U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
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Post-Effective Amendment No. 2
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 3
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(Check appropriate box or boxes)
ATALANTA/SOSNOFF INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
101 Park Avenue
New York, New York 10178
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 867-5000
Anthony G. Miller
Atalanta/Sosnoff Capital Corporation (Delaware)
101 Park Avenue
New York, New York 10178
(Name and Address of Agent for Service)
Copies to:
Tina D. Hosking
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to Rule 485(b)
/ / on (date) pursuant to Rule 485(b)
/X/ 75 days after filing pursuant to Rule 485(a)
/ / on (date) pursuant to Rule 485(a)
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
UNDER THE SECURITIES ACT OF 1933
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PART A
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Item No. Registration Statement Caption Caption in Prospectus
- -------- ------------------------------ ---------------------
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information;
Financial Highlights
4. General Description of Registrant Operation of the Funds;
Investment Objectives,
Investment Methodologies and
Risk Considerations
5. Management of the Fund Operation of the Funds
6. Capital Stock and Other Securities Cover Page; Operation of the
Funds; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Service Plan; Calculation of
Share Price; Application
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services
9. Pending Legal Proceedings Inapplicable
PART B
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Caption in Statement
of Additional
Item No. Registration Statement Caption Information
- -------- ------------------------------ --------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
<PAGE>
12. General Information and History The Trust
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations; Quality
Ratings of Corporate Bonds
and Preferred Stocks;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Principal Holders of
Securities
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
Service Plan; Custodian;
Auditors; Countrywide Fund
Services, Inc.
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Trust
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price; Other Purchase
Information; Redemption in
Kind
20. Tax Status Taxes
21. Underwriters The Distributor
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Financial Statements
PART C
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The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
(ii)
<PAGE>
PROSPECTUS
______________ , 1999
ATALANTA/SOSNOFF INVESTMENT TRUST
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(877) 767-6633
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The Atalanta/Sosnoff Investment Trust currently offers four separate series of
shares to investors: the Atalanta/Sosnoff Fund, the Atalanta/Sosnoff Focus Fund,
the Atalanta/Sosnoff Value Fund and the Atalanta/Sosnoff Balanced Fund
(individually a "Fund" and collectively the "Funds").
- - The ATALANTA/SOSNOFF FUND seeks long-term capital appreciation, through equity
investments in companies which the Adviser believes are entering into a cycle of
accelerating earnings momentum.
- - The ATALANTA/SOSNOFF FOCUS FUND is a non-diversified fund that seeks long-term
capital appreciation by concentrating its investments in a core position of
20-25 common stocks of companies which the Adviser believes are entering into a
cycle of accelerating earnings momentum.
- - The ATALANTA/SOSNOFF VALUE FUND seeks long-term capital appreciation by
investing primarily in equity securities which the Adviser believes are
fundamentally undervalued. The Fund uses a "value" investment approach, choosing
companies with relatively low price/earnings ratios, appropriate debt/equity
ratios and supportive free cash flow.
- - The ATALANTA/SOSNOFF BALANCED FUND seeks to preserve capital while producing
long-term capital appreciation by investing in a blend of equity and
fixed-income securities with strong credit ratings. Convertible debentures and
preferred stocks also will be part of the investment universe.
Atalanta/Sosnoff Capital Corporation (Delaware) (the "Adviser"), 101 Park
Avenue, New York, New York 10178, manages each 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 Funds that you
should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated _________, 1999 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 Funds.
<PAGE>
TABLE OF CONTENTS
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Expense Information ...................................................... 2
Financial Highlights ..................................................... 3
Prior Performance of the Adviser ......................................... 4
Investment Objective, Investment Methodology and
Risk Considerations .................................................... 6
How to Purchase Shares ................................................... 16
Shareholder Services ..................................................... 17
How to Redeem Shares ..................................................... 18
Exchange Privilege ....................................................... 20
Dividends and Distributions .............................................. 21
Taxes .................................................................... 21
Operation of the Funds ................................................... 22
Service Plan ............................................................. 25
Calculation of Share Price ............................................... 26
Performance Information .................................................. 26
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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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<PAGE>
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 Funds' Custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$9. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
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<TABLE>
<CAPTION>
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
---- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Management Fees .75% .75% .75% .75%
12b-1 Fees .25% .25% .25% .25%
Other Expenses .50% .50% .50% .50%
----- ----- ----- -----
Total Fund Operating Expenses 1.50% 1.50% 1.50% 1.50%
===== ===== ===== =====
</TABLE>
The purpose of this table is to assist you in understanding the various costs
and expenses that an investor in the Funds will bear directly or indirectly. The
percentages expressing "Other Expenses" are based on estimated amounts for the
current fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Example
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You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
---- ---------- ---------- -------------
<S> <C> <C> <C> <C>
1 Year $15 $15 $15 $15
3 Years 47 47 47 47
</TABLE>
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<PAGE>
FINANCIAL HIGHLIGHTS
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The following information, which relates only to the Atalanta/Sosnoff Fund
and is unaudited, is an integral part of the Fund's financial statements and
should be read in conjunction with the financial statements. The financial
statements as of November 30, 1998 appear in the Statement of Additional
Information of the Trust, which can be obtained at no charge by calling
Countrywide Fund Services, Inc. (Nationwide call toll-free 1-877-SOSNOFF
(1-877-767-6633) or by writing to the Trust at the address on the front of this
Prospectus. Information is not provided for the Atalanta/Sosnoff Focus Fund, the
Atalanta/Sosnoff Value Fund or the Atalanta/Sosnoff Balanced Fund because the
public offering of the shares of these series has not yet commenced as of the
date of this Prospectus.
For the period ended November 30, 1998(a) (unaudited)
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
Net asset value at beginning of period ........................ $ 10.00
---------
Income (loss) from investment operations:
Net investment loss ........................................ (0.01)
Net realized and unrealized gains on investments ........... 0.67
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Total from investment operations .............................. 0.66
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Net asset value at end of period .............................. $ 10.66
=========
RATIOS AND SUPPLEMENTAL DATA:
Total return .................................................. 6.60%(c)
=========
Net assets at end of period (000's) .......................... $ 9,777
=========
Ratio of net expenses to average net assets(b) ................ 1.50%(d)
Ratio of net investment loss to average net assets ............ (0.30%)(d)
Portfolio turnover rate ....................................... 156%(d)
(a) Represents the period from the initial public offering of shares (June 17,
1998) through November 30, 1998.
(b) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 2.75%(d) for the period
ended November 30, 1998.
(c) Unannualized.
(d) Annualized.
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<PAGE>
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" and the
"Balanced 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 Atalanta/Sosnoff Fund and the
Atalanta/Sosnoff Balanced Fund, respectively. 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 and
the Balanced Composite throughout the entire period presented. Mr. Sosnoff is
likewise responsible for the day-to-day management of each 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 Atalanta/Sosnoff
Fund.
The performance data below represents the prior performance of the Equity
Composite and the Balanced Composite and not the prior performance of the Funds
and should not be relied upon by investors as an indication of future
performance of the Funds. As a point of comparison for the Equity Composite, the
performance of the Standard & Poor's 500 Stock Index (the "S&P 500 Index") is
also presented. As a point of comparison for the Balanced Composite, the
performance of a composite index consisting of 65% of the S&P 500 Index and 35%
of the Lehman Brothers Intermediate Government/Corporate Bond Index is
presented. The S&P 500 Index is an unmanaged capitalization-weighted measure of
500 widely held common stocks listed on the New York Stock Exchange, the
American Stock Exchange and Over The Counter market. The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely recognized bond index
composed of intermediate-term debt instruments calculated by Lehman Brothers.
This Index is being used to portray the pattern of bond movement over the stated
period.
PERIODIC RATES OF RETURN - FOR THE PAST 10 YEARS
Equity Composite S&P
(dollar weighted 500
and net of fees) Index
---------------- -----
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%
1998 30.41% 28.56%
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<PAGE>
Balanced Composite 65/35
(dollar weighted Composite
and net of fees) Index
---------------- -----
1989 26.83% 24.84%
1990 3.63% 1.38%
1991 31.94% 24.79%
1992 6.69% 7.51%
1993 13.81% 9.62%
1994 -2.30% 0.19%
1995 29.82% 29.46%
1996 7.89% 16.09%
1997 20.66% 24.11%
1998 27.07% 22.10%
ANNUALIZED RETURNS - FOR PERIODS ENDED DECEMBER 31, 1998
Equity Composite S&P 500 Index
---------------- -------------
1 year 30.41% 28.56%
5 years 18.73% 24.06%
10 years 19.05% 19.17%
Balanced Composite 65/35 Composite Index
------------------ ---------------------
1 year 27.07% 22.10%
5 years 15.98% 17.94%
10 years 16.01% 15.55%
While the Adviser will employ for the Atalanta/Sosnoff Fund and the
Atalanta/Sosnoff Balanced Fund investment objectives, policies and strategies
that are substantially similar to those that were employed in managing the
Equity Composite and the Balanced Composite, respectively, the Adviser, in
managing the Funds, 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 Composites, 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
Composites, may have adversely affected the performance results of the
Composites.
The Atalanta/Sosnoff Fund and the Atalanta/Sosnoff Balanced Fund may incur
operating expenses that were not incurred by the Equity Composite and Balanced
Composite. It is anticipated that the fees and expenses of the Atalanta/Sosnoff
Fund and the Atalanta/Sosnoff Balanced Fund will be higher than those of the
Composites, which will lower performance results. While the Composites' incur
inflows and outflows of cash, there can be no assurance that the continuous
offering of each Fund's shares and each Fund's obligation to redeem their shares
will not impact the each Fund's performance.
- 5 -
<PAGE>
The performance data above represents the prior performance of each
Composite and not the prior performance of the corresponding Fund and should not
be relied upon by investors as an indication of future performance of the Funds.
The performance of each Composite, which is unaudited, has otherwise 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 OBJECTIVES, INVESTMENT METHODOLOGY AND RISK CONSIDERATIONS
The Funds are series of the Atalanta/Sosnoff Investment Trust (the
"Trust"). The Funds are not intended to be a complete investment program, and
there is no assurance that each Fund's investment objective can be achieved.
Each 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
a 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.
INVESTMENT OBJECTIVES
The ATALANTA/SOSNOFF FUND seeks long-term capital appreciation, through
equity investments in companies which the Adviser believes are entering into a
cycle of accelerating earnings momentum. Under normal circumstances, at least
65% of the total assets of the Fund will be invested in common stocks and
securities convertible into common stocks (such as convertible bonds,
convertible preferred stocks and warrants). Although the Fund can invest in
companies of any size, the Fund generally invests in larger, more established
companies.
The ATALANTA/SOSNOFF FOCUS FUND is a non-diversified fund that seeks
long-term capital appreciation by normally concentrating its investments in a
core position of 20-25 large capitalization companies which the Adviser believes
are entering into a cycle of accelerating earnings momentum. Under normal
circumstances, at least 65% of the total assets of the Fund will be invested in
common stocks and securities convertible into
- 6 -
<PAGE>
common stocks (such as convertible bonds, convertible preferred stocks and
warrants) of large capitalization companies.
The ATALANTA/SOSNOFF VALUE FUND seeks long-term capital appreciation by
investing primarily in equity securities which the Adviser believes are
fundamentally undervalued. The Fund uses a "value" investment approach, choosing
companies with relatively low price/earnings ratios, appropriate debt/equity
ratios and supportive free cash flow.
The ATALANTA/SOSNOFF BALANCED FUND seeks to preserve capital while
producing long-term capital appreciation by investing in a blend of equity and
fixed-income securities. Under normal circumstances, 65% (maximum of 80%) of the
Balanced Fund's assets will be invested in equity securities and 35% will be
invested in cash, cash equivalents and fixed-income securities.
INVESTMENT METHODOLOGY AND RISK CONSIDERATIONS
GROWTH FUNDS:
ATALANTA/SOSNOFF FUND
AND ATALANTA/SOSNOFF FOCUS FUND
The Adviser selects stocks for the two Growth Funds by 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
selected list of stocks which are then subjected to further fundamental research
analysis. The Adviser may examine various factors including, but not limited to,
the following:
Earnings Momentum - Which companies will experience an accelerating rate of
growth during the next business cycle?
Growth Rate P/E - What price to earnings ratio is being paid for the growth
rate and where does that place it relative to its peers?
Earnings Stability - How consistently has the company been able to grow
operating income over an economic cycle?
- 7 -
<PAGE>
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.
The Atalanta/Sosnoff Focus Fund is a non-diversified fund and therefore may
invest more than 5% of its total assets in the securities of one or more
issuers. Because a relatively high percentage of the assets of the Fund may be
invested in the securities of a limited number of issuers, the value of shares
of the Fund may be more sensitive to any single economic, business, political or
regulatory occurrence than the value of shares of a diversified investment
company. This fluctuation, if significant, may affect the performance of the
Fund.
ATALANTA/SOSNOFF VALUE FUND
The Adviser's value philosophy seeks to identify stocks priced
below-average in comparison to such factors as earnings and book value. Value
investing is predicated on the Adviser's ability to identify undervalued
securities. The Adviser emphasizes stocks that have relatively low
price/earnings ratios, appropriate debt/equity ratios and supportive free cash
flow. The dividend yield of these stocks tends to be higher.
The Adviser will use a bottom-up approach (focusing on specific companies
rather than the overall market level or industry sectors) in selecting
securities. Before a security is purchased, the Adviser will analyize company
reports and other public information to develop an opinion on the company's
value. The Adviser selects companies that demonstrate strong cash flows,
significant barriers to competition, and moderate or low requirements for
capital reinvestment. While the Adviser intends to invest primarily in companies
which are leaders in their respective industries, the Adviser may also invest in
smaller, less well known companies.
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<PAGE>
Investments in smaller or newer companies may suffer more significant
losses as well as realize more substantial growth than larger or more
established issuers because they lack depth of management, may be unable to
generate funds necessary for growth or potential development, or be developing
or marketing new products or services for which markets are not yet established
and may never become established. In addition, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the markets for
securities of larger or more established issuers, and may be subject to wide
price fluctuations. Investments in such companies tend to be more volatile and
somewhat more speculative.
ATALANTA/SOSNOFF BALANCED FUND
The Balanced Fund's blend of equity securities (the "equity segment") and
cash, cash equivalents and fixed-income securities (the "fixed-income segment")
is determined by systematically integrating a macroeconomic outlook with
individual security analysis. In addition, the Adviser will make asset
allocation decisions in anticipation of interest rate changes. The equity
segment of the Fund will employ the investment methodolgy described above for
the Atalanta/Sosnoff Fund.
In the fixed-income segment of the Fund, the Adviser will own a mix of
Federal, agency and corporate securities. The Adviser's analysis of currencies,
inflation rates, Federal Reserve policy, GDP momentum, world currencies and
interest rates, and geopolitical changes is coupled with fundamental bottom-up
security research. The Adviser believes the most critical variable in managing
the fixed-income segment is the overall duration of the segment. Thus, the
Adviser will actively manage the duration and maturity of the Fund's
fixed-income segment, and will seek to enhance returns from interest rate
anticipation, sector allocations and individual security analysis. The Adviser
monitors yield disparities among different asset classes and sectors, and will
invest the portfolio accordingly. The flow of funds between the equity and fixed
income segments of the Fund is an ongoing process.
Because the Fund intends to allocate 65% of its total assets to equity
securities and 35% of its total assets to cash, cash equivalents and
fixed-income securities, it may not be able to achieve, at times, a total return
as high as that of a portfolio with complete freedom to invest its assets
entirely in any one type of security. Likewise, since a portion of the Fund's
portfolio will normally consist of fixed-income securities, the Fund may not
achieve the degree of capital appreciation that a portfolio
- 9 -
<PAGE>
investing solely in equity securities might achieve. It should be noted that,
although the Fund intends to invest in fixed-income securities to reduce the
price volatility of the Fund's shares, intermediate and long-term fixed-income
securities do fluctuate in value more than money market instruments.
ADDITIONAL INVESTMENT INFORMATION
- ---------------------------------
EQUITY SECURITIES. Each Fund may invest in common stocks and securities
convertible into common stocks (such as convertible bonds, convertible preferred
stocks and warrants). Each Fund may also invest in preferred stocks and bonds
which are rated at the time of purchase in the five highest grades assigned by
Moody's Investors Service, Inc. (Aaa, Aa, A, Baa or Ba) or Standard & Poor's
Ratings Group (AAA, AA, A, BBB or BB) or in unrated securities determined by the
Adviser to be of comparable quality. Preferred stocks and bonds rated Ba, or BB
or lower 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 a Fund, a security may cease to be rated or its
rating may be reduced below Ba or BB, and the Adviser will consider such an
event to be relevant in its determination of whether the Fund should continue to
hold such security.
