or series or class thereof), such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall be
held within or without the State of Delaware on such day and at such time as
the Trustees shall designate. Holders of one-third of the Interests in the
Trust, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as may otherwise be required by the 1940
Act or other applicable law or by this Declaration or the By-Laws of the
Trust. If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding more than 50% of the total Interests
(or series or class thereof) of the Holders present, either in person or by
proxy, at such meeting constitutes the action of the Holders, unless the 1940
Act, other applicable law, this Declaration or the By-Laws of the Trust
requires a greater number of affirmative votes. Notwithstanding the foregoing,
the affirmative vote by the Holders present, in person or by proxy, holding
less than 50% of the Interests (or class or series thereof) of the Holders
present, in person or by proxy, at such meeting shall be sufficient for
adjournments. Any meeting of Holders, whether or not a quorum is present, may
be adjourned for any lawful purpose provided that no meeting shall be
adjourned for more than six months beyond the originally scheduled meeting
date. Any adjoined session or sessions may be held, within a reasonable time
after the date set for the original meeting without the necessity of further
notice.
8.5 Notice of Meetings. Written or printed notice of all meetings of the
Holders, stating the time, place and purposes of the meeting, shall be given
as provided in Section 8.3 for the giving of notices. At any such
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meeting, any business properly before the meeting may be considered whether or
not stated in the notice of the meeting. Any adjourned meeting held as
provided in Section 8.4 shall not require the giving of additional notice.
8.6 Record Date. For the purpose of determining the Holders who are entitled
to notice of any meeting and to vote at any meeting, or to participate in any
distribution, or for the purpose of any other action, the Trustees may from
time to time fix a date, not more than 90 calendar days prior to the date of
any meeting of the Holders or payment of distributions or other action, as the
case may be, as a record date for the determination of the persons to be
treated as Holders of record for such purposes, and any Holder who was a
Holder at the date and time so fixed shall be entitled to vote at such meeting
or to be treated as a Holder of record for purposes of such other action, even
though he or she has since that date and time disposed of his or her
Interests, and no Holder becoming such after that date and time shall be so
entitled to vote at such meeting or to be treated as a Holder of record for
purposes of such other action. If the Trustees shall divide the Interests into
two or more series in accordance with Section 6.2 herein, nothing in this
Section shall be construed as precluding the Trustees from setting different
record dates for different series and if the Trustees shall divide any series
into two or more classes in accordance with Section 6.3 herein, nothing in
this Section 8.5 shall be construed as precluding the Trustees from setting
different record dates for different classes.
8.7 Proxies, Etc. At any meeting of Holders, any Holder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken.
(a) Pursuant to a resolution of a majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or one or more of the officers
of the Trust. Only Holders of record shall be entitled to vote. Each Holder
shall be entitled to a vote proportionate to its Interest in the Trust.
(b) When Interests are held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Interest, but if
more than one of them shall be present at such meeting in person or by proxy,
and such joint owners or their proxies so present disagree as to any vote to
be cast, such vote shall not be received in respect of such Interest.
(c) A proxy purporting to be executed by or on behalf of a Holder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. If the Holder is a minor or a
person of unsound mind, and subject to guardianship or to the legal control of
any other person regarding the charge or management of its Interest, he or she
may vote by his or her guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
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8.8 Reports. The Trustees shall cause to be prepared, at least annually, a
report of operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally
accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition,
furnish to the Holders at least semi-annually interim reports containing an
unaudited balance sheet as of the end of such period and an unaudited
statement of income and surplus for the period from the beginning of the
current Fiscal Year to the end of such period.
8.9 Inspection of Records. The records of the Trust shall be open to
inspection by Holders during normal business hours and for any purpose not
harmful to the Trust.
8.10 Voting Powers. (a) The Holders shall have power to vote only (i) for
the election of Trustees as contemplated by Section 2.2 hereof, (ii) with
respect to any investment advisory contract as contemplated by Section 4.1
hereof, (iii) with respect to termination of the Trust as provided in Section
9.2 hereof, (iv) with respect to amendments to the Amended and Restated
Declaration of Trust as provided in Section 9.3 hereof, (v) with respect to
any merger, consolidation or sale of assets as provided in Section 9.4 hereof,
(vi) with respect to incorporation of the Trust to the extent and as provided
in Section 9.5 hereof, (vii) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, DBTA, or any other applicable
law, the Declaration, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as and when the Trustees
may consider necessary or desirable.
(b) Each Holder shall be entitled to vote based on the ratio its Interest
bears to the Interests of all Holders entitled to vote. Until Interests are
issued, the Trustees may exercise all rights of Holders and may take any
action required by law, the Declaration or the By-Laws to be taken by Holders.
The By-Laws may include further provisions for Holders' votes and meetings and
related matters not inconsistent with this Declaration.
8.11 Holder Action by Written Consent. Any action which may be taken by
Holders may be taken without notice and without a meeting if Holders holding
more than 50% of the total Interests entitled to vote (or such larger
proportion thereof as shall be required by any express provision of this
Declaration) shall consent to the action in writing and the written consents
shall be filed with the records of the meetings of Holders. Such consents
shall be treated for all purposes as votes taken at a meeting of Holders.
8.12 Holder Communications. (a) Whenever ten or more Holders who have been
such for at least six months preceding the date of application, and who hold
in the aggregate at least 1% of the total Interests, shall apply to the
Trustees in writing, stating that they wish to communicate with other Holders
with a view to obtaining signatures to a request for a meeting of Holders and
accompanied by a form of
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communication and request which they wish to transmit, the Trustees shall
within five business days after receipt of such application either (1) afford
to such applicants access to a list of the names and addresses of all Holders
as recorded on the books of the Trust; or (2) inform such applicants as to the
approximate number of Holders, and the approximate cost of transmitting to
them the proposed communication and form of request.
(b) If the Trustees elect to follow the course specified in clause (2)
above, the Trustees, upon the written request of such applicants, accompanied
by a tender of the material to be transmitted and of the reasonable expenses
of transmission, shall, with reasonable promptness, transmit, by United States
mail or by electronic transmission, such material to all Holders at their
addresses as recorded on the books, unless within five business days after
such tender the Trustees shall transmit, by United States mail or by
electronic transmission, to such applicants and file with the Commission,
together with a copy of the material to be transmitted, a written statement
signed by at least a majority of the Trustees to the effect that in their
opinion either such material contains untrue statements of fact or omits to
state facts necessary to make the statements contained therein not misleading,
or would be in violation of applicable law, and specifying the basis of such
opinion. The Trustees shall thereafter comply with any order entered by the
Commission and the requirements of the 1940 Act and the Securities Exchange
Act of 1934.
