U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
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Pre-Effective Amendment No. 1
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Post-Effective Amendment No.
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and/or
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
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Amendment No. 1
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(Check appropriate box or boxes)
ATALANTA/SOSNOFF INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
101 Park Avenue
New York, New York 10178
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 867-5000
Anthony G. Miller
Atalanta/Sosnoff Capital Corporation (Delaware)
101 Park Avenue
New York, New York 10178
(Name and Address of Agent for Service)
Copies to:
Cassandra M. Wambaugh
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
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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ATALANTA/SOSNOFF INVESTMENT TRUST
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
UNDER THE SECURITIES ACT OF 1933
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PART A
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Item No. Registration Statement Caption Caption in Prospectus
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1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information
4. General Description of Registrant Operation of the Fund;
Investment Objective,
Investment Methodology and
Risk Considerations
5. Management of the Fund Operation of the Fund
6. Capital Stock and Other Securities Cover Page; Operation of the
Fund; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Service Plan; Calculation of
Share Price; Application
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services
9. Pending Legal Proceedings Inapplicable
PART B
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Caption in Statement
of Additional
Item No. Registration Statement Caption Information
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
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12. General Information and History The Trust
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations; Quality
Ratings of Corporate Bonds
and Preferred Stocks;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Inapplicable
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
Service Plan; Custodian;
Auditors; Countrywide Fund
Services, Inc.
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Trust
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price; Other Purchase
Information; Redemption in
Kind
20. Tax Status Taxes
21. Underwriters The Distributor
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Statement of Assets and
Liabilities
PART C
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The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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PROSPECTUS
May __, 1998
ATALANTA/SOSNOFF INVESTMENT TRUST
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(877) 767-6633
ATALANTA/SOSNOFF FUND
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The Atalanta/Sosnoff Fund (the "Fund"), a separate series of the
Atalanta/Sosnoff Investment Trust, seeks long-term capital appreciation, through
equity investments in companies entering into a cycle of accelerating earnings
momentum.
Atalanta/Sosnoff Capital Corporation (Delaware) (the "Adviser"), 101 Park
Avenue, New York, New York 10178, manages the Fund's investments. The Adviser is
a registered investment adviser that has advised individual, institutional and
corporate clients since 1982.
This Prospectus sets forth concisely the information about the Fund that
you should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated May ___, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. The Fund's address is 101 Park Avenue, New York, New
York 10178 and its telephone number is toll-free: 1-877-SOSNOFF
(1-877-767-6633). A copy of the Statement of Additional Information can be
obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
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Expense Information ...................................................... 2
Prior Performance of the Adviser ......................................... 3
Investment Objective, Investment Methodology and
Risk Considerations .................................................... 5
How to Purchase Shares ................................................... 12
Shareholder Services ..................................................... 13
How to Redeem Shares ..................................................... 14
Dividends and Distributions .............................................. 15
Taxes .................................................................... 16
Operation of the Fund .................................................... 17
Service Plan ............................................................. 19
Calculation of Share Price ............................................... 20
Performance Information .................................................. 21
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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 UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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EXPENSE INFORMATION
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Shareholder Transaction Expenses
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Sales Load Imposed on Purchases . . . . . . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends. . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . None*
* A wire transfer fee is charged by the Fund's Custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$9. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
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Management Fees . . . . . . . . . . . . . . . . . . .75%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . .25% (A)
Other Expenses. . . . . . . . . . . . . . . . . . . .50%
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Total Fund Operating Expenses . . . . . . . . . . . 1.50%
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(A) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers.
The purpose of this table is to assist you in understanding the various costs
and expenses that an investor in the Fund will bear directly or indirectly. The
percentages expressing annual fund operating expenses are based on estimated
amounts for the current fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
Example
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You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $15
3 Years 47
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PRIOR PERFORMANCE OF THE ADVISER
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The investment performance illustrated below represents the composite
performance of all the separate accounts (the "Equity Composite") managed by
entities controlled by the Chief Investment Officer and Chairman of the
Adviser's investment committee, Martin T. Sosnoff, which were managed with
investment objectives, policies and strategies substantially similar to those to
be employed by the Adviser in managing the Fund. The performance prior to
January 1, 1983 represents the average account performance of Atalanta Capital
Corp. The performance from January 1, 1983 forward, represents the composite
performance of the Adviser's separate accounts. Mr. Sosnoff founded Atalanta
Capital Corp. in 1970 and became its Chief Investment Officer January 1, 1976.
When Mr. Sosnoff terminated his association with Atalanta Capital in 1982, he
transferred all the separate accounts he managed ("Equity Composite") to the
Adviser. The investment philosophy and practices employed by Mr. Sosnoff in
managing the Equity Composite accounts at Atalanta Capital Corp. were
substantially the same as those employed by the Adviser.
The performance data below represents the prior performance of the Equity
Composite and not the prior performance of the Fund and should not be relied
upon by investors as an indication of future performance of the Fund. Should
material differences develop between the investment objectives and strategies of
the Fund and those employed in managing the Equity Composite, such differences
will be disclosed. As a point of comparison, the performance of the Standard &
Poor's 500 Stock Index (the "S&P 500 Index") is also presented. The S&P 500
Index is an unmanaged index of 500 stocks, the purpose of which is to portray
the pattern of common stock price movement.
PERIODIC RATES OF RETURN
Equity Composite* S&P
(dollar weighted 500
and net of fees) Index
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1976 33.66% 23.81%
1977 3.63% -7.42%
1978 13.60% 6.39%
1979 20.66% 18.45%
1980 30.85% 32.45%
1981 2.85% -4.92%
1982 32.85% 21.50%
1983 21.25% 22.46%
1984 5.01% 6.23%
1985 29.46% 31.67%
1986 15.77% 18.61%
1987 3.94% 5.18%
1988 5.89% 16.50%
1989 34.95% 31.60%
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PERIODIC RATES OF RETURN
Equity Composite* S&P
(dollar weighted 500
and net of fees) Index
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1990 -0.70% -3.11%
1991 46.63% 30.33%
1992 4.63% 7.62%
1993 18.05% 10.06%
1994 -3.52% 1.31%
1995 34.76% 37.58%
1996 10.55% 22.96%
1997 25.86% 33.37%
Quarter ended
March 31, 1998 12.92% 13.95%
Annualized Return
For Periods Ended
March 31 Equity Composite S&P 500 Index
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1 year 38.95% 48.02%
5 years 16.83% 22.40%
10 years 17.84% 18.91%
Since Inception 17.38% 16.19%
* The above returns represent the performance of Atalanta Capital Corp. from
1976 through 1982 when Mr. Sosnoff was Chief Investment Officer of Atalanta
Capital Corp. When Mr. Sosnoff terminated his relationship with Atalanta Capital
Corp. and founded the Atalanta/Sosnoff Capital Corporation (Delaware), the
investment adviser to the Fund (the "Adviser"), he transferred these accounts to
the Adviser. From 1983 forward, the table illustrates the composite performance
of the Adviser.
While the Adviser will employ for the Fund investment objectives, policies
and strategies that are substantially similar to those that were employed in
managing the Equity Composite, the Adviser, in managing the Fund, may be subject
to certain restrictions imposed by the Investment Company Act of 1940 and the
Internal Revenue Code on its investment activities to which, as the investment
adviser to the Equity Composite, it was not previously subject. Examples include
limits on the percentage of assets invested in securities of issuers in a single
industry and requirements on distributing income to shareholders. Such
restrictions, if they had been applicable to the Equity Composite, may have
adversely affected the performance result of the Equity Composite.
Operating expenses may be incurred by the Fund which were not incurred by
the Equity Composite. The Fund's fees and expenses are higher than those of the
Equity Composite and the Fund's fee/expense structure would lower the
performance results. While the Equity
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Composite incurs inflows and outflows of cash, there can be no assurance that
the continuous offering of the Fund's shares and the Fund's obligation to redeem
its shares will not impact the Fund's performance. It is not intended that the
foregoing performance data be relied upon by investors as an indication of
future performance of the Fund.
The performance data above represents the prior performance of the Equity
Composite and not the prior performance of the Fund and should not be relied
upon by investors as an indication of future performance of the Fund. The
performance of the Equity Composite, which is unaudited, has been computed by
the Adviser in accordance with the standards formulated by the Association for
Investment Management and Research ("AIMR"). This method of calculating
performance differs from the standardized methodology used by mutual funds to
calculate performance and results in a total return different from that derived
from the standardized methodology. The Adviser believes, however, that the
Equity Composite's performance would be substantially the same if it was
recalculated in accordance with the standardized methodology. All performance
data presented is net of advisory fees and other expenses.
INVESTMENT OBJECTIVE, INVESTMENT METHODOLOGY AND RISK CONSIDERATIONS
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The Fund is a series of the Atalanta/Sosnoff Investment Trust (the
"Trust"). The investment objective of the Fund is to seek long-term capital
appreciation, through equity investments in companies entering into a cycle of
accelerating earnings momentum. The Fund is not intended to be a complete
investment program, and there is no assurance that its investment objective can
be achieved. The Fund's investment objective may be changed by the Board of
Trustees without shareholder approval, but only after notification has been
given to shareholders and after this Prospectus has been revised accordingly. If
there is a change in the Fund's investment objective, shareholders should
consider whether the Fund remains an appropriate investment in light of their
then current financial position and needs. Unless otherwise indicated, all
investment practices and limitations of the Fund are nonfundamental policies
which may be changed by the Board of Trustees without shareholder approval.
The Fund seeks to achieve its investment objective by investing primarily
in the common stocks of companies which, in the opinion of the Adviser, are
entering a cycle of accelerating earnings momentum.
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<PAGE>
The Adviser determines stock selection using quantitative screening
techniques and fundamental investment analysis. The Adviser first employs a
quantitative screening strategy to its large capitalization universe of stocks
by searching for companies which may have the following general characteristics,
among others: market capitalization over $500 million; earnings growth rate
above market for at least 12 months; relative price/earnings ratio in the lower
one-third of its historical range over the past 5 years; and earnings per share
estimated by the Adviser to be above the consensus as reported in financial
industry publications. Through its evaluation of these general criteria, the
Adviser reduces the initial universe of stocks to a "focus list" of stocks which
are then subjected to further fundamental research analysis. The Adviser may
examine various factors including, but not limited to, the following:
Earnings Momentum - Which companies will experience an accelerating rate of
growth during the next business cycle?
Growth Rate P/E - What price to earnings ratio is being paid for the growth
rate and where does that place it relative to its peers?
Earnings Stability - How consistently has the company been able to grow
operating income over an economic cycle?
Price Performance - Has the stock outperformed the market indices through
the current stock market cycle?
The Adviser may also cultivate a dialogue with the senior management of the
companies it analyzes. Such a hands-on approach emphasizes direct contact
whereby impressions gained by interviewing management are verified against the
assessments of vendors, competitors and suppliers. The Adviser's conclusions are
often quantified by the development of an earnings model which may be gauged
against the investment community's expectations.
The Adviser's fundamental approach is disciplined by two additional steps.
First, prospective purchases are screened against valuation criteria such as
historical and relative price to earnings ratios. Next, specific target prices
are established for each stock. Securities are bought and sold based upon the
relationship of the current stock price to the target price.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Adviser. As a result, the return and net asset value
of the Fund will fluctuate.
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<PAGE>
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in common stocks and securities convertible into common stocks (such as
convertible bonds, convertible preferred stocks and warrants). The Fund may
invest in preferred stocks and bonds which are rated at the time of purchase in
the four highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or in unrated
securities determined by the Adviser to be of comparable quality. Preferred
stocks and bonds rated Baa or BBB have speculative characteristics and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity of the issuers of these securities to pay principal and
interest or to pay the preferred stock obligations than is the case with higher
grade securities. Subsequent to its purchase by the Fund, a security may cease
to be rated or its rating may be reduced below Baa or BBB, and the Adviser will
consider such an event to be relevant in its determination of whether the Fund
should continue to hold such security.
When the Adviser believes substantial price risks exist for common stocks
and securities convertible into common stocks because of uncertainties in the
investment outlook or when in the judgment of the Adviser it is otherwise
warranted in selling to manage the Fund's portfolio, the Fund may temporarily
hold for defensive purposes all or a portion of its assets in short-term
obligations such as bank debt instruments (certificates of deposit, bankers'
acceptances and time deposits), commercial paper, shares of money market
investment companies, U.S. Government obligations having a maturity of less than
one year or repurchase agreements.
ADDITIONAL INVESTMENT INFORMATION
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U.S. GOVERNMENT OBLIGATIONS. "U.S. Government obligations" include
securities which are issued or guaranteed by the United States Treasury, by
various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. Other U.S. Government obligations may or may
not be backed by the full faith and credit of the United States. In the case of
securities not backed by the full faith and security of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States in the event the agency or instrumentality does not meet its
commitments. Shares of the Fund are not guaranteed or backed by the Unites
States Government.
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<PAGE>
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which the
Fund purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest and,
in the Adviser's judgment, most creditworthy primary U.S. Government securities
dealers. The Fund will enter into repurchase agreements which are collateralized
by U.S. Government obligations or other liquid high-grade debt obligations.
Collateral for repurchase agreements is held in safekeeping in the customer-only
account of the Fund's Custodian at the Federal Reserve Bank. At the time the
Fund enters into a repurchase agreement, the value of the collateral, including
accrued interest, will equal or exceed the value of the repurchase agreement
and, in the case of a repurchase agreement exceeding one day, the seller agrees
to maintain sufficient collateral so that the value of the underlying
collateral, including accrued interest, will at all times equal or exceed the
value of the repurchase agreement. The Fund will not enter into a repurchase
agreement not terminable within seven days if, as a result thereof, more than
15% of the value of its net assets would be invested in such securities and
other illiquid securities.
FOREIGN SECURITIES. The Fund will invest primarily in domestic equity
securities, although it may invest in foreign companies through the purchase of
sponsored American Depository Receipts (certificates of ownership issued by an
American bank or trust company as a convenience to investors in lieu of the
underlying shares which such bank or trust company holds in custody) or other
securities of foreign issuers that are publicly traded in the United States. To
the extent that the Fund invests in such securities, such investments may be
subject to special risks, including future political and economic developments
and the possibility of seizure or nationalization of companies, imposition of
withholding taxes on income, establishment of exchange controls or adoption of
other restrictions, that might affect an investment adversely.