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 Funds will fluctuate.
FIXED-INCOME SECURITIES. Each Fund may invest in fixed-income securities,
including U.S. Government obligations and corporate debt securities (such as
bonds and debentures) maturing in more than one year from the date of purchase
and preferred stocks of domestic issuers rated at the time of purchase in the
five highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A, Baa
or Ba) or Standard & Poor's Ratings Group (AAA, AA, A, BBB or BB) or, if
unrated, which are determined by the Adviser to be of comparable quality.
Fixed-income securities rated Ba or BB or lower 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 a Fund, a security may
cease to be rated or its rating may be reduced below Ba or BB and the Adviser
will consider such an event to be relevant in its determination of whether the
Fund should continue to hold such security.
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<PAGE>
Investments in fixed-income securities are subject to inherent market risks
and fluctuations in value due to changes in earnings, economic conditions,
quality ratings and other factors beyond the control of the Adviser.
Fixed-income securities are also subject to price fluctuations based upon
changes in the level of interest rates, which will generally result in all those
securities changing in price in the same way, i.e., all those securities
experiencing appreciation when interest rates decline and depreciation when
interest rates rise. As a result, the return and net asset value of a Fund will
fluctuate.
TEMPORARY DEFENSIVE POSITION. 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 a Fund's portfolio,
each 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. When the Adviser takes a
temporary defensive position, the Fund may not achieve its investment objective.
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 Funds are not guaranteed or backed by the Unites
States Government.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a
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, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
the Funds intend to enter into repurchase agreements only with the
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<PAGE>
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 Funds will only 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 Funds' Custodian at the Federal Reserve Bank. At
the time a 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. A 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 Funds will invest primarily in domestic equity
securities, although each 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 a 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. Each Fund may write covered call and covered put
options on equity securities that it is eligible to purchase. Call options
written by a Fund give the holder the right to buy the underlying securities
from a Fund at a stated exercise price; put options give the holder the right to
sell the underlying security to a 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. Each Fund may also write
straddles (combinations of puts and calls on the same underlying security). A
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
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<PAGE>
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, a 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, a 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.
Each Fund may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this manner, a 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. Each Fund may
purchase call options on securities or on relevant stock indices to hedge
against an increase in the value of securities that it wants to buy sometime in
the future. The premium paid for the call option and any transaction costs will
increase the cost of securities acquired, upon exercise of the option, and,
unless the price of the underlying security rises sufficiently, the option may
expire worthless.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option.
Each Fund may purchase either exchange-traded or over-the-counter options
on securities. Each 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. Each 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.
Each Fund may purchase and sell futures contracts, including stock index
futures contracts, to hedge against changes in prices. Each 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
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<PAGE>
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. Each 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 a 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, a Fund is entitled (but not obligated) to sell a futures contract at
the fixed price during the life of the option.
Each 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 a 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 a 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 a 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, a 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. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
LENDING PORTFOLIO SECURITIES. The Funds 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
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<PAGE>
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
any Fund if as a result the aggregate of all outstanding loans exceeds one-third
of the value of that Fund's total assets. Securities lending will afford a Fund
the opportunity to earn additional income because a Fund will continue to be
entitled to the interest payable on the loaned securities and also will either
receive as income all or a portion of the interest on the investment of any cash
loan collateral or, in the case of collateral other than cash, a fee negotiated
with the borrower. Such loans will be terminable at any time. Loans of
securities involve risks of delay in receiving additional collateral or in
recovering the securities lent or even loss of rights in the collateral in the
event of the insolvency of the borrower of the securities. A Fund will have the
right to regain record ownership of loaned securities in order to exercise
beneficial rights. A Fund may pay reasonable fees in connection with arranging
such loans.
BORROWING AND PLEDGING. A 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. A Fund will not make any borrowing which would cause its
outstanding borrowings to exceed one-third of its total assets. A 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 a Fund and, therefore, if employed,
increases the possibility of fluctuation in a Fund's net asset value. This is
the speculative factor known as leverage. The Funds' 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 each 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. Each Fund does not intend to use short-term trading as
a primary means of achieving its investment objective. The Adviser expects the
Atalanta/Sosnoff Focus Fund and the Atalanta/Sosnoff Balanced Fund to maintain
lower portfolio turnover than the Atalanta/Sosnoff Fund and the Atalanta/Sosnoff
Value Fund. However, a 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 each Fund cannot be accurately
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<PAGE>
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 a Fund
were replaced once in a one-year period. High turnover involves correspondingly
greater commission expenses and transaction costs. High turnover may result in a
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
- ----------------------
Your initial investment in the Funds ordinarily must be at least $5,000
($2,000 for tax-deferred retirement plans). The Funds may, in the Adviser's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. Shares of the Funds 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 Funds 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 appropriate Fund. An account application is included in this
Prospectus. Please mark the appropriate box indicating the Fund or Funds you are
purchasing.
The Trust mails you confirmations of all purchases or redemptions of the
Funds shares. Certificates representing shares are not issued. The Trust and its
principal underwriter,
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<PAGE>
Atalanta/Sosnoff Management Corporation (the "Distributor") reserve the rights
to limit the amount of investments and to refuse to sell to any person.
Investors should be aware that the Funds' 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 Funds 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 applicable
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.
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<PAGE>
SHAREHOLDER SERVICES
- --------------------
Contact the Transfer Agent (Nationwide call toll-free 1-877-SOSNOFF
(1-877-767-6633)) for additional information about the shareholder services
described below.
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 Funds are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals.
-- Individual retirement account (IRA) plans for individuals and their
non-employed spouses, including Roth IRAs and Education IRAs.
-- Qualified pension and profit-sharing plans for employees, including
those profit-sharing plans with a 401(k) provision.
-- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code.
Direct Deposit Plans
--------------------
Shares of the Funds 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 Funds.
Automatic Investment Plan
-------------------------
You may make automatic monthly investments in the Funds from your bank,
savings and loan or other depository institution account on either the 15th or
the last business day of the month or both. 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
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<PAGE>
investment in the Funds.
HOW TO REDEEM SHARES
- --------------------
You may redeem shares of the Funds on each day that the Trust is open for
business by sending a written request to the Transfer Agent. 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, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. If the name(s) or the address on your account has been changed
within 30 days of your redemption request, you will be required to request the
redemption in writing with your signature guaranteed, regardless of the value of
the shares being redeemed.
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
as designated on your application. There is currently no charge for processing
wire redemptions. However, the Transfer Agent reserves the right, upon thirty
days' written notice, to make reasonable charges for wire redemptions. 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 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 normally 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 Funds by certified check or wire.
You may also redeem your shares through a brokerage firm or financial
institution that has been authorized to accept orders on behalf of the Funds at
the applicable Fund's net asset value next determined after your order is
received by such organization in proper form before 4:00 p.m., Eastern time, or
such earlier time as may be required by such organization. These organizations
may be authorized to designate other intermediaries to act in this capacity.
Such an organization may charge you transaction fees on redemptions of Fund
shares and may impose other charges or restrictions or account options that
differ from
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<PAGE>
those applicable to shareholders who redeem shares directly through the Transfer
Agent.
The Trust and the Transfer Agent will consider all written and verbal
instructions as authentic and will not be responsible for the processing of
exchange instructions received by telephone which are reasonably believed to be
genuine or the delivery or transmittal of the redemption proceeds by wire. The
affected shareholders will bear the risk of any such loss. The privilege of
exchanging shares by telephone is automatically available to all shareholders.
The Trust or the Transfer Agent, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Trust and/or the
Transfer Agent do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
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 require you to close your account if at any time the value of your
shares is less than $25,000 (based on actual amounts invested, unaffected by
market fluctuations), or such other minimum amount as the Fund may determine
from time to time. After notification to you of the Trust's intention to close
your account, you will be given sixty days to increase the value of your account
to the minimum amount.
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. Under
unusual circumstances, when the Board of Trustees deems it appropriate, the
Trust may make payment for shares redeemed in portfolio securities of the Fund
taken at current value.
EXCHANGE PRIVILEGE
- ------------------
Shares of the Funds may be exchanged for each other at net asset value. You
may exchange shares by written request or by telephone. You must sign your
written request exactly as your name appears on our account records. If you are
unable to exchange shares by telephone due to such circumstances as unusually
heavy market activity, you can exchange shares by mail or in person. Your
exchange will be processed at the next determined net asset value after the
Transfer Agent receives your request.
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<PAGE>
You may only exchange shares into a fund which is authorized for sale in
your state of residence and you must meet that fund's minimum initial investment
requirements. The Board of Trustees may change or discontinue the exchange
privilege after giving shareholders 60 days' prior notice. Any gain or loss on
an exchange of shares is a taxable event.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
The Atalanta/Sosnoff Fund, the Atalanta/Sosnoff Focus Fund and the
Atalanta/Sosnoff Value Fund each expects to distribute substantially all of its
net investment income, if any, on an annual basis. The Atalanta/Sosnoff Balanced
Fund expects to distribute substantially all of its net investment income, if
any, on a quarterly basis. Each 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.
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<PAGE>
TAXES
- -----
Each 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. Each 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 from net realized short-term capital
gains, if any, are taxable to investors as ordinary income. Dividends
distributed by the Funds 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 a 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 20% with respect to assets held for more than 12 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 Funds are
taxable events on which a shareholder may realize a gain or loss.
The Funds' use of hedging techniques, such as foreign currency forwards,
futures and options, involves greater risk of unfavorable tax consequences than
funds not engaging in such techniques. Hedging may also result in the
application of the mark-to-market and straddle provisions of the Internal
Revenue Code. These provisions could result in an increase (or decrease) in the
amount of taxable dividends paid by the Funds as well as affect whether
dividends paid by the Funds are classified as capital gains or ordinary income.
The Funds will mail to each of their 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 Funds 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 Funds
and the use of the Automatic Withdrawal Plan and Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares. See "Taxes" in the Statement of
Additional Information for further information.
OPERATION OF THE FUND
- ---------------------
Each Fund is a 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 Atalanta/Sosnoff Fund, the
Atalanta/Sosnoff Value Fund and the Atalanta/Sosnoff Balanced Fund are
diversified series of the Trust. The Atalanta/Sosnoff Focus Fund is a
non-diversified series of the Trust. The Board of Trustees supervises the
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<PAGE>
business activities of the Trust. Like other mutual funds, the Trust retains
various organizations to perform specialized services for the Funds.
The Trust retains Atalanta/Sosnoff Capital Corporation (Delaware), 101 Park
Avenue, New York, New York 10178 (the "Adviser"), to manage the Funds'
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 on the New York Stock Exchange(NYSE: ATL). Martin T.
Sosnoff is the controlling shareholder of A/SCC.
As of the date of this Prospectus, Atalanta/Sosnoff Management Corporation
(the "Distributor") may be deemed to control the Atalanta/Sosnoff Fund by virtue
of its ownership of more than 25% of its shares.
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 each 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 each
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.
Each Fund pays the Adviser a fee, payable monthly, at the annual rate of
.75% of the average value of its daily net assets.
In addition to the advisory fee, each Fund is responsible for the payment
of all of its 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.
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<PAGE>
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 Trust and, as such, is the exclusive agent for
distribution of the Funds' 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 Funds' 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 Funds. The Transfer Agent receives a monthly fee from
each 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 Funds. 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.
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 Funds
as a factor in the selection of brokers and dealers to execute portfolio
transactions of the Funds. Subject to the requirements of the Investment Company
Act of 1940 (the "1940 Act") and procedures adopted by the Board of Trustees,
the Funds 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 each Fund have equal voting rights and liquidation rights and are
voted in the aggregate and not by Fund except in matters where a separate vote
is required by the 1940 Act or when the matter affects only the interests of a
particular Fund. 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
- 24 -
<PAGE>
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.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most computer
systems to designate the year. When the year advances from 1999 to 2000, many
computers will not recognize "00" as the Year 2000. This issue could potentially
affect every aspect of computer-related activity, on an individual and corporate
level. The Funds could be adversely impacted if the computer systems used by the
Adviser and other service providers have not been converted to meet the
requirements of the new century. The Funds' Adviser has evaluated its internal
systems and expects them to handle the change of millennium. The Adviser is
monitoring on an ongoing basis the progress of the Funds' service providers to
convert their systems to comply with the requirements of the Year 2000. The
Adviser currently has no reason to believe that these service providers will not
be fully and timely complaint. However, you should be aware that there can be no
assurance that all systems will be successfully converted prior to January 1,
2000, in which case it would become necessary for the Funds to enter into
agreements with new service providers or to make other arrangements.
SERVICE PLAN
- ------------
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a service
plan (the "Plan") under which each 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 Fund shareholders or the
distribution of Fund shares.
The annual limitation for payments to the Distributor pursuant to the Plan
is .25% of each Fund's average daily net assets. In the event the Plan is
terminated by a Fund in accordance with its terms, that Fund will not be
required to make any payments to the Distributor after the date the Plan
terminates.
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<PAGE>
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
Funds 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 Funds may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Funds, no preference will be shown for
such securities.
CALCULATION OF SHARE PRICE
- --------------------------
On each day that the Trust is open for business, the share price (net asset
value) of the shares of each 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 a
Fund's investments that its net asset value might be materially affected. The
net asset value per share of a 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
- 26 -
<PAGE>
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 a
Fund will fluctuate with the value of the securities it holds.
PERFORMANCE INFORMATION
- -----------------------
From time to time, each Fund may advertise its "average annual total
return." Each Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of a 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. Each 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 a Fund's "average annual total
return" as described above.
The "yield" of a Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
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<PAGE>
From time to time, each 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. Each 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, the S&P 500 Index or the Lehman Brothers
Intermediate Government/Corporate Bond Index. In connection with a ranking, the
Funds 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. Each 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.
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<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue
New York, New York 10178
BOARD OF TRUSTEES
Howard A. Drucker
Anthony G. Miller
Toni E. Sosnoff
Irving L. Straus
Aida L. Wilder
INVESTMENT ADVISER
ATALANTA/SOSNOFF CAPITAL CORPORATION (DELAWARE)
101 Park Avenue
New York, New York 10178
212-867-5000
INDEPENDENT AUDITORS
ARTHUR ANDERSEN LLP
425 Walnut Street
Cincinnati, Ohio 45202
LEGAL COUNSEL
WILLKIE FARR & GALLAGHER
787 Seventh Avenue
New York, New York 10019-6099
DISTRIBUTOR
ATALANTA/SOSNOFF MANAGEMENT CORPORATION
101 Park Avenue
New York, New York 10178
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Services
Nationwide: (Toll-Free 1-877-SOSNOFF (1-877-767-6633))
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Funds. This Prospectus does not constitute an offer by the Funds to sell
shares in any State to any person to whom it is unlawful for the Funds to make
such offer in such State.
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<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
_______, 1999
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 _____, 1999. 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 at 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................................................................... 2
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS............................... 2
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS..................... 11
INVESTMENT LIMITATIONS...................................................... 14
TRUSTEES AND OFFICERS....................................................... 16
THE INVESTMENT ADVISER...................................................... 17
THE DISTRIBUTOR............................................................. 18
SERVICE PLAN................................................................ 19
SECURITIES TRANSACTIONS..................................................... 20
PORTFOLIO TURNOVER.......................................................... 22
CALCULATION OF SHARE PRICE.................................................. 22
TAXES....................................................................... 22
REDEMPTION IN KIND.......................................................... 24
HISTORICAL PERFORMANCE INFORMATION.......................................... 24
PRINCIPAL SECURITY HOLDERS.................................................. 25
CUSTODIAN................................................................... 26
AUDITORS.................................................................... 26
COUNTRYWIDE FUND SERVICES, INC.............................................. 26
FINANCIAL STATEMENTS........................................................ 27
- 2 -
<PAGE>
THE TRUST
- ---------
The Atalanta/Sosnoff Investment Trust was organized as an Ohio business trust on
January 29, 1998. The Trust currently offers four series of shares to investors:
the Atalanta/Sosnoff Fund, the Atalanta/Sosnoff Focus Fund, the Atalanta/Sosnoff
Value Fund and the Atalanta/Sosnoff Balanced Fund (referred to individually as a
"Fund" and collectively as the "Funds"). Each Fund has its own investment
objective(s) and policies. The Atalanta/Sosnoff Fund, the Atalanta/Sosnoff Value
Fund and the Atalanta/Sosnoff Balanced Fund, are diversified series of the
Trust. Each Fund has its own investment objective(s) and policies. The
Atalanta/Sosnoff Focus Fund is a non-diversified series.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that 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 any Fund into a
greater or lesser number of shares so long as the proportionate beneficial
interest in the assets belonging to that Fund and the rights of shares of any
other Fund are in no way affected. In case of any liquidation of a Fund, the
holders of shares of the Fund or Funds being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to the Fund. Expenses attributable to any Fund are borne by that Fund.
