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ATLAS BALANCED GROWTH PORTFOLIO
ANNUAL REPORT
December 31, 1997
[ATLAS HOLDING WORLD GRAPHIC]
ATLAS ANNUITIES
The annuities you want from the people you trust.
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(ATLASFUNDS LOGO)
FROM THE OFFICE OF MARION O. SANDLER
President and Chief Executive Officer
Dear Valued Policyholder,
On September 30, 1997, we proudly introduced both Atlas
Portfolio Builder, a new variable annuity, and the Atlas
Balanced Growth Portfolio, one of the exciting new investment
choices available to policyholders of the Atlas Portfolio
Builder. The Atlas Balanced Growth Portfolio is a "fund of
funds" that offers investors the convenience of one-step
diversification by allocating assets among eight Atlas stock,
bond, and money market funds while seeking long-term growth of
capital and moderate current income. The investment strategy
under normal market conditions is to maintain stock, bond, and
cash ratios of approximately 60%, 30%, and 10%, respectively.
The Short-Term Results
Of A Long-Term Investment
The fourth quarter of 1997 was a difficult time for the
stock market, and the Atlas Balanced Growth Portfolio
experienced a total return(1) of -1.28%. During this same period
of time, the price of the average U.S. stock fund fell by 1.54%.
Of course, we would prefer positive returns, but we remain very
optimistic about the long-term performance of the Portfolio.
At year-end, assets were allocated to the underlying Atlas
Funds as follows:
<TABLE>
<CAPTION>
Atlas Funds % of Assets
--------------------------------- -----------
<S> <C>
Emerging Growth 10%
Global Growth 25
Strategic Growth 20
Growth and Income 10
Balanced 10
Strategic Income 15
U.S. Government and Mortgage
Securities 10
Treasury Money Fund 0
100%
</TABLE>
[GRAPHIC OF THUMBTACK]
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WE WANT YOU
TO KNOW ...
Annuities are not
FDIC-insured and
are not deposits
or obligations of,
or guaranteed by
World Savings.
They are subject to
investment risks,
including possible
loss of principal.
--------------------
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The 1997 Economy In Retrospect
The stock market continued to climb in 1997, although most
of the gains for the year occurred in the first two quarters.
During the latter half, the market experienced some price
fluctuation, including a correction of over 10% in the Fall, as
weakness in several Asian economies impacted earnings
expectations for U.S. companies. Responding to the financial
news from the Far East, international markets also were
volatile.
In the bond market, interest rates rose during the first
quarter due to a strong economy and the expectation that the
Federal Reserve (Fed) would raise short-term rates in order to
put a brake on inflation. In March, the Fed did nudge rates
higher, but the increase from 5.25% to 5.50% turned out to be
the only upward movement for the entire year. In a similar
pattern, long-term interest rates, as measured by the
bellweather 30-year Treasury bond yield, began the year at 6.70%
and peaked at 7.17% in mid-April. Inflation remained tame,
however, and bond prices responded by rising gradually during
the second half of the year. The crisis in Asian markets in the
Fall sparked a flight to quality and combined with a
strengthening dollar to send the yield on long-term Treasury
bonds below the 6% level in December. The year ended with the
yield near 30-year lows at 5.92%.
Helping You Build A Better Tomorrow
If you would like more information on Atlas Funds or Atlas
Annuities, just call 1-800-933-ATLAS (1-800-933-2852) to speak
with an Atlas Representative or to set up an appointment at a
nearby World branch. As a sister company of World Savings and a
member of the $40 billion-strong Golden West Financial
Corporation, Atlas is dedicated to providing the superior
products, personal service, and caring professional advice
you've come to expect from World. That's why we call Atlas Funds
"THE INVESTMENTS YOU WANT FROM THE PEOPLE YOU TRUST."
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On behalf of Atlas, I thank you for the opportunity to serve
your tax-deferred investment needs. We look forward to assisting
you now and in the future.
Sincerely,
(SANDLER SIGNATURE)
(Mrs.) Marion O. Sandler
President and Chief Executive Officer
February 10, 1998
(1) Total return includes price change, plus income and capital
gains distributions. It has not been annualized and does not
include annual insurance fees or surrender charges.