OPTIONS AND FUTURES. The Fund may write covered call and covered put
options on equity securities that the Fund is eligible to purchase. Call options
written by the Fund give the holder the right to buy the underlying securities
from the Fund at a stated exercise price; put options give the holder the right
to sell the underlying security to the Fund. These options are covered by the
Fund because, in the case of call options, it will own the underlying securities
as long as the option is
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<PAGE>
outstanding or because, in the case of put options, it will maintain a
segregated account of cash, U.S. Government obligations or other liquid
securities which can be liquidated promptly to satisfy any obligation of the
Fund to purchase the underlying securities. The Fund may also write straddles
(combinations of puts and calls on the same underlying security). The Fund will
receive a premium from writing a put or call option, which increases the Fund's
return in the event the option expires unexercised or is closed out at a profit.
The amount of the premium will reflect, among other things, the relationship of
the market price of the underlying security to the exercise price of the option
and the remaining term of the option. By writing a call option, the Fund limits
its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put
option, the Fund assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market
value, resulting in a potential capital loss unless the security subsequently
appreciates in value.
The Fund may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this manner, the Fund will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and by transaction costs. The Fund may
purchase call options on securities or on relevant stock indices to hedge
against an increase in the value of securities that the Fund wants to buy
sometime in the future. The premium paid for the call option and any transaction
costs will increase the cost of securities acquired, upon exercise of the
option, and, unless the price of the underlying security rises sufficiently, the
option may expire worthless.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option.
The Fund may purchase either exchange-traded or over-the-counter options on
securities. The Fund's ability to terminate options positions established in the
over-the-counter market may be more limited than in the case of exchange-traded
options and may also involve the risk that securities dealers participating in
such transactions would fail to meet their obligations to the Fund. The Fund
will not purchase any option, which in the opinion of the Adviser, is illiquid
if, as a result
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<PAGE>
thereof, more than 15% of the Fund's net assets would be invested in illiquid
securities.
The Fund may purchase and sell futures contracts, including stock index
futures contracts, to hedge against changes in prices. The Fund will not engage
in futures transactions for speculative purposes. Stock index futures contracts
are based on indexes that reflect the market value of common stock of the firms
included in the indexes. An index futures contract is an agreement pursuant to
which two parties agree to take or make delivery of an amount of cash equal to
the differences between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was originally
written. The Fund may also write call options and purchase put options on
futures contracts as a hedge to attempt to protect securities in its portfolio
against decreases in value. When the Fund writes a call option on a futures
contract, it is undertaking the obligation of selling a futures contract at a
fixed price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets. When the Fund purchases futures
contracts, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security, or will make deposits to collateralize the
position as discussed above. When the Fund uses futures and options on futures
as hedging devices, there is a risk that the prices of the securities subject to
the futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and any
related options to react differently than the portfolio securities to market
changes. In addition, the Adviser could be incorrect in its expectations about
the direction or extent of market factors such as stock price movements. In
these events, the Fund may lose money on the futures contract or option. It is
not certain that a secondary market for positions in futures contracts or for
options will exist at all times. Although the Adviser will consider liquidity
before entering into these transactions, there is no assurance that a liquid
secondary market on an exchange or otherwise will exist for any particular
futures contract or option at any particular time. The Fund's
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<PAGE>
ability to establish and close out futures and options positions depends on this
secondary market.
LENDING PORTFOLIO SECURITIES. The Fund may, from time to time, lend
securities on a short-term basis (i.e., for up to seven days) to banks, brokers
and dealers and receive as collateral cash, U.S. Government obligations or
irrevocable bank letters of credit (or any combination thereof), which
collateral will be required to be maintained at all times in an amount equal to
at least 100% of the current value of the loaned securities plus accrued
interest. It is the present intention of the Trust, which may be changed without
shareholder approval, that loans of portfolio securities will not be made with
respect to the Fund if as a result the aggregate of all outstanding loans
exceeds one-third of the value of the Fund's total assets. Securities lending
will afford the Fund the opportunity to earn additional income because the Fund
will continue to be entitled to the interest payable on the loaned securities
and also will either receive as income all or a portion of the interest on the
investment of any cash loan collateral or, in the case of collateral other than
cash, a fee negotiated with the borrower. Such loans will be terminable at any
time. Loans of securities involve risks of delay in receiving additional
collateral or in recovering the securities lent or even loss of rights in the
collateral in the event of the insolvency of the borrower of the securities. The
Fund will have the right to regain record ownership of loaned securities in
order to exercise beneficial rights. The Fund may pay reasonable fees in
connection with arranging such loans.
BORROWING AND PLEDGING. The Fund may borrow money from banks provided that,
immediately after any such borrowing, there is asset coverage of 300% for all
borrowings of the Fund. The Fund will not make any borrowing which would cause
its outstanding borrowings to exceed one-third of its total assets. The Fund may
pledge assets in connection with borrowings but will not pledge more than
one-third of its total assets. Borrowing magnifies the potential for gain or
loss on the portfolio securities of the Fund and, therefore, if employed,
increases the possibility of fluctuation in the Fund's net asset value. This is
the speculative factor known as leverage. The Fund's policies on borrowing and
pledging are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares. It is the Fund's
present intention, which may be changed by the Board of Trustees without
shareholder approval, to limit its borrowings to 5% of its total assets and to
borrow only for emergency or extraordinary purposes and not for leverage.
PORTFOLIO TURNOVER. The Fund does not intend to use short-term trading as a
primary means of achieving its investment objective. However, the Fund's rate of
portfolio turnover will
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depend upon market and other conditions, and it will not be a limiting factor
when portfolio changes are deemed necessary or appropriate by the Adviser.
Although the annual portfolio turnover rate of the Fund cannot be accurately
predicted, it is not expected to exceed 150%, but may be either higher or lower.
A 100% turnover rate would occur, for example, if all the securities of the Fund
were replaced once in a one-year period. High turnover involves correspondingly
greater commission expenses and transaction costs. High turnover may result in
the Fund recognizing greater amounts of income and capital gains, which would
increase the amount of income and capital gains which the Fund must distribute
to shareholders in order to maintain its status as a regulated investment
company and to avoid the imposition of federal income or excise taxes (see
"Taxes").
HOW TO PURCHASE SHARES
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Your initial investment in the Fund ordinarily must be at least $5,000
($2,000 for tax-deferred retirement plans). The Fund may, in the Adviser's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. Shares of the Fund are sold on a continuous basis at the net asset
value next determined after receipt of a purchase order by the Trust. Purchase
orders received by dealers prior to 4:00 p.m., Eastern time, on any business day
and transmitted to the Trust's transfer agent, Countrywide Fund Services, Inc.
(the "Transfer Agent"), by 5:00 p.m., Eastern time, that day are confirmed at
the net asset value determined as of the close of the regular session of trading
on the New York Stock Exchange on that day. It is the responsibility of dealers
to transmit properly completed orders so that they will be received by the
Distributor by 5:00 p.m., Eastern time. Dealers may charge a fee for effecting
purchase orders. Direct purchase orders received by the Transfer Agent, by 4:00
p.m., Eastern time, are confirmed at that day's net asset value. Direct
investments received by the Transfer Agent after 4:00 p.m., Eastern time, and
orders received from dealers after 5:00 p.m., Eastern time, are confirmed at the
net asset value next determined on the following business day.
You may open an account and make an initial investment in the Fund by
sending a check and a completed account application form to Countrywide Fund
Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be
made payable to the "Atalanta/Sosnoff Fund." An account application is included
in this Prospectus.
The Trust mails you confirmations of all purchases or redemptions of Fund
shares. Certificates representing shares are not issued. The Trust and the
Distributor reserve the rights to limit the amount of investments and to refuse
to sell to any person.
- 12 -
<PAGE>
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Trust or the Transfer Agent in the transaction.
You may also purchase shares of the Fund by wire. Please telephone the
Transfer Agent (Nationwide call toll-free 1-877-SOSNOFF (1-877-767-6633)) for
instructions. You should be prepared to give the name in which the account is to
be established, the address, telephone number and taxpayer identification number
for the account, and the name of the bank which will wire the money.
Your investment will be made at the net asset value next determined after
your wire is received together with the account information indicated above. If
the Trust does not receive timely and complete account information, there may be
a delay in the investment of your money and any accrual of dividends. To make
your initial wire purchase, you are required to mail a completed account
application to the Transfer Agent. Your bank may impose a charge for sending
your wire. There is presently no fee for receipt of wired funds, but the Trust
reserves the right to charge shareholders for this service upon thirty days
prior notice to shareholders.
You may purchase and add shares to your account by mail or by bank wire.
Checks should be sent to Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio 45201-5354. Checks should be made payable to the
"Atalanta/Sosnoff Fund." Bank wires should be sent as outlined above. You may
also make additional investments at the Trust's offices at 101 Park Avenue, New
York, New York. Each additional purchase request must contain the name of your
account and your account number to permit proper crediting to your account.
While there is no minimum amount required for subsequent investments, the Trust
reserves the right to impose such a requirement.
SHAREHOLDER SERVICES
- --------------------
Contact the Transfer Agent (Nationwide call toll-free 1-877-SOSNOFF
(1-877-767-6633)) for additional information about the shareholder services
described below.
- 13 -
<PAGE>
Automatic Withdrawal Plan
-------------------------
If the shares in your account have a value of at least $25,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $100 each. There is no
charge for this service.
Tax-Deferred Retirement Plans
-----------------------------
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for individuals and their
non-employed spouses, including Roth IRAs and Education IRAs
-- Qualified pension and profit-sharing plans for employees, including
those profit-sharing plans with a 401(k) provision
-- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code.
Direct Deposit Plans
--------------------
Shares of the Fund may be purchased through direct deposit plans offered by
certain employers and government agencies. These plans enable a shareholder to
have all or a portion of his or her payroll or social security checks
transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
-------------------------
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account on either the 15th or
the last business day of the month. The minimum initial and subsequent
investments must be $100 under the plan. The Transfer Agent pays the costs
associated with these transfers, but reserves the right, upon thirty days
written notice, to make reasonable charges for this service. Your depository
institution may impose its own charge for debiting your account which would
reduce your return from an investment in the Fund.
HOW TO REDEEM SHARES
- --------------------
You may redeem shares of the Fund on each day that the Trust is open for
business by sending a written request to the Fund. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be
- 14 -
<PAGE>
signed exactly as your name appears on the Trust's account records. If the
shares to be redeemed have a value of $25,000 or more, your signature must be
guaranteed by any eligible guarantor institution, including banks, brokers and
dealers, municipal securities brokers and dealers, government securities brokers
and dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations.
Redemption requests may direct that the proceeds be wired directly to your
existing account in any commercial bank or brokerage firm in the United States.
If your instructions request a redemption by wire, you will be charged a $9
processing fee by the Fund's custodian. The Trust reserves the right, upon
thirty days written notice, to change the processing fee. All charges will be
deducted from your account by redemption of shares in your account. Your bank or
brokerage firm may also impose a charge for processing the wire. In the event
that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
You may also redeem shares by placing a wire redemption request through a
securities broker or dealer. Unaffiliated broker-dealers may impose a fee on the
shareholder for this service. You will receive the net asset value per share
next determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly transmit wire
redemption orders.
You will receive the net asset value per share next determined after
receipt by the Transfer Agent of your redemption request in the form described
above. Payment is made within three business days after tender in such form,
provided that payment in redemption of shares purchased by check will be
effected only after the check has been collected, which may take up to fifteen
days from the purchase date. To eliminate this delay, you may purchase shares of
the Fund by certified check or wire. At the discretion of the Trust or the
Transfer Agent, corporate investors and other associations may be required to
furnish an appropriate certification authorizing redemptions to ensure proper
authorization.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
The Fund expects to distribute substantially all of its net investment
income, if any, on an annual basis. The Fund expects to distribute any net
realized long-term capital gains at least
- 15 -
<PAGE>
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional shares.
Income Option - income distributions and short-term capital gains
distributions paid in cash; long-term capital
gains distributions reinvested in additional
shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
You should indicate your choice of option on your application. If no option
is specified on your application, distributions will automatically be reinvested
in additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed distribution checks.
TAXES
- -----
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. The Fund intends to distribute substantially all of its net
investment income and any realized capital gains to its shareholders.
Distributions of net investment income and net realized short-term capital
gains, if any, are taxable to investors as ordinary income. Dividends
distributed by the Fund from net investment income may be eligible, in whole or
in part, for the dividends received deduction available to corporations.
Distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) by the Fund to its
shareholders are taxable to the recipient shareholders as capital gains, without
regard to the length of
- 16 -
<PAGE>
time a shareholder has held Fund shares. The maximum capital gains rate for
individuals is 28% with respect to assets held for more than 12 months, but not
more than 18 months, and 20% with respect to assets held more than 18 months.
The maximum capital gains rate for corporate shareholders is the same as the
maximum tax rate for ordinary income. Redemptions of shares of the Fund are
taxable events on which a shareholder may realize a gain or loss.
The Fund will mail to each of its shareholders a statement indicating the
amount and federal income tax status of all distributions made during the year.
In addition to federal taxes, shareholders of the Fund may be subject to state
and local taxes on distributions. Shareholders should consult their tax advisors
about the tax effect of distributions and withdrawals from the Fund and the use
of the Automatic Withdrawal Plan. The tax consequences described in this section
apply whether distributions are taken in cash or reinvested in additional
shares. See "Taxes" in the Statement of Additional Information for further
information.
OPERATION OF THE FUND
- ---------------------
The Fund is a diversified series of the Atalanta/Sosnoff Investment Trust
(the "Trust"), an open-end management investment company organized as an Ohio
business trust on January 29, 1998. The Board of Trustees supervises the
business activities of the Trust. Like other mutual funds, the Trust retains
various organizations to perform specialized services for the Fund.
The Trust retains Atalanta/Sosnoff Capital Corporation (Delaware), 101 Park
Avenue, New York, New York 10178 (the "Adviser"), to manage the Fund's
investments. The Adviser is a registered investment adviser that has been
advising individual, institutional and corporate clients since 1982. The Adviser
is a wholly-owned subsidiary of Atalanta/Sosnoff Capital Corporation ("A/SCC"),
a public company listed as a member firm of the New York Stock Exchange. Martin
T. Sosnoff is the controlling shareholder of A/SCC.
The Fund pays the Adviser a fee, payable monthly, at the annual rate of
.75% of the average value of its daily net assets. The Adviser has not
previously provided investment advisory services to a regulated investment
company. As of the date of this Prospectus, the Adviser is the sole shareholder
of the Fund.