Any general expenses of the Trust not readily identifiable as belonging to a
particular Fund are allocated by or under the direction of the Trustees in such
manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust 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 Objectives, 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 Trust means
the lesser of (1) 67% or more of the outstanding shares of the Trust (or the
applicable Fund) present at a meeting, if the holders of more than 50% of the
outstanding shares of the Trust (or the applicable Fund) are present or
represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
- 3 -
<PAGE>
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a
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
by the seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each 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
Reserve Bank. A 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 a 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 Trust'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 a Fund to the seller subject to the repurchase
agreement and is therefore subject to that Fund's investment restriction
applicable to loans. It is not clear whether a court would consider the
securities purchased by that Fund subject to a repurchase agreement as being
owned by a 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, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve
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<PAGE>
loss of interest or decline in price of the security. If a court characterized
the transaction as a loan and a Fund has not perfected a security interest in
the security, that 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, a 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 a 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 a Fund may incur a loss if the proceeds to a Fund of the sale of the
security to a third party are less than the repurchase price. However, if the
market value of the securities subject to the repurchase agreement becomes less
than the repurchase price (including interest), a 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 a Fund will be unsuccessful in seeking to
enforce the seller's contractual obligation to deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities
subject to the restrictions stated in the 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 a Fund if the demand meets the terms of the letter. Such terms and
the issuing bank must be satisfactory to a Fund. The Funds receive 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 Funds 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 Funds' loans must meet applicable tests under the Internal Revenue
Code and permit the Funds to reacquire loaned securities on five days' notice or
in time to vote on any important matter.
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<PAGE>
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds 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 specified
period of time at a stated interest rate. Investments in time deposits maturing
in more than seven days will be subject to the Trust'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. Each 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 Trust'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
- 6 -
<PAGE>
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 Trust's investment policies and quality
and maturity standards, each Fund may invest in the securities (payable in U.S.
dollars) of foreign issuers. Because a Fund may invest in foreign securities, an
investment in a 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. Each 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 a Fund owns the
underlying security subject to the call option at all times during the option
period. A covered call writer is
- 7 -
<PAGE>
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, each Fund will not
commit more than 15% of its net assets to unlisted covered call transactions and
other illiquid securities.
WRITING COVERED PUT OPTIONS. Each 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 a 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 a 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. Each Fund may purchase put options. As the holder
of a put option, a Fund has the right to sell the underlying security at the
exercise price at any time during the option period. Each Fund may enter into
closing sale transactions with respect to such options, exercise them or permit
them to expire. Each 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.
- 8 -
<PAGE>
Each 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 a 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.
Each Fund may also purchase put options at a time when a Fund does not own
the underlying security. By purchasing put options on a security it does not
own, a Fund seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, a 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.
Each Fund will commit no more than 5% of its assets to premiums when
purchasing put options. The premium paid by a Fund when purchasing a put option
will be recorded as an asset in a 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 a 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. Each Fund may purchase call options. As the holder
of a call option, a Fund has the right to purchase the underlying security at
the exercise price at any time during the option period. Each Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire. Each Fund may purchase call options for the purpose of
increasing its current return or avoiding tax consequences which could reduce
its current return. Each Fund may also purchase call options in order to acquire
the underlying securities. Examples of such uses of call options are provided
below.
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<PAGE>
Call options may be purchased by each Fund for the purpose of acquiring the
underlying securities for its portfolio. Utilized in this fashion, the purchase
of call options enables a 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 a 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, a 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.
Each Fund will commit no more than 5% of its assets to premiums when
purchasing call options. Each Fund may also purchase call options on underlying
securities it owns in order to protect unrealized gains on call options
previously written by it. A call option would be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times to
avoid realizing losses that would result in a reduction of a Fund's current
return. For example, where a 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 a Fund, an increase in the market price could result in the
exercise of the call option written by a 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 a 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 a Fund
may affect its portfolio turnover rate and the amount of brokerage commissions
paid by a Fund. The success of a 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.
- 10 -
<PAGE>
STOCK INDEX FUTURES CONTRACTS. Each 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 each Fund. A 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, a Fund will segregate cash assets
to cover any related liability.
Each 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 exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission.
A Fund will not enter into a Futures Contract if, as a result thereof, more
than 5% of a 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. Each Fund may purchase warrants and rights, provided
that each 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 each 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.
- 11 -
<PAGE>
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.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
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.
- 12 -
<PAGE>
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.
BB, B, CCC and CC - Bonds rated BB, B, CCC and CC are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for preferred stocks in which each 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.
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.
ba - An issue which is rated ba is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
- 13 -
<PAGE>
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.
BB, B and CCC - Preferred stock rated BB, B and CCC are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay preferred stock obligations. BB indicates the lowest degree of speculation
and CCC the highest degree of speculation. While such issues will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
INVESTMENT LIMITATIONS
- ----------------------
The Trust has adopted certain fundamental investment limitations designed
to reduce the risk of an investment in each of Funds. These limitations may not
be changed with respect to any Fund without the affirmative vote of a majority
of the outstanding shares of that Fund.
Under these fundamental limitations, each 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;
- 14 -
<PAGE>
(2) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(3) Make short sales of securities or maintain a short position, except short
sales "against the box";
(4) 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);
The following fundamental limitation is applicable only to THE
ATALANTA/SOSNOFF FUND, THE ATALANTA/SOSNOFF VALUE FUND AND THE
ATALANTA/SOSNOFF BALANCED FUND. Each of these Funds MAY NOT:
(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), each Fund will, to the extent
necessary, reduce its existing borrowings to comply with the limitation.
- 15 -
<PAGE>
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.
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 L. Bennett 57 Treasurer 0
Tina D. Hosking 30 Secretary 0
* Mr. Miller and Mrs. Sosnoff, as affiliated persons of Atalanta/Sosnoff
Capital Corporation (Delaware), the Funds' investment adviser, and
Atalanta/Sosnoff Management Corporation, the Funds' 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 Funds 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.
- 16 -
<PAGE>
IRVING L. STRAUS, 1501 Broadway #1809, New York, New York, is a Trustee of
the Trust. He is also 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 L. BENNETT, 312 Walnut Street, Cincinnati, Ohio, is First Vice President
and Chief Operations Officer of Countrywide Fund Services, Inc. (a registered
transfer agent). He is also Treasurer for the Dean Family of Funds, Williamsburg
Investment Trust, The New York State Opportunity Funds, Wells Family of Real
Estate Funds and The Winter Harbor Fund (all of which are registered investment
companies).
TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio, is Associate General
Counsel of Countrywide Fund Services, Inc. She is also Secretary of The Winter
Harbor Fund, The Bjurman Funds, Dean Family of Funds, The James Advantage Funds,
UC Investment Trust, Williamsburg Investment Trust, Wells Family of Real Estate
Funds and The New York State Opportunity Funds and Assistant Secretary of The
Gannett Welsh & Kotler Funds, The Westport Funds and Lake Shore Family of Funds.
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
investment adviser for all four Funds. The Adviser is a wholly-owned subsidiary
of Atalanta/Sosnoff Capital Corporation ("A/SCC"), a public company listed on
the New York Stock Exchange (NYSE: ATL). 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 Trust'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.
- 17 -
<PAGE>
Under the terms of the advisory agreements between the Trust and the
Adviser, the Adviser manages each Fund's investments. Each 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.
Each Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of that
Fund, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which a Fund may be a party. Each 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 each 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 for the Atalanta/Sosnoff Fund will
remain in force until June 1, 2000. The advisory agreement for the
Atalanta/Sosnoff Focus Fund, the Atalanta/Sosnoff Value Fund, and the
Atalanta/Sosnoff Balanced Fund and will remain in force until June 1, 2001. Each
of the advisory agreements will remain in force 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. Each Fund's advisory agreements may be
terminated at any time, on sixty days' written notice, without the payment of
any penalty, by the Board of Trustees, by a vote of the majority of the Fund's
outstanding voting securities, or by the Adviser. Each of 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 Funds. The Distributor is
obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of the Funds are offered to the public on a
continuous basis. The Distributor pays from its own resources promotional
expenses in connection with the distribution of each Fund's shares and any other
expenses incurred by it in the performance of its obligations under the
Underwriting Agreement with that Fund.
- 18 -
<PAGE>
SERVICE PLAN
- ------------
As stated in the Prospectus, the Trust has adopted a service plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits each Fund to compensate the Distributor for its services to that Fund.
The Distributor is responsible for the payment of any expenses incurred in the
distribution and promotion of each Fund's 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 each
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 each Fund's shares, are in writing and have been approved
by the Board of Trustees. All payments made pursuant to the Plan are made in
accordance with written agreements.
The continuance of the Plan and Implementation Agreements must be
specifically approved at least annually by a vote of the Trust's Board of
Trustees and by a vote of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the Plan (the
"Independent Trustees") at a meeting called for the purpose of voting on such
continuance. The Plan may be terminated by each 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 that Fund. In the event a Plan is terminated in
accordance with its terms, that 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.
- 19 -
<PAGE>
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 each Fund and its
shareholders. The Board of Trustees believes that expenditure of each Fund's
assets for distribution and shareholder servicing expenses under the Plan should
assist in the growth of a 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 Funds' assets for
shareholder servicing will be realized. While the Plan is in effect, all amounts
spent by the Funds 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 Funds and the placing of the
Funds' 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 Funds, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. The Adviser generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received.
Generally, the Funds attempt 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 Funds may be purchased
directly from the issuer.
- 20 -
<PAGE>
The Adviser is specifically authorized to select brokers who also provide
brokerage and research services to the Funds 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 Funds 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 Funds 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 Funds and the
Adviser, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Funds effect 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 Funds.
The Funds have 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 Funds 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 Funds do not anticipate any ongoing arrangements with other brokerage firms,
brokerage business may be transacted from time to time with other firms. Neither
the Adviser, nor affiliates of the Trust, or the Adviser, will receive
reciprocal brokerage business as a result of the brokerage business transacted
by the Funds 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 and, as described below,
imposes additional, more onerous, restrictions on investment personnel of the
Adviser. The Code requires that all access persons preclear any personal
securities investment (with limited exceptions, such as U.S. Government
obligations). The preclearance requirement
- 21 -
<PAGE>
and associated procedures are designed to identify any substantive prohibition
or limitation applicable to the proposed investment. The substantive
restrictions applicable to investment personnel of the Adviser include a ban on
acquiring any securities in an initial public offering and a prohibition from
profiting on short-term trading in securities.
PORTFOLIO TURNOVER
- ------------------
A 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 Funds during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. The Adviser anticipates that each Fund's portfolio turnover rate normally
will not exceed 150%. A 100% turnover rate would occur if all of a Fund's
portfolio securities were replaced once within a one year period.
Generally, each 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 each 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), 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 a Fund's portfolio securities that its net
asset value might be materially affected. For a description of the methods used
to determine the share price, see "Calculation of Share Price" in the
Prospectus.
TAXES
- -----
The Prospectus describes generally the tax treatment of distributions by
the Funds. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
- 22 -
<PAGE>
Each 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 a 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
Funds total assets are 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 Funds investments
are limited in respect to any issuer to an amount not greater than 5% of the
Funds assets and 10% of the outstanding voting securities of such issuer) and
(b) not more than 25% of the value of a Fund's assets is invested in securities
of any one issuer (other than U.S. Government securities or securities of other
regulated investment companies).
A 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 a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a 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. Each Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a portion
(31%) of dividend income on any account unless the shareholder provides a
taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
- 23 -
<PAGE>
REDEMPTION IN KIND
- ------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interest of the Fund's shareholders, a 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, each Fund intends
to make an election pursuant to Rule 18f-1 under the 1940 Act. This election
will require the Funds to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of each 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, each 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 a 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. Each Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from average annual total return. A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and capital gains
distributions. A nonstandardized quotation may also indicate average annual
compounded rates of return without including the effect of any applicable
initial sales load or over periods other than those specified for average annual
total return. A nonstandardized quotation of total return will always be
accompanied by a Fund's average annual total return as described above.
- 24 -
<PAGE>
To help investors better evaluate how an investment in a Fund might satisfy
their investment objective, advertisements regarding the Funds may discuss
various measures of a Fund's 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 Funds 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. Each Fund may provide comparative
performance information appearing in the Growth Funds, Value Funds, and Balanced
Funds category. In addition, the Funds may use comparative performance
information of relevant indices, including the S&P 500 Index, the Dow Jones
Industrial Average and the Lehman Brothers Intermediate Government/Corporate
Bond Index. 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. The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely recognized bond index
composed of all bonds of investment grade in the maturity of between one and
three years.
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 Funds' portfolios, 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 Funds to calculate
performance. In addition, there can be no assurance that the Funds will continue
this performance as compared to such other averages.
PRINCIPAL SECURITY HOLDERS
- --------------------------
As of ____________, 1999, the Distributor owned of record __% of the
Atalanta/Sosnoff Fund's outstanding shares. As of the share date, the Trustees
and officers as a group of the Trust owned of record or beneficially less than
1% of the outstanding shares of the Trust.
- 25 -
<PAGE>
CUSTODIAN
- ---------
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, has been
retained to act as Custodian for the Funds' investments. Firstar Bank, acts as
each Fund's depository, safekeeps its portfolio securities, collects all income
and other payments with respect thereto, disburses funds as instructed and
maintains records in connection with its duties.
AUDITORS
- --------
The firm of Arthur Andersen LLP has been selected as independent public
accountants for the Trust for the fiscal year ended May 31, 1999. Arthur
Andersen LLP, 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 each 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 each Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
The Transfer Agent receives from each 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 per Fund. In addition, each 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 each
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,
each 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
- 26 -
<PAGE>
In addition, each Fund pays all costs of external pricing services.
The Transfer Agent also provides administrative services to each 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 each 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, each 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 per Fund.
FINANCIAL STATEMENTS
- --------------------
The Atalanta/Sosnoff Fund's Statement of Asset and Liabilities as of May 6,
1998, which has been audited by Arthur Andersen LLP, and the Atalanta/Sosnoff
Fund's unaudited Financial Statements as of November 30, 1998, are attached to
this Statement of Additional Information.
- 27 -
<PAGE>
[LOGO]
Semi-Annual Report
November 30, 1998
(Unaudited)
Atalanta/Sosnoff Fund
<PAGE>
LETTER TO SHAREHOLDERS JANUARY 20, 1999
================================================================================
Dear Shareholder:
As Frank Sinatra used to sing and reminisce, "It was a very good year" but there
were times like late summer when panic embraced financial markets worldwide. The
destabilizing forces of deflation hurt emerging markets, Russia, Southeast Asia
and South America. Our stock market was 20 percent below where it is today with
downside volatility among even the most liquid of our giant multinationals like
GE, Coca-Cola, Microsoft and Cisco.
The world isn't out of the woods as yet, but through the coordinated efforts of
the G7 nations capital injections into Indonesia, Brazil, and South Korea were
timely and staved off total disarray. Russia is the sole exception, but this is
a small economy and the capital losses were sustained mainly by European banks
and their countries which guaranteed many of the loans outstanding.
Turning to our performance in this most volatile setting, we stayed ahead of the
market through the third quarter. When stock prices turned south, we exercised
our pragmatic loss discipline and reduced invested positions in equities by 20
percent. When the market rallied early in October on Federal Reserve Board
easing, we fell behind, but then quickly repositioned portfolios by adding to
our holdings in growth stocks and financial services.
By early December, we began to outperform again and have ended the year with
good absolute and relative performance. Through December 31, 1998, performance
totaled 14.70% versus 13.92% for the S&P 500 Index, and as of this writing we
have added another 6.63% in 1999 versus 2.28% for the S&P 500.
The underlying theme is the world has slowed down and we are likely to remain in
a deflationary environment with low interest rates for a year or two longer. We
continue to avoid investments in companies in the industrial sector. Most of our
holdings are counter cyclical as in healthcare, non-cyclical beneficiaries of
low interest rates and a weakening dollar, and the logical leaders in computer
software, hardware and telecommunications equipment.
We are more concerned about the deflationary forces in the world than the
predicament of President Clinton who should prevail in the Senate impeachment
proceedings. The air won't clear for a month or two. The price of oil hovers
near $10 a barrel and this could further destabilize the Mideast, Indonesia, and
our important trading partners like Mexico and Canada. South America is wobbly,
particularly Venezuela and Brazil. All these countries' budget deficits will
widen markedly, in Saudi Arabia and Russia, too. The chances of geopolitical
unrest have increased and our financial markets are beginning to reflect this
with increased volatility, daily.