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Statement of Net Assets December 31, 1997
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<TABLE>
<CAPTION>
--------
Balanced
Growth
Portfolio
--------
<S> <C> <C> <C> <C>
INVESTMENTS: (98.37%)
Investment in Atlas Funds, at identified cost............................ $3,633,296
========
<CAPTION>
Per Cent of
Shares Net Assets
------- ----------
<S> <C> <C> <C> <C>
Investment in Atlas Funds, at value:
U.S. Government and Mortgage Securities Fund........................... 34,044 9.89% $ 347,253
Strategic Income Fund.................................................. 101,319 14.89 522,806
Balanced Fund.......................................................... 25,181 10.14 356,052
Growth and Income Fund................................................. 18,831 10.11 355,155
Strategic Growth Fund.................................................. 41,251 19.21 674,867
Global Growth Fund..................................................... 67,726 24.47 859,443
Emerging Growth Fund................................................... 26,103 9.66 339,337
U.S. Treasury Money Fund............................................... 0 0.00 0
--------
3,454,913
--------
OTHER ASSETS AND LIABILITIES: (1.63%)
Other assets............................................................. 64,477
Liabilities.............................................................. (7,193)
--------
Total Other Assets and Liabilities....................................... 57,284
--------
NET ASSETS (100.00%)....................................................... $3,512,197
========
NET ASSETS CONSIST OF:
Unrealized depreciation.................................................. $ (178,383)
Accumulated net realized loss............................................ (2,714)
Undistributed net investment income...................................... 1,262
Paid in capital.......................................................... 3,692,032
--------
NET ASSETS................................................................. $3,512,197
========
NET ASSET VALUE PER SHARE:
Net assets............................................................... $3,512,197
Beneficial interest shares outstanding................................... 376,430
========
Net asset value per share................................................ $ 9.33
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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Statement of Operations for the period September 30, 1997 (inception of
operations) to December 31, 1997
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<TABLE>
<CAPTION>
-------
Balanced
Growth
Portfolio
-------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest................................................................................ $ 604
Distribution income from Atlas Funds.................................................... 194,941
-------
Total income.............................................................................. 195,545
-------
Expenses:
Management fees (note 5)................................................................ 1,270
Transfer agency fees and expenses....................................................... 2,858
Custodian fees and expenses............................................................. 2,792
Organization costs...................................................................... 1,258
Registration fees....................................................................... 1,032
Accounting fees......................................................................... 5,000
-------
Gross expenses............................................................................ 14,210
Waiver of management fees............................................................... (1,270)
Expense reimbursement................................................................... (10,420)
-------
Net expenses.............................................................................. 2,520
-------
Net investment income..................................................................... 193,025
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REALIZED LOSS AND UNREALIZED DEPRECIATION ON INVESTMENTS:
Realized loss:
Proceeds from sales..................................................................... 38,503
Cost of securities sold................................................................. (39,860)
-------
Net realized loss......................................................................... (1,357)
-------
Unrealized depreciation:
Beginning of period..................................................................... 0
End of period........................................................................... (178,383)
-------
Unrealized depreciation................................................................... (178,383)
-------
Net realized loss and unrealized depreciation of investments.............................. (179,740)
-------
Net increase in net assets resulting from operations...................................... $ 13,285
=======
</TABLE>
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Statement of Changes in Net Assets for the period September 30, 1997 (inception
of operations) to December 31, 1997
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<TABLE>
<CAPTION>
--------
Balanced
Growth
Portfolio
--------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................... $ 193,025
Net realized loss on investments......................................................... (1,357)
Net unrealized depreciation on investments............................................... (178,383)
--------
Net increase in net assets resulting from operations..................................... 13,285
--------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Distributions from net investment income................................................. (193,120)
--------
BENEFICIAL INTEREST SHARE TRANSACTIONS:(1)
Proceeds from shares sold................................................................ 3,407,177
Proceeds from shares issued in reinvestment of distributions............................. 193,120
Cost of shares repurchased............................................................... (8,265)
--------
Net increase in net assets resulting from beneficial interest share transactions......... 3,592,032
--------
Net increase in net assets............................................................... 3,412,197
NET ASSETS:
Beginning of period...................................................................... 100,000
--------
End of period............................................................................ $3,512,197
========
(1)Share Transactions:
Sold................................................................................... 346,590
Issued in reinvestment of dividends.................................................... 20,699
Redeemed............................................................................... (859)
--------
Net increase in shares outstanding....................................................... 366,430
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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Financial Highlights selected data for a share outstanding throughout the
period September 30, 1997 (inception of operations)
to December 31, 1997
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<TABLE>
<CAPTION>
-------
Balanced
Growth
Portfolio
-------
<S> <C> <C>
Net asset value, beginning of period........................................................ $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................................................... 0.55
Net realized and unrealized loss on investments........................................... (0.68)
-------
Total from investment operations.......................................................... (0.13)
-------
LESS DISTRIBUTIONS:
Distributions from net investment income.................................................. (0.54)
-------
Net asset value, end of period.............................................................. $ 9.33
=======
Total return, aggregate (not annualized)(1)................................................. -1.28%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................................................... $ 3,512
Ratio of expenses to average net assets (annualized)(2)................................... 0.50%
Ratio of net investment income to average net assets (annualized)......................... 38.25%
Portfolio turnover rate (Note 4).......................................................... 1.49%
</TABLE>
(1) Total return assumes purchase at net asset value at the beginning of the
period.
(2) The Adviser for Balanced Growth Portfolio has agreed to temporarily cap (or
waive) its management fee and to absorb other operating expenses. Had such
action not been taken, the ratio of expenses to average net assets
(annualized) would have been 2.82%.