An investment committee of three senior executives of the Adviser is
primarily responsible for managing the Fund's portfolio. Martin T. Sosnoff,
C.F.A., Chairman of the Board of the Adviser and A/SCC, chairs this committee.
Mr. Sosnoff founded the Adviser in 1981. He has authored two books on the
- 17 -
<PAGE>
money management business, Humble on Wall Street (1975) and Silent Investor,
Silent Loser (1986), and currently writes a column for Forbes magazine. Craig B.
Steinberg is President and a Director of the Adviser and has been employed by
the Adviser since 1985. Paul P. Tanico is Executive Vice President of the
Adviser and has been employed by the Adviser since 1997. He has been General
Partner of Castlerock Partners, an investment partnership, since 1993.
In addition to the advisory fee, the Fund is responsible for the payment of
all operating expenses, including fees and expenses in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
federal and state securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, transfer agent, administrator, and
accounting and pricing agent of the Fund, fees and expenses of members of the
Board of Trustees who are not interested persons of the Trust, the cost of
preparing and distributing prospectuses, statements, reports and other documents
to shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Fund may be a party and indemnification of the Trust's officers and
Trustees with respect thereto.
Atalanta/Sosnoff Management Corporation, 101 Park Avenue, New York, New
York (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as
principal underwriter for the Fund and, as such, is the exclusive agent for
distribution of the Fund's shares. Martin T. Sosnoff, Chairman of the Board of
the Adviser and A/SCC, is also Chairman of the Board of the Distributor.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent"), to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent. The Transfer Agent is a
wholly-owned indirect subsidiary of Countrywide Credit Industries, Inc., a New
York Stock Exchange listed company principally engaged in the business of
residential mortgage lending. The Transfer Agent also provides accounting and
pricing services to the Fund. The Transfer Agent receives a monthly fee from the
Fund for calculating daily net asset value per share and maintaining such books
and records as are necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained to provide administrative
services to the Fund. In this capacity, the Transfer Agent supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
- 18 -
<PAGE>
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Transfer Agent a fee, payable monthly,
for these administrative services at the annual rate of .15% of the average
value of its daily net assets up to $50,000,000, .125% of such assets from
$50,000,000 to $100,000,000 and .10% of such assets in excess of $100,000,000;
provided, however, that the minimum fee is $1,000 per month.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its objective of seeking best execution
of portfolio transactions, the Adviser may consider sales of shares of the Fund
as a factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. Subject to the requirements of the Investment Company
Act of 1940 (the "1940 Act") and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust, the Adviser or
the Distributor.
Shares of the Fund have equal voting rights and liquidation rights. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each full share owned and fractional votes for fractional shares
owned. The Trust does not normally hold annual meetings of shareholders. The
Trustees shall promptly call and give notice of a meeting of shareholders for
the purpose of voting upon removal of any Trustee when requested to do so in
writing by shareholders holding 10% or more of the Trust's outstanding shares.
The Trust will comply with the provisions of Section 16(c) of the 1940 Act in
order to facilitate communications among shareholders.
SERVICE PLAN
- ------------
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a service
plan (the "Plan") under which the Fund is required to compensate the Distributor
for its services to the Fund. The Distributor is responsible for the payment of
any expenses related to the distribution or promotion of Fund shares, including
payments to securities dealers and others who are engaged in activites related
to the servicing of shareholder accounts such as maintaining personnel who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional
- 19 -
<PAGE>
information and reports; expenses of obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and any other expenses related to the
distribution of the Fund's shares or the servicing of the Fund's shareholders.
The annual limitation for payments to the Distributor pursuant to the Plan
is .25% of the Fund's average daily net assets. In the event the Plan is
terminated by the Fund in accordance with its terms, the Fund will not be
required to make any payments to the Distributor after the date the Plan
terminates.
Pursuant to the Plan, the Distributor may make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass-Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or their shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
CALCULATION OF SHARE PRICE
- --------------------------
On each day that the Trust is open for business, the share price (net asset
value) of the shares of the Fund is determined as of the close of the regular
session of trading on the New York Stock Exchange, currently 4:00 p.m., Eastern
time. The Trust is open for business on each day the New York Stock Exchange is
open for business and on any other day when there is sufficient
- 20 -
<PAGE>
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more of the major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted by NASDAQ are valued at the last reported sale
price as of the close of the regular session of trading on the New York Stock
Exchange on the day the securities are being valued, or, if not traded on a
particular day, at the closing bid price, (2) securities traded in the
over-the-counter market, and which are not quoted by NASDAQ, are valued at the
last sale price (or, if the last sale price is not readily available, at the
last bid price as quoted by brokers that make markets in the securities) as of
the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, (3) securities which are traded both in
the over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and (4) securities (and other assets)
for which market quotations are not readily available are valued at their fair
value as determined in good faith in accordance with consistently applied
procedures established by and under the general supervision of the Board of
Trustees. The net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
PERFORMANCE INFORMATION
- -----------------------
From time to time, the Fund may advertise its "average annual total
return." Average annual total return figures are based on historical earnings
and are not intended to indicate future performance.
The "average annual total return" of the Fund refers to the average annual
compounded rates of return over the most recent 1, 5 and 10 year periods or,
where the Fund has not been in operation for such period, over the life of the
Fund (which periods will be stated in an advertisement) that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions. The Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative
- 21 -
<PAGE>
return which measures the percentage change in the value of an account between
the beginning and end of a period, assuming no activity in the account other
than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation of total return may also indicate average annual
compounded rates of return over periods other than those specified for "average
annual total return." A nonstandardized quotation of total return will always be
accompanied by the Fund's "average annual total return" as described above.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week, Barron's
Fortune or Morningstar Mutual Fund Values. The Fund may also compare its
performance to that of other selected mutual funds, average of the other mutual
funds within its category as determined by Lipper, or recognized indicators such
as the Dow Jones Industrial Average or the S&P 500 Index. In connection with a
ranking, the Fund may provide additional information, such as the particular
category of funds to which the ranking relates, the number of funds in the
category, the criteria upon which the ranking is based, and the effect of fee
waivers and/or expense reimbursements, if any. The Fund may also present its
performance and other investment characteristics, such as volatility or a
temporary defensive posture, in light of the Adviser's view of current or past
market conditions or historical trends.
- 22 -
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue
New York, New York 10178
BOARD OF TRUSTEES
Howard A. Drucker
Anthony G. Miller
Toni E. Sosnoff
Irving L. Straus
Aida L. Wilder
INVESTMENT ADVISER
ATALANTA/SOSNOFF CAPITAL CORPORATION (DELAWARE)
101 Park Avenue
New York, New York 10178
212-867-5000
INDEPENDENT AUDITORS
ARTHUR ANDERSEN LLP
425 Walnut Street
Cincinnati, Ohio 45202
LEGAL COUNSEL
WILLKIE FARR & GALLAGHER
787 Seventh Avenue
New York, New York 10019-6099
DISTRIBUTOR
ATALANTA/SOSNOFF MANAGEMENT CORPORATION
101 Park Avenue
New York, New York 10178
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Services
- --------------------
Nationwide: (Toll-Free 1-877-SOSNOFF (1-877-767-6633))
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
- 23 -
<PAGE>
ACCOUNT APPLICATION ACCOUNT NO. A8 - ___________________
(For Fund Use Only)
Please mail account application to: ------------------------------------
FOR BROKER/DEALER USE ONLY
Atalanta/Sosnoff Fund Firm Name:__________________________
P.O. Box 5354 Home Office Address: _______________
Cincinnati, Ohio 45201-5354 Branch Address: ____________________
Rep Name & No.: ____________________
Rep Signature: _____________________
ATALANTA/SOSNOFF FUND ------------------------------------
================================================================================
Initial Investment of $______________________________________ ($5,000 minimum)
o Check or draft enclosed payable to the Fund.
o Bank Wire From: _____________________________________________________________
ACCOUNT NAME S.S. #/TAX I.D.#
__________________________________________________________ _____________________
Name of Individual, Corporation, (In case of custodial
Organization, or Minor, etc. account please list
minor's S.S.#)
_________________________________________________________ Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other
_______
ADDRESS PHONE
__________________________________________________________ ( )________________
Street or P.O. Box Business Phone
__________________________________________________________ ( )________________
City State Zip Home Phone
Check Appropriate Box: o Individual o Trust
o Joint Tenant o Custodial
o Partnership o Non-Profit
(Right of survivorship o Other
presumed)
o Corporation
Occupation and Employer Name/Address____________________________________________
Are you an associated person of an NASD member? o Yes o No
================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the
Taxpayer Identification Number listed above is my correct number. The Internal
Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if
appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short term capital gains
distributions paid in cash, long term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions paid in
cash.
o By Check o By ACH to my bank checking or savings account.
PLEASE ATTACH A VOIDED CHECK.
================================================================================
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon
instructions received by telephone, or upon receipt of and in the amounts of
checks as described below (if checkwriting is selected), to have amounts
withdrawn from my (our) account in the Atalanta/Sosnoff Fund (see prospectus for
limitations on this option) and:
o WIRED ($1,000 minimum) OR MAILED to my (our) bank account designated below. I
(we) further authorize the use of automated cash transfers to and from the
account designated below.
NOTE: For wire redemptions, the indicated bank should be a commercial bank.
PLEASE ATTACH A VOIDED CHECK FOR THE ACCOUNT.
Bank Account Number____________________Bank Routing Transit Number______________
Name of Account Holder__________________________________________________________
Bank Name______________________Bank Address_____________________________________
City State
================================================================================
SIGNATURES
By signature below each investor certifies that the investor has received a copy
of the Fund's current Prospectus, that he or she is of legal age, and that he or
she has full authority and legal capacity for himself/herself or the
organization named below, to make this investment and to use the options
selected above. The investor appoints Countrywide Fund Services, Inc. as his or
her agent to enter orders for shares whether by direct purchase or exchange, to
receive dividends and distributions for automatic reinvestment in additional
shares of the Fund for credit to the investor's account and to surrender for
redemption shares held in the investor's account in accordance with any of the
procedures elected above or for payment of service charges incurred by the
investor. The investor further agrees that Countrywide Fund Services, Inc. can
cease to act as such agent upon ten days' notice in writing to the investor at
the address contained in this Application. The investor hereby ratifies any
instructions given pursuant to this Application and for himself/herself and his
or her successors and assigns does hereby release Countrywide Fund Services,
Inc., Atalanta/Sosnoff Investment Trust, Atalanta/Sosnoff Management
Corporation, and their respective officers, employees, agents and affiliates
from any and all liability in the performance of the acts instructed herein.
Neither the Trust, Atalanta/Sosnoff Capital Corporation (Delaware), Countrywide
Fund Services, Inc., nor their respective affiliates will be liable for
complying with telephone instructions they reasonably believe to be genuine or
for any loss, damage, cost or expense in acting on such telephone instructions.
The investor(s) will bear the risk of any such loss. The Trust or Countrywide
Fund Services, Inc., or both, will employ reasonable procedures to determine
that telephone instructions are genuine. If the Trust and/or Countrywide Fund
Services, Inc. do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
____________________________________ _____________________________________
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
____________________________________ _____________________________________
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE RESOLUTION
FORM ON THE REVERSE SIDE. UNLESS OTHERWISE SPECIFIED, EACH JOINT OWNER SHALL
HAVE FULL AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
<PAGE>
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund) The Automatic
Investment Plan is available for all established accounts of the
Atalanta/Sosnoff Fund. There is no charge for this service, and it offers the
convenience of automatic investing on a regular basis. For an account that is
opened by using this Plan, the minimum initial and subsequent investments must
be at least $100. Though a continuous program of 12 monthly investments is
recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $_________________ per ABA Routing Number ____________________
month in the Fund.
FI Account Number _____________________
o Checking Account o Savings Account
____________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
o the last business day of each month
____________________________________ o the 15th day of each month
City State o both the 15th and last business day
X___________________________________ X______________________________________
(Signature of Depositor EXACTLY as (Signature of Joint Tenant - if any)
it appears on FI Records)
(Joint Signatures are required when bank account is in joint names. Please
sign exactly as signature appears on your FI's records.)
Please attach a voided check for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("Countrywide") has put into effect, by which amounts, determined
by your depositor, payable to the Atalanta/Sosnoff Fund, for purchase of shares
of said Fund, are collected by Countrywide, Countrywide hereby agrees:
Countrywide will indemnify and hold you harmless from any liability to any
person or persons whatsoever arising out of the payment by you of any amount
drawn by the Fund to their own order on the account of your depositor or from
any liability to any person whatsoever arising out of the dishonor by you
whether with or without cause or intentionally or inadvertently, of any such
amount. Countrywide will defend, at its own cost and expense, any action which
might be brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. Countrywide will refund to you
any amount erroneously paid by you to the Fund if the claim for the amount of
such erroneous payment is made by you within six (6) months from the date of
such erroneous payment; your participation in this arrangement and that of the
Funds may be terminated by thirty (30) days' written notice from either party to
the other.
================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund -- if the
shares in your account have a value of at least $25,000 you may elect this
option.) This is an authorization for you to withdraw $________________ ($100
minimum) from my mutual fund account beginning the last business day of the
month of ____________.
Please Indicate Withdrawal Schedule (Check One):
o Monthly -- Withdrawals will be made on the last business day of each month.
o Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
o Annually -- Please make withdrawals on the last business day of the month of:
______________.
Please Select Payment Method (Check One):
o Check: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank
checking or savings account as indicated below. I understand that the
transfer will be completed in two to three business days and that there is no
charge.
o Bank Wire: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
Please attach a voided _____________________________________________________
check for ACH or bank wire Bank Name Bank Address
_____________________________________________________
Bank ABA# Account # Account Name
o Send to special payee (other than applicant): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee __________________________________________________________________
Please send to: ________________________________________________________________
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of the
Atalanta/Sosnoff Fund (the Fund) and that
________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of
the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the Trust,
and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign
any documents necessary or appropriate to appoint Countrywide Fund Services,
Inc. as redemption agent of the corporation or organization for shares of the
applicable series of the Trust, to establish or acknowledge terms and conditions
governing the redemption of said shares and to otherwise implement the
privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the
Charter and Bylaws or other empowering documents of the
________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of _______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on ______________________ at
which a quorum was present and acting throughout, and that the same are now in
full force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the foregoing
resolutions.