We expect the world to muddle through the present deflationary environment, but
it will take some time. Recovery in Southeast Asia could be a year or more away.
At home, low interest rates, minimal inflation and a relatively buoyant consumer
sector should keep our GDP going at better than 2 percent which isn't much below
normal. The newest worry is weakness in the dollar, a reflection of our
unfavorable trade balance and somewhat alarming balance of payment deficit.
The stock market needs to digest the autumn rally and gain some confidence that
corporate earnings, particularly for large capitalization growth stocks, will
not disappoint.
We expect to maintain overweighted positions in technology and in the financial
sector, which includes brok[4s, banks, insurance underwriters, credit card
operators, mortgage agencies and commercial finance companies. Price-earnings
ratios remain very attractive relative to the S&P 500 Index which is ranked at
24 times projected '99 earnings. Many of our holdings sell at 50 percent of this
valuation with prospects of growing earnings at mid-teens levels.
Our Best Wishes for the New Year.
Sincerely,
Martin T. Sosnoff
1
<PAGE>
PORTFOLIO CHARACTERISTICS
NOVEMBER 30,1998 (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX
[GRAPHIC OMITTED]
% of Portfolio
---------------------------------------
Atalanta/Sosnoff Fund S&P 500 Index
--------------------- -------------
Financial
Consumer Staples
Technology
Health Care
Consumer Cyclicals
Communications Services
Basic Materials
Capital Goods
Utilities
Energy
Transportation
TOP TEN HOLDINGS
% OF
STOCK SECTOR PORTFOLIO
----------------------------------------------------------
General Re Financial 6.0%
Microsoft Technology 5.4%
Philip Morris Consumer Staples 5.3%
Chancellor Media Consumer Staples 4.9%
IBM Technology 4.8%
Sun Microsystems Technology 4.2%
Cablevision Systems Consumer Staples 4.2%
Merrill Lynch Financial 4.0%
Time Warner Consumer Staples 3.4%
Citigroup Financial 3.3%
-----
Total: 45.5%
TOTAL RETURNS
INCEPTION INCEPTION
(JUNE 17, 1998)* (JUNE 17, 1998)*
TO NOVEMBER 30, 1998 TO DECEMBER 31, 1998
-------------------- --------------------
Atalanta/Sosnoff Fund 6.60% 14.70%
Lipper Growth Fund Index 1.62% 9.75%
S&P 500 Index 7.72% 13.92%
*Except for the Lipper Growth Fund Index which represents the periods from June
18, 1998.
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
================================================================================
ASSETS
Investment securities:
At acquisition cost ........................................ $ 9,007,023
===========
At market value (Note 1) ................................... $ 9,873,975
Dividends receivable .......................................... 6,083
Receivable for capital shares sold ............................ 13,400
Organization costs, net (Note 1) .............................. 51,876
Other assets .................................................. 21,317
-----------
TOTAL ASSETS ........................................... 9,966,651
-----------
LIABILITIES
Bank overdraft ................................................ 69,311
Payable for securities purchased .............................. 105,134
Payable to affiliates (Note 3) ................................ 13,806
Other accrued expenses and liabilities ........................ 1,708
-----------
TOTAL LIABILITIES .......................................... 189,959
-----------
NET ASSETS .................................................... $ 9,776,692
===========
Net assets consist of:
Paid-in capital ............................................... $ 9,445,256
Accumulated net investment loss ............................... (12,187)
Accumulated net realized losses from security transactions .... (523,329)
Net unrealized appreciation on investments .................... 866,952
-----------
Net assets .................................................... $ 9,776,692
===========
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) ...... 917,246
===========
Net asset value, offering price and
redemption price per share (Note 1) ........................ $ 10.66
===========
See accompanying notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED NOVEMBER 30, 1998(a) (UNAUDITED)
================================================================================
INVESTMENT INCOME
Dividends ..................................................... $ 49,347
---------
EXPENSES
Investment advisory fees (Note 3) ............................. 30,767
Distribution expense (Note 3) ................................. 10,255
Accounting services fees (Note 3) ............................. 10,000
Trustees' fees and expenses ................................... 9,627
Professional fees ............................................. 7,861
Postage and supplies .......................................... 7,823
Registration fees ............................................. 7,503
Transfer agent fees (Note 3) .................................. 7,500
Organization expense (Note 1) ................................. 5,764
Administration fees (Note 3) .................................. 5,740
Custodian fees ................................................ 4,820
Insurance expense ............................................. 4,573
Other expenses ................................................ 1,360
---------
TOTAL EXPENSES ............................................ 113,593
Fees waived and expenses reimbursed by the Adviser (Note 3) ... (52,059)
---------
NET EXPENSES .............................................. 61,534
---------
NET INVESTMENT LOSS .............................................. (12,187)
---------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ................ (523,329)
Net change in unrealized appreciation/
depreciation on investments ............................... 866,952
---------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ................. 343,623
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS ....................... $ 331,436
=========
(a) Represents the period from the initial public offering of shares (June 17,
1998) through November 30, 1998.
See accompanying notes to financial statements.
4
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED NOVEMBER 30, 1998(a) (UNAUDITED)
================================================================================
FROM OPERATIONS:
Net investment loss ......................................... $ (12,187)
Net realized losses from security transactions .............. (523,329)
Net change in unrealized appreciation/
depreciation on investments ............................. 866,952
-----------
Net increase in net assets from operations ..................... 331,436
-----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ................................... 9,724,526
Payments for shares redeemed ................................ (379,270)
-----------
Net increase in net assets from capital share transactions ..... 9,345,256
-----------
TOTAL INCREASE IN NET ASSETS ................................... 9,676,692
NET ASSETS:
Beginning of period (Note 1) ................................ 100,000
-----------
End of period ............................................... $ 9,776,692
===========
ACCUMULATED NET INVESTMENT LOSS ................................ $ (12,187)
===========
CAPITAL SHARE ACTIVITY:
Shares sold ................................................. 944,945
Shares redeemed ............................................. (37,699)
-----------
Net increase in shares outstanding .......................... 907,246
Shares outstanding, beginning of period (Note 1) ............ 10,000
-----------
Shares outstanding, end of period ........................... 917,246
===========
(a) Represents the period from the initial public offering of shares (June 17,
1998) through November 30, 1998.
See accompanying notes to financial statements.
5
<PAGE>
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED NOVEMBER 30, 1998(a) (UNAUDITED)
================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
Net asset value at beginning of period ........................ $ 10.00
---------
Income (loss) from investment operations:
Net investment loss ........................................ (0.01)
Net realized and unrealized gains on investments ........... 0.67
---------
Total from investment operations .............................. 0.66
---------
Net asset value at end of period .............................. $ 10.66
=========
RATIOS AND SUPPLEMENTAL DATA:
Total return .................................................. 6.60%(c)
=========
Net assets at end of period (000's) .......................... $ 9,777
=========
Ratio of net expenses to average net assets(b) ................ 1.50%(d)
Ratio of net investment loss to average net assets ............ (0.30%)(d)
Portfolio turnover rate ....................................... 156%(d)
(a) Represents the period from the initial public offering of shares (June 17,
1998) through November 30, 1998.
(b) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 2.75%(d) for the period
ended November 30, 1998 (Note 3).
(c) Unannualized.
(d) Annualized.
See accompanying notes to financial statements.
6
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998 (UNAUDITED)
================================================================================
Market
COMMON STOCKS -- 101.0% Shares Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 2.3%
Monsanto ....................................... 4,900 $ 222,031
----------
CAPITAL GOODS -- 1.8%
Waste Management ............................... 4,100 175,787
----------
COMMUNICATION SERVICES -- 2.2%
MCI WorldCom* .................................. 3,700 218,300
----------
CONSUMER CYCLICALS -- 7.5%
Costco Companies* .............................. 3,500 219,625
Saks* .......................................... 8,700 239,250
Wal-Mart Stores ................................ 3,600 271,125
----------
730,000
----------
CONSUMER STAPLES -- 25.9%
Cablevision Systems - Class A* ................. 9,800 405,475
Chancellor Media* .............................. 12,700 478,631
Fox Entertainment Group - Class A* ............. 8,400 198,450
Liberty Media Group - Class A* ................. 6,800 274,125
News Corporation Limited - ADR ................. 4,500 113,344
Philip Morris Companies ........................ 9,100 509,031
Rite Aid ....................................... 4,900 227,237
Time Warner .................................... 3,100 327,825
----------
2,534,118
----------
FINANCIAL -- 31.2%
Allstate ....................................... 4,200 171,150
American International Group ................... 3,000 282,000
Bank One ....................................... 3,700 189,856
CIT Group - Class A ............................ 3,500 98,219
Chase Manhattan ................................ 2,600 164,938
Citigroup ...................................... 6,300 316,181
Dime Bancorp ................................... 6,000 159,375
Fannie Mae ..................................... 4,300 312,825
First Union .................................... 3,200 194,400
General Re ..................................... 2,500 583,750
Golden West Financial .......................... 2,000 189,375
Merrill Lynch .................................. 5,200 390,000
----------
3,052,069
----------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
Market
COMMON STOCKS -- 101.0% (Continued) Shares Value
- --------------------------------------------------------------------------------
HEALTH CARE -- 13.4%
Bristol-Myers Squibb ........................... 1,000 $ 122,562
Johnson & Johnson .............................. 3,100 251,875
Pfizer ......................................... 2,600 290,225
Sofamor Danek Group* ........................... 2,000 223,625
United HealthCare .............................. 4,100 185,013
Warner-Lambert ................................. 3,100 234,050
----------
1,307,350
----------
TECHNOLOGY -- 15.6%
Cisco Systems* ................................. 1,700 128,138
International Business Machines ................ 2,800 462,000
Microsoft* ..................................... 4,300 524,600
Sun Microsystems* .............................. 5,500 407,344
----------
1,522,082
----------
UTILITIES -- 1.1%
Niagara Mohawk Power* .......................... 7,300 112,238
----------
TOTAL COMMON STOCKS (Cost $9,007,023) $9,873,975
LIABILITIES IN EXCESS OF OTHER ASSETS-- (1.0%) (97,283)
----------
NET ASSETS-- 100.0% $9,776,692
==========
* Non-income producing security.
ADR-American Depository Receipt.
See accompanying notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (UNAUDITED)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Atalanta/Sosnoff Fund (the Fund) is a diversified series of the
Atalanta/Sosnoff Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940. The Trust was
organized as an Ohio business trust on January 29, 1998. The Fund was
capitalized on May 6, 1998 when Atalanta/Sosnoff Capital Corporation (Delaware)
(the Adviser) purchased the initial 10,000 shares of the Fund at $10.00 per
share. The public offering of shares of the Fund commenced on June 17, 1998. The
Fund had no operations prior to the public offering of shares except for the
initial issuance of shares.
The Fund seeks long-term capital appreciation, through equity investments in
companies entering into a cycle of accelerating earnings momentum.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded on stock
exchanges or are quoted by NASDAQ are valued at the last reported sale price or,
if not traded on a particular day, at the closing bid price. Securities traded
in the over-the-counter market, and which are not quoted by NASDAQ, are valued
at the last sale price, if available, otherwise, at the last quoted bid price.
Securities for which market quotations are not readily available are valued at
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.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of the Fund is equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
Distributions to shareholders-- Dividends arising from net investment income, if
any, are declared and paid annually to shareholders of the Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Organization costs -- Costs incurred by the Fund in connection with its
organization and registration of shares, net of certain expenses, have been
capitalized and are being amortized on a straight-line basis over a five year
period beginning with the commencement of operations.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Federal income tax-- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, in any fiscal year in which the Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
There were no dividends required to be declared by the Fund during 1998.
As of November 30, 1998, net unrealized appreciation on investments was $834,325
for federal income tax purposes, of which $1,165,919 related to appreciated
securities and $331,594 related to depreciated securities based on a federal
income tax cost basis of $9,039,650. The difference between the federal income
tax cost of portfolio investments and the financial statement cost is due to
certain timing differences in the recognition of capital losses under income tax
regulations and generally accepted accounting principles.
2. INVESTMENT TRANSACTIONS
During the period ended November 30, 1998, cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$15,123,843 and $5,593,491, respectively.
3. TRANSACTIONS WITH AFFILIATES
The President of the Trust is also Executive Vice President of the Adviser and
of Atalanta/Sosnoff Management Corporation (the Distributor), the principal
underwriter for the Fund and exclusive agent for the distribution of Fund
shares. The Vice President of the Trust is also Vice President of the Adviser.
Certain other officers of the Trust are also officers of Countrywide Fund
Services, Inc. (CFS), the administrative services agent, shareholder servicing
and transfer agent and accounting services agent for the Trust.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement. The Fund pays the Adviser an investment advisory
fee, computed and accrued daily and paid monthly, at an annual rate of 0.75% of
average daily net assets of the Fund.
The Adviser currently intends to voluntarily waive its investment advisory fees
and reimburse the Fund for expenses incurred to the extent necessary to limit
total operating expenses of the Fund to a maximum level of 1.50% of the Fund's
average daily net assets. Accordingly, the Adviser waived its investment
advisory fees of $30,767 and reimbursed the Fund for $21,292 of other operating
expenses during the period ended November 30, 1998.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, CFS supplies non-investment
related statistical and research data, internal regulatory compliance services
and executive and administrative services for the Fund. CFS 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 these
services, CFS receives a monthly fee at an annual rate of 0.15% on the Fund's
average daily net assets up to $50 million; 0.125% on such net assets between
$50 million and $100 million; and 0.10% on such net assets in excess of $100
million, subject to a $1,000 minimum monthly fee.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement, CFS calculates the daily
net asset value per share and maintains the financial books and records of the
Fund. For these services, CFS receives a fee, based on current asset levels, of
$2,000 per month from the Fund. In addition, the Fund reimburses CFS for
out-of-pocket expenses related to the pricing of the Fund's portfolio
securities.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement, CFS 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. For these
services, CFS receives a monthly fee at an annual rate of $20 per shareholder
account from the Fund, subject to a $1,500 minimum monthly fee. In addition, the
Fund reimburses CFS for out-of-pocket expenses including, but not limited to,
postage and supplies.
DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the Plan) under which the Fund may
directly incur or reimburse the Distributor for expenses related to the
distribution and promotion of Fund shares. The annual limitation for payment of
such expenses under the Plan is 0.25% of the Fund's average daily net assets.
The Fund incurred distribution expenses of $10,255 under the Plan during the
period ended November 30, 1998.
11
<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
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
PART C. OTHER INFORMATION
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Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) (i) Financial Statements included in Part A:
None
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities, May 6, 1998, including Notes
to Financial Statement and Report of Independent Public
Accountants, of the Atalanta/Sosnoff Fund
Statement of Assets and Liabilities, November 30, 1998
(unaudited), of the Atalanta/Sosnoff Fund
Statement of Operations for the Period Ended November 30, 1998
(unaudited), of the Atalanta/Sosnoff Fund
Statement of Changes in Net Assets for the Period Ended November
30, 1998 (unaudited), of the Atalanta/Sosnoff Fund
Financial Highlights for the Period Ended November 30, 1998
(unaudited) of the Atalanta/Sosnoff Fund
Portfolio of Investments, November 30, 1998 (unaudited), of the
Atalanta/Sosnoff Fund
(b) Exhibits
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5) Advisory Agreement with Atalanta/Sosnoff Capital Corporation
(Delaware)
(6) Underwriting Agreement with Atalanta/Sosnoff Management
Corporation
(7) Inapplicable
(8) Custody Agreement with Firstar Bank, N.A.
(9) (i) Administration Agreement with Countrywide Fund Services,
Inc.
<PAGE>
(ii) Accounting Services Agreement with Countrywide Fund
Services, Inc.
(iii) Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement with Countrywide Fund Services, Inc.
(10) Opinion and Consent of Counsel for the Trust and the Independent
Trustees*
(11) Consent of Independent Public Accountants
(12) Inapplicable
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15) Service Plan Pursuant to Rule 12b-1
(16) Inapplicable
(17) Financial Data Schedule for the Atalanta/Sosnoff Fund
(18) Inapplicable
- --------------------------------------
* Incorporated by reference to the Trust's registration statement on Form
N-1A.
Item 25. Persons Controlled by or Under Common Control with Registrant.
- -------- --------------------------------------------------------------
None.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of ____________, 1999, there are __ holders of the shares of
beneficial interest of the Registrant.