ARTICLE IX
Duration; Termination of Trust; Amendment; Mergers: Etc.
9.1 Duration. Subject to possible termination in accordance with the
provisions of Section 9.2, the Trust created hereby shall continue perpetually
pursuant to Section 3808 of DBTA.
9.2 Termination of Trust.
(a) The Trust may be terminated (i) by the affirmative vote of the Holders
of not less than two-thirds of the Interests in the Trust at any meeting of
the Holders, or (ii) by an instrument in writing, without a meeting, signed by
a majority of the Trustees and consented to by the Holders of not less than
two-thirds of such Interests, or (iii) by the Trustees by written notice to
the Holders. Upon any such termination,
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall continue
until the affairs of the Trust shall have been wound up, including the
power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, or otherwise dispose of all or all
or any part of the remaining Trust Property to one or more Persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind,
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discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, or other disposition of all or substantially all of the Trust
Property shall require approval of the principal terms of the transaction
and the nature and amount of the consideration by the Holders by a
Majority Interests Vote.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly
each, among the Holders according to their respective rights.
(b) Upon termination of the Trust and distribution to the Holders as herein
provided, a majority of the Trustees shall execute and lodge among the records
of the Trust an instrument in writing setting forth the fact of such
termination and file a certificate of cancellation in accordance with Section
3810 of the DBTA. Upon termination of the Trust, the Trustees shall thereon be
discharged from all further liabilities and duties hereunder, and the rights
and interests of all Holders shall thereupon cease.
9.3 Amendment Procedure.
(a) All rights granted to the Holders under this Declaration of Trust are
granted subject to the reservation of the right of the Trustees to amend this
Declaration of Trust as herein provided, except as set forth herein to the
contrary. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Holders) may be amended at any
time, so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority of
the then Trustees (or by an officer of the Trust pursuant to the vote of a
majority of such Trustees). Any such amendment shall be effective as provided
in the instrument containing the terms of such amendment or, if there is no
provision therein with respect to effectiveness, upon the execution of such
instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer of the Trust to the effect that such
amendment has been duly adopted.
(b) No amendment may be made, under Section 9.3(a) above, which would change
any rights with respect to any Interest in the Trust by reducing the amount
payable thereon upon liquidation of the Trust, by repealing the limitations on
personal liability of any Holder or Trustee, or by diminishing or eliminating
any voting rights pertaining thereto, except with a Majority Interests Vote.
(c) A certification signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Holders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed
by a majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
(d) Notwithstanding any other provision hereof, until such time as Interests
are first sold, this Declaration may be terminated or amended in
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any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
9.4 Merger, Consolidation and Sale of Assets. The Trust may merge or
consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of its
property, including its good will, upon such terms and conditions and for such
consideration when and as authorized by no less than a majority of the
Trustees and by a Majority Interests Vote of the Trust or by an instrument or
instruments in writing without a meeting, consented to by the Holders of not
less than 50% of the total Interests of the Trust and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to
have been accomplished under and pursuant to the statutes of the State of
Delaware. In accordance with Section 3815(f) of DBTA, an agreement of merger
or consolidation may effect any amendment to the Declaration or By-Laws or
effect the adoption of a new declaration of trust or by-laws of the Trust if
the Trust is the surviving or resulting business trust. A certificate of
merger or consolidation of the Trust shall be signed by a majority of the
Trustees.
9.5 Incorporation. Upon a Majority Interests Vote, the Trustees may cause to
be organized or assist in organizing a corporation or corporations under the
laws of any jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property, or series thereof, or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property, or series
thereof, to any such corporation, trust, association or organization in
exchange for the equity interests thereof or otherwise, and to lend money to,
subscribe for the equity interests of, and enter into any contracts with any
such corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the
Trust holds or is about to acquire equity interests. The Trustees may also
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust, partnership, association or other organization if
and to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of the
Holders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organizations or entities.
ARTICLE X
Miscellaneous
10.1 Certificate of Designation; Agent for Service of Process. The Trust
shall file, in accordance with Section 3812 of DBTA, in the office of the
Secretary of State of Delaware, a certificate of trust, in the form and with
such information required by Section 3810 by DBTA and executed in the manner
specified in Section 3811 of DBTA. In the event the Trust does
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not have at least one Trustee qualified under Section 3807(a) of DBTA, then
the Trust shall comply with Section 3807(b) of DBTA by having and maintaining
a registered office in Delaware and by designating a registered agent for
service of process on the Trust, which agent shall have the same business
office as the Trust's registered office. The failure to file any such
certificate, to maintain a registered office, to designate a registered agent
for service of process, or to include such other information shall not affect
the validity of the establishment of the Trust, the Declaration, the By-Laws
or any action taken by the Trustees, the Trust officers or any other Person
with respect to the Trust except insofar as a provision of the DBTA would have
governed, in which case the Delaware common law governs.
10.2 Governing Law. This Declaration is executed by all of the Trustees and
delivered with reference to DBTA and the laws of the State of Delaware, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to DBTA and the laws of the
State of Delaware (unless and to the extent otherwise provided for and/or
preempted by the 1940 Act or other applicable federal securities laws);
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration (a) the provisions of Section 3540 of Title 12 of
the Delaware Code or (b) any provisions of the laws (statutory or common) of
the State of Delaware (other than the DBTA) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of
the Trustees set forth or referenced in this Declaration.
10.3 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
10.4 Reliance by Third Parties. Any certificate executed by an individual
who, according to the records of the Trust or of any recording office in which
this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to (a) the number or identity of Trustees or Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of
any vote passed at a meeting of Trustees or Holders, (d) the fact that the
number of Trustees or Holders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (e) the form of any
By-Laws adopted by or the identity of any officers elected by the Trustees, or
(f) the existence of any fact or facts which in any manner relate to the
affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their
successors.
10.5 Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the DBTA, or with other applicable laws and
regulations, the conflicting provisions shall be deemed
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never to have constituted a part of this Declaration; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
10.6 Trust Only. It is the intention of the Trustees to create only a
business trust under DBTA with the relationship of Trustee and beneficiary
between the Trustees and each Holder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any form of
legal relationship other than a Delaware business trust except to the extent
such trust is deemed to constitute a corporation under the Code and applicable
state tax laws. Nothing in this Declaration of Trust shall be construed to
make the Holders, either by themselves or with the Trustees, partners or
members of a joint stock association.