Name Title
_____________________________________ _______________________________________
_____________________________________ _______________________________________
_____________________________________ _______________________________________
Witness my hand and seal of the corporation or organization this _______________
day of ________________, 19___
_____________________________________ _______________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
May ___, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the Atalanta/Sosnoff Investment Trust (the
"Trust") dated May ___, 1998. A copy of the Trust's Prospectus can be obtained
by writing the Trust at 312 Walnut Street, 21st floor, Cincinnati, Ohio 45202 or
by calling the Trust nationwide toll-free: 1-877-SOSNOFF (1-877- 767-6633).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
Atalanta/Sosnoff Investment Trust
101 Park Avenue
New York, New York 10178
THE TRUST ................................................................ 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS ............................ 3
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS .................. 11
INVESTMENT LIMITATIONS ................................................... 13
TRUSTEES AND OFFICERS .................................................... 14
THE INVESTMENT ADVISER ................................................... 17
THE DISTRIBUTOR .......................................................... 18
SERVICE PLAN ............................................................. 18
SECURITIES TRANSACTIONS .................................................. 19
PORTFOLIO TURNOVER ....................................................... 21
CALCULATION OF SHARE PRICE ............................................... 21
TAXES .................................................................... 21
REDEMPTION IN KIND ....................................................... 23
HISTORICAL PERFORMANCE INFORMATION ....................................... 23
CUSTODIAN ................................................................ 24
AUDITORS ................................................................. 24
COUNTRYWIDE FUND SERVICES, INC ........................................... 25
STATEMENT OF ASSETS AND LIABILITIES ...................................... 26
- 2 -
<PAGE>
THE TRUST
- ---------
The Atalanta/Sosnoff Investment Trust was organized as an Ohio business
trust on January 29, 1998. The Trust currently offers one series of shares to
investors: the Atalanta/Sosnoff Fund (the "Fund").
Each share of the Fund represents an equal proportionate interest in the
assets and liabilities belonging to the Fund with each other share of the Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of the Fund into a
greater or lesser number of shares so long as the proportionate beneficial
interest in the assets belonging to the Fund are in no way affected. In case of
any liquidation of the Fund, the holders of shares of the Fund being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to the Fund. No shareholder is liable to further
calls or to assessment by the Fund without his express consent.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
- ---------------------------------------------
A more detailed discussion of some of the terms used and investment
methodology described in the Prospectus (see "Investment Objective, Investment
Methodology and Risk Considerations") appears below:
MAJORITY. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Fund means the
lesser of (1) 67% or more of the Fund's outstanding shares present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented at such meeting or (2) more than 50% of the outstanding
shares of the Fund.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which the
Fund purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, with banks having assets in excess of $10 billion and with
broker-dealers who are recognized as primary dealers in U.S. Government
obligations by the Federal Reserve Bank of New York. Collateral for repurchase
agreements is held in safekeeping in the customer-only account of the Fund's
Custodian at the Federal
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<PAGE>
Reserve Bank. The Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 15% of the value of its net
assets would be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time the Fund
enters into a repurchase agreement, the value of the underlying security,
including accrued interest, will equal or exceed the value of the repurchase
agreement, and in the case of a repurchase agreement exceeding one day, the
seller will agree that the value of the underlying security, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement. The collateral securing the seller's obligation must be of a credit
quality at least equal to the Fund's investment criteria for portfolio
securities and will be held by the Custodian or in the Federal Reserve Book
Entry System.
For purposes of the Investment Company Act of 1940, a repurchase agreement
is deemed to be a loan from the Fund to the seller subject to the repurchase
agreement and is therefore subject to the Fund's investment restriction
applicable to loans. It is not clear whether a court would consider the
securities purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of interest or decline
in price of the security. If a court characterized the transaction as a loan and
the Fund has not perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds to the Fund of the sale of the security to a third
party are less than the repurchase price. However, if the
- 4 -
<PAGE>
market value of the securities subject to the repurchase agreement becomes less
than the repurchase price (including interest), the Fund will direct the seller
of the security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Fund will be unsuccessful in seeking
to enforce the seller's contractual obligation to deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
subject to the restrictions stated in its Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral must,
on each business day, at least equal the value of the loaned 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. Such terms and
the issuing bank must be satisfactory to the Fund. The Fund receives amounts
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 collateral;
either type of interest may be shared with the borrower. The Fund may also pay
fees to placing brokers as well as custodian and administrative fees in
connection with loans. Fees may only be paid to a placing broker provided that
the Trustees determine that the fee paid to the placing broker is reasonable and
based solely upon services rendered, that the Trustees separately consider the
propriety of any fee shared by the placing broker with the borrower, and that
the fees are not used to compensate the Adviser or any affiliated person of the
Trust or an affiliated person of the Adviser or other affiliated person. The
terms of the Fund's loans must meet applicable tests under the Internal Revenue
Code and permit the Fund to reacquire loaned securities on five days' notice or
in time to vote on any important matter.
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Fund may invest
consist of certificates of deposit, bankers' acceptances and time deposits
issued by national banks and state banks, trust companies and mutual savings
banks, or of banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a
- 5 -
<PAGE>
specified period of time at a stated interest rate. Investments in time deposits
maturing in more than seven days will be subject to the Fund's restrictions on
illiquid investments (see "Investment Limitations").
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one
to two hundred seventy days) unsecured promissory notes issued by corporations
in order to finance their current operations. The Fund will only invest in
commercial paper rated A-1 by Standard & Poor's Ratings Group or Prime-1 by
Moody's Investors Service, Inc. or unrated paper of issuers who have outstanding
unsecured debt rated AA or better by Standard & Poor's or Aa or better by
Moody's. Certain notes may have floating or variable rates. Variable and
floating rate notes with a demand notice period exceeding seven days will be
subject to the Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the Adviser, subject to the direction
of the Board of Trustees, such note is liquid.
The rating of Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. Among the factors considered by Moody's in
assigning ratings are the following: valuation of the management of the issuer;
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; evaluation of the
issuer's products in relation to competition and customer acceptance; liquidity;
amount and quality of long-term debt; trend of earnings over a period of 10
years; financial strength of the parent company and the relationships which
exist with the issuer; and recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. These factors are all considered in
determining whether the commercial paper is rated Prime-1. Commercial paper
rated A-1 (highest quality) by Standard & Poor's Ratings Group has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances; typically, the issuer's industry is
well established and the issuer has a strong position within the industry; and
the reliability and quality of management are unquestioned. The relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated A-1.
FOREIGN SECURITIES. Subject to the Fund's investment policies and quality
and maturity standards, the Fund may invest in the securities (payable in U.S.
dollars) of foreign issuers. Because the Fund may invest in foreign securities,
an investment
- 6 -
<PAGE>
in the Fund involves risks that are different in some respects from an
investment in a fund which invests only in securities of U.S. domestic issuers.
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to those applicable to U.S.
companies. There may be less governmental supervision of securities markets,
brokers and issuers of securities. Securities of some foreign companies are less
liquid or more volatile than securities of U.S. companies, and foreign brokerage
commissions and custodian fees are generally higher than in the United States.
Settlement practices may include delays and may differ from those customary in
United States markets. Investments in foreign securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
restrictions on foreign investment and repatriation of capital, imposition of
withholding taxes on dividend or interest payments, currency blockage (which
would prevent cash from being brought back to the United States), and difficulty
in enforcing legal rights outside the United States.
WRITING COVERED CALL OPTIONS. The Fund may write covered call options on
equity securities to earn premium income, to assure a definite price for a
security it has considered selling, or to close out options previously
purchased. A call option gives the holder (buyer) the right to purchase a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). A call option is "covered" if the Fund owns the
underlying security subject to the call option at all times during the option
period. A covered call writer is required to deposit in escrow the underlying
security in accordance with the rules of the exchanges on which the option is
traded and the appropriate clearing agency.
The writing of covered call options is a conservative investment technique
which the Adviser believes involves relatively little risk. However, there is no
assurance that a closing transaction can be effected at a favorable price.
During the option period, the covered call writer has, in return for the premium
received, given up the opportunity for capital appreciation above the exercise
price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline.
As long as the Securities and Exchange Commission continues to take the
position that unlisted options are illiquid securities, the Fund will not commit
more than 15% of its net assets to unlisted covered call transactions and other
illiquid securities.
- 7 -
<PAGE>
WRITING COVERED PUT OPTIONS. The Fund may write covered put options on
equity securities to assure a definite price for a security if it is considering
acquiring the security at a lower price than the current market price or to
close out options previously purchased. A put option gives the holder of the
option the right to sell, and the writer has the obligation to buy, the
underlying security at the exercise price at any time during the option period.
The operation of put options in other respects is substantially identical to
that of call options. When the Fund writes a covered put option, it maintains in
a segregated account with its Custodian cash or liquid securities in an amount
not less than the exercise price at all times while the put option is
outstanding.
The risks involved in writing put options include the risk that a closing
transaction cannot be effected at a favorable price and the possibility that the
price of the underlying security may fall below the exercise price, in which
case the Fund may be required to purchase the underlying security at a higher
price than the market price of the security at the time the option is exercised.
PURCHASING PUT OPTIONS. The Fund may purchase put options. As the holder of
a put option, the Fund has the right to sell the underlying security at the
exercise price at any time during the option period. The Fund may enter into
closing sale transactions with respect to such options, exercise them or permit
them to expire. The Fund may purchase put options for defensive purposes in
order to protect against an anticipated decline in the value of its securities.
An example of such use of put options is provided below.
The Fund may purchase a put option on an underlying security (a "protective
put") owned as a defensive technique in order to protect against an anticipated
decline in the value of the security. Such hedge protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. For
example, a put option may be purchased in order to protect unrealized
appreciation of a security where the Adviser deems it desirable to continue to
hold the security because of tax considerations. The premium paid for the put
option and any transaction costs would reduce any capital gain otherwise
available for distribution when the security is eventually sold.
The Fund may also purchase put options at a time when the Fund does not own
the underlying security. By purchasing put
- 8 -
<PAGE>
options on a security it does not own, the Fund seeks to benefit from a decline
in the market price of the underlying security. If the put option is not sold
when it has remaining value, and if the market price of the underlying security
remains equal to or greater than the exercise price during the life of the put
option, the Fund will lose its entire investment in the put option. In order for
the purchase of a put option to be profitable, the market price of the
underlying security must decline sufficiently below the exercise price to cover
the premium and transaction costs, unless the put option is sold in a closing
sale transaction.
The Fund will commit no more than 5% of its assets to premiums when
purchasing put options. The premium paid by the Fund when purchasing a put
option will be recorded as an asset in the Fund's statement of assets and
liabilities. This asset will be adjusted daily to the option's current market
value, which will be the latest sale price at the time at which the Fund's net
asset value per share is computed (close of trading on the New York Stock
Exchange), or, in the absence of such sale, the latest bid price. The asset will
be extinguished upon expiration of the option, the selling (writing) of an
identical option in a closing transaction, or the delivery of the underlying
security upon the exercise of the option.
PURCHASING CALL OPTIONS. The Fund may purchase call options. As the holder
of a call option, the Fund has the right to purchase the underlying security at
the exercise price at any time during the option period. The Fund may enter into
closing sale transactions with respect to such options, exercise them or permit
them to expire. The Fund may purchase call options for the purpose of increasing
its current return or avoiding tax consequences which could reduce its current
return. The Fund may also purchase call options in order to acquire the
underlying securities. Examples of such uses of call options are provided below.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying securities for its portfolio. Utilized in this fashion, the purchase
of call options enables the Fund to acquire the securities at the exercise price
of the call option plus the premium paid. At times the net cost of acquiring
securities in this manner may be less than the cost of acquiring the securities
directly. This technique may also be useful to the Fund in purchasing a large
block of securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option rather than the underlying
security itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security and in such event could allow the
call option to expire, incurring a loss only to the extent of the premium paid
for the option.
- 9 -
<PAGE>
The Fund will commit no more than 5% of its assets to premiums when
purchasing call options. The Fund may also purchase call options on underlying
securities it owns in order to protect unrealized gains on call options
previously written by it. A call option would be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times to
avoid realizing losses that would result in a reduction of the Fund's current
return. For example, where the Fund has written a call option on an underlying
security having a current market value below the price at which such security
was purchased by the Fund, an increase in the market price could result in the
exercise of the call option written by the Fund and the realization of a loss on
the underlying security with the same exercise price and expiration date as the
option previously written.
OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Fund may
engage involve the specific risks described above as well as the following
risks: the writer of an option may be assigned an exercise at any time during
the option period; disruptions in the markets for underlying instruments could
result in losses for options investors; imperfect or no correlation between the
option and the securities being hedged; the insolvency of a broker could present
risks for the broker's customers; and market imposed restrictions may prohibit
the exercise of certain options. In addition, the option activities of the Fund
may affect its portfolio turnover rate and the amount of brokerage commissions
paid by the Fund. The success of the Fund in using the option strategies
described above depends, among other things, on the Adviser's ability to predict
the direction and volatility of price movements in the options and securities
markets and the Adviser's ability to select the proper time, type and duration
of the options.
STOCK INDEX FUTURES CONTRACTS. The Fund may enter into S&P Index (or other
major market index) futures contracts ("Futures" or "Futures Contracts") as a
hedge against changes in prevailing levels of stock values in order to establish
more definitely the effective return on securities held or intended to be
acquired by the Fund. The Fund's hedging may include the purchase of Futures in
anticipation of purchasing underlying index stocks prior to the availability of
sufficient assets to purchase such stocks or to offset potential increase in
stocks prices. When selling Futures Contracts, the Fund will segregate cash
assets to cover any related liability.
The Fund will not enter into Futures Contracts for speculation and will
only enter into Futures Contracts which are traded on national futures exchanges
and are standardized as to maturity date and underlying financial instrument.
The principal
- 10 -
<PAGE>
Futures exchanges in the United States are the Board of Trade of the City of
Chicago and the Chicago Mercantile Exchange. Futures exchanges and trading are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission.
The Fund will not enter into a Futures Contract if, as a result thereof,
more than 5% of the Fund's total assets (taken at market value at the time of
entering into the contract) would be committed to "margin" (down payment)
deposits on such Futures Contracts.
WARRANTS AND RIGHTS. Warrants are options to purchase equity securities at
a specified price and are valid for a specific time period. Rights are similar
to warrants, but normally have a short duration and are distributed by the
issuer to its shareholders. The Fund may purchase warrants and rights, provided
that the Fund does not presently intend to invest more than 5% of its net assets
at the time of purchase in warrants and rights other than those that have been
acquired in units or attached to other securities.
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
- -------------------------------------------------------
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for corporate bonds in which the Fund may invest are as follows:
Moody's Investors Service, Inc.