Item 27. Idemnification
- -------- --------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
"Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject
to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers,
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<PAGE>
including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with
which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a
Trustee or officer, director or trustee, and except that no
Covered Person shall be indemnified against any liability to the
Trust or its Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office
Section 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorney's fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
any such person."
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<PAGE>
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides coverage to the Registrant, its
Trustees and officers, Atalanta/Sosnoff Capital Corporation
(Delaware)(the "Adviser") and Atalanta/Sosnoff Management
Corporation, the Trust's principal underwriter. Coverage under
the policy includes losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of duty.
The Advisory Agreement with the Adviser provides that the Adviser
shall not be liable for any action taken, omitted or suffered to
be taken by it in its reasonable judgment, in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by the Advisory Agreement, or
in accordance with (or in the absence of) specific directions or
instructions from the Trust, provided, however, that such acts or
omissions shall not have resulted from the Adviser's willful
misfeasance, bad faith or gross negligence, a violation of the
standard care established by and applicable to the Adviser in its
actions under this Agreement or breach of its duty or of its
obligations hereunder.
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<PAGE>
Item 28. Business and Other Connections of the Investment Adviser
- -------- --------------------------------------------------------
(a) The Adviser is a registered investment adviser, providing
investment advisory services to the Registrant. The Adviser has
been engaged since 1982 in the business of providing investment
advisory services to individual, institutional and corporate
clients.
(b) The directors and officers of the Adviser and any other business,
profession, vocation or employment of a substantial nature
engaged in at any time during the past two years:
(i) Martin T. Sosnoff - Chairman & Director of the Adviser.
Chairman, Director and Controlling Shareholder of
Atalanta/Sosnoff Capital Corporation ("A/SCC"), the
Adviser's parent company. Chairman and Director of
Atalanta/Sosnoff Management Corporation, the Registrant's
principal underwriter (the "Distributor").
(ii) Craig B. Steinberg - President and Director of the Adviser
and the Distributor.
(iii) Anthony G. Miller - Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the
Adviser, A/SCC and the Distributor. Chairman, President
and a Trustee of the Trust.
(iv) Paul P. Tanico - Executive Vice President of the Adviser
and the Distributor. General Partner of Castlerock
Partners, an investment partnership.
(v) Toni E. Sosnoff - Vice President of the Adviser. Vice
President and a Trustee of the Trust.
Item 29. Principal Underwriters
- -------- ----------------------
(a) Inapplicable
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<PAGE>
Position Position
with with
(b) Name Underwriter Registrant
---- ----------- ----------
Martin T. Sosnoff Chairman of None
the Board
and Director
Craig B. Steinberg President None
and
Director
Anthony G. Miller Executive Vice Chairman,
President, Chief President and
Operating Officer a Trustee
and Chief
Financial Officer
Paul P. Tanico Executive Vice None
President
John P. O'Brien Vice President; None
Controller
The address of all of the above-named persons is 101 Park Avenue,
New York, New York 10178.
(c) Inapplicable
Item 30. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder will be maintained by the Registrant at its
offices located at 101 Park Avenue, New York, New York 10178 as well
as at the offices of the Registrant's transfer agent located at 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
- -------- -------------------------------------------------
Inapplicable
Item 32. Undertakings
- -------- ------------
(a) Inapplicable
(b) Inapplicable
(c) The Registrant undertakes to furnish each person to whom a
Prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
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<PAGE>
(d) The Registrant undertakes to call a meeting of shareholders, if
requested to do so by holders of at least 10% of the Fund's
outstanding shares, for the purpose of voting upon the question
of removal of a trustee or trustees and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
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<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed below on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York, on the 8th day of
April, 1999.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
------------------------------
Anthony G. Miller
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Anthony G. Miller Chairman, April 8, 1999
- -------------------------- President
Anthony G. Miller and Trustee
/s/ Robert L. Bennett
- -------------------------- Treasurer April 8, 1999
Robert L. Bennett
Trustee /s/ Tina D. Hosking
- -------------------------- -------------------
Howard A. Drucker* Tina D. Hosking
Attorney-in-fact*
April 8, 1999
Trustee
- --------------------------
Toni E. Sosnoff*
Trustee
- --------------------------
Irving L. Straus*
Trustee
- --------------------------
Aida L. Wilder*
<PAGE>
INDEX TO EXHIBITS
-----------------
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5)(i) Advisory Agreement
(6) Underwriting Agreement
(7) Inapplicable
(8) Custody Agreement
(9)(i) Administration Agreement
(9)(ii) Accounting Services Agreement
(9)(iii) Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement
(10) Opinion and Consent of Counsel for the Trust and the Independent
Trustees*
(11) Consent of Independent Public Accountants
(12) Inapplicable
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15) Service Plan Pursuant to Rule 12b-1
(16) Inapplicable
(17) Financial Data Schedule
(18) Inapplicable
- ----------------------------
* Incorporated by reference to the Trust's registration statement on Form
N-1A.
Atalanta/Sosnoff Capital Corporation (Delaware)
101 Park Avenue
New York, NY 10178
Re: Advisory Agreement
Ladies and Gentlemen:
Atalanta/Sosnoff Investment Trust (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), and subject to the rules and regulations promulgated
thereunder. The Trust currently offers one series of shares to investors, the
Atalanta/Sosnoff Fund (the "Fund"). Each share of the Fund represents an
undivided interest in the assets, subject to the liabilities, of the Fund.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized hereby appoints
and employs Atalanta/Sosnoff Capital Corporation (Delaware) (the "Adviser") as
discretionary portfolio manager on the terms and conditions set forth herein of
the Fund.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Adviser accepts
the appointment as discretionary portfolio manager and agrees to use its best
professional judgement to make investment decisions for the Fund in accordance
with the provisions of this Agreement.
3. DISCRETIONARY PORTFOLIO MANAGEMENT SERVICES OF THE ADVISER. The Adviser
is hereby employed and authorized to select portfolio securities for investment
by the Trust on behalf of the Fund, to purchase and sell securities of the Fund,
and, upon making any purchase or sale decision, to place orders for the
<PAGE>
execution of such portfolio transactions in accordance with paragraphs 5 and 6
hereof. In providing discretionary portfolio management services to the Fund,
the Adviser shall be subject to such investment restrictions as are set forth in
the Act and the rules thereunder, Subchapter M of the Internal Revenue Code of
1986, applicable state securities laws, the supervision and control of the
Trustees of the Trust, such specific instructions as the Trustees may adopt and
communicate to the Adviser and the investment objectives, policies and
restrictions of the Trust applicable to the Fund furnished pursuant to paragraph
4. The Adviser is not authorized by the Trust to take any action, including the
purchase or sale of securities for the Fund, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. The Adviser shall maintain on behalf of the Trust the records
listed in Schedule A hereto (as amended from time to time). At the Trust's
reasonable request, the Adviser will consult with the Trust with respect to any
decision made by it with respect to the investments of the Fund.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will provide
the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Trustees supplemental thereto. The Trust will provide the Adviser
with such further information concerning the investment objectives, policies and
restrictions applicable thereto as the
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<PAGE>
Adviser may from time to time reasonably request. The Trust retains the right,
on written notice to the Adviser from the Trust, to modify any such objectives,
policies or restrictions in any manner at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by Star Bank, N.A. or any successor custodian (the "Custodian"),
or such depositories or agents as may be designated by the Custodian in writing,
as custodian for the Trust, of all cash and/or securities due to or from the
Fund, and the Adviser shall not have possession or custody thereof. The Adviser
shall advise the Custodian and confirm in writing to the Trust and to
Countrywide Fund Services, Inc. or any other designated agent of the Trust, all
investment orders for the Fund placed by it with brokers and dealers. The
Adviser shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Adviser.
6. ALLOCATION OF BROKERAGE. The Adviser shall have authority and discretion
to select brokers and dealers to execute portfolio transactions initiated by the
Adviser and to select the markets on or in which the transactions will be
executed.
In doing so, the Adviser will give primary consideration to securing the
most favorable price and efficient execution. Consistent with this policy, the
Adviser may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which
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<PAGE>
other clients of the Adviser may be a party. It is understood that neither the
Trust nor the Adviser has adopted a formula for allocation of the Fund's
investment transaction business. It is also understood that it is desirable for
the Trust that the Adviser have access to supplemental investment and market
research and security and economic analyses provided by certain brokers who may
execute brokerage transactions at a higher commission to the Fund than may
result when allocating brokerage to other brokers on the basis of seeking the
lowest commission. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Adviser in connection with its services to
other clients.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other clients.
- 4 -
<PAGE>
For each fiscal quarter of the Trust, the Adviser shall prepare and render
reports to the Trust's Trustees of the total brokerage business placed and the
manner in which the allocation has been accomplished. Such reports shall set
forth at a minimum the information required to be maintained by Rule 31a-1(b)(9)
under the Act.
7. PROXIES. The Trust will vote all proxies solicited by or with respect to
the issuers of securities in which assets of the Fund may be invested from time
to time. At the request of the Trust, the Adviser shall provide the Trust with
its recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISER. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
9. FEES FOR SERVICES. For all of the services to be rendered and payments
made as provided in this Agreement, the Fund will pay the Adviser a fee,
computed and accrued daily and paid monthly, at the annual rate of .75% of its
average daily net assets.
10. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall employ or provide
and compensate the executive, administrative, secretarial and clerical personnel
necessary to provide the services set forth herein, and shall bear the expense
thereof. The Adviser shall compensate all Trustees, officers and employees of
the Trust who are also employees of the Adviser. The Adviser will pay all
expenses incurred in connection with the sale or
- 5 -
<PAGE>
distribution of the Fund's shares to the extent such expenses are not assumed by
the Fund under a plan of distribution pursuant to Rule 12b-1 under the Act.
The Fund will be responsible for the payment of all operating expenses of
the Fund, including fees and expenses incurred by the Fund 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, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Fund,
expenses including clerical expenses of the issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of Trustees of the Trust
who are not interested persons of the Trust, the cost of preparing, printing 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 Trust may be a party and indemnification of the Trust's officers
and Trustees with respect thereto, or any other expense not specifically
described above incurred in the performance of the Trust's obligations. All
other expenses not expressly assumed by the Adviser herein incurred in
connection with the organization, registration of shares and operations of the
Fund will be borne by the Fund.
- 6 -
<PAGE>
11. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust acknowledges that
the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Adviser acts
in good faith, and provided further, that it is the Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Trust
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which the Fund may have an interest from time to time, whether in
transactions which involve the Fund or otherwise. The Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated
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<PAGE>
Account may acquire, and the Trust shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Fund or
otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall furnish to
each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
13. LIMITATION OF LIABILITY. The Adviser may rely on information reasonably
believed by it to be accurate and reliable. Except as may otherwise be required
by the Act and the rules thereunder, neither the Adviser nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
the duties of the Adviser under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of the Adviser
under this Agreement.
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<PAGE>
B. Any person, even though also a director, officer, employee,
shareholder or agent of the Adviser, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of the Adviser or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless the, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Adviser may sustain or incur or
which may be asserted against the Adviser by any person by reason of, or as a
result of: (i) any action taken or omitted to be taken by the Adviser in good
faith in reliance upon any certificate, instrument, order or share certificate
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the opinion of legal
counsel for the Trust or its own counsel; or (ii) any action taken or omitted to
be taken by the Trust in connection with its appointment in good
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<PAGE>
faith in reliance upon any law, act, regulation or interpretation of the same
even though the same may thereafter have been altered, changed, amended or
repealed. However, indemnification under this subparagraph shall not apply to
actions or omissions of the Adviser or its directors, officers, employees,
shareholders or agents in cases of its or their own gross negligence, willful
misconduct, bad faith, or reckless disregard of its or their own duties
hereunder.
Nothing in this paragraph 13 shall be construed in a manner inconsistent
with Sections 17(h) and (i) of the Act.
14. CONFIDENTIALITY. Subject to the duty of the Adviser and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
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<PAGE>
16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees of the Trust to
provide investment advisory services to the Fund as contemplated hereby.
B. The Trust will deliver to the Adviser true and complete copies of
its then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Trust by applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on behalf of
the Trust, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. The Adviser agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the
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<PAGE>
Trust may from time to time require to ensure compliance with the Act, the
Internal Revenue Code of 1986 and applicable state securities laws.
D. The Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a copy
of the code of ethics and evidence of its adoption. Within forty-five (45) days
of the end of the last calendar quarter of each year while this Agreement is in
effect, an executive officer of the Adviser shall certify to the Trust that the
Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Adviser's code of ethics or, if
such a violation has occurred, that appropriate action was taken in response to
such violation. Upon the written request of the Trust, the Adviser shall permit
the Trust, its employees or its agents to examine the reports required to be
made to the Adviser by Rule 17j-1(c)(1).
E. The Adviser will, promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, the Adviser will provide assistance to
the Custodian in the collection of income due or payable to the Fund.
G. The Adviser will immediately notify the Trust of the occurrence of
any event which would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the Act or
otherwise.
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<PAGE>
18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and the
shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order or interpretive position
of the Securities and Exchange Commission or its staff modifying the provisions
of the Act with respect to approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
of its execution and shall remain in force for a period of two (2) years from
such date, and from year to year thereafter but only so long as such continuance
is specifically approved at least annually by the vote of a majority of the
Trustees who are not interested persons of the Trust or the Adviser, cast in
person at a meeting called for the purpose of voting on such approval, and by a
vote of the Board of Trustees or of a majority of the outstanding voting
securities of the Fund. The aforesaid requirement that this Agreement may be
continued "annually" shall be construed in a manner consistent with the Act and
the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
- 13 -
<PAGE>
21. OBLIGATIONS OF THE TRUST. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust. The execution and delivery of
this Agreement have been authorized by the trustees of the Trust and signed by
an officer of the Trust, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust.
22. FORCE MAJEURE. If The Adviser shall be delayed in its performance of
services or prevented entirely or in part from performing services due to causes
or events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
23. DEFINITIONS. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote
- 14 -
<PAGE>
of a majority of the outstanding voting securities" shall have the meanings set
forth in the Act and the rules and regulations hereunder.
24. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of New York.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
---------------------------
Title: Chairman and President
---------------------------
Date: June 1, 1998
---------------------------
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATALANTA/SOSNOFF CAPITAL
CORPORATION (DELAWARE)
By: /s/ Anthony G Miller
---------------------------
Title: Executive Vice President
---------------------------
Date: June 1, 1998
---------------------------
- 15 -
<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
---------------------------------------
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases or sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
- 16 -
<PAGE>
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Fund.
- -----------------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage
firms (including their recommendation; i.e., buy, sell, hold) or any
internal reports or portfolio adviser reviews.
- 17 -
UNDERWRITING AGREEMENT
----------------------
This Agreement made as of June 1, 1998 by and between Atalanta/Sosnoff
Investment Trust, an Ohio business trust, (the "Trust"), and Atalanta/Sosnoff
Management Corporation, a New York corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
------------
The Trust hereby appoints Underwriter as its exclusive agent for the
distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable.
<PAGE>
2. Sale and Repurchase of Shares.
------------------------------
(a) Underwriter will have the right, as agent for the Trust, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering price
(as defined in subparagraph 2(d) hereof) stated in the Trust's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the Trust, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right to take, as agent for the
Trust, all actions which, in Underwriter's judgment, are necessary to carry into
effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be
the respective net asset value of the Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of the NASD.
- 2 -
<PAGE>
(e) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net asset
value of the Shares promptly, but in no event later than the third business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
- 3 -
<PAGE>
(i) Underwriter, as agent of and for the account of the Trust, may
repurchase the Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. Sale of Shares by the Trust.
----------------------------
The Trust reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
------------------------
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Trust, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
-------------------
(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter nor any such dealers shall withhold the placing of
purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient copies of
any agreements, plans or other materials it
- 4 -
<PAGE>
intends to use in connection with any sales of Shares in adequate time for the
Trust to file and clear them with the proper authorities before they are put in
use, and not to use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable State or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust.
--------------------------------
The Trust shall furnish to Underwriter copies of all information,
financial statements and other papers which Underwriter may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.
- 5 -
<PAGE>
7. Expenses.
---------
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Trust or the Trust's
investment adviser in accordance with agreements between them as permitted by
applicable law, including the Act and rules and regulations promulgated
thereunder.