10.7 Withholding. Should any Holder be subject to withholding pursuant to
the Code or any other provision of law, the Trust shall withhold all amounts
otherwise distributable to such Holder as shall be required by law and any
amounts so withheld shall be deemed to have been distributed to such Holder
under this Declaration of Trust. If any sums are withheld pursuant to this
provision, the Trust shall remit the sums so withheld to and file the required
forms with the Internal Revenue Service, or other applicable government
agency.
10.8 Headings and Construction. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. Whenever the singular
number is used herein, the same shall include the plural; and the neuter,
masculine and feminine genders shall include each other, as applicable.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/ Steven J. Gray
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Initial Trustee
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EXHIBIT 2
ATLAS INSURANCE TRUST
BY-LAWS
These By-Laws are made as of the 27th day of January, 1997 and adopted
pursuant to Section 2.7 of the Declaration of Trust establishing Atlas
Insurance Trust dated January 27, 1997, as from time to time amended
(hereinafter called the "Declaration"). All words and terms capitalized in
these By-Laws shall have the meaning or meanings set forth for such words or
terms in the Declaration.
ARTICLE I
Meetings of Holders
Section 1.1 Annual Meeting. An annual meeting of the Holders of Interests in
the Trust, which may be held on such date and at such hour as may from time to
time be designated by the Board of Trustees and stated in the notice of such
meeting, is not required to be held unless certain actions must be taken by
the Holders as set forth in Section 8.7 of the Declaration, or except when the
Trustees consider it necessary or desirable.
Section 1.2 Chairman. The President or, in his or her absence, the Chief
Operating Officer shall act as chairman at all meetings of the Holders and, in
the absence of both of them, the Trustee or Trustees present at the meeting
may elect a temporary chairman for the meeting, who may be one of themselves
or an officer of the Trust.
Section 1.3 Proxies; Voting. Holders may vote either in person or by duly
executed proxy and each Holder shall be entitled to a vote proportionate to
his or her Interest in the Trust, all as provided in Article VIII of the
Declaration. No proxy shall be valid after eleven (11) months from the date of
its execution, unless a longer period is expressly stated in such proxy.
Section 1.4 Fixing Record Dates. For the purpose of determining the Holders
who are entitled to notice of or to vote or act at a meeting, including any
adjournment thereof, or who are entitled to participate in any distributions,
or for any other proper purpose, the Trustees may from time to time fix a
record date in the manner provided in Section 8.3 of the Declaration. If the
Trustees do not, prior to any meeting of the Holders, so fix a record date,
then the date of mailing notice of the meeting shall be the record date.
Section 1.5 Inspectors of Election. In advance of any meeting of the
Holders, the Trustees may appoint Inspectors of Election to act at the meeting
or any adjournment thereof. If Inspectors of Election are not so appointed,
the chairman, if any, of any meeting of the Holders may, and on the request of
any Holder or his or her proxy shall, appoint Inspectors of Election of the
meeting. The number of Inspectors shall be either one or three. If appointed
at the meeting on the request of one or more Holders
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or proxies, a Majority Interests Vote shall determine whether one or three
Inspectors are to be appointed, but failure to allow such determination by the
Holders shall not affect the validity of the appointment of Inspectors of
Election. In case any person appointed as Inspector fails to appear or fails
or refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the
Interests owned by Holders, the Interests represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges
and questions in any way arising in connection with the right to vote, shall
count and tabulate all votes or consents, determine the results, and do such
other acts as may be proper to conduct the election or vote with fairness to
all Holders. If there are three Inspectors of Election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. On request of the chairman, if any, of the meeting, or of
any Holder or his or her proxy, the Inspectors of Election shall make a report
in writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
Section 1.6 Records of Meetings of Holders. At each meeting of the Holders
there shall be open for inspection the minutes of the last previous meeting of
Holders of the Trust and a list of the Holders of the Trust, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of
the record date of the meeting. Such list of Holders shall contain the name of
each Holder in alphabetical order, the Holder's address and Interests owned by
such Holder. Holders shall have the right to inspect books and records of the
Trust during normal business hours for any purpose not harmful to the Trust.
ARTICLE II
Trustees
Section 2.1 Annual and Regular Meetings. The Trustees shall hold an Annual
Meeting of the Trustees for the review of contractual arrangements for the
Trust and the transaction of other business which may come before such
meeting. Regular meetings of the Trustees may be held without call or notice
at such place or places and times as the Trustees may provide from time to
time.
Section 2.2 Special Meetings. Special Meetings of the Trustees shall be held
upon the call of the chairman, if any, the President, the Secretary, or any
two Trustees, at such time, on such day and at such place, as shall be
designated in the notice of the meeting.
Section 2.3 Notice. Notice of a meeting shall be given by mail (which term
shall include overnight mail) or by telegram (which term shall include a
cablegram or telefacsimile) or delivered personally (which term shall include
notice by telephone). If notice is given by mail, it shall be
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mailed not later than 72 hours preceding the meeting and if given by telegram
or personally, such notice shall be delivered not later than 24 hours
preceding the meeting. Notice of a meeting of Trustees may be waived before or
after any meeting by signed written waiver. Neither the business to be
transacted at, nor the purpose of, any meeting of the Board of Trustees need
be stated in the notice or waiver of notice of such meeting, and no notice
need be given of action proposed to be taken by written consent. The
attendance of a Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Trustee attends a meeting for the express purpose
of objecting, at the commencement of such meeting, to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened.
Section 2.4 Chairman; Records. The Trustees shall appoint a Chairman of the
Board from among their number. Such Chairman of the Board shall act as
chairman at all meetings of the Trustees; in his or her absence the President
shall act as chairman; and, in the absence of all of them, the Trustees
present shall elect one of their number to act as temporary chairman. The
results of all actions taken at a meeting of the Trustees, or by written
consent of the Trustees, shall be recorded by the Secretary.
