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Prospectus
June 5, 1998
ATALANTA/SOSNOFF FUND
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PROSPECTUS
June 5, 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 June 5, 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 ..... 4
How to Purchase Shares ................................................... 8
Shareholder Services ..................................................... 9
How to Redeem Shares ..................................................... 10
Dividends and Distributions .............................................. 11
Taxes .................................................................... 11
Operation of the Fund .................................................... 12
Service Plan ............................................................. 13
Calculation of Share Price ............................................... 14
Performance Information .................................................. 14
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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
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)
Management Fees .......................................... 0.75%
12b-1 Fees ............................................... 0.25% (A)
Other Expenses ........................................... 0.50%
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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
percentage expressing "Other Expenses" is 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
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 the
Adviser which were managed with investment objectives, policies and strategies
substantially similar to those to be employed by the Adviser in managing the
Fund. Martin T. Sosnoff, the Adviser's Chief Investment Officer and Chairman of
its investment committee, has been primarily responsible for the day-to-day
management of the Equity Composite throughout the entire period presented. Mr.
Sosnoff will likewise be primarily responsible for the day-to-day management of
the Fund's portfolio. Mr. Sosnoff founded Atalanta Capital Corp. in 1970 and
became its Chief Investment Officer in 1976. After Mr. Sosnoff founded the
Adviser in 1981, all the accounts he managed transferred from Atalanta Capital
Corp. to the Adviser. Mr. Sosnoff has not managed a registered investment
company other than the Fund.
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. 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 FOR PAST 10 YEARS
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Equity Composite S&P
(dollar weighted 500
and net of fees) Index
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Nine months ended
December 31, 1988 4.14% 10.22%
1989 34.95% 31.60%
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%
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ANNUALIZED RETURNS FOR PERIODS ENDED MARCH 31, 1998
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S&P
Equity 500
Composite Index
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1 year 38.95% 48.02%
5 years 16.83% 22.40%
10 years 17.84% 18.91%
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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 results 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 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.
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. 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. 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:
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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.
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
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.
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 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.
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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 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 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
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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 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
Transfer Agent 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.
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Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent, the Distributor 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 10178.
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
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Contact the Transfer Agent (Nationwide call toll-free 1-877-SOSNOFF
(1-877-767-6633)) for additional information about the shareholder services
described below.
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, quarterly or
annual 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.
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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
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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 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.
10
<PAGE>
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 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 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.
11
<PAGE>
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.
Martin T. Sosnoff, C.F.A., Chairman of the Board of the Adviser and A/SCC is
primarily responsible for the day-to-day management of the Fund. Mr. Sosnoff
founded the Adviser in 1981. He has authored two books on the money management
business, HUMBLE ON WALL STREET (1975) and SILENT INVESTOR, SILENT LOSER (1986),
and currently writes a column for Forbes magazine. Mr. Sosnoff chairs an
investment committee of three senior executives of the Adviser in managing the
Fund's portfolio. 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 reports
to and filings with the Securities and Exchange Commission and state securities
authorities. The Fund pays the Transfer Agent a fee, payable
12
<PAGE>
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 activities 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 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 servicing of the Fund's shareholders or the
distribution of the Fund's shares.
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.
13
<PAGE>
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 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 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,
14
<PAGE>
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.
15
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue o New York, NY 10178
toll free 1-877-SOSNOFF (767-6633)
website o www.atalantasosnoff.com
e-mail o [email protected]
BOARD OF TRUSTEES
Howard A. Drucker
Anthony G. Miller
Toni E. Sosnoff
Irving L. Straus
Aida L. Wilder
INVESTMENT ADVISER
Atalanta/Sosnoff Capital Corp. (Delaware)
101 Park Avenue o New York, NY 10178
DISTRIBUTOR
Atalanta/Sosnoff Management Corporation
101 Park Avenue o New York, NY 10178
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354 o Cincinnati, OH 45201-5354
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.
<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:__________________________
c/o Countrywide Fund Services, Inc. Home Office Address: _______________
P.O. Box 5354 Branch Address: ____________________
Cincinnati, Ohio 45201-5354 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.
================================================================================
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 Capital Corporation
(Delaware), 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.
____________________________________ _____________________________________
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 a $9.00 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
-----------------------------------
June 5, 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 June 5, 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 .................................................................... 22
REDEMPTION IN KIND ....................................................... 23
HISTORICAL PERFORMANCE INFORMATION ....................................... 23
CUSTODIAN ................................................................ 24
AUDITORS ................................................................. 25
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
- 3 -
<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 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
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<PAGE>
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.
The Fund will commit no more than 5% of its assets to premiums when
purchasing call options. The Fund may also purchase
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<PAGE>
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 Futures exchanges in the United States are the Board of Trade of
the City of Chicago and the Chicago Mercantile Exchange. Futures
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<PAGE>
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 which suggest a susceptibility to impairment sometime in the future.
- 11 -
<PAGE>
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.
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.
- 12 -
<PAGE>
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;
(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;
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<PAGE>
(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 person" of the Trust, as defined by
the Investment Company Act of 1940 Act, is indicated by an asterisk.
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<PAGE>
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 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 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 The
Gannett Welsh & Kotler Funds, The Westport 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 June 1,
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 activities related to 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 services as the Trust might reasonably request; formulating
and implementing of marketing and promotional 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
- 18 -
<PAGE>
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 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
- 19 -
<PAGE>
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.
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
- 20 -
<PAGE>
business as a result of the brokerage business transacted by the Fund with other
brokers.
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.
- 21 -
<PAGE>
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.
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 50% 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.
- 22 -
<PAGE>
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 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
- 23 -
<PAGE>
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 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
- 24 -
<PAGE>
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.
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.
- 25 -
<PAGE>
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.
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.