8. Indemnification of Trust.
-------------------------
Underwriter agrees to indemnify and hold harmless the Trust and each
person who has been, is, or may hereafter be a trustee, director, officer,
employee, partner, shareholder or control person of the Trust, against any loss,
damage or expense (including the reasonable costs of investigation) reasonably
incurred by any of them in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a party, which arises out
of or is alleged to arise out of or is based upon any untrue statement or
alleged untrue statement of a material fact, or the omission or alleged omission
to state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other person
for whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust. Underwriter
likewise agrees to indemnify and hold harmless the
- 6 -
<PAGE>
Trust and each such person in connection with any claim or in connection with
any action, suit or proceeding which arises out of or is alleged to arise out of
Underwriter's failure to exercise reasonable care and diligence with respect to
its services, if any, rendered in connection with investment, reinvestment,
automatic withdrawal and other plans for Shares. The term "expenses" for
purposes of this and the next paragraph includes amounts paid in satisfaction of
judgments or in settlements which are made with Underwriter's consent. The
foregoing rights of indemnification shall be in addition to any other rights to
which the Trust or each such person may be entitled as a matter of law.
9. Indemnification of Underwriter.
-------------------------------
Underwriter, its directors, officers, employees, shareholders and
control persons shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of any of such persons in the performance
of Underwriter's duties or from the reckless disregard by any of such persons of
Underwriter's obligations and duties under this Agreement. The Trust will
advance attorneys' fees or other expenses incurred by any such person in
defending a proceeding, upon the undertaking by or on behalf of such person to
repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Underwriter who may also be
or become an officer or employee
- 7 -
<PAGE>
of the Trust shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and not as an
employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
--------------------------------------------
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of Underwriter by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
-----------------------------------
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 10), and from
year to year thereafter, subject to annual approval (i) by Underwriter, (ii) by
the Board of Trustees of the Trust or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Trustees of the Trust who are not
interested persons of the Trust or of
- 8 -
<PAGE>
Underwriter by vote cast in person at a meeting called for the purpose of voting
on such approval.
12. Limitation of Liability.
------------------------
The term "Atalanta/Sosnoff Investment Trust" means and refers to the
Trustees from time to time serving under the Trust's Agreement and Declaration
of Trust as the same may subsequently thereto have been, or subsequently hereto
be, amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, Shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Agreement and Declaration of Trust of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an officer of the Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Agreement and Declaration of Trust.
13. New Series.
-----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the initial
or renewal term of this Agreement.
14. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement
- 9 -
<PAGE>
shall become automatically applicable to any investment company which is a
successor to the Trust as a result of reorganization, recapitalization or change
of domicile.
15. Severability.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
16. Questions of Interpretation.
----------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. Notices.
--------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party
- 10 -
<PAGE>
at such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that the address
of both the Trust and Underwriter for this purpose shall be 101 Park Avenue, New
York, New York 10178.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and year
first above written.
ATTEST: ATALANTA/SOSNOFF INVESTMENT TRUST
/s/ Tina D. Hosking By: /s/ Anthony G. Miller
- ------------------------------ -----------------------------
Its:President
ATTEST: ATALANTA/SOSNOFF MANAGEMENT
CORPORATION
/s/ Toni E. Sosnoff By: /s/ Anthony G. Miller
- ------------------------------ -----------------------------
Its:Executive Vice President
- 11 -
CUSTODY AGREEMENT
-----------------
This AGREEMENT, dated as of June 1, 1998, by and between the
ATALANTA/SOSNOFF INVESTMENT TRUST (the "Trust"), a business trust organized
under the laws of the State of Ohio, acting with respect to its existing series
as of the date of this Agreement, and such other series as shall be designated
from time to time by the Trust (individually, a "Fund" and, collectively, the
"Funds"), each of them a series of the Trust and each of them operated and
administered by the Trust, and STAR BANK, N.A., a national banking association
(the "Custodian").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust desires that the Funds' Securities and cash be held and
administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Funds and named in Exhibit A hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees from time to time serving
under the Trust's Agreement and Declaration of Trust, as from time to time
amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Trust computes the
net asset value of Shares of any Fund.
1.5 "FUND CUSTODY ACCOUNT" shall mean any of the accounts in the name of
the Trust, which is provided for in Section 3.2 below.
- 2 -
<PAGE>
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "OFFICER" shall mean the Chairman, the President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Trust.
1.8 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person, (ii) recorded and
kept among the records of the Custodian made in the ordinary course of business
and (iii) orally confirmed by the Custodian. The Trust shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end of the
next Business Day. If such Written Instructions confirming Oral Instructions are
not received by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by the Trust. If
Oral Instructions vary from the Written Instructions which purport to confirm
them, the Custodian shall notify the Trust of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
- 3 -
<PAGE>
1.10 "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
of Trustees, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Funds) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other instruments or
documents representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and to
service.
1.12 "SHARES" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Trust on account of such Fund.
- 4 -
<PAGE>
1.13 "SUB-CUSTODIAN" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership of the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the Funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with
- 5 -
<PAGE>
respect to the safekeeping of the Funds' assets, including, but not limited to,
notification of any transfer to or from a Fund's account or a third party
account containing assets held for the benefit of the Fund. Such contract may
contain, in lieu of any or all of the provisions specified above, such other
provisions that the Custodian determines will provide, in their entirety, the
same or greater level of care and protection for Fund assets as the specified
provisions, in their entirety.
1.14 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
----------
APPOINTMENT OF CUSTODIAN
------------------------
2.1 APPOINTMENT. The Trust hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of the Funds
at any time during the period of this Agreement.
- 6 -
<PAGE>
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Trust:
a. A copy of the Declaration of Trust of the Trust certified by the
Secretary or an Assistant Secretary;
b. A copy of the Bylaws of the Trust certified by the Secretary or
Assistant Secretary;
c. A copy of the resolution of the Board of Trustees of the Trust
appointing the Custodian, certified by the Secretary or Assistant
Secretary;
d. A copy of the then current Prospectus of each Fund; and
e. A certification of the Chairman or the President and Secretary or
Assistant Secretary of the Trust setting forth the names and
signatures of the current Officers of the Trust and other
Authorized Persons.
2.4 NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT. The Trust agrees
to notify the Custodian in writing of the appointment, termination or change in
appointment of any Dividend and Transfer Agent of the Funds.
- 7 -
<PAGE>
ARTICLE III
-----------
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 SEGREGATION. All Securities and non-cash property held by the Custodian
for the account of a Fund (other than Securities maintained in a Securities
Depository or Book-Entry System) shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian (including
the Securities and non-cash property of the other Funds) and shall be identified
as subject to this Agreement.
3.2 FUND CUSTODY ACCOUNTS. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the Trust
coupled with the name of such Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. (a) In its discretion, the Custodian may appoint
one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
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<PAGE>
(b) If, after the initial approval of Sub-Custodians by the Board of
Trustees in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Funds, it will so notify the Trust
and provide it with information reasonably necessary to determine any such new
Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act, including a
copy of the proposed agreement with such Sub-Custodian. The Trust shall at the
meeting of the Board of Trustees next following receipt of such notice and
information give a written approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement of the
Securities and cash of the Funds with a particular Sub-Custodian and of any
material changes in the Funds' arrangements. The Custodian shall promptly take
such steps as may be required to withdraw assets of the Funds from any
Sub-Custodian that has ceased to meet the requirements of Rule 17f-5 under the
1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Trust that it agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of property of the
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<PAGE>
Funds. The Custodian further warrants that a Fund's assets will be subject to
reasonable care, based on the standards applicable to custodians in the relevant
market, if maintained with each Sub-Custodian, after considering all factors
relevant to the safekeeping of such assets, including, without limitation: (i)
the Sub-Custodian's practices, procedures, and internal controls, including, but
not limited to, the physical protections available for certificated securities
(if applicable), the method of keeping custodial records, and the security and
data protection practices; (ii) whether the Sub-Custodian has the requisite
financial strength to provide reasonable care for Fund assets; (iii) the
Sub-Custodian's general reputation and standing and, in the case of a Securities
Depository, the Securities Depository's operating history and number of
participants; and (iv) whether the Fund will have jurisdiction over and be able
to enforce judgments against the Sub-Custodian, such as by virtue of the
existence of any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United States.
(f) The Custodian shall establish a system to monitor the appropriateness
of maintaining the Funds' assets with a particular Sub-Custodian and the
contract governing the Funds' arrangements with such Sub-Custodian.
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<PAGE>
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Trust shall deliver, or cause to
be delivered, to the Custodian all of the Funds' Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Funds with respect to such Securities, cash or
other assets owned by the Funds at any time during the period of this Agreement,
and (b) all cash received by the Funds for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Trust shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of
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purchases and sales of Securities, loans of Securities, and deliveries
and returns of collateral consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account
of such Fund. If Securities sold by a Fund are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that payment for such Securities
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<PAGE>
has been transferred to the Depository Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of such Fund.
(e) The Custodian shall provide the Trust with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Funds are kept) on the internal
accounting controls and procedures for safeguarding Securities
deposited in such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to a
Fund resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such Sub-Custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities Depository.
At its election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System or
Securities Depository or any other person from any loss or damage to
the Funds arising
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<PAGE>
from the use of such Book-Entry System or Securities Depository, if
and to the extent that the Funds have not been made whole for any such
loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM FUND CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in accordance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any Sub-Custodian appointed pursuant to Section 3.3 above) of such
Securities registered as provided in Section 3.9 below or in proper
form for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
Sub- Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such Sub-Custodian) of evidence of title thereto in
favor of the Fund or any nominee referred to in Section 3.9
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below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Trust and a bank which is a member
of the Federal Reserve System or between the Trust and a primary
dealer in U.S. Government securities, against delivery of the
purchased Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or Securities
Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest; taxes; administration, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal
fees; and other operating expenses of the Fund; in all cases, whether
or not such expenses are to be in whole or in part capitalized or
treated as deferred expenses; (f) For transfer in accordance with the
provisions of any agreement among the Trust, the Custodian and a
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broker-dealer registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing Corporation
and of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other arrangements
in connection with transactions by the Fund;
(g) For transfer in accordance with the provision of any agreement among
the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
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3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers
check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund, the Custodian or any Sub-Custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities
are to be delivered to the Custodian;
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(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the Fund,
but only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by
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<PAGE>
the Trust, but only against receipt by the Custodian of the amounts
borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by
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<PAGE>
an Officer, specifying the Securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for a
Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Fund is entitled either by law or pursuant
to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations
of any other taxing authority now or hereafter in effect, and prepare
and submit reports to the Internal Revenue Service ("IRS") and to the
Trust at such time, in such manner and
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containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a Fund
that are issued or issuable only in bearer form shall be held by the Custodian
in that form, provided that any such Securities shall be held in a Book-Entry
System if eligible therefor. All other Securities held for a Fund may be
registered in the name of such Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry
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<PAGE>
System or Securities Depository, any Securities registered in the name of a
Fund.
3.10 RECORDS. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Funds, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Funds as the Trust
shall reasonably request, or as may be required by the 1940 Act, including, but
not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or
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agents of the Securities and Exchange Commission, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the periods
prescribed in Rule 31a-2 under the 1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust with
a daily activity statement by Fund and a summary of all transfers to or from
each Fund Custody Account on the day following such transfers. At least monthly
and from time to time, the Custodian shall furnish the Trust with a detailed
statement, by Fund, of the Securities and moneys held by the Custodian and the
Sub-Custodians for the Funds under this a Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Trust with
such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of a Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
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3.14 INFORMATION ON CORPORATE ACTIONS. The Custodian shall promptly deliver
to the Trust all information received by the Custodian and pertaining to
Securities being held by the Funds with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Trust desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
ARTICLE IV
----------
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
---------------------------------------------
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the Fund for which the purchase was made, (b) the name of the issuer or writer
of such Securities, and the title or other description thereof, (c) the number
of shares, principal amount (and accrued interest, if any) or other units
purchased, (d) the date of purchase and settlement, (e) the purchase price per
unit, (f) the total amount payable upon such purchase, and (g) the name of the
person to whom such amount is
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payable. The Custodian shall upon receipt of such Securities purchased by a Fund
pay out of the moneys held for the account of such Fund the total amount
specified in such Written Instructions to the person named therein. The
Custodian shall not be under any obligation to pay out moneys to cover the cost
of a purchase of Securities for a Fund, if in the relevant Fund Custody Account
there is insufficient cash available to the Fund for which such purchase was
made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt of the Securities purchased but in
the absence of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Fund for such Securities to the same extent as
if the Securities had been received by the Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
Fund for which the sale was made, (b) the name of the issuer or writer of such
Securities, and the title or other description thereof, (c) the number of
Shares, principal amount (and accrued interest, if any), or other units sold,
(d) the date of sale and settlement, (e) the sale price per unit, (f) the total
amount payable upon such sale, and (g) the person to whom such Securities are to
be delivered. Upon receipt of the total amount payable to the Fund as specified
in
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<PAGE>
such Written Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund for which such Securities
were delivered shall bear the risk that final payment for such Securities may
not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the relevant Fund Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund. Any such credit
shall be conditional upon actual
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<PAGE>
receipt by Custodian of final payment and may be reversed if final payment is
not actually received in full. The Custodian may, in its sole discretion and
from time to time, permit a Fund to use funds so credited to its Fund Custody
Account in anticipation of actual receipt of final payment. Any such funds shall
be repayable immediately upon demand made by the Custodian at any time prior to
the actual receipt of all final payments in anticipation of which funds were
credited to the Fund Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of a Fund's transactions in its Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
---------
REDEMPTION OF FUND SHARES
-------------------------
5.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the Custodian
shall wire each amount specified in such Proper Instructions to or through such
bank as the Trust may designate with respect to such amount in such Proper
Instructions.
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5.2 NO DUTY REGARDING PAYING BANKS. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
----------
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written
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<PAGE>
by the Fund or in connection with financial futures contracts (or
options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions,
and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
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ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or a Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or bylaws, or its investment objectives and policies
as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or
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its agents actually receive such cash or collect on such instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for a Fund if such Securities are in
default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7 CO-OPERATION. The Custodian shall cooperate with and supply necessary
information, by Fund, to the entity or entities appointed by the Trust to keep
the books of account of the Funds and/or compute the value of the assets of the
Funds. The
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Custodian shall take all such reasonable actions as the Trust may from time to
time request to enable the Trust to obtain, from year to year, favorable
opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 INDEMNIFICATION BY TRUST. The Trust shall indemnify and hold harmless
the Custodian and any Sub-Custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such Sub-Custodian, from and against any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the Securities
Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such Sub-Custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a Sub-Custodian appointed
pursuant to
- 32 -
<PAGE>
Section 3.3 above, provided that neither the Custodian nor any such
Sub-Custodian shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the Custodian's or
such Sub-Custodian's negligence, bad faith or willful misconduct.
8.2 INDEMNIFICATION BY CUSTODIAN. The Custodian shall indemnify and hold
harmless the Trust from and against any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability (including without limitation,
liability arising under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or claim arising from
the negligence, bad faith or willful misconduct of the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3 INDEMNITY TO BE PROVIDED. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 SECURITY. If the Custodian advances cash or Securities to a Fund for
any purpose, either at the Trust's request or as otherwise contemplated in this
Agreement, or in the event that
- 33 -
<PAGE>
the Custodian or its nominee incurs, in connection with its performance under
this Agreement, any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim (except such as may arise from its or its
nominee's negligence, bad faith or willful misconduct), then, in any such event,
any property at any time held for the account of such Fund shall be security
therefor, and should such Fund fail promptly to repay or indemnify the
Custodian, the Custodian shall be entitled to utilize available cash of such
Fund and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental
- 34 -
<PAGE>
actions; or inability to obtain labor, material, equipment or transportation;
provided, however, that the Custodian in the event of a failure or delay (i)
shall not discriminate against the Funds in favor of any other customer of the
Custodian in making computer time and personnel available to input or process
the transactions contemplated by this Agreement and (ii) shall use its best
efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Funds and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an
- 35 -
<PAGE>
account of or for the benefit of the Funds at the successor custodian, provided
that the Trust shall have paid to the Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be entitled. Upon
such delivery and transfer, the Custodian shall be relieved of all obligations
under this Agreement. The Trust may at any time immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which (a) is a "bank"
as defined in the 1940 Act and (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, all Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for the Funds at such bank or
trust company all Securities of the Funds held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement.
- 36 -
<PAGE>
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Trust and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Funds are set forth in Exhibit C attached
hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust, as from time to time amended. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has been
signed and delivered by an authorized officer of the Trust, acting as such, and
neither such authorization by the Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the above-mentioned Agreement and
Declaration of Trust.
- 37 -
<PAGE>
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
-------------
Atalanta/Sosnoff Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone: (513) 629-2000
Facsimile: (513) 629-2008
To Custodian:
-------------
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-3016
Facsimile: (513) 632-4448
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
- 38 -
<PAGE>
14.2 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for a Fund and such other printed matter as
merely identifies Custodian as custodian for one or more Funds. The Trust shall
submit printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
- 39 -
<PAGE>
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: ATALANTA/SOSNOFF INVESTMENT TRUST
/s/ Tina D. Hosking By:/s/ Anthony G. Miller
- ------------------------------ -------------------------------
Its: Chairman and President
ATTEST: STAR BANK, N.A.