Section 2.5 Audit Committee. The Board of Trustees may, by the affirmative
vote of a majority of the entire Board, appoint from its members an Audit
Committee composed of two or more Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, as the Board may from time to time
determine. The Audit Committee shall (a) recommend independent public
accountants for selection by the Board, (b) review the scope of audit,
accounting and financial internal controls and the quality and adequacy of the
Trust's accounting staff with the independent public accountants and such
other persons as may be deemed appropriate, (c) review with the accounting
staff and the independent public accountants the compliance of transactions of
the Trust with its investment adviser, administrator or any other service
provider with the financial terms of applicable contracts or agreements, (d)
review reports of the independent public accountants and comment to the Board
when warranted, (e) report to the Board at least once each year and at such
other times as the committee deems desirable, and (f) be directly available at
all times to independent public accountants and responsible officers of the
Trust for consultation on audit, accounting and related financial matters.
Section 2.6 Nominating Committee of Trustees. The Board of Trustees may, by
the affirmative vote of a majority of the entire Board, appoint from its
members a Trustee Nominating Committee composed of two or more Trustees. The
Trustee Nominating Committee shall recommend to the Board a slate of persons
to be nominated for election as Trustees by the Holders at a meeting of the
Holders and a person to be elected to fill any vacancy occurring for any
reason in the Board. Notwithstanding anything in this Section to the contrary,
if the Trust has in effect a plan pursuant to Rule 12b-1 under the 1940 Act,
the selection and nomination of those Trustees who are not "interested
persons" (as defined
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in the Act) shall be committed to the discretion of such Disinterested
Trustees.
Section 2.7 Executive Committee. The Board of Trustees may appoint from its
members an Executive Committee composed of those Trustees as the Board may
from time to time determine, of which committee the Chairman of the Board
shall be a member. In the intervals between meetings of the Board, the
Executive Committee shall have the power of the Board to (a) determine the
value of securities and assets owned by the Trust, (b) elect or appoint
officers of the Trust to serve until the next meeting of the Board, and (c)
take such action as may be necessary to manage the business of the Trust. All
action by the Executive Committee shall be recorded and reported to the Board
at its meeting next succeeding such action.
Section 2.8 Other Committees. The Board of Trustees may appoint from among
its members other committees composed of two or more of its Trustees which
shall have such powers as may be delegated or authorized by the resolution
appointing them.
Section 2.9 Committee Procedures. The Board of Trustees may at any time
change the members of any committee, fill vacancies or discharge any
committee. In the absence of any member of any committee, the member or
members thereof present at any meeting, whether or not they constitute a
quorum, may unanimously appoint to act in the place of such absent member a
member of the Board who, except in the case of the Executive Committee, is not
an "interested person" of the Trust as the Board may from time to time
determine. Each committee may fix its own rules of procedure and may meet as
and when provided by those rules. Copies of the minutes of all meetings of
committees other than the Nominating Committee and the Executive Committee
shall be distributed to the Board unless the Board shall otherwise provide.
ARTICLE III
Officers
Section 3.1 Officers of the Trust; Compensation. The officers of the Trust
shall consist of a President, a Secretary, a Treasurer and such other officers
or assistant officers, including Vice Presidents, as may be elected by the
Trustees. Any two or more of the offices may be held by the same person. The
Trustees may designate a Vice President as an Executive Vice President and may
designate the order in which the other Vice Presidents may act. No officer of
the Trust need be a Trustee. The Board of Trustees may determine what, if any,
compensation shall be paid to officers of the Trust.
Section 3.2 Election and Tenure. At the initial organization meeting and
thereafter at each annual meeting of the Trustees, the Trustees shall elect
the President, Secretary, Treasurer and such other officers as the Trustees
shall deem necessary or appropriate in order to carry out the business of the
Trust. Such officers shall hold office until the
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next annual meeting of the Trustees and until their successors have been duly
elected and qualified. The Trustees may fill any vacancy in office or add any
additional officers at any time.
Section 3.3 Removal of Officers. Any officer may be removed at any time,
with or without cause, by action of a majority of the Trustees. This provision
shall not prevent the making of a contract of employment for a definite term
with any officer and shall have no effect upon any cause of action which any
officer may have as a result of removal in breach of a contract of employment.
Any officer may resign at any time by notice in writing signed by such officer
and delivered or mailed to the President or Secretary, and such resignation
shall take effect immediately, or at a later date according to the terms of
such notice in writing.
Section 3.4 Bonds and Surety. Any officer may be required by the Trustees to
be bonded for the faithful performance of his or her duties in such amount and
with such sureties as the Trustees may determine.
Section 3.5 President and Vice-Presidents. The President shall be the chief
executive officer of the Trust and, subject to the control of the Trustees,
shall have general supervision, direction and control of the business of the
Trust and of its employees and shall exercise such general powers of
management as are usually vested in the office of president of a corporation.
The President shall preside at all meetings of the Holders and, in the absence
of the Chairman of the Board, the President shall preside at all meetings of
the Trustees. The President shall be, ex officio, a member of all standing
committees. Subject to direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority
and power, on behalf of all of the Trustees, to attend and to act and to vote,
on behalf of the Trust at any meetings of business organizations in which the
Trust holds an interest, or to confer such powers upon any other persons, by
executing any proxies duly authorizing such persons. The President shall have
such further authorities and duties as the Trustees shall from time to time
determine. In the absence or disability of the President, the Vice Presidents
in order of their rank or the Vice President designated by the Trustees, shall
perform all of the duties of President, and when so acting shall have all the
powers of and be subject to all of the restrictions upon the President.
Subject to the direction of the President, the Treasurer and each Vice
President shall have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages
and other instruments in writing, and, in addition, shall have such other
duties and powers as shall be designated from time to time by the Trustees,
the Chairman, or the President.
Section 3.6 Secretary. The Secretary shall keep the minutes of all meetings
of, and record all votes of, Holders, Trustees and any committees of Trustees,
provided that, in the absence or disability of the Secretary, the
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Holders or Trustees or committee may appoint any other person to keep the
minutes of a meeting and record votes. The Secretary shall attest the
signature or signatures of the officer or officers executing any instrument on
behalf of the Trust. The Secretary shall also perform any other duties
commonly incident to such office in a Delaware business trust and shall have
such other authorities and duties as the Trustees shall from time to time
determine.
Section 3.7 Treasurer. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds, securities,
notes receivable and other valuable papers and documents of the Trust, and
shall have and exercise under the supervision of the Trustees and of the
Chairman and the President all powers and duties normally incident to his
office. He or she may endorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order. He or she shall
deposit all funds of the Trust as may be ordered by the Trustees, the Chairman
or the President. He or she shall keep accurate account of the books of the
Trust's transactions which shall be the property of the Trust and which,
together with all other property of the Trust in his or her possession, shall
be subject at all times to the inspection and control of the Trustees. Unless
the Trustees shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal financial
officer of the Trust. He or she shall have such other duties and authorities
as the Trustees shall from time to time determine. Notwithstanding anything to
the contrary herein contained, the Trustees may authorize any adviser or
administrator to maintain bank accounts and deposit and disburse funds on
behalf of the Trust.