-------------------------------
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 most unlikely 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 amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in 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 but elements may be
present
- 11 -
<PAGE>
which suggest a susceptibility to impairment sometime 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.
Standard & Poor's Ratings Group
-------------------------------
AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A - Bonds 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 rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit 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
bonds in this category than for bonds in higher rated categories.
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for preferred stocks in which the Fund may invest are as follows:
Moody's Investors Service, Inc.
-------------------------------
aaa - An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
- 12 -
<PAGE>
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
Standard & Poor's Ratings Group
-------------------------------
AAA - This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the diverse
effects of changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
INVESTMENT LIMITATIONS
- ----------------------
The Trust has adopted certain fundamental investment limitations designed
to reduce the risk of an investment in the Fund. These limitations may not be
changed without the affirmative vote of a majority of the outstanding shares of
the Fund.
Under these fundamental limitations, the Fund MAY NOT:
(1) Issue senior securities, pledge its assets or borrow money, or purchase
securities on margin except that it may do so if, immediately after such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and
may pledge its assets to secure all such borrowings;
- 13 -
<PAGE>
(2) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(3) Make short sales of securities or maintain a short position, except short
sales "against the box";
(4) The Fund will not make loans to other persons, except (a) by loaning
portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the
purchase of marketable bonds, debentures, commercial paper or corporate
notes, and similar marketable evidences of indebtedness;
(5) Write, purchase or sell commodities, commodities contracts or related
options;
(6) Invest more than 25% of its total assets in the securities of issuers in
any particular industry (other than securities of the United States
Government, its agencies or instrumentalities);
(7) Invest in interests in real estate or real estate limited partnerships
(although it may invest in real estate investment trusts and purchase
securities secured by real estate or interests therein, or issued by
companies or investment trusts which invest in real estate or interests
therein);
(8) Purchase the securities of any issuer if with respect to 75% of the value
of the total assets of the Fund , more than 5% of the value of the total
assets of the Fund would be invested in the securities of any one issuer or
the Fund would own more than 10% of the outstanding voting securities of
such issuer, provided that this limitation shall not apply to the purchase
of securities issued by the U.S. government, its agencies or
instrumentalities.
Percentage restrictions stated as an investment limitation apply at the
time of investment; if a later increase or decrease in percentage beyond the
specified limits results from a change in securities values or total assets, it
will not be considered a violation. However, in the case of the borrowing
limitation (limitation number 1, above), the Fund will, to the extent necessary,
reduce its existing borrowings to comply with the limitation.
TRUSTEES AND OFFICERS
- ---------------------
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested
- 14 -
<PAGE>
person" of the Trust, as defined by the Investment Company Act of 1940, is
indicated by an asterisk.
Estimated Annual
Compensation
Name Age Position Held From the Trust
- ---- --- ------------- --------------
*Anthony G. Miller 39 Chairman, $ 0
President and Trustee
*Toni E. Sosnoff 55 Vice President 0
and Trustee
+Howard A. Drucker 56 Trustee 8,000
+Irving L. Straus 77 Trustee 8,000
+Aida L. Wilder 50 Trustee 8,000
Robert G. Dorsey 41 Vice President 0
Mark J. Seger 35 Treasurer 0
Tina D. Hosking 29 Secretary 0
* Mr. Miller and Mrs. Sosnoff, as affiliated persons of Atalanta/Sosnoff
Capital Corporation (Delaware) the Fund's investment adviser, and
Atalanta/Sosnoff Management Corporation, the Fund's principal underwriter,
are "interested persons" of the Trust within the meaning of Section
2(a)(19) of the Investment Company Act of 1940.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
ANTHONY G. MILLER, 101 Park Avenue, New York, New York, is President and a
Trustee of the Trust. He is Executive Vice President, Chief Operating Officer
("COO") and Chief Financial Officer ("CFO") of Atalanta/Sosnoff Capital
Corporation (Delaware), (the investment adviser to the Trust and parent of
Atalanta/Sosnoff Management Corporation) and Atalanta/Sosnoff Capital
Corporation (parent of Atalanta/Sosnoff Capital Corporation (Delaware)). Mr.
Miller is also Executive Vice President, COO and CFO of Atalanta/Sosnoff
Management Corporation (the Fund's principal underwriter).
TONI E. SOSNOFF, 101 Park Avenue, New York, New York, is Vice President of
Atalanta/Sosnoff Capital Corporation (Delaware), (the investment adviser to the
Trust and parent of Atalanta/Sosnoff Management Corporation).
HOWARD A. DRUCKER, 25 East End Avenue, New York, New York is an attorney
and the President of Fundamental Management Corp. which provides real estate
management services. He is also a general partner of East Hartford Estates,
L.P., a real estate company; and a real estate investor and manager with various
properties throughout the United States.
- 15 -
<PAGE>
IRVING L. STRAUS, 1501 Broadway #1809, New York, New York, is a Trustee of
the Trust. He is also the chairman of Straus Corporate Communications, a public
relations firm; and President of 100% No-Load Mutual Fund Council, a trade
organization. Mr. Straus also serves as assistant secretary for Spectral
Diagnostics, Inc. which is a publicly-held company in the biotechnology field.
AIDA L. WILDER, 24 Old Albany Post Rd., Rhinebeck, New York, is a Trustee
of the Trust. She is also the Vice President of Wilder Consolidated Enterprises
which engages in restaurant operations and has served in this capacity since
1979.
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio, is President and
Treasurer of Countrywide Fund Services, Inc. (a registered transfer agent) and
Treasurer of Countrywide Investments, Inc. (a registered broker-dealer and
investment adviser) and Countrywide Financial Services, Inc. (a financial
services company and parent of Countrywide Fund Services, Inc. and Countrywide
Investments, Inc. and a wholly-owned subsidiary of Countrywide Credit
Industries, Inc.). He is also Vice President of Brundage, Story and Rose
Investment Trust, Markman MultiFund Trust, Dean Family of Funds, The New York
State Opportunity Funds, Lake Shore Family of Funds, Maplewood Investment Trust
and Wells Family of Real Estate Funds and Assistant Vice President of Firsthand
Funds, Schwartz Investment Trust, The James Advantage Funds, The Tuscarora
Investment Trust, Williamsburg Investment Trust, The Gannett Welsh & Kotler
Funds and The Westport Funds (all of which are registered investment companies).
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio, is Vice
President of Countrywide Financial Services, Inc. and Countrywide Fund Services,
Inc. He is also Treasurer of Countrywide Investment Trust, Countrywide Tax-Free
Trust, Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust,
Markman MultiFund Trust, Williamsburg Investment Trust, Dean Family of Funds,
The New York State Opportunity Funds, Lake Shore Family of Funds, Maplewood
Investment Trust and Wells Family of Real Estate Funds and Assistant Treasurer
of Firsthand Funds, Schwartz Investment Trust, The James Advantage Funds, The
Tuscarora Investment Trust, The Gannett Welsh & Kotler Funds and The Westport
Funds.
TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio, is Associate General
Counsel of Countrywide Fund Services, Inc. She is also Secretary of Dean Family
of Funds and The New York State Opportunity Funds and Assistant Secretary of
PRAGMA Investment Trust, The Gannett Welsh & Kotler Funds, The James Advantage
Funds, Wells Family of Real Estate Funds and Lake Shore Family of Funds.
- 16 -
<PAGE>
Each non-interested Trustee will receive a quarterly retainer of $1,000 and
a $1,000 fee for each Board meeting attended and will be reimbursed for travel
and other expenses incurred in the performance of their duties.
THE INVESTMENT ADVISER
- ----------------------
Atalanta/Sosnoff Capital Corporation (Delaware) (the "Adviser") is the
Fund's investment adviser. The Adviser is a wholly-owned subsidiary of
Atalanta/Sosnoff Capital Corporation ("A/SCC"), a public company listed as a
member firm of the New York Stock Exchange. Martin T. Sosnoff is the controlling
shareholder, Chairman and a Director of A/SCC and the Chairman and a Director of
the Adviser and Atalanta/Sosnoff Management Corporation, the Fund's principal
underwriter (the "Distributor"). Anthony G. Miller is Executive Vice President,
COO and CFO of the Adviser, A/SCC and the Distributor. Messrs. Sosnoff and
Miller, by reason of such affiliation, may directly or indirectly receive
benefits from the advisory fees paid to the Adviser. Mr. Miller is also the
President and a Trustee of the Trust.
Under the terms of the advisory agreement between the Trust and the
Adviser, the Adviser manages the Fund's investments. The Fund pays the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of .75% of its
average daily net assets.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Fund, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Fund may be a party. The Fund may have an obligation
to indemnify the Trust's officers and Trustees with respect to such litigation,
except in instances of willful misfeasance, bad faith, gross negligence or
reckless disregard by such officers and Trustees in the performance of their
duties. The Adviser bears promotional expenses in connection with the
distribution of the Fund's shares. The compensation and expenses of any officer,
Trustee or employee of the Trust who is an officer, director, employee or
stockholder of the Adviser are paid by the Adviser.
By its terms, the advisory agreement will remain in force until ______,
2000 and from year to year thereafter, subject to annual approval by (a) the
Board of Trustees or (b) a vote of the majority of the Fund's outstanding voting
securities; provided that in either event continuance is also approved by a
majority of the Trustees who are not interested persons of the Trust, by a vote
cast in person at a meeting called for the purpose of voting such approval. The
advisory agreement may be terminated at any time, on sixty days' written notice,
without the payment of any
- 17 -
<PAGE>
penalty, by the Board of Trustees, by a vote of the majority of the Fund's
outstanding voting securities, or by the Adviser. The advisory agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
THE DISTRIBUTOR
- ---------------
Atalanta/Sosnoff Management Corporation (the "Distributor") is the
exclusive agent for distribution of shares of the Fund. The Distributor is
obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of the Fund are offered to the public on a
continuous basis. The Distributor pays from its own resources promotional
expenses in connection with the distribution of the Fund's shares and any other
expenses incurred by it in the performance of its obligations under the
Underwriting Agreement with the Fund.
SERVICE PLAN
- ------------
As stated in the Prospectus, the Fund has adopted a service plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits the Fund to compensate the Distributor for its services to the Fund. The
Distributor is responsible for the payment of any expenses incurred in the
distribution and promotion of Fund shares or the servicing of shareholder
accounts, including but not limited to, office space and equipment, telephone
facilities and expenses, answering routine inquiries regarding the Trust,
processing shareholder transactions and providing such other shareholder
servicing as the Trust might reasonably request; formulating and implementing of
marketing and promotion activities; the printing of prospectuses, statements of
additional information and reports used for sales purposes, advertisements,
expenses of preparation and printing of sales literature, promotion, marketing
and sales expenses, and other shareholder servicing-related expenses, including
any servicing fees paid to securities dealers or other firms who have executed a
distribution or service agreement with the Distributor. The Plan expressly
limits payments to the Distributor in any fiscal year to a maximum of .25% of
the average daily net assets of the Fund.
Agreements implementing the Plan (the "Implementation Agreements"),
including agreements with dealers wherein such dealers agree for a fee to act as
agents for the sale of the Fund's shares, are in writing and have been approved
by the Board of Trustees. All payments made pursuant to the Plan are made in
accordance with written agreements.
The continuance of the Plan and Implementation Agreements must be
specifically approved at least annually by a vote of the Trust's Board of
Trustees and by a vote of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the Plan (the
"Independent Trustees") at a meeting called for the purpose of voting on such
continuance. The Plan may be terminated by the Fund at any time by a vote of a
majority of the Independent Trustees or by a vote of the holders of a majority
of the outstanding shares of the
- 18 -
<PAGE>
Fund. In the event the Plan is terminated in accordance with its terms, the Fund
will not be required to make any payments to the Distributor after the
termination date. The Plan may not be amended to increase materially the amount
to be spent under the Plan without shareholder approval. All material amendments
to the Plan must be approved by a vote of the Trust's Board of Trustees and by a
vote of the Independent Trustees.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Board of Trustees believes that expenditure of the Fund's
assets for distribution and shareholder servicing expenses under the Plan should
assist in the growth of the Fund which will benefit the Fund and its
shareholders through increased economies of scale, greater investment
flexibility, greater portfolio diversification and less chance of disruption of
planned investment strategies. The Plan will be renewed only if the Trustees
make a similar determination for each subsequent year of the Plan. There can be
no assurance that the benefits anticipated from the expenditure of the Fund's
assets for shareholder servicing will be realized. While the Plan is in effect,
all amounts spent by the Fund pursuant to the Plan and the purposes for which
such expenditures were made must be reported quarterly to the Board of Trustees
for its review. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
By reason of their ownership of shares of the Adviser and the Distributor,
Anthony G. Miller and Toni E. Sosnoff may each be deemed to have a financial
interest in the operation of the Plan.
SECURITIES TRANSACTIONS
- -----------------------
Decisions to buy and sell securities for the Fund and the placing of the
Fund's securities transactions and negotiation of commission rates where
applicable are made by the Adviser and are subject to review by the Board of
Trustees of the Trust. In the purchase and sale of portfolio securities, the
Adviser seeks best execution for the Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. The Adviser generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received.
- 19 -
<PAGE>
Generally, the Fund attempts to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Fund may be purchased
directly from the issuer.
The Adviser is specifically authorized to select brokers who also provide
brokerage and research services to the Fund and/or other accounts over which the
Adviser exercises investment discretion and to pay such brokers a commission in
excess of the commission another broker would charge if the Adviser determines
in good faith that the commission is reasonable in relation to the value of the
brokerage and research services provided. The determination may be viewed in
terms of a particular transaction or the Adviser's overall responsibilities with
respect to the Fund and to accounts over which it exercises investment
discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Fund and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Fund and the
Adviser, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Fund effects securities transactions may
be used by the Adviser in servicing all of its accounts and not all such
services may be used by the Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Adviser and other affiliates
of the Trust may effect securities transactions which are executed on a national
securities exchange or transactions in the over-the-counter market conducted on
an agency basis. The Fund will not effect any brokerage transactions in its
portfolio securities with the Adviser if such transactions would be unfair or
unreasonable to its shareholders. Over-the-counter transactions will be placed
either directly with principal market makers or with broker-dealers. Although
the Fund does not anticipate any ongoing arrangements with other brokerage
firms, brokerage business may be transacted from time to time with other firms.
Neither the Adviser, nor affiliates of the Trust, or the Adviser, will receive
reciprocal brokerage business as a result of the brokerage business transacted
by the Fund with other brokers.