/s/ Lynnette C. Gibson By:/s/ Marsha A. Crofton
- ------------------------------ -------------------------------
Its: Senior Vice President
- 40 -
<PAGE>
EXHIBIT A
---------
AUTHORIZED PERSONS
------------------
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
NAME SIGNATURE
- ---- ---------
Anthony G. Miller /s/ Anthony G. Miller
----------------------------------
Toni E. Sosnoff /s/ Toni E. Sosnoff
----------------------------------
John O'Brien /s/ John O'Brien
----------------------------------
John F. Splain /s/ John F. Splain
----------------------------------
Robert G. Dorsey /s/ Robert G. Dorsey
----------------------------------
Mark J. Seger /s/ Mark J. Seger
----------------------------------
M. Kathleen Leugers /s/ M. Kathleen Leugers
----------------------------------
Christina H. Kelso /s/ Christina H. Kelso
----------------------------------
Gary H. Goldschmidt /s/ Gary H. Goldschmidt
----------------------------------
Tina D. Hosking /s/ Tina D. Hosking
----------------------------------
Theresa M. Samocki /s/ Theresa M. Samocki
----------------------------------
- 41 -
<PAGE>
EXHIBIT B
STAR BANK, N.A.
STANDARDS OF SERVICE GUIDE
Star Bank, N.A., is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide as a tool
for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a direct
member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers Trust
Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the WALL STREET
JOURNAL,
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond Source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Star Bank will not notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the Star
Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
The information contained in this Standards Service Guide is subject to change.
Should any changes be made Star Bank will provide you with an updated copy of
its Standards of Service Guide.
<PAGE>
STAR BANK SECURITY SETTLEMENT STANDARDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
- ---------------- ----------------------- ---------------------
<S> <C> <C>
DTC 1:30 P.M. on Settlement Date DTC Participant #2219
Agent Bank ID #27895
Institutional # _____________
For Account #________________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of
Cinti/Trust for Star Bank, N.A.
ABA# 042000013
For Account # _______________
Federal Reserve Book Entry 1:00 P.M. on Settlement Date Federal Reserve Bank of
(Repurchase Agreement Cinti/Spec for Star Bank, N.A.
Collateral Only) ABA# 042000013
For Account # _______________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BTRST/CUST
(GNMA Book Entry) Sub Account: Star Bank,
N.A. #090334
Physical Securities 9:30 A.M. EST on Settlement Date Bankers Trust Company
(for Deliveries, by 4:00 P.M. on 16 Wall Street 4th Floor, Window 43
Settlement Date minus 1) for Star Bank Account #090334
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Eurclear Via Cedel Bridge
minus 2 In favor of Bankers Trust Comp
Cedel 53355
For Star Bank Account #501526354
Cash Wire Transfer 3:00 P.M. Star Bank, N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to ___________
Account # ___________________
</TABLE>
*All times listed are Cincinnati time.
<PAGE>
STAR BANK PAYMENT STANDARDS
- --------------------------------------------------------------------------------
SECURITY TYPE INCOME PRINCIPAL
- --------------------------------------------------------------------------------
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank
Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs*
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Payable Date Payable Date
Certificates*
Certificates of Deposit* Payable Date Payable Date
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank
Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE:If a payable date falls on a weekend or bank holiday, payment will be made
on the immediately following business day.
<PAGE>
STAR BANK CORPORATE REORGANIZATION STANDARDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACTION NOTIFICATION TO CLIENT DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TO STAR BANK POSTING
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rights, Warrants, Later of 10 business days prior 5 business days prior to expiration Upon receipt
and Optional Mergers to expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior 5 business days prior to expiration Upon receipt
Option to Retain to expiration or receipt of notice
Class Actions 10 business days prior to 5 business days prior to expiration Upon receipt
expiration date
Voluntary Tenders, Later of 10 business days prior 5 business days prior to expiration Upon receipt
Exchanges, to expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities None Upon receipt
Liquidations, Bankruptcies, received
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior None Upon receipt
to expiration or receipt of notice
</TABLE>
NOTE:Fractional shares/par amounts resulting from any of the above will be sold.
<PAGE>
EXHIBIT C
STAR BANK, N.A.
DOMESTIC CUSTODY FEE SCHEDULE
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
---------------------------
(a) For each repurchase agreement transaction $ 7.00
(b) For each portfolio transaction processed
through DTC or Federal Reserve $ 9.00
(c) For each portfolio transaction processed
through our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA/Prin/Int Paydown, GNMA Sales $ 8.00
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euroclear transaction $80.00
(h) For each Disbursement (Fund expenses only) $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
II. AGGREGATE MARKET VALUE FEE
--------------------------
Based upon an annual rate of: MILLION
-------
.0003 (3.0 Basis Points) on First $ 20
.0002 (2.0 Basis Points) on Next $ 20
.00015 (1.5 Basis Points) on Balance
III. MONTHLY MINIMUM FEE-PER FUND $300.00
----------------------------
IV. OUT-OF-POCKET EXPENSES
----------------------
The only out-of-pocket expenses charged to your account will be shipping
fees or transfer fees.
V. EARNINGS CREDITS
----------------
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees
generated. Earnings credits are based on a Cost of Funds Tiered Earnings
Credit Rate.
<PAGE>
STAR BANK
CASH MANAGEMENT FEE SCHEDULE
SERVICES UNIT COST ($) MONTHLY COST ($)
-------- ------------- ----------------
D.D.A. Account Maintenance.............. 14.00
Deposits ................. .399
Deposited Items......................... .109
Checks Paid............................. .159
Balance Reporting-P.C. Access........... 50.00 1st Acct.
................. ...... 35.00 each add'l
ACH Transaction......................... .105
ACH Monthly Maintenance................. ...... 40.00
ACH Additions, Deletions, Changes....... 3.50
ACH Debits ............................. .12
Controlled Disbursement (1st account)... ...... 110.00
Each additional account............ ...... 25.00
Deposited Items Returned 6.00
International Items returned............ 10.00
NSF Returned Checks..................... 25.00
Stop Payments........................... 22.00
Data Transmission per account........... ...... 110.00
Data Capture*........................... .10
Drafts Cleared.......................... .179
Lockbox Maintenance**................... ...... 55.00
Lockbox items Processed
with copy of check................. .32
without copy of check.............. .26
Checks Printed.......................... .20
Positive Pay............................ .06
Issued Items............................ .015
ARP Tape/Transmission/Diskette.......... 25.00
Special Statements...................... 6.00
Invoicing for Service Charge............ 15.00
Wires Incoming
Domestic........................... 10.00
International...................... 10.00
Wires Outgoing
Domestic
International
Repetitive.................... 12.00 Repetitive........... 35.00
Non-Repetitive................ 13.00 Repetitive........... 40.00
PC-Initiated Wires:
Domestic
International
Repetitive.................... 9.00 Repetitive........... 25.00
Non-Repetitive................ 9.00 Non-Repetitive....... 25.00
*** Uncollected Charge Star Bank Prime Rate as of first of month plus 4%
* Price can vary depending upon what information needs to be captured
** With the use of lockbox, the collected balances in the demand deposit
account will be significantly increased and therefore earnings to offset
cash management service fees will be maximized.
*** Fees for uncollected balances are figured pm the monthly average of all
combined accounts.
**** Other available cash management services are priced separately.
ADMINISTRATION AGREEMENT
------------------------
AGREEMENT dated as of June 1, 1998 between Atalanta/Sosnoff Investment
Trust, an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve as
its administrative services agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing
the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by
Board of Trustees' resolutions approving such forms;
<PAGE>
F. Such other certificates, documents or opinions which Countrywide
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as plan
agent.
3. TRUST ADMINISTRATION.
---------------------
Subject to the direction and control of the Trustees of the Trust,
Countrywide shall supervise the Trust's business affairs not otherwise
supervised by other agents of the Trust. To the extent not otherwise the primary
responsibility of, or provided by, other agents of the Trust, Countrywide shall
supply (i) office facilities, (ii) internal auditing and regulatory services,
and (iii) executive and administrative services. Countrywide shall coordinate
the preparation of (i) tax returns, (ii) reports to shareholders of the Trust,
(iii) reports to and filings with the SEC and state securities authorities
including preliminary and definitive proxy materials, post-effective amendments
to the Trust's registration statement, and the Trust's Form N-SAR, and (iv)
necessary materials for Board of Trustees' meetings unless prepared by other
parties under agreement with the Trust. Countrywide shall provide personnel to
serve as officers of the Trust if so elected by the Board of Trustees; provided,
however, that the Trust shall reimburse Countrywide for the reasonable
out-of-pocket expenses incurred by such personnel in attending Board of
Trustees' meetings and shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
- 2 -
<PAGE>
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
5. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
-------------
For the performance of Countrywide's obligations under this Agreement,
each series of the Trust shall pay Countrywide, on the first business day
following the end of each month, a monthly fee at the annual rate of .15% of
such series' average daily net assets up to $50 million; .125% of such assets
from $50 to $100 million; and .10% of such assets in excess of $100 million;
provided, however, that the minimum fee shall be $1,000 per month for each
series.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Trust assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent, and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
- 3 -
<PAGE>
9. INDEMNIFICATION OF COUNTRYWIDE.
-------------------------------
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
- 4 -
<PAGE>
10. INDEMNIFICATION OF THE TRUST.
-----------------------------
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, and its directors, officers and
employees, from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which the Trust or any such person may sustain or incur or which may be
asserted against the Trust or any such person by reason of, or as a result of,
Countrywide's gross negligence, willful misconduct, bad faith, or reckless
disregard of its duties hereunder.
11. TERMINATION.
------------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due as of the date of
such termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
12. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that
- 5 -
<PAGE>
Countrywide expressly represents that it will undertake no activities which, in
its judgment, will adversely affect the performance of its obligations to the
Trust under this Agreement.
13. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
14. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
15. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
16. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
- 6 -
<PAGE>
To the Trust: Atalanta/Sosnoff Investment Trust
101 Park Avenue
New York, New York 10178
Attention: Anthony G. Miller
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 16. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
17. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
18. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
19. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
20. FORCE MAJEURE.
--------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
- 7 -
<PAGE>
21. YEAR 2000 COMPLIANCE.
---------------------
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
22. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
-----------------------------
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
-----------------------------
Its: President
- 8 -
ACCOUNTING SERVICES AGREEMENT
-----------------------------
AGREEMENT dated as of June 1, 1998 between the Atalanta/Sosnoff Investment
Trust, an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to provide
the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
-------------------------------
Countrywide will calculate the net asset value of each series of the
Trust and the per share net asset value of each series of the Trust, in
accordance with the Trust's current prospectus and statement of additional
information, once daily as of the time selected by the Trust's Board of
Trustees. Countrywide will prepare and maintain a daily valuation of all
securities and other assets of the Trust in accordance with instructions from a
designated officer of the Trust or its investment adviser and in the manner set
forth in the Trust's current prospectus and statement of additional information.
In valuing securities of the Trust, Countrywide may contract with, and rely upon
market quotations provided by, outside services.
3. BOOKS AND RECORDS.
------------------
Countrywide will maintain and keep current the general ledger for each
series of the Trust, recording all income and expenses, capital share activity
and security transactions of the Trust. Countrywide will maintain such further
books and records
<PAGE>
as are necessary to enable it to perform its duties under this Agreement, and
will periodically provide reports to the Trust and its authorized agents
regarding share purchases and redemptions and trial balances of each series of
the Trust. Countrywide will prepare and maintain complete, accurate and current
all records with respect to the Trust required to be maintained by the Trust
under the Internal Revenue Code of 1986, as amended (the "Code"), and under the
rules and regulations of the 1940 Act, and will preserve said records in the
manner and for the periods prescribed in the Code and the 1940 Act. The
retention of such records shall be at the expense of the Trust.
All of the records prepared and maintained by Countrywide pursuant to this
Section 3 which are required to be maintained by the Trust under the Code and
the 1940 Act will be the property of the Trust. In the event this Agreement is
terminated, all such records shall be delivered to the Trust at the Trust's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
--------------------------
Countrywide shall process each request received from the Trust or its
authorized agents for payment of the Trust's expenses. Upon receipt of written
instructions signed by an officer or other authorized agent of the Trust,
Countrywide shall prepare checks in the appropriate amounts which shall be
signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
-----------
Countrywide shall maintain such records within its control and shall
be requested by the Trust to assist the Trust in fulfilling the requirements of
Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
-----------------------------
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
- 2 -
<PAGE>
8. FEES.
-----
For the performance of the services under this Agreement, each series
of the Trust shall pay Countrywide a monthly fee in accordance with the schedule
attached hereto as Schedule A. The fees with respect to any month shall be paid
to Countrywide on the last business day of such month. The Trust shall also
promptly reimburse Countrywide for the cost of external pricing services
utilized by Countrywide.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Trust assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent, and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
11. EQUIPMENT FAILURES.
-------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
12. INDEMNIFICATION OF COUNTRYWIDE.
-------------------------------
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors,
- 3 -
<PAGE>
employees, agents, control persons or affiliates of any thereof shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of Countrywide under
this Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
- 4 -
<PAGE>
13. INDEMNIFICATION OF THE TRUST.
-----------------------------
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, and its trustees, officers and
employees, from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which the Trust or any such person may sustain or incur or which may be
asserted against the Trust or any such person by reason of, or as a result of,
Countrywide's gross negligence, willful misconduct, bad faith, or reckless
disregard of its duties hereunder.
14. TERMINATION.
------------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due as of the date of
such termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
15. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation
- 5 -
<PAGE>
(including other investment companies); provided, however, that Countrywide
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Trust
under this Agreement.
16. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
17. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
18. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
19. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
- 6 -
<PAGE>
To the Trust: Atalanta/Sosnoff Investment Trust
101 Park Avenue
New York, New York 10178
Attention: Anthony G. Miller
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 19. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
20. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
21. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
22. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. FORCE MAJEURE.
--------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
- 7 -
<PAGE>
24. YEAR 2000 COMPLIANCE.
---------------------
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
25. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
-----------------------------
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
-----------------------------
Its: President
- 8 -
<PAGE>
Schedule A
----------
COMPENSATION
------------
Each series of the Trust will pay Countrywide a monthly fee, according to
the average monthly net assets of such series during such month, as follows:
Monthly Fee Average Net Assets During Month
----------------- -------------------------------
$2,000 $0 - $ 50,000,000
$2,500 $50,000,000 - $100,000,000
$3,000 $100,000,000 - $200,000,000
$4,000 $200,000,000 - $300,000,000
$5,000 + .001% of Over - $300,000,000
average net assets
- 9 -
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
--------------------------------------------------
AND PLAN AGENCY AGREEMENT
-------------------------
AGREEMENT dated as of June 1, 1998 between Atalanta/Sosnoff Investment
Trust, an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve as
its transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and Declaration of
Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Trustees' resolutions approving such forms;
<PAGE>
F. Such other certificates, documents or opinions which Countrywide may,
in its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Trust
and for which Countrywide is to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
-----------------------------
Countrywide shall record the issuance of shares of the Trust and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Trust which are authorized, issued and outstanding, based upon
data provided to it by the Trust. Countrywide shall also provide the Trust on a
regular basis or upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation when recording
the issuance of the Trust's shares, except as otherwise set forth herein, to
monitor the issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
----------------------------------
Upon receipt of a proper request for transfer and upon surrender to
Countrywide of certificates, if any, in proper form for transfer, Countrywide
shall approve such transfer and shall take all necessary steps to effectuate the
transfer as indicated in the transfer request. Upon approval of the transfer,
Countrywide shall notify the Trust in writing of each such transaction and shall
make appropriate entries on the shareholder records maintained by Countrywide.