Section 3.8 Other Officers and Duties. The Trustees may elect such other
officers and assistant officers as they shall from time to time determine to
be necessary or desirable in order to conduct the business of the Trust.
Assistant officers shall act generally in the absence of the officer whom they
assist and shall assist that officer in the duties of his or her office. Each
officer, employee and agent of the Trust shall have such other duties and
authority as may be conferred upon him or her by the Trustees or delegated to
him or her by the President.
ARTICLE IV
Custodian
Section 4.1 Appointment and Duties. The Trustees shall at all times employ a
custodian or custodians with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained
in these By-Laws:
(1) to hold the securities owned by the Trust and deliver the same upon
written order;
(2) to receive and receipt for any moneys due to the Trust and deposit
the same in its own banking department or elsewhere as the Trustees may
direct;
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(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and accounts of the
Trust and furnish clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the net income
and net assets of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. The Trustees may also authorize the custodian to employ one
or more sub-custodians, from time to time, to perform such of the acts and
services of the custodian and upon such terms and conditions as may be agreed
upon between the custodian and such sub-custodian and approved by the Trustee.
Section 4.2 Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian
to deposit all or any part of the securities owned by the Trust in a system
for the central handling of securities established by a national securities
exchange or a national securities association registered with the Commission
under the Securities Exchange Act of 1934, any such other person or entity
with which the Trustees may authorize deposit in accordance with the 1940 Act,
pursuant to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities. All such deposits shall be subject to withdrawal only upon the
order of the Trust.
ARTICLE V
Miscellaneous
Section 5.1 Depositories. In accordance with Article IV of these By-Laws,
the funds of the Trust shall be deposited in such depositories as the Trustees
shall designate and shall be drawn out on checks, drafts or other orders
signed by such officer, officers, agent or agents (including any adviser or
administrator), as the Trustees may from time to time authorize.
Section 5.2 Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in these By-Laws or as the Trustees may from time to time by
resolution or authorization provide.
Section 5.3 Fiscal Year. The fiscal year of the Trust shall be established
by resolution of the Board of Trustees, subject, however, to change from time
to time by the Board of Trustees.
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ARTICLE VI
Interests
Section 6.1 Interests. Except as otherwise provided by law, the Trust shall
be entitled to recognize the exclusive right of a person in whose name
Interests stand on the record of Holders as the owners of such Interests for
all purposes, including, without limitation, the rights to receive
distributions, and to vote as such owner, and the Trust shall not be bound to
recognize any equitable or legal claim to or interest in any such Interests on
the part of any other person.
Section 6.2 Regulations. The Trustees may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Interests of the Trust.
Section 6.3 Distribution Disbursing Agents and the Like. The Trustees shall
have the power to employ and compensate such distribution disbursing agents,
warrant agents and agents for the reinvestment of distributions as they shall
deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustees.
ARTICLE VII
Amendment of By-Laws
Section 7.1 Amendment and Repeal of By-Laws. In accordance with Section 2.7
of the Declaration, the Trustees shall have the power to alter, amend or
repeal the By-Laws or adopt new By-Laws at any time. The Trustees shall in no
event adopt By-Laws which are in conflict with the Declaration, DBTA, the 1940
Act or applicable federal securities laws.
Section 7.2 No Personal Liability. The Declaration establishing the Trust
provides that the name Atlas Insurance Trust does not refer to the Trustees as
individuals or personally; and no Trustee, officer, employee or agent of, or
Holder of Interest in, the Trust shall be held to any personal liability, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Trust
(except to the extent of a Holder's Interest in the Trust).
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EXHIBIT 5
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, dated and effective as of the day of , 1997, is made
and entered into by and between ATLAS INSURANCE TRUST, a Delaware business
trust (hereinafter called the "Trust"), on behalf of each series of the Trust
listed in Appendix A hereto, as amended from time to time (hereinafter
referred to individually as a "Series" and collectively as the "Series") and
ATLAS ADVISERS, INC., a California corporation (hereinafter called the
"Adviser").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Adviser is engaged principally in the business of rendering
investment management services and is so registered under the Investment
Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and management services as described hereunder with respect to the
Series and the Adviser is willing so to do.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. Appointment. The Trust hereby appoints the Adviser to act as adviser and
investment manager to each Series listed in Appendix A on the terms herein set
forth, as may be amended in writing from time to time by the parties hereto.
The Adviser accepts such appointment and agrees to render the services herein
set forth, for the compensation provided in Appendix A.
The Adviser shall, for all purposes herein, be deemed an independent
contractor and not an agent of the Trust.
2. Investment Management Service.
(a) Subject to the supervision of the Trust's Board of Trustees ("Board"),
the Adviser agrees to provide supervision of the portfolio investments of each
Series and to determine what securities or other property shall be purchased
or sold by each Series, giving due consideration to the policies of each
Series as expressed in the Trust's Agreement and Declaration of Trust, By-
laws, Form N-1A Registration Statement ("Registration Statement") under the
1940 Act and under the Securities Act of 1933, as amended (the "1933 Act"),
and prospectus as in use from time to time, as well as to the factors
affecting the status of each Series as a "regulated investment company" under
the Internal Revenue Code of
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1986, as amended. In its duties hereunder, the Adviser shall further be bound
by any and all determinations by the Board relating to investment policy,
which determinations shall in writing be communicated to the Adviser.
(b) (i) The Adviser shall provide adequate facilities and qualified
personnel for the placement of, and shall place orders for the purchase, or
other acquisition, and sale, or other disposition, of portfolio securities for
each Series. With respect to such transactions, the Adviser, subject to such
direction as may be furnished from time to time by the Board of Trustees of
the Trust, shall endeavor as the primary objective to obtain the most
favorable prices and executions of orders. Subject to such primary objective,
the Adviser may place orders with brokerage firms which have sold shares of
any Series or which furnish statistical and other information to the Adviser,
taking into account the value and quality of the brokerage services of such
brokerage firms, including the availability and quality of such statistical
and other information. Receipt by the Adviser of any such statistical and
other information and services shall not be deemed to give rise to any
requirement for abatement of the advisory fee payable to the Adviser pursuant
to Section 4 hereof.