- 20 -
<PAGE>
CODE OF ETHICS. The Trust, the Adviser and the Distributor have each
adopted a Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act
of 1940. The Code significantly restricts the personal investing activities of
all employees of the Adviser and the Distributor. No employee may purchase or
sell any security which at the time is being purchased or sold (as the case may
be), or to the knowledge of the employee is being considered for purchase or
sale, by the Fund.
PORTFOLIO TURNOVER
- ------------------
The Fund's portfolio turnover rate is calculated 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 Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Fund. The Adviser anticipates that the Fund's portfolio turnover rate normally
will not exceed 150%. A 100% turnover rate would occur if all of the Fund's
portfolio securities were replaced once within a one year period.
Generally, the Fund intends to invest for long-term purposes. However, the
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when the Adviser believes that portfolio changes
are appropriate.
CALCULATION OF SHARE PRICE
- --------------------------
The share price (net asset value) of the shares of the Fund are determined
as of the close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time), on each day the Trust is open for business.
The Trust is open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. The Trust may also be open for business on other days in
which there is sufficient trading in the Fund's portfolio securities that its
net asset value might be materially affected. For a description of the methods
used to determine the share price, see "Calculation of Share Price" in the
Prospectus.
TAXES
- -----
The Prospectus describes generally the tax treatment of distributions by
the Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
- 21 -
<PAGE>
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. To so qualify the Fund must, among other things, (i) derive at
least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in stock, securities or
currencies; and (ii) diversify its holdings so that at the end of each quarter
of its taxable year the following two conditions are met: (a) at least 75% of
the value of the Fund's total assets is represented by cash, U.S. Government
securities, securities of other regulated investment companies and other
securities (for this purpose such other securities will qualify only if the
Fund's investment is limited in respect to any issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer) and (b) not more than 25% of the value of the Fund's assets is
invested in securities of any one issuer (other than U.S. Government securities
or securities of other regulated investment companies).
The Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess, if
any, of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a portion
(31%) of dividend income on any account unless the shareholder provides a
taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
REDEMPTION IN KIND
- ------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of the Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If
- 22 -
<PAGE>
any such redemption in kind is to be made, the Fund intends to make an election
pursuant to Rule 18f-1 under the 1940 Act. This election will require the Fund
to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund during any ninety day period for any one shareholder.
Should payment be made in securities, the redeeming shareholder will generally
incur brokerage costs in converting such securities to cash. Portfolio
securities which are issued in an in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------
From time to time, the Fund may advertise average annual total return.
Average annual total return quotations will be computed by finding the average
annual compounded rates of return over 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 and 10 year periods at the end of the 1, 5 or 10
year periods (or fractional portion thereof)
The calculation of average annual total return assumes the reinvestment of
all dividends and distributions. If the Fund has been in existence less than
one, five or ten years, the time period since the date of the initial public
offering of shares will be substituted for the periods stated. The Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from average annual total return. A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and capital gains
distributions. A nonstandardized quotation may also indicate average annual
compounded rates of return without including the effect of any applicable
initial sales load or over periods other than those specified for average annual
total return. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance, including current performance
ratings and/or
- 23 -
<PAGE>
rankings appearing in financial magazines, newspapers and publications which
track mutual fund performance. Advertisements may also compare performance
(using the calculation methods set forth in the Prospectus) to performance as
reported by other investments, indices and averages. When advertising current
ratings or rankings, the Fund may use the following publications or indices to
discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis measures total return and average
current yield for the mutual fund industry and ranks individual mutual fund
performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Fund may provide comparative
performance information appearing in the Growth Funds category. In addition, the
Fund may use comparative performance information of relevant indices, including
the S&P 500 Index and the Dow Jones Industrial Average. The S&P 500 Index is an
unmanaged index of 500 stocks, the purpose of which is to portray the pattern of
common stock price movement. The Dow Jones Industrial Average is a measurement
of general market price movement for 30 widely held stocks listed on the New
York Stock Exchange.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Fund's portfolio, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate its
performance. In addition, there can be no assurance that the Fund will continue
this performance as compared to such other averages.
CUSTODIAN
- ---------
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, has been
retained to act as Custodian for the Fund's investments. Star Bank, acts as the
fund's depository, safekeeps its portfolio securities, collects all income and
other payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
AUDITORS
- --------
The firm of Arthur Andersen LLP has been selected as independent public
accountants for the Trust for the fiscal year ending May 31, 1999. Arthur
Andersen, 425 Walnut Street, Cincinnati, Ohio 45202 performs an annual audit of
the Trust's financial statements and advises the Trust as to certain accounting
matters.
- 24 -
<PAGE>
COUNTRYWIDE FUND SERVICES, INC.
- -------------------------------
The Trust has retained Countrywide Fund Services, Inc. (the "Transfer
Agent") to act as the Fund's transfer agent. The Transfer Agent is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Transfer Agent maintains the records of each shareholder's
account, answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
The Transfer Agent receives from the Fund for its services as transfer agent a
fee payable monthly at an annual rate of $20 per account, provided, however,
that the minimum fee is $1,500 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
The Transfer Agent also provides accounting and pricing services to the
Fund. For calculating daily net asset value per share and maintaining such books
and records as are necessary to enable the Transfer Agent to perform its duties,
the Fund pays the Transfer Agent a fee in accordance with the following
schedule:
Average Monthly Net Assets Monthly Fee
-------------------------- -----------
$ 0 - $ 50,000,000 $2,000
$ 50,000,000 - 100,000,000 $2,500
$100,000,000 - 200,000,000 $3,000
$200,000,000 - 300,000,000 $4,000
Over - 300,000,000 $5,000 + .001%
of average net assets
In addition, the Fund pays all costs of external pricing services.
The Transfer Agent also provides administrative services to the Fund. In
this capacity, the Transfer Agent supplies non-investment related statistical
and research data, internal regulatory compliance services and executive and
administrative services. The Transfer Agent supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays the Transfer Agent a fee at the annual
rate of .15% of the average value of its daily net assets up to $50,000,000,
.125% of such assets from $50,000,000 to $100,000,000 and .10% of such assets in
excess of $100,000,000, provided, however, that the minimum fee is $1,000 per
month.
- 25 -
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
The Fund's Statement of Assets and Liabilities as of May 6, 1998, which has
been audited by Arthur Andersen is attached to this Statement of Additional
Information.
- 26 -
<PAGE>
ARTHUR ANDERSEN LLP
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
ATALANTA/SOSNOFF FUND
---------------------
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------
AS OF
-----
MAY 6, 1998
-----------
TOGETHER WITH
-------------
AUDITORS' REPORT
----------------
<PAGE>
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
----------------------------------------
To the Trustees and Shareholder of
the Atalanta/Sosnoff Fund of Atalanta/Sosnoff Investment Trust:
We have audited the accompanying statement of assets and liabilities of the
Atalanta/Sosnoff Fund of Atalanta/Sosnoff Investment Trust as of May 6, 1998.
This financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement 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 statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. 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, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Atalanta/Sosnoff Fund of Atalanta/Sosnoff Investment Trust as of May 6, 1998 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
May 8, 1998
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
ATALANTA/SOSNOFF FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 6, 1998
- --------------------------------------------------------------------------------
ASSETS
Cash $ 100,000
Organization costs (Note 2) 56,000
-----------
TOTAL ASSETS 156,000
-----------
LIABILITIES
Accrued expenses (Note 2) $ 56,000
-----------
TOTAL LIABILITIES 56,000
-----------
NET ASSETS FOR SHARES OF BENEFICIAL
INTEREST OUTSTANDING $ 100,000
===========
SHARES OUTSTANDING 10,000
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE $ 10.00
===========
The accompanying notes are an integral part of this statement.
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
NOTES OF STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------
AS OF MAY 6, 1998
-----------------
(1) The ATALANTA/SOSNOFF FUND (the Fund) is a diversified series of the
ATALANTA/SOSNOFF INVESTMENT TRUST, an open-end management investment
company established as a Ohio business trust under a Declaration of Trust
dated January 29, 1998. On May 6, 1998, 10,000 shares of the Fund were
issued for cash at $10.00 per share. The Fund has had no operations except
for the initial issuance of shares.
(2) Expenses incurred in connection with the organization of the Fund and the
initial offering of shares are estimated to be $56,000. These expenses have
been or will be paid by Atalanta/Sosnoff Capital Corporation (Delaware)
(the Adviser). Upon commencement of the public offering of shares of the
Fund, the Fund will reimburse the Adviser for such expenses, with that
amount being capitalized and amortized on a straight-line basis over five
years. As of May 6, 1998, all outstanding shares of the Fund were held by
the Adviser, who purchased these initial shares in order to provide the
Trust with its required capital. In the event the initial shares of the
Fund are redeemed by any holder thereof at any time prior to the complete
amortization of organizational expenses, the redemption proceeds payable
with respect to such shares will be reduced by the pro rata share (based
upon the portion of the shares redeemed in relation to the required
capitalization) of the unamortized deferred organizational expenses as of
the date of such redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Advisory Agreement, the Underwriting
Agreement, the Administration Agreement, tax aspects of the Funds and the
calculation of the net asset value of shares of the Fund.
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
PART C. OTHER INFORMATION
- ------- -----------------
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) (i) Financial Statements included in Part A:
None
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities,
May 6, 1998
Notes to Financial Statements
Report of Independent Public Accountants
(b) Exhibits
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5) Form of Advisory Agreement with Atalanta/Sosnoff Capital
Corporation (Delaware)*
(6) Form of Underwriting Agreement with Atalanta/Sosnoff
Management Corporation*
(7) Inapplicable
(8) Form of Custody Agreement
(9)(i) Form of Administration Agreement with Countrywide Fund
Services, Inc.*
(ii) Form of Accounting Services Agreement with Countrywide Fund
Services, Inc.*
(iii) Form of Transfer, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement with Countrywide Fund Services,
Inc.*
(10)(i) Opinion and Consent of Counsel
(ii) Consent of Counsel to Trust and Independent Trustees
(11) Consent of Independent Public Accountants
(12) Inapplicable
<PAGE>
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15) Form of Service Plan Pursuant to Rule 12b-1
(16) Inapplicable
(17) Financial Data Schedule
(18) Inapplicable
- --------------------------------------
* Incorporated by reference to the Trust's initial registration statement on
Form N-1A.
Item 25. Persons Controlled by or Under Common Control with Registrant.
- -------- --------------------------------------------------------------
After commencement of the public offering of the Registrant's shares,
the Registrant expects that no person will be directly or indirectly
controlled by or under common control with the Registrant.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of May 18, 1998, Atalanta/Sosnoff Capital Corporation (Delaware),
the investment adviser to the Registrant, is the only holder of the
shares of beneficial interest of the Registrant.
Item 27. Indemnification
- -------- ---------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
"Section 6.4 Indemnification of Trustees, Officers, etc. Subject
to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person") against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and
- 2 -
<PAGE>
counsel fees, incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with
which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a
Trustee or officer, director or trustee, and except that no
Covered Person shall be indemnified against any liability to the
Trust or its Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
any such person."
Insofar as indemnification for liability 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
- 3 -
<PAGE>
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant 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 issue.
The Registrant expects to maintain a standard mutual fund and
investment advisory professional and directors and officers liability
policy. The policy will provide coverage to the Registrant, its
Trustees and officers, Atalanta/Sosnoff Capital Corporation (Delaware)
(the "Adviser") and Atalanta/Sosnoff Management Corporation (the
"Distributor"). Coverage under the policy will include losses by
reason of any act, error, omission, misstatement, misleading
statement, neglect or breach of duty.
The Advisory Agreement with the Adviser provides that the Adviser
shall not be liable for any action taken, omitted or suffered to be
taken by it in its reasonable judgment, in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have resulted
from the Adviser's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to
the Adviser in its actions under this Agreement or breach of its duty
or of its obligations hereunder.
Item 28. Business and Other Connections of the Investment Adviser
- -------- --------------------------------------------------------
(a) The Adviser is a registered investment adviser, providing
investment advisory services to the Registrant. The Adviser has
been engaged since 1982 in the business of providing investment
advisory services to individual, institutional and corporate
clients.
- 4 -
<PAGE>
(b) The directors and officers of the Adviser and any other business,
profession, vocation or employment of a substantial nature
engaged in at any time during the past two years:
(i) Martin T. Sosnoff - Chairman & Director of the Adviser.
Chairman, Director and Controlling Shareholder of
Atalanta/Sosnoff Capital Corporation ("A/SCC"), the
Adviser's parent company. Chairman and Director of
Atalanta/Sosnoff Management Corporation, the Registrant's
principal underwriter (the "Distributor").
(ii) Craig B. Steinberg - President and Director of the Adviser
and the Distributor.
(iii)Anthony G. Miller - Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the
Adviser, A/SCC and the Distributor. Chairman, President and
a Trustee of the Trust.
(iv) Paul P. Tanico - Executive Vice President of the Adviser and
the Distributor. General Partner of Castlerock Partners, an
investment partnership.
(v) Toni E. Sosnoff - Vice President of the Adviser. Vice
President and Trustee of the Trust.
Item 29. Principal Underwriters
- -------- ----------------------
(a) Inapplicable
Position Position
with with
(b) Name Underwriter Registrant
---- ----------- ----------
Martin T. Sosnoff Chairman of None
the Board
and Director
Craig B. Steinberg President None
and
Director
Anthony G. Miller Executive Vice Chairman,
President, Chief President and
Operating Officer a Trustee
and Chief
Financial Officer
- 5 -
<PAGE>
Paul P. Tanico Executive Vice None
President
John P. O'Brien Vice President; None
Controller
The address of all of the above-named persons is 101 Park Avenue,
New York, New York 10178.
(c) Inapplicable
Item 30. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder will be maintained by the Registrant at its
offices located at 101 Park Avenue, New York, New York 10178 as well
as at the offices of the Registrant's transfer agent located at 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
- -------- -------------------------------------------------
Inapplicable
Item 32. Undertakings
- -------- ------------
(a) Inapplicable
(b) The Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from the effective date of this Registration
Statement.
(c) The Registrant undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
(d) The Registrant undertakes to call a meeting of shareholders, if
requested to do so by holders of at least 10% of the Fund's
outstanding shares, for the purpose of voting upon the question
of removal of a trustee or trustees and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
- 6 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed below on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York, on the 18th day of
May, 1998.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
------------------------
Anthony G. Miller
Chairman 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 dates indicated.