5. SHARE CERTIFICATES.
-------------------
If the Trust authorizes the issuance of share certificates and an
investor requests a share certificate, Countrywide will countersign and mail, by
insured first class mail, a share certificate to the investor at his address as
set forth on the transfer books of the Trust, subject to any other instructions
for delivery of certificates representing newly purchased shares and subject to
the limitation that no certificates representing newly purchased shares shall be
mailed to the investor until the cash purchase price of such shares has
- 2 -
<PAGE>
been collected and credited to the account of the Trust maintained by the
Custodian. The Trust shall supply Countrywide with a sufficient supply of blank
share certificates and from time to time shall renew such supply upon request of
Countrywide. Such blank share certificates shall be properly signed, manually
or, if authorized by the Trust, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Trust authorized to sign share
certificates, Countrywide may continue to countersign certificates which bear
the manual or facsimile signature of such officer until otherwise directed by
the Trust. In case of the alleged loss or destruction of any share certificate,
no new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Countrywide and the Trust, and
issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
-----------------
Upon receipt of any check or other instrument drawn or endorsed to it
as agent for, or identified as being for the account of, the Trust, Countrywide
shall stamp the check or instrument with the date of receipt and shall forthwith
process the same for collection. Upon receipt of notification of receipt of
funds eligible for share purchases in accordance with the Trust's then current
prospectus and statement of additional information, Countrywide shall notify the
Trust, at the close of each business day, in writing of the amount of said funds
credited to the Trust and deposited in its account with the Custodian.
7. PURCHASE ORDERS.
----------------
Upon receipt of an order for the purchase of shares of the Trust,
accompanied by sufficient information to enable Countrywide to establish a
shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
----------------
In the event that Countrywide is notified by the Trust's Custodian
that any check or other order for the payment of money is returned unpaid for
any reason, Countrywide will:
- 3 -
<PAGE>
A. Give prompt notification to the Trust of the non-payment of said
check;
B. In the absence of other instructions from the Trust, take such steps
as may be necessary to redeem any shares purchased on the basis of
such returned check and cause the proceeds of such redemption plus any
dividends declared with respect to such shares to be credited to the
account of the Trust and to request the Trust's Custodian to forward
such returned check to the person who originally submitted the check;
and
C. Notify the Trust of such actions and correct the Trust's records
maintained by Countrywide pursuant to this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
----------------------------
The Trust shall furnish Countrywide with appropriate evidence of
trustee action authorizing the declaration of dividends and other distributions.
Countrywide shall establish procedures in accordance with the Trust's then
current prospectus and statement of additional information and with other
authorized actions of the Trust's Board of Trustees under which it will have
available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full and fractional shares in accordance with the Trust's then current
prospectus and statement of additional information. If a shareholder has elected
to receive dividends or other distributions in cash, then Countrywide shall
disburse dividends to shareholders of record in accordance with the Trust's then
current prospectus and statement of additional information. Countrywide shall,
on or before the mailing date of such checks, notify the Trust and the Custodian
of the estimated amount of cash required to pay such dividend or distribution,
and the Trust shall instruct the Custodian to make available sufficient funds
therefor in the appropriate account of the Trust. Countrywide shall mail to the
shareholders periodic statements, as requested by the Trust, showing the number
of full and fractional shares and the net asset value per share of shares so
credited. When requested by the Trust, Countrywide shall prepare and file with
the Internal Revenue Service, and when required, shall address and mail to
shareholders, such returns and information relating to dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed by applicable laws, rules and regulations.
- 4 -
<PAGE>
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
------------------------------------------------------
Countrywide shall, at least annually, furnish in writing to the Trust
the names and addresses, as shown in the shareholder accounts maintained by
Countrywide, of all shareholders for which there are, as of the end of the
calendar year, dividends, distributions or redemption proceeds for which checks
or share certificates mailed in payment of distributions have been returned.
Countrywide shall use its best efforts to contact the shareholders affected and
to follow any other written instructions received from the Trust concerning the
disposition of any such unclaimed dividends, distributions or redemption
proceeds.
11. REDEMPTIONS AND EXCHANGES.
--------------------------
A. Countrywide shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the requirements
for redemptions, Countrywide shall promptly notify the shareholder indicating
the reason therefor.
B. If shares of the Trust are eligible for exchange with shares of any
other investment company, Countrywide, in accordance with the then current
prospectus and statement of additional information and exchange rules of the
Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
- 5 -
<PAGE>
C. Countrywide shall notify the Trust and the Custodian on each
business day of the amount of cash required to meet payments made pursuant to
the provisions of this Paragraph 11, and, on the basis of such notice, the Trust
shall instruct the Custodian to make available from time to time sufficient
funds therefor in the appropriate account of the Trust. Procedures for effecting
redemption orders accepted from shareholders or dealers of record by telephone
or other methods shall be established by mutual agreement between Countrywide
and the Trust consistent with the then current prospectus and statement of
additional information.
D. The authority of Countrywide to perform its responsibilities under
Paragraph 7, Paragraph 9, and this Paragraph 11 shall be suspended with respect
to any series of the Trust upon receipt of notification by it of the suspension
of the determination of such series' net asset value.
12. AUTOMATIC WITHDRAWAL PLANS.
---------------------------
Countrywide will process automatic withdrawal orders pursuant to the
provisions of any withdrawal plans duly executed by shareholders and the current
prospectus and statement of additional information of the Trust. Payments upon
such withdrawal order shall be made by Countrywide from the appropriate account
maintained by the Trust with the Custodian on approximately the last business
day of each month in which a payment has been requested, and Countrywide will
withdraw from a shareholder's account and present for repurchase or redemption
as many shares as shall be sufficient to make such withdrawal payment pursuant
to the provisions of the shareholder's withdrawal plan and the current
prospectus and statement of additional information of the Trust. From time to
time on new automatic withdrawal plans, a check for a payment date already past
may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
---------------------
Countrywide will send written confirmations to the dealers of record
containing all details of the wire-order purchases placed by each such dealer by
the close of business on the business day following receipt of such orders by
Countrywide. Upon receipt of any check drawn or endorsed to the Trust (or
Countrywide, as agent) or otherwise identified as being payment of an
outstanding wire-order, Countrywide will stamp said check with the date of its
receipt and deposit the amount represented by such check to Countrywide's
deposit accounts maintained with the Custodian. Countrywide will cause the
Custodian to transfer federal funds in an amount equal to the net asset value of
the shares so purchased to the Trust's account with the Custodian, and will
notify the Trust before noon of each business day of the total amount deposited
in the Trust's deposit accounts, and in the event that payment for a purchase
order is not received by
- 6 -
<PAGE>
Countrywide or the Custodian on the tenth business day following receipt of the
order, prepare an NASD "notice of failure of dealer to make payment."
14. OTHER PLANS.
------------
Countrywide will process such accumulation plans, group programs and
other plans or programs for investing in shares of the Trust as are now provided
for in the Trust's current prospectus and statement of additional information
and will act as plan agent for shareholders pursuant to the terms of such plans
and programs duly executed by such shareholders.
15. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
16. SHAREHOLDER RECORDS.
--------------------
Countrywide shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and
realized long-term gains;
- 7 -
<PAGE>
F. Any instructions from a shareholder including all forms furnished by
the Trust and executed by a shareholder with respect to (i) dividend
or distribution elections and (ii) elections with respect to payment
options in connection with the redemption of shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's account;
J. Information with respect to withholding in the case of a foreign
account or any other account for which withholding is required by the
Internal Revenue Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform the
calculations contemplated under this Agreement.
17. TAX RETURNS AND REPORTS.
------------------------
Countrywide will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE TRUST.
-------------------------------
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
19. ACCESS TO SHAREHOLDER INFORMATION.
----------------------------------
Upon request, Countrywide shall arrange for the Trust's investment
adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
- 8 -
<PAGE>
20. COOPERATION WITH ACCOUNTANTS.
-----------------------------
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
---------------------------------------
Countrywide will provide and maintain adequate personnel, records and
equipment to receive and answer all shareholder and dealer inquiries relating to
account status, share purchases, redemptions and exchanges and other investment
plans available to Trust shareholders. Countrywide will answer written
correspondence from shareholders relating to their share accounts and such other
written or oral inquiries as may from time to time be mutually agreed upon, and
Countrywide will notify the Trust of any correspondence or inquiries which may
require an answer from the Trust.
22. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
23. COMPENSATION.
-------------
For the performance of Countrywide's obligations under this Agreement,
each series of the Trust shall pay Countrywide, on the first business day
following the end of each month, a monthly fee in accordance with the schedule
attached hereto as Schedule A. The Trust shall promptly reimburse Countrywide
for any out-of-pocket expenses and advances which are to be paid by the Trust in
accordance with Paragraph 24.
24. EXPENSES.
---------
Countrywide shall furnish, at its expense and without cost to the
Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) the use of
data processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 24 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board of Trustees and shareholders of the Trust, as
well as costs and expenses for postage, envelopes, checks, drafts, continuous
forms, reports, communications, statements and other materials, telephone,
telegraph and remote transmission lines, use of
- 9 -
<PAGE>
outside pricing services, use of outside mailing firms, necessary outside record
storage, media for storage of records (e.g., microfilm, microfiche, computer
tapes), printing, confirmations and any other shareholder correspondence and any
and all assessments, taxes or levies assessed on Countrywide for services
provided under this Agreement. Postage for mailings of dividends, proxies,
reports and other mailings to all shareholders shall be advanced to Countrywide
three business days prior to the mailing date of such materials.
25. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Trust assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
26. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent, and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
27. EQUIPMENT FAILURES.
-------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
28. INDEMNIFICATION OF COUNTRYWIDE.
-------------------------------
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees,
- 10 -
<PAGE>
agents, control persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the Trust in
connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of Countrywide under
this Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Countrywide, or any of its affiliates, who may be or become an
officer, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide, its directors,
officers, employees, shareholders, agents, control persons and affiliates from
and against any and all claims, demands, expenses and liabilities (whether with
or without basis in fact or law) of any and every nature which Countrywide may
sustain or incur or which may be asserted against Countrywide by any person by
reason of, or as a result of: (i) any action taken or omitted to be taken by
Countrywide in good faith in reliance upon any certificate, instrument, order or
share certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
29. INDEMNIFICATION OF THE TRUST.
-----------------------------
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, and its directors, officers and
employees, from and against any and all
- 11 -
<PAGE>
claims, demands, expenses and liabilities (whether with or without basis in fact
or law) of any and every nature which the Trust or any such person may sustain
or incur or which may be asserted against the Trust or any such person by reason
of, or as a result of, Countrywide's gross negligence, willful misconduct, bad
faith, or reckless disregard of its duties hereunder.
30. TERMINATION.
------------
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due as of the date of
such termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Countrywide's duties or responsibilities under this
Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
31. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
- 12 -
<PAGE>
32. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
33. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
34. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
35. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Atalanta/Sosnoff Investment Trust
101 Park Avenue
New York, New York 10178
Attention: Anthony G. Miller
- 13 -
<PAGE>
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Paragraph 35. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date telecommunicated if
by telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
36. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
37. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
38. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
39. FORCE MAJEURE.
--------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
- 14 -
<PAGE>
40. YEAR 2000 COMPLIANCE.
---------------------
Countrywide represents and warrants that it has taken reasonable steps to
make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
41. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATALANTA/SOSNOFF INVESTMENT TRUST
By: /s/ Anthony G. Miller
-----------------------------
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
-----------------------------
Its: President
- 15 -
<PAGE>
Schedule A
----------
COMPENSATION
------------
Services FEE
- -------- ---
As Transfer Agent,
Dividend Disbursing Agent
and Shareholder Servicing Agent: (Per Account)
Atalanta/Sosnoff Fund Payable monthly at
rate of $20.00/
account; subject to
a minimum of $1,500
per month
- 16 -
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated May 8, 1998 and to all references to our Firm included in or made a part
of this Post-Effective Amendment No. 2.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
April 8, 1999
AGREEMENT RELATING TO INITIAL CAPITAL
-------------------------------------
May 6, 1998
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue
New York, New York 10178
Dear Sir/Madam:
In conjunction with the purchase by Atalanta/Sosnoff Capital Corporation
(Delaware) (the "Purchaser") of 10,000 shares of beneficial interest of the
Atalanta/Sosnoff Fund of the Atalanta/Sosnoff Investment Trust (the "Shares"),
the Purchaser hereby represents that it is acquiring the Shares for investment
with no intention of reselling or otherwise distributing the Shares. The
Purchaser hereby further agrees that any transfer of any of the Shares or any
interest therein shall be subject to the following conditions:
1. The Purchaser shall furnish you and counsel satisfactory to you prior
to the time of transfer, a written description of the proposed
transfer specifying its nature and consequence and giving the name of
the proposed transferee.
2. You shall have obtained from your counsel a written opinion stating
whether in the opinion of such counsel the proposed transfer may be
effected without registration under the Securities Act of 1933. If
such opinion states that such transfer may be so effected, the
Purchaser shall then be entitled to transfer the Shares in accordance
with the terms specified in its description of the transaction to you.
If such opinion states that the proposed transfer may not be so
effected, the Purchaser will not be entitled to transfer the Shares
unless the Shares are registered.
<PAGE>
The Purchaser hereby authorizes you to take such action as you shall
reasonably deem appropriate to prevent any violation of the Securities Act of
1933 in connection with the transfer of the Shares, including the imposition of
a requirement that any transferee of the Shares sign a letter agreement similar
to this one. The Purchaser agrees that in the event the Shares are redeemed by
the Purchaser or its successors or any current holder prior to the complete
amortization of organization expenses by the Atalanta/Sosnoff Fund, the
redemption proceeds payable in respect of the Shares so redeemed shall be
reduced by the pro-rata share (based on the proportionate share of the Shares
redeemed to the total number of the Shares outstanding at the time of
redemption) of the then unamortized deferred organization expenses as of the
date of such redemption.
Very truly yours,
ATALANTA/SOSNOFF CAPITAL CORPORATION (DELAWARE)
By: /s/ Anthony G. Miller
---------------------------
Its: Executive Vice President
- 2 -
SERVICE PLAN
PURSUANT TO RULE 12B-1
----------------------
WHEREAS, Atalanta/Sosnoff Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Ohio, engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which may be divided into
two or more Series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act, on the following terms and conditions:
1. SERVICE ACTIVITIES. Subject to the supervision of the Trustees of the
Trust, the principal underwriter may, directly or indirectly, engage in any
activities related to the servicing of shareholder accounts, which activities
may include, but are not limited to, the following: engaging in activities
related to the servicing of shareholder accounts; maintaining personnel
(including personnel of organizations with which the Trust has entered into
agreements related to this Plan) who engage in or support service activities of
Shares or who render shareholder support services not otherwise provided by the
Trust's transfer agent, including, but not limited to, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (c) formulating
and implementing of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparing, printing and distributing sales
literature; (e) preparing, printing and distributing prospectuses and statements
of additional
<PAGE>
information and reports of the Trust; and (f) obtaining such information,
analyses and reports with respect to marketing and promotional activities as the
Trust may, from time to time, deem advisable. The Trust is authorized to engage
in the activities listed above, and in any other activities related to the
servicing of shareholder accounts of Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
2. SERVICE FEE. The Trust shall pay the principal underwriter a maintenance
fee, accrued daily and paid monthly, in an amount equal to an annual rate of
.25% of the daily net assets of the Shares of the Trust. When requested by and
at the direction of the principal underwriter, the Trust shall pay a service fee
to dealers based on the amount of Shares of the Trust sold by such dealers and
remaining outstanding for specific periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Shares of the Trust. Any fees paid to dealers shall reduce the
service fees otherwise payable to the principal underwriter.
3. TERM AND TERMINATION. (a) This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval.
(b) This Plan may be terminated with respect to any Series at any time
by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Series.
4. AMENDMENTS. This Plan may not be amended to increase materially the
amount of a Series' expenditures provided for in Section 2 hereof unless such
amendment is approved by a vote of the majority of the outstanding voting
securities of such Series (as defined in the 1940 Act), and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3(a) hereof.
5. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
- 2 -
<PAGE>
6. QUARTERLY REPORTS. The Treasurer of the Trust shall provide to the
Trustees and the Trustees shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. RECORDKEEPING. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
8. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Ohio and notice
is hereby given that this Plan is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: May 11, 1998
Attest: ATALANTA/SOSNOFF INVESTMENT TRUST
/s/ Tina D. Hosking By: /s/ Anthony G. Miller
- ------------------------------ ------------------------------
Secretary President
- 3 -
<TABLE> <S> <C>
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<CIK> 0001053535
<NAME> ATALANTA/SOSNOFF INVESTMENT TRUST
<S> <C>
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<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 9,007,023
<INVESTMENTS-AT-VALUE> 9,873,975
<RECEIVABLES> 19,483
<ASSETS-OTHER> 73,193
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<OTHER-ITEMS-LIABILITIES> 84,825
<TOTAL-LIABILITIES> 189,959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,445,256
<SHARES-COMMON-STOCK> 917,246
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<OVERDISTRIBUTION-NII> 0
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<APPREC-INCREASE-CURRENT> 866,952
<NET-CHANGE-FROM-OPS> 331,436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 944,945
<NUMBER-OF-SHARES-REDEEMED> 37,699
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<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .67
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