(ii) On occasions when the Adviser deems the purchase or sale of a security
to be in the best interests of a Series as well as other clients of the
Adviser, the Adviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so sold or purchased when the
Adviser believes that to do so will be in the best interests of the Series. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the
manner the Adviser considers to be the most equitable and consistent with its
fiduciary obligations to the Series and to such other clients.
(c) The Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Series, and will furnish the
Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Adviser hereby agrees that all records which it maintains for the Trust
are the property of the Trust, agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any records which it maintains for the Trust
and which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) The Adviser will oversee the computation of the net asset value and the
net income of each Series as described in the currently effective Registration
Statement or as more frequently requested by the Board.
3. Administrative Duties of the Adviser. The Adviser will administer the
affairs of each Series subject to the supervision of the Board and the
following understandings:
(a) The Adviser will provide or will supervise the provision of all aspects
of the operations of each Series, including transfer agency,
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custodial, pricing and accounting services, except as hereinafter set forth;
provided, however, that nothing herein contained shall be deemed to relieve or
deprive the Board of its responsibility for control of the conduct of the
affairs of the Series.
(b) The Adviser will provide the Trust and the Series with such corporate,
administrative and clerical personnel (including offices of the Trust) and
services as are reasonably deemed necessary or advisable by the Board.
(c) The Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Series' prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Series' shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) The Adviser will provide the Trust and the Series with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
The Trust will reimburse the Adviser for the expenses it incurs in providing
the administrative services provided by the Adviser at the end of each
calendar quarter upon presentation to the Trust of an itemized schedule of
such expenses.
4. Further Duties. In all matters relating to the performance of this
Contract, the Adviser will act in conformity with the Agreement and
Declaration of Trust, By-Laws and Registration Statement of the Trust and with
the instructions and directions of the Board and will comply with the
requirements of the 1940 Act, and rules thereunder, and all other applicable
federal and state laws and regulations.
5. Delegation of the Adviser's Duties as Investment Manager and
Administrator. With respect to one or more of the Series, the Adviser may
enter into on or more agreements ("Sub-Advisory or Sub-Administration
Contract") with a sub-adviser or sub-administrator in which the Adviser
delegates to such sub-adviser or sub-administrator the performance of any or
all of the services specified in Section 2 and 3 of this Agreement, provided
that; (i) each Sub-Advisory and Sub-Administration Contract imposes on the
sub-adviser or sub-administrator bound thereby all the duties and conditions
to which the Adviser is subject with respect to the delegated services under
Sections 2, 3 and 4 of this Agreement; (ii) each Sub-Advisory or Sub-
Administration Contract meets all requirements of the 1940 Act and rules
thereunder; and (iii) the Adviser shall not enter into a Sub-Advisory or Sub-
Administration Contract unless it is approved by the Board prior to
implementation.
6. Compensation.
(a) Each Series shall pay to the Adviser on or before the tenth (10th) day
of each month, as compensation for the services rendered by the
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Adviser during the preceding month, an amount to be computed by applying to
the total net asset value of such Series the applicable annual rates set forth
on Appendix A hereto.
(b) The fees on Appendix A shall be computed and accrued daily at one three-
hundred-sixty-fifth (1/365th) of the applicable rates set forth therein. The
net asset value of each Series shall be determined in the manner set forth in
the Agreement and Declaration of Trust, Prospectus and Statement of Additional
Information of the Trust after the close of the New York Stock Exchange on
each day on which said Exchange is open, and in the case of Saturdays,
Sundays, and other days on which said exchange shall not be open, in the
manner further set forth in said Agreement and Declaration of Trust,
Prospectus and Statement of Additional Information. In the event of
termination other than at the end of a calendar month, the monthly fee shall
be prorated for the portion of the month prior to termination and paid on or
before the tenth (10th) day subsequent to termination.
7. Expense Reduction. From time to time, the Advisor may voluntarily
undertake to reduce the fee payable to it under the Agreement and/or to absorb
other operating expenses of the Trust. Such undertaking shall be described in
the current prospectus(es) of the Trust. The payment or assumption by the
Adviser of any expense of the Trust or any Series that the Adviser is not
required by this Agreement to pay or assume shall not obligate the Adviser to
pay or assume the same or any similar expense of the Trust or any Series on
any subsequent occasion.
8. Services Not Exclusive. Nothing contained in this Agreement shall be
construed to prohibit the Adviser from performing investment advisory,
management, or distribution services for other investment companies and other
persons or companies, or to prohibit affiliates of the Adviser from engaging
in such businesses or in other related or unrelated businesses.
9. Indemnification. The Trust agrees (i) not to hold the Adviser or any of
its officers or employees liable for, and (ii) to indemnify or insure the
Adviser and its officers and employees ("Indemnified Parties") against, any
costs and liabilities the Indemnified Parties may incur as a result of any
claim against the Indemnified Parties in the good faith exercise of their
powers hereunder (excepting matters as to which the Indemnified Parties shall
be finally adjudged to have been guilty of willful misconduct, bad faith, or
gross negligence in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this agreement, or in
violation of applicable law) or arising out of an act or omission of any
service provider selected by the Adviser in a commercially reasonable manner.
10. Duration. This Agreement shall become effective with respect to any
Series, on the date hereof or the date of the applicable amendment to Appendix
A to include additional Series. Unless terminated as herein provided, this
Agreement shall remain in full force and effect for two (2)
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years from the date hereof with respect to the initial series and, with
respect to each additional Series, until the day and month following the first
anniversary of the date on which such Series becomes a Series hereunder, and
shall continue in full force and effect for periods of one year thereafter
with respect to each Series so long as such continuance with respect to any
such Series is approved at least annually (i) by either the Trustees of the
Company or by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Series, and (ii) in either event by the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
Any approval of this Agreement by a majority (as defined in the 1940 Act) of
the outstanding voting securities of any Series shall be effective to continue
this Agreement with respect to any such Series notwithstanding (i) that this
Agreement has not been approved by the holders of a majority (as defined in
the 1940 Act) of the outstanding voting securities of any other Series
affected thereby, and (ii) that this Agreement has not been approved by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Trust, unless such approval shall be required by any
applicable law or otherwise.
11. Termination. This Agreement may be terminated with respect to any Series
at any time, without payment of any penalty, by the Board of Trustees of the
Trust or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Trust, on sixty (60) days' written notice
to the Adviser, or by the Adviser on like notice to the Trust. This Agreement
shall automatically and immediately terminate in the event of its assignment.
12. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought and no amendment of this Agreement shall be effective
with respect to a series until approved by a vote of a majority of the
outstanding voting securities of such series, if such approval is required by
applicable law.
13. Miscellaneous.
(a) This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
(b) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
(c) This Agreement shall be construed in accordance with the laws of the
State of California and the 1940 Act. To the extent that the applicable laws
of the State of California conflict with the applicable provisions of the 1940
Act, the latter shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
Atlas Insurance Trust Atlas Advisers, Inc.
By___________________________________ By___________________________________
Larry E. LaCasse Larry E. LaCasse
Chief Operating Officer and Chief Operating Officer and
Group Senior Vice President Group Senior Vice President
Attest: Attest:
_____________________________________ _____________________________________
Steven J. Gray Steven J. Gray
Secretary Secretary
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT
DATED XXXXXXXX XX, 1997
The provisions of the Investment Management Agreement among ATLAS ADVISERS,
INC. and ATLAS INSURANCE TRUST (the "Trust") apply to the following series of
the Trust with the following applicable fee:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
---- -----------
<S> <C>
1. Atlas Balanced Growth Portfolio.................................. .25%
</TABLE>
The management fee is computed on the aggregate net assets of the Portfolio
as of the close of business each day and is payable monthly.
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<PAGE>
EXHIBIT 6
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, dated as of , 1997, between
ATLAS INSURANCE TRUST, a Delaware business trust (the "Trust"), and ATLAS
SECURITIES, INC., a California corporation ("Distributor"), is made with
reference to the following facts:
A. The Trust is an open-end management investment company.
B. Distributor has the facilities to sell and distribute the shares of
beneficial interests of the various series established from time to time
by the Trust (individually and collectively, a "Portfolio" and the
"Portfolios").
C. The Trust and Distributor desire to enter into an agreement to
provide for the sale and distribution of the Portfolios' shares.
NOW, THEREFORE, the parties agree as follows:
1. Distributor shall be the exclusive principal underwriter for the sale of
shares of the Portfolios, except as otherwise provided pursuant to paragraph
20 hereof. The terms "shares of the Portfolios" or "shares" as used herein
shall mean shares of beneficial interest issued by the various series
established by the Trust.
2. In sale of shares of the Portfolios, Distributor shall act as agent of
the Trust except in any transaction in which Distributor sells such shares as
a dealer to the public, in which event Distributor shall act as principal for
its own account.
3. The Trust shall sell shares only through Distributor except that the
Trust may at any time:
(a) Issue shares to any corporation, association, trust, partnership, or
other organization, or its, or their, security holders, beneficiaries, or
members, in connection with a merger, consolidation, or reorganization to
which the Trust is a party, or in connection with the acquisition of all
or substantially all the property and assets of such corporation,
association, trust, partnership, or other organization;
(b) Issue shares at net asset value to the holders of shares of other
series of the Trust or shares of beneficial interest of other investment
companies managed by Atlas Advisers, Inc. pursuant to any exchange or
reinvestment option made available as described in a current Prospectus
for the Portfolios;
(c) Issue shares at net asset value to its shareholders in connection
with the reinvestment of dividends and other distributions paid by the
Portfolios;
(d) Issue shares at net asset value to Trustees, officers, and employees
of the Trust, its investment manager, any principal underwriter of the
Trust, and their affiliates or affiliates of Golden
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West Financial Corporation, including any trust, pension, profit sharing,
or other benefit plan established for such persons, registered
representatives and other employees of dealers having Selling Agreements
with Distributor and with respect to all such persons listed, their
respective spouse, siblings, parents and children, and to other persons as
permitted by applicable rules adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act"), as in
effect from time to time and to other persons as described in a Prospectus
for the Portfolios;
(e) Issue shares at net asset value to the sponsor organization,
custodian, or depository of a periodic or single payment plan, or similar
plan for the purchase of shares of the Portfolios, purchasing for such
plan; and
(f) Issue shares in the course of any other transaction specifically
provided for in a Prospectus for the Portfolios, or upon obtaining the
written consent of Distributor thereto.
4. Distributor shall devote its best efforts to the sale of shares of the
Portfolios and shares of any other mutual funds managed by Atlas Advisers,
Inc., for which Distributor has been authorized to act as a principal
underwriter for the sale of their shares. Distributor shall maintain a sales
organization suited to the sale of shares of the Portfolios and shall use its
best efforts to effect such sales and maintain appropriate qualification to do
so in all those jurisdictions in which it sells or offers shares for sale and
in which qualification is required.
5. Within the United States of America, Distributor shall offer and sell
shares only to insurance company separate accounts, or to such broker-dealers
as are members in good standing of the National Association of Securities
Dealers, Inc. ("NASD"), or to persons legally engaged in securities sales
activities who are exempt from NASD membership in accord with applicable law.
Shares sold to such broker-dealers or other sellers of securities shall be for
resale by such persons only to insurance company separate accounts at the
public offering price set forth in an effective Prospectus, which is part of
the Trust's Registration Statement in effect under the Securities Act of 1933
(the "1933 Act"), as amended, at the time of such offer or sale (herein, the
"Prospectus"). Distributor may sell shares to such persons (a "dealer" or
"dealers") at such discounts from said public offering price as are set forth
in the Prospectus, and/or in a Selling Agreement between Distributor and the
dealer, but neither such discounts nor commissions shall exceed the sales
charge or discounts referred to in the Prospectus. Distributor shall not
without the consent of the Trust sell or offer for sale any shares of a
Portfolio other than as principal underwriter under this Agreement.
6. In its sales to dealers, it shall be the responsibility of Distributor to
ensure that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules, and regulations promulgated by such
national, state, local, or other governmental or quasi-governmental
authorities as may in a particular instance have jurisdiction.
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<PAGE>
7. The applicable public offering price of shares shall be the price which
is equal to the net asset value per share plus such sales charge as may be
provided for in the Prospectus. Net asset value per share shall be determined
for the Portfolios in the manner and at the time or times set forth in the
subject to the provisions of the Prospectus of the Portfolios.