Signature Title Date
--------- ----- ----
/s/ Anthony G. Miller President May 18, 1998
- --------------------- and Trustee
Anthony G. Miller
/s/ Mark J. Seger Treasurer May 18, 1998
- ---------------------
Mark J. Seger
Trustee /s/ Cassandra M. Wambaugh
- --------------------- -------------------------
Howard A. Drucker* Cassandra M. Wambaugh
Attorney-in-fact*
May 18, 1998
Trustee
- ---------------------
Toni E. Sosnoff*
Trustee
- ---------------------
Irving L. Straus*
Trustee
- ---------------------
Aida L. Wilder*
<PAGE>
INDEX TO EXHIBITS
-----------------
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5) Form of Advisory Agreement*
(6) Form of Underwriting Agreement*
(7) Inapplicable
(8) Form of Custody Agreement
(9)(i) Form of Administration Agreement*
(ii) Form of Accounting Services Agreement*
(iii) Form of Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement*
(10)(i) Opinion and Consent of Counsel
(ii) Consent of Counsel to Trust and Independent Trustees
(11) Consent of Independent Public Accountants
(12) Inapplicable
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15) Form of Service Plan Pursuant to Rule 12b-1
(16) Inapplicable
(17) Financial Data Schedule
(18) Inapplicable
- ----------------------------
* Incorporated by reference to the Trust's registration statement on Form
N-1A.
CUSTODY AGREEMENT
-----------------
This AGREEMENT, dated as of ______________, 1998, by and between the
ATALANTA/SOSNOFF INVESTMENT TRUST (the "Trust"), a business trust organized
under the laws of the State of Ohio, acting with respect to its existing series
as of the date of this Agreement, and such other series as shall be designated
from time to time by the Trust (individually, a "Fund" and, collectively, the
"Funds"), each of them a series of the Trust and each of them operated and
administered by the Trust, and STAR BANK, N.A., a national banking association
(the "Custodian").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust desires that the Funds' Securities and cash be held and
administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Funds and named in Exhibit A hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time serving
under the Trust's Agreement and Declaration of Trust, as from time to time
amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Trust computes the
net asset value of Shares of any Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name of
the Trust, which is provided for in Section 3.2 below.
- 2 -
<PAGE>
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "Officer" shall mean the Chairman, the President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person, (ii) recorded and
kept among the records of the Custodian made in the ordinary course of business
and (iii) orally confirmed by the Custodian. The Trust shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end of the
next Business Day. If such Written Instructions confirming Oral Instructions are
not received by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by the Trust. If
Oral Instructions vary from the Written Instructions which purport to confirm
them, the Custodian shall notify the Trust of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
- 3 -
<PAGE>
1.10 "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
of Trustees, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Funds) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other instruments or
documents representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Trust on account of such Fund.
- 4 -
<PAGE>
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership of the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the Funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with
- 5 -
<PAGE>
respect to the safekeeping of the Funds' assets, including, but not limited to,
notification of any transfer to or from a Fund's account or a third party
account containing assets held for the benefit of the Fund. Such contract may
contain, in lieu of any or all of the provisions specified above, such other
provisions that the Custodian determines will provide, in their entirety, the
same or greater level of care and protection for Fund assets as the specified
provisions, in their entirety.
1.14 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
----------
APPOINTMENT OF CUSTODIAN
------------------------
2.1 Appointment. The Trust hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of the Funds
at any time during the period of this Agreement.
- 6 -
<PAGE>
2.2 Acceptance. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Trust:
a. A copy of the Declaration of Trust of the Trust certified by the
Secretary or an Assistant Secretary;
b. A copy of the Bylaws of the Trust certified by the Secretary or
Assistant Secretary;
c. A copy of the resolution of the Board of Trustees of the Trust
appointing the Custodian, certified by the Secretary or Assistant
Secretary;
d. A copy of the then current Prospectus of each Fund; and
e. A certification of the Chairman or the President and Secretary or
Assistant Secretary of the Trust setting forth the names and
signatures of the current Officers of the Trust and other
Authorized Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Trust agrees
to notify the Custodian in writing of the appointment, termination or change in
appointment of any Dividend and Transfer Agent of the Funds.
- 7 -
<PAGE>
ARTICLE III
-----------
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 Segregation. All Securities and non-cash property held by the Custodian
for the account of a Fund (other than Securities maintained in a Securities
Depository or Book-Entry System) shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian (including
the Securities and non-cash property of the other Funds) and shall be identified
as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the Trust
coupled with the name of such Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may appoint
one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
- 8 -
<PAGE>
(b) If, after the initial approval of Sub-Custodians by the Board of
Trustees in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Funds, it will so notify the Trust
and provide it with information reasonably necessary to determine any such new
Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act, including a
copy of the proposed agreement with such Sub-Custodian. The Trust shall at the
meeting of the Board of Trustees next following receipt of such notice and
information give a written approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement of the
Securities and cash of the Funds with a particular Sub-Custodian and of any
material changes in the Funds' arrangements. The Custodian shall promptly take
such steps as may be required to withdraw assets of the Funds from any
Sub-Custodian that has ceased to meet the requirements of Rule 17f-5 under the
1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Trust that it agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of property of the
- 9 -
<PAGE>
Funds. The Custodian further warrants that a Fund's assets will be subject to
reasonable care, based on the standards applicable to custodians in the relevant
market, if maintained with each Sub-Custodian, after considering all factors
relevant to the safekeeping of such assets, including, without limitation: (i)
the Sub-Custodian's practices, procedures, and internal controls, including, but
not limited to, the physical protections available for certificated securities
(if applicable), the method of keeping custodial records, and the security and
data protection practices; (ii) whether the Sub-Custodian has the requisite
financial strength to provide reasonable care for Fund assets; (iii) the
Sub-Custodian's general reputation and standing and, in the case of a Securities
Depository, the Securities Depository's operating history and number of
participants; and (iv) whether the Fund will have jurisdiction over and be able
to enforce judgments against the Sub-Custodian, such as by virtue of the
existence of any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United States.
(f) The Custodian shall establish a system to monitor the appropriateness
of maintaining the Funds' assets with a particular Sub-Custodian and the
contract governing the Funds' arrangements with such Sub-Custodian.
- 10 -
<PAGE>
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause to
be delivered, to the Custodian all of the Funds' Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Funds with respect to such Securities, cash or
other assets owned by the Funds at any time during the period of this Agreement,
and (b) all cash received by the Funds for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Trust shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of
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<PAGE>
purchases and sales of Securities, loans of Securities, and
deliveries and returns of collateral consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository shall,
by book-entry, identify such Securities as belonging to such
Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that such Securities have been
transferred to the Depository Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of such Fund. If Securities sold by a
Fund are held in a Book-Entry System or Securities Depository,
the Custodian shall transfer such Securities upon (i) receipt of
advice from the Book-Entry System or Securities Depository that
payment for such Securities
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<PAGE>
has been transferred to the Depository Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of such Fund.
(e) The Custodian shall provide the Trust with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Funds are kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person from any loss or
damage to the Funds arising
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<PAGE>
from the use of such Book-Entry System or Securities Depository,
if and to the extent that the Funds have not been made whole for
any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any Sub-Custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of
options on Securities, against delivery to the Custodian (or such
Sub- Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such Sub-Custodian) of evidence of
title thereto in favor of the Fund or any nominee referred to in
Section 3.9
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<PAGE>
below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Trust and a bank which is a
member of the Federal Reserve System or between the Trust and a
primary dealer in U.S. Government securities, against delivery of
the purchased Securities either in certificate form or through an
entry crediting the Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of the Fund;
in all cases, whether or not such expenses are to be in whole or
in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a
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<PAGE>
broker-dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by
the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Trust, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
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<PAGE>
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
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<PAGE>
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by
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<PAGE>
the Trust, but only against receipt by the Custodian of the
amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by
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<PAGE>
an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such Securities
shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for a
Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by
law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Trust at such time, in such manner and
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<PAGE>
containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for a Fund
that are issued or issuable only in bearer form shall be held by the Custodian
in that form, provided that any such Securities shall be held in a Book-Entry
System if eligible therefor. All other Securities held for a Fund may be
registered in the name of such Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry
- 21 -
<PAGE>
System or Securities Depository, any Securities registered in the name of a
Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Funds, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Funds as the Trust
shall reasonably request, or as may be required by the 1940 Act, including, but
not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or
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<PAGE>
agents of the Securities and Exchange Commission, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the periods
prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust with
a daily activity statement by Fund and a summary of all transfers to or from
each Fund Custody Account on the day following such transfers. At least monthly
and from time to time, the Custodian shall furnish the Trust with a detailed
statement, by Fund, of the Securities and moneys held by the Custodian and the
Sub-Custodians for the Funds under this a Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust with
such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of a Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
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<PAGE>
3.14 Information on Corporate Actions. The Custodian shall promptly deliver
to the Trust all information received by the Custodian and pertaining to
Securities being held by the Funds with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Trust desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
ARTICLE IV
----------
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
---------------------------------------------
4.1 Purchase of Securities. Promptly upon each purchase of Securities for a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the Fund for which the purchase was made, (b) the name of the issuer or writer
of such Securities, and the title or other description thereof, (c) the number
of shares, principal amount (and accrued interest, if any) or other units
purchased, (d) the date of purchase and settlement, (e) the purchase price per
unit, (f) the total amount payable upon such purchase, and (g) the name of the
person to whom such amount is
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<PAGE>
payable. The Custodian shall upon receipt of such Securities purchased by a Fund
pay out of the moneys held for the account of such Fund the total amount
specified in such Written Instructions to the person named therein. The
Custodian shall not be under any obligation to pay out moneys to cover the cost
of a purchase of Securities for a Fund, if in the relevant Fund Custody Account
there is insufficient cash available to the Fund for which such purchase was
made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt of the Securities purchased but in
the absence of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Fund for such Securities to the same extent as
if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
Fund for which the sale was made, (b) the name of the issuer or writer of such
Securities, and the title or other description thereof, (c) the number of
Shares, principal amount (and accrued interest, if any), or other units sold,
(d) the date of sale and settlement, (e) the sale price per unit, (f) the total
amount payable upon such sale, and (g) the person to whom such Securities are to
be delivered. Upon receipt of the total amount payable to the Fund as specified
in
- 25 -
<PAGE>
such Written Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund for which such Securities
were delivered shall bear the risk that final payment for such Securities may
not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from time
to time, the Custodian may credit the relevant Fund Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund. Any such credit
shall be conditional upon actual
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<PAGE>
receipt by Custodian of final payment and may be reversed if final payment is
not actually received in full. The Custodian may, in its sole discretion and
from time to time, permit a Fund to use funds so credited to its Fund Custody
Account in anticipation of actual receipt of final payment. Any such funds shall
be repayable immediately upon demand made by the Custodian at any time prior to
the actual receipt of all final payments in anticipation of which funds were
credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of a Fund's transactions in its Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
---------
REDEMPTION OF FUND SHARES
-------------------------
5.1 Transfer of Funds. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the Custodian
shall wire each amount specified in such Proper Instructions to or through such
bank as the Trust may designate with respect to such amount in such Proper
Instructions.
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<PAGE>
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
----------
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written
- 28 -
<PAGE>
by the Fund or in connection with financial futures contracts (or
options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
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<PAGE>
ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or a Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or bylaws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or
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<PAGE>
its agents actually receive such cash or collect on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for a Fund if such Securities are in
default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply necessary
information, by Fund, to the entity or entities appointed by the Trust to keep
the books of account of the Funds and/or compute the value of the assets of the
Funds. The
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<PAGE>
Custodian shall take all such reasonable actions as the Trust may from time to
time request to enable the Trust to obtain, from year to year, favorable
opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 Indemnification by Trust. The Trust shall indemnify and hold harmless
the Custodian and any Sub-Custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such Sub-Custodian, from and against any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the Securities
Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such Sub-Custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a Sub-Custodian appointed
pursuant to
- 32 -
<PAGE>
Section 3.3 above, provided that neither the Custodian nor any such
Sub-Custodian shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the Custodian's or
such Sub-Custodian's negligence, bad faith or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify and hold
harmless the Trust from and against any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability (including without limitation,
liability arising under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or claim arising from
the negligence, bad faith or willful misconduct of the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3 Indemnity to be Provided. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 Security. If the Custodian advances cash or Securities to a Fund for
any purpose, either at the Trust's request or as otherwise contemplated in this
Agreement, or in the event that
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<PAGE>
the Custodian or its nominee incurs, in connection with its performance under
this Agreement, any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim (except such as may arise from its or its
nominee's negligence, bad faith or willful misconduct), then, in any such event,
any property at any time held for the account of such Fund shall be security
therefor, and should such Fund fail promptly to repay or indemnify the
Custodian, the Custodian shall be entitled to utilize available cash of such
Fund and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental
- 34 -
<PAGE>
actions; or inability to obtain labor, material, equipment or transportation;
provided, however, that the Custodian in the event of a failure or delay (i)
shall not discriminate against the Funds in favor of any other customer of the
Custodian in making computer time and personnel available to input or process
the transactions contemplated by this Agreement and (ii) shall use its best
efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Funds and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an
- 35 -
<PAGE>
account of or for the benefit of the Funds at the successor custodian, provided
that the Trust shall have paid to the Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be entitled. Upon
such delivery and transfer, the Custodian shall be relieved of all obligations
under this Agreement. The Trust may at any time immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which (a) is a "bank"
as defined in the 1940 Act and (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, all Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for the Funds at such bank or
trust company all Securities of the Funds held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement.
- 36 -
<PAGE>
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Trust and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Funds are set forth in Exhibit C attached
hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust, as from time to time amended. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has been
signed and delivered by an authorized officer of the Trust, acting as such, and
neither such authorization by the Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the above-mentioned Agreement and
Declaration of Trust.
- 37 -
<PAGE>
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
-------------
Atalanta/Sosnoff Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone: (513) 629-2000
Facsimile: (513) 629-2008
To Custodian:
-------------
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-3016
Facsimile: (513) 632-4448
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
- 38 -
<PAGE>
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for a Fund and such other printed matter as
merely identifies Custodian as custodian for one or more Funds. The Trust shall
submit printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
- 39 -
<PAGE>
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: ATALANTA/SOSNOFF INVESTMENT TRUST
______________________________ By:________________________________
Its:
ATTEST: STAR BANK, N.A.