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Notes to Financial Statements December 31, 1997
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1. SIGNIFICANT ACCOUNTING POLICIES
Atlas Insurance Trust (the "Trust") is registered under the Investment Company
Act of 1940 ("1940 Act"), as amended, as an open-end management investment
company. The Trust offers a choice of investment portfolios to investors through
the purchase of Atlas Portfolio Builder variable annuity contracts which fund
insurance company separate accounts for variable annuity and variable life
policies. The Trust is a series company currently offering only the Atlas
Balanced Growth Portfolio (the "Portfolio"). The Portfolio, which has as its
investment objective long-term growth of capital and moderate income, invests
among eight diversified Atlas mutual funds (Class A shares) including the U.S.
Treasury Money Fund, the U. S. Government and Mortgage Securities Fund, the
Strategic Income Fund, the Balanced Fund, the Growth and Income Fund, the
Strategic Growth Fund, the Global Growth Fund, and the Emerging Growth Fund (the
"Atlas Funds"). Since the Portfolio invests in shares of a limited number of
mutual funds, it is a "nondiversified" investment company under the 1940 Act.
The Portfolio, however, intends to qualify as a diversified investment company
under provisions of the Internal Revenue Code. Additional diversification
requirements under Internal Revenue Code Section 817(h) are imposed on the
Portfolio because the Trust is an investment medium for variable annuity
contracts.
The following is a summary of significant accounting policies consistently
used by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Investment Valuation: Investments are valued at the net asset value of
each underlying Atlas Fund determined as of the close of the New York
Stock Exchange (generally 4:00 p.m. eastern time) on each day the
Exchange is open for trading.
b. Federal Income Taxes: It is the Portfolio's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment income,
including any net realized gain on investments, to its shareholders.
Accordingly, no provision for federal income or excise tax is required.
c. Security Transactions: As is common in the industry, security
transactions are accounted for on the date securities are purchased or
sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial
statement and federal income tax purposes.
d. Investment Income, Expenses and Distributions: Interest income and
estimated expenses are accrued daily. Dividends, representing
distributions from Atlas Funds, are recorded on the ex-dividend date.
Distributions of capital gains, if any, will normally be declared and
paid once a year.
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e. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
2. UNAMORTIZED ORGANIZATION COSTS
The Trust was organized by Golden West Financial Corporation ("Golden West
Financial"). On July 30, 1997, the Trust sold and issued to Golden West
Financial 10,000 shares of beneficial interest ("Initial Shares"). Organization
costs of $25,156 incurred by the Trust have been deferred and are being
amortized on a straight line basis over a period of five years from October
1997. If any of the Initial Shares are redeemed during the amortization period ,
the redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of Initial Shares being redeemed bears to
the number of Initial Shares outstanding at the time of the redemption.
3. UNREALIZED APPRECIATION/DEPRECIATION -- TAX BASIS
As of December 31, 1997, unrealized depreciation of investment securities for
federal income tax purposes was $178,383, consisting of unrealized gains of
$1,693 and unrealized losses of $180,076.
4. PURCHASES AND SALES OF SECURITIES
During the period September 30, 1997 through December 31, 1997, the Portfolio
purchased $3,521,269 of investment securities and sold $38,503 of investment
securities.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Atlas Advisers, Inc. (the "Adviser") 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.
(the "Subadviser"). The Adviser is responsible for providing or overseeing all
aspects of the Portfolio's day-to-day operations and implementing the
Portfolio's investment programs. The Portfolio pays a fee for management and
administrative services to the Adviser. The management fee is based on an annual
rate of .25% of the Portfolio's average daily net assets. The Adviser 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 .50% through at
least April 30, 1998. Due to the voluntary expense waiver in effect during the
period ended December 31, 1997, the management fees due the Adviser were reduced
by $1,270. The Adviser also absorbed $10,420 of other Fund expenses during the
period.
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Notes to Financial Statements December 31, 1997
- --------------------------------------------------------------------------------
Atlas Securities, Inc. (the "Distributor") acts as principal underwriter of
the Portfolio's shares. The Adviser and Distributor are wholly owned
subsidiaries of Golden West Financial. Certain officers and trustees of the
Trust are also officers and/or directors of the Adviser, the Distributor and the
Atlas Funds.
At December 31, 1997 Golden West Financial owned 21,317 Class A shares in U.S.
Government and Mortgage Securities Fund and 116,324 Class A shares of Emerging
Growth Fund.
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Independent Auditors' Report
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
ATLAS INSURANCE TRUST:
We have audited the accompanying statement of net assets of the Atlas
Insurance Trust (Balanced Growth Portfolio) (the "Fund") and the related
statements of operations and of changes in net assets, and the financial
highlights for the period from September 30, 1997 (inception of operations) to
December 31, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1997 by corresponding with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Fund at December
31, 1997 and the results of its operations, the changes in its net assets, and
its financial highlights for the period from September 30, 1997 (inception of
operations) to December 31, 1997 in conformity with generally accepted
accounting principles.
[Deloitte & Touche LLP LOGO]
Oakland, California
February 13, 1998
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AT-686 AS1M28