8. All orders for shares received by Distributor, unless rejected by
Distributor or the Trust, shall be forwarded by the Distributor to the
Transfer Agent upon receipt and the Transfer Agent upon receipt will confirm
an offering price determined in accordance with the provisions of the
Prospectus and the Act, and applicable rules in effect thereunder. Distributor
shall not hold orders subject to acceptance nor otherwise delay their
execution. The provisions of this paragraph shall not be construed to restrict
the right of the Trust to withhold shares of the Portfolios from sale under
paragraph 17 hereof.
9. The Trust or the Transfer Agent shall be promptly advised of all orders
received, and shall cause shares of Portfolios to be issued upon payment
received in accord with policies established by the Trust and Distributor.
10. Distributor shall adopt and follow procedures as approved by the
officers of the Trust for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and the Act, as such requirements may from time to time exist.
11. The compensation for the services of Distributor as a principal
underwriter under this Agreement shall be that part of the sales charge, if
any, which is retained by Distributor after allowance of discounts to dealers
as provided for in paragraph 5 hereof.
12. The Trust agrees to use its best efforts to maintain its registration as
an open-end management investment company under the Act.
13. The Trust agrees to use its best efforts to maintain an effective
prospectus under the 1933 Act, and warrants that such prospectus will contain
all statements required by and will conform with the requirements of the 1933
Act and the rules and regulations thereunder, and that no part of any such
prospectus, at the time the Registration Statement of which it is a part is
ordered effective, will 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 not misleading. Distributor agrees and warrants
that it will not in the sale of Portfolio shares use any prospectus,
advertising, or sales literature not approved by the Trust or its officers nor
make any untrue statement of a material fact nor omit the stating of a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they made, not misleading.
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<PAGE>
14. Subject to the requirements and restrictions of the Act and the 1933 Act
and the rules and regulations promulgated thereunder.
(a) Distributor agrees to indemnify and hold the Trust harmless from any and
all loss, expense, damage, and liability resulting from a breach by
Distributor of the agreements and warranties in paragraph 13, and from the use
of any sales literature, information, statistics, or other aid or device
prepared and employed by the Distributor and not approved by the Company in
connection with the sale of shares of the Funds; and
(b) The Trust agrees (i) not to hold Distributor or any of its officers or
employees liable for, and (ii) to indemnify or insure the Distributor and its
officers and employees ("Indemnified Parties") against, any costs and
liabilities the Indemnified Parties may incur as a result of any claim against
the Indemnified Parties in the good faith exercise of their powers hereunder
(excepting matters as to which the Indemnified Parties shall be finally
adjudged to have been guilty of willful misconduct or gross negligence, or in
violation of applicable law) or arising out of an act or omission of the
custodian, or of any broker or agent selected by the Distributor in a
commercially reasonable manner.
15. To the extent permitted under the Trust's Distribution Plan adopted
under Rule 12b-1 under the Act, the expense of each printing of each
Prospectus and each revision thereof or addition thereto deemed necessary by
the Trust officers to meet the requirements of applicable laws shall be borne
by the Trust.
16. As applicable, the Trust agrees to use its best efforts to qualify and
maintain the qualification of an appropriate number of its shares for sale
under the securities laws of such states as Distributor and the Trust may
approve. Any such qualification may be withheld, terminated, or withdrawn by
the Trust at any time in its discretion. The expense of qualification and
maintenance of qualification shall be borne by the Trust, but Distributor
shall furnish such information and other material relating to its affairs and
activities as may be required by the Trust or its counsel in connection with
such qualifications.
17. The Trust may withhold shares of the Portfolios from sale in any state
or country temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Board of Trustees or the
President or any Vice President of the Trust determines that such offer or
sale is not in the best interest of the Trust. The Trust will give prompt
notice to Distributor of any withholding and will indemnify it against any
loss suffered by Distributor as a result of such withholding by reason of non-
delivery of Portfolio shares after a good faith confirmation by Distributor of
sales thereof prior to receipt of such withholding.
18. (a) This Agreement may be terminated at any time, without payment of any
penalty, by the Trust on sixty (60) days' written notice to Distributor, or by
Distributor on like notice to the Trust.
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<PAGE>
(b) The Agreement may be terminated by either party upon five (5) days'
written notice to the other party in the event that the Securities and
Exchange Commission has issued an order or obtained an injunction or other
court order suspending effectiveness of the Registration Statement covering
the shares of the Portfolios.
(c) This Agreement may also be terminated by the Trust upon five (5) days'
written notice to Distributor, should the NASD expel Distributor or suspend
its membership in that organization.
Distributor shall inform the Trust promptly of the institution of any
proceedings against it by the Securities and Exchange Commission, the NASD or
any state regulatory authority. The Trust shall inform Distributor promptly of
the institution of any proceedings against it by the Securities and Exchange
Commission, the NASD or any state regulatory authority, of the revocation,
expiration or suspension of qualification of the Trust's securities in any
state or other jurisdiction in which such securities have been or will be
qualified.
19. This Agreement shall not be assignable by either party hereto without
the prior written permission of the other party and in the event of assignment
without such permission shall automatically terminate forthwith. The term
"assignment" shall have the meaning defined in the Act.
20. The Trust may, upon sixty (60) days' written notice to Distributor from
time to time designate other principal underwriters of their shares with
respect to areas other than the North American continent, Hawaii, Puerto Rico,
and such countries as to which the Company may have expressly waived in
writing its right to make such designation. In the event of such designation,
the right of Distributor under this Agreement to sell shares in the areas so
designated shall terminate, but this Agreement shall remain otherwise in full
effect until terminated in accordance with the provisions of paragraphs 18 and
19 hereof.
21. No provision of this Agreement shall protect or purport to protect
Distributor against any liability to the Trust or holders of shares of the
Portfolios for which Distributor would otherwise be liable by reason of
willful misfeasance, bad faith, or negligence.
22. Unless sooner terminated in accordance with the provisions of paragraphs
18 and 19 hereof, this Agreement shall continue in effect until December 31,
1998 and shall continue in effect from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (i) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (within the meaning of the 1940 Act) of the
Trust or Distributor cast in person at a meeting called for the purpose of
voting on such approval, and (ii) either the Board of Trustees of the Trust or
a vote of a majority (within the meaning of the 1940 Act) of the outstanding
voting securities of the Trust.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized
and their corporation seal to be affixed as of the day and year first written
above.
Atlas Insurance Trust
a Delaware business trust
By___________________________________
Larry E. LaCasse
Chief Operating Officer and
Group Senior Vice President
Atlas Securities, Inc.
a California corporation
By___________________________________
Larry E. LaCasse
Chief Operating Officer and
Group Senior Vice President
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