______________________________ By:_______________________________
Its:
- 40 -
<PAGE>
EXHIBIT A
---------
AUTHORIZED PERSONS
------------------
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
Name Signature
- ---- ---------
Anthony G. Miller ______________________________
Toni E. Sosnoff ______________________________
John O'Brien ______________________________
John F. Splain ______________________________
Robert G. Dorsey ______________________________
Mark J. Seger ______________________________
M. Kathleen Leugers ______________________________
Christina H. Kelso ______________________________
Gary H. Goldschmidt ______________________________
Tina D. Hosking ______________________________
Theresa M. Samocki ______________________________
- 41 -
<PAGE>
EXHIBIT B
STAR BANK, N.A.
STANDARDS OF SERVICE GUIDE
Star Bank, N.A., is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide as a tool
for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a direct
member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers Trust
Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal,
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond Source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Star Bank will not notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the Star
Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
The information contained in this Standards Service Guide is subject to change.
Should any changes be made Star Bank will provide you with an updated copy of
its Standards of Service Guide.
<PAGE>
<TABLE>
<CAPTION>
STAR BANK SECURITY SETTLEMENT STANDARDS
- -----------------------------------------------------------------------------------------------------------------
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
- ---------------- ----------------------- ---------------------
<S> <C> <C>
DTC 1:30 P.M. on Settlement Date DTC Participant #2219
Agent Bank ID #27895
Institutional #___________________
For Account #_____________________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of
Cinti/Trust for Star Bank, N.A.
ABA# 042000013
For Account #_____________________
Federal Reserve Book Entry 1:00 P.M. on Settlement Date Federal Reserve Bank of
(Repurchase Agreement Cinti/Spec for Star Bank, N.A.
Collateral Only) ABA# 042000013
For Account #______________________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BTRST/CUST
(GNMA Book Entry) Sub Account: Star Bank, N.A. #090334
Physical Securities 9:30 A.M. EST on Settlement Date Bankers Trust Company
(for Deliveries, by 4:00 P.M. on 16 Wall Street 4th Floor, Window 43
Settlement Date minus 1) for Star Bank Account #090334
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Eurclear Via Cedel Bridge
minus 2 In favor of Bankers Trust Comp
Cedel 53355
For Star Bank Account #501526354
Cash Wire Transfer 3:00 P.M. Star Bank, N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to_________________
Account #_________________________
</TABLE>
*All times listed are Cincinnati time.
<PAGE>
STAR BANK PAYMENT STANDARDS
- --------------------------------------------------------------------------------
SECURITY TYPE INCOME PRINCIPAL
- --------------------------------------------------------------------------------
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank
Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs*
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Payable Date Payable Date
Certificates*
Certificates of Deposit* Payable Date Payable Date
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank
Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will be made
on the immediately following business day.
<PAGE>
<TABLE>
<CAPTION>
STAR BANK CORPORATE REORGANIZATION STANDARDS
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACTION NOTIFICATION TO CLIENT DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TO STAR BANK POSTING
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rights, Warrants, Later of 10 business days prior 5 business days prior to expiration Upon receipt
and Optional Mergers to expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior 5 business days prior to expiration Upon receipt
Option to Retain to expiration or receipt of notice
Class Actions 10 business days prior to 5 business days prior to expiration Upon receipt
expiration date
Voluntary Tenders, Later of 10 business days prior 5 business days prior to expiration Upon receipt
Exchanges, to expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities None Upon receipt
Liquidations, Bankruptcies, received
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior None Upon receipt
to expiration or receipt of notice
</TABLE>
NOTE: Fractional shares/par amounts resulting from any of the above will be
sold.
<PAGE>
EXHIBIT C
STAR BANK, N.A.
DOMESTIC CUSTODY FEE SCHEDULE
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
---------------------------
(a)For each repurchase agreement transaction $ 7.00
(b)For each portfolio transaction processed
through DTC or Federal Reserve $ 9.00
(c)For each portfolio transaction processed
through our New York custodian $25.00
(d)For each GNMA/Amortized Security Purchase $16.00
(e)For each GNMA/Prin/Int Paydown, GNMA Sales $ 8.00
(f)For each option/future contract written,
exercised or expired $40.00
(g)For each Cedel/Euroclear transaction $80.00
(h)For each Disbursement (Fund expenses only) $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
II. AGGREGATE MARKET VALUE FEE
--------------------------
Based upon an annual rate of: Million
-------
.0003 (3.0 Basis Points) on First $ 20
.0002 (2.0 Basis Points) on Next $ 20
.00015 (1.5 Basis Points) on Balance
III. MONTHLY MINIMUM FEE-PER FUND $300.00
----------------------------
IV. OUT-OF-POCKET EXPENSES
----------------------
The only out-of-pocket expenses charged to your account will be shipping
fees or transfer fees.
V. EARNINGS CREDITS
----------------
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees
generated. Earnings credits are based on a Cost of Funds Tiered Earnings
Credit Rate.
<PAGE>
STAR BANK
CASH MANAGEMENT FEE SCHEDULE
SERVICES UNIT COST ($) MONTHLY COST ($)
-------- ------------- ----------------
D.D.A. Account Maintenance.............. 14.00
Deposits ............................... 399
Deposited Items......................... 109
Checks Paid............................. 159
Balance Reporting-P.C. Access........... ........ 50.00 1st Acct.
.................... ........ 35.00 each add'l
ACH Transaction......................... 105
ACH Monthly Maintenance................. ........ 40.00
ACH Additions, Deletions, Changes....... 3.50
ACH Debits ............................. 12
Controlled Disbursement (1st account)... ........ 110.00
Each additional account............ ........ 25.00
Deposited Items Returned ............... 6.00
International Items returned............ 10.00
NSF Returned Checks..................... 25.00
Stop Payments........................... 22.00
Data Transmission per account........... ........ 110.00
Data Capture*........................... .10
Drafts Cleared.......................... .179
Lockbox Maintenance**................... ........ 55.00
Lockbox items Processed
with copy of check................. .32
without copy of check.............. .26
Checks Printed.......................... .20
Positive Pay............................ .06
Issued Items............................ .015
ARP Tape/Transmission/Diskette.......... 25.00
Special Statements...................... 6.00
Invoicing for Service Charge............ 15.00
Wires Incoming
Domestic........................... 10.00
International...................... 10.00
Wires Outgoing
Domestic
International
Repetitive.................... 12.00 Repetitive......... 35.00
Non-Repetitive................ 13.00 Repetitive......... 40.00
PC-Initiated Wires:
Domestic
International
Repetitive.................... 9.00 Repetitive......... 25.00
Non-Repetitive................ 9.00 Non-Repetitive..... 25.00
*** Uncollected Charge Star Bank Prime Rate as of first of month plus 4%
* Price can vary depending upon what information needs to be captured
** With the use of lockbox, the collected balances in the demand deposit
account will be significantly increased and therefore earnings to offset
cash management service fees will be maximized.
*** Fees for uncollected balances are figured pm the monthly average of all
combined accounts.
**** Other available cash management services are priced separately.
COUNTRYWIDE
FUND SERVICES, INC.
May 15, 1998
Atalanta/Sosnoff Investment Trust
101 Park Avenue
New York, NY 10178
Ladies and Gentlemen:
You have requested my opinion in connection with the registration by
Atalanta/Sosnoff Investment Trust, an Ohio business trust (the "Trust"), of an
indefinite number of shares of beneficial interest of the Atalanta/Sosnoff of
the Trust (the "Shares") authorized by the Trust's Agreement and Declaration of
Trust, which has been filed with the Securities and Exchange Commission as an
exhibit to the Trust's registration statement on Form N-1A (File No. 333-46679),
as amended (the "Registration Statement"), under the Securities Act of 1933 and
the Investment Company Act of 1940.
I have examined and relied upon originals or copies, certified or otherwise
identified to my satisfaction, of such records, agreements, documents and other
instruments and certificates or comparable documents of public officials and of
officers and representatives of the Trust, and I have made such inquiries of the
officers and representatives of the Trust, as I have deemed relevant and
necessary as the basis for the opinion hereinafter set forth.
In such examination, I have assumed, without independent verification, the
genuineness of all signatures (whether original or photostatic) and the
authenticity of all documents submitted to me as originals and the conformity to
authentic original documents of all documents submitted to me as certified or
photostatic copies. As to all questions of fact material to such opinion, I have
relied upon the certificates referred to hereinabove. I have assumed, without
independent verification, the accuracy of the relevant facts stated therein.
This letter expresses my opinion as to the provisions of the Trust's Agreement
and Declaration of Trust and the laws of the State of Ohio applying to business
trusts generally, but does not extend to the Ohio Securities Act or to federal
securities or other laws.
312 Walnut Street o Cincinnati, Ohio 45202 o 513.629.2000 o 800.543.8721
<PAGE>
Atalanta/Sosnoff Investment Trust
May 15, 1998
Page Two
Based on the foregoing, and subject to the qualifications set forth herein, I am
of the opinion that the Shares have been duly and validly authorized, and, when
issued and delivered as described in the Registration Statement, will be fully
paid and nonassessable by the Trust.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving such consent, I do not thereby admit that I come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or under the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Cassandra M. Wambaugh
- ------------------------------
Cassandra M. Wambaugh
Counsel
CONSENT OF COUNSEL FOR THE TRUST AND THE INDEPENDENT TRUSTEES
-------------------------------------------------------------
As counsel for the Trust and the Independent Trustees, we hereby consent to the
use in this Pre-Effective Amendment No. 1 of all references to our Firm included
in or made a part of this Pre-Effective Amendment.
WILLKIE FARR & GALLAGHER
New York, New York
May 15, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Pre-Effective Amendment No. 1 of our report dated May 8, 1998 and to all
references to our Firm included in or made a part of this Pre-Effective
Amendment.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
May 8, 1998
AGREEMENT RELATING TO INITIAL CAPITAL
-------------------------------------
May 6, 1998
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue
New York, New York 10178
Dear Sir/Madam:
In conjunction with the purchase by Atalanta/Sosnoff Capital Corporation
(Delaware) (the "Purchaser") of 10,000 shares of beneficial interest of the
Atalanta/Sosnoff Fund of the Atalanta/Sosnoff Investment Trust (the "Shares"),
the Purchaser hereby represents that it is acquiring the Shares for investment
with no intention of reselling or otherwise distributing the Shares. The
Purchaser hereby further agrees that any transfer of any of the Shares or any
interest therein shall be subject to the following conditions:
1. The Purchaser shall furnish you and counsel satisfactory to you prior
to the time of transfer, a written description of the proposed
transfer specifying its nature and consequence and giving the name of
the proposed transferee.
2. You shall have obtained from your counsel a written opinion stating
whether in the opinion of such counsel the proposed transfer may be
effected without registration under the Securities Act of 1933. If
such opinion states that such transfer may be so effected, the
Purchaser shall then be entitled to transfer the Shares in accordance
with the terms specified in its description of the transaction to you.
If such opinion states that the proposed transfer may not be so
effected, the Purchaser will not be entitled to transfer the Shares
unless the Shares are registered.
<PAGE>
The Purchaser hereby authorizes you to take such action as you shall
reasonably deem appropriate to prevent any violation of the Securities Act of
1933 in connection with the transfer of the Shares, including the imposition of
a requirement that any transferee of the Shares sign a letter agreement similar
to this one. The Purchaser agrees that in the event the Shares are redeemed by
the Purchaser or its successors or any current holder prior to the complete
amortization of organization expenses by the Atalanta/Sosnoff Fund, the
redemption proceeds payable in respect of the Shares so redeemed shall be
reduced by the pro-rata share (based on the proportionate share of the Shares
redeemed to the total number of the Shares outstanding at the time of
redemption) of the then unamortized deferred organization expenses as of the
date of such redemption.
Very truly yours,
ATALANTA/SOSNOFF CAPITAL CORPORATION (DELAWARE)
By: /s/ Tony Miller
-------------------------------------
Its: Executive Vice President
------------------------------------
- 2 -
SERVICE PLAN
PURSUANT TO RULE 12B-1
----------------------
WHEREAS, Atalanta/Sosnoff Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Ohio, engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which may be divided into
two or more Series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act, on the following terms and conditions:
1. SERVICE ACTIVITIES. Subject to the supervision of the Trustees of the
Trust, the principal underwriter may, directly or indirectly, engage in any
activities related to the servicing of shareholder accounts, which activities
may include, but are not limited to, the following: engaging in activities
related to the servicing of shareholder accounts; maintaining personnel
(including personnel of organizations with which the Trust has entered into
agreements related to this Plan) who engage in or support service activities of
Shares or who render shareholder support services not otherwise provided by the
Trust's transfer agent, including, but not limited to, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (c) formulating
and implementing of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparing, printing and distributing sales
literature; (e) preparing, printing and distributing prospectuses and statements
of additional
<PAGE>
information and reports of the Trust; and (f) obtaining such information,
analyses and reports with respect to marketing and promotional activities as the
Trust may, from time to time, deem advisable. The Trust is authorized to engage
in the activities listed above, and in any other activities related to the
servicing of shareholder accounts of Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
2. SERVICE FEE. The Trust shall pay the principal underwriter a maintenance
fee, accrued daily and paid monthly, in an amount equal to an annual rate of
.25% of the daily net assets of the Shares of the Trust. When requested by and
at the direction of the principal underwriter, the Trust shall pay a service fee
to dealers based on the amount of Shares of the Trust sold by such dealers and
remaining outstanding for specific periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Shares of the Trust. Any fees paid to dealers shall reduce the
service fees otherwise payable to the principal underwriter.
3. TERM AND TERMINATION. (a) This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval.
(b) This Plan may be terminated with respect to any Series at any time
by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Series.
4. AMENDMENTS. This Plan may not be amended to increase materially the
amount of a Series' expenditures provided for in Section 2 hereof unless such
amendment is approved by a vote of the majority of the outstanding voting
securities of such Series (as defined in the 1940 Act), and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3(a) hereof.
5. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
- 2 -
<PAGE>
6. QUARTERLY REPORTS. The Treasurer of the Trust shall provide to the
Trustees and the Trustees shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. RECORDKEEPING. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
8. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Ohio and notice
is hereby given that this Plan is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: ___________, 1998
Attest: ATALANTA/SOSNOFF INVESTMENT TRUST
By:
- ----------------------------- --------------------------------
Secretary President
- 3 -
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001053535
<NAME> ATALANTA/SOSNOFF INVESTMENT TRUST - ATALANTA/SOSNOFF FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAY-6-1998
<PERIOD-END> MAY-6-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100,000
<OTHER-ITEMS-ASSETS> 56,000
<TOTAL-ASSETS> 156,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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</TABLE>
