- --------------------------------------------------------------------------------
Semi-Annual Report
November 30,1999
(Unaudited)
- --------------------------------------------------------------------------------
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 [LOGO]
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
ATALANTA/SOSNOFF FUND
ATALANTA/SOSNOFF FOCUS FUND
ATALANTA/SOSNOFF VALUE FUND
ATALANTA/SOSNOFF BALANCED FUND
<PAGE>
LETTER TO SHAREHOLDERS JANUARY 19, 2000
================================================================================
Dear Shareholder:
For the six months ended November 30, 1999, the Atalanta/Sosnoff Fund returned
13.3% compared with the S&P 500 Index return of 6.7%. For the year ended
December 31, 1999, the Atalanta/Sosnoff Fund returned 39.8% compared with 21.0%
for the S&P 500 Index.
The Atalanta/Sosnoff Focus Fund returned 15.2% for the period July 1, 1999 (date
of inception) to November 30, 1999 compared with the S&P 500 Index return of
1.1%. For the six months ended December 31, 1999, the Atalanta/Sosnoff Focus
Fund returned 34.3% compared with the S&P 500 Index return of 3.4%.
The Atalanta/Sosnoff Value Fund returned -2.7% for the period July 1, 1999 (date
of inception) to November 30, 1999 compared with the S&P 500 Index return of
1.1%. For the six months ended December 31, 1999, the Atalanta/Sosnoff Value
Fund returned 1.4% and the S&P 500 Index returned 3.4%.
The Atalanta/Sosnoff Balanced Fund returned 11.3% for the period July 1, 1999
(date of inception) to November 30, 1999 compared with 1.3% for the Lehman
Brothers Intermediate Government/Corporate Bond Index and 1.1% for the S&P 500
Index. For the six months ended December 31, 1999, the Atalanta/Sosnoff Balanced
Fund returned 24.5% compared with 1.0% for the Lehman Brothers Intermediate
Government/Corporate Bond Index and 3.4% for the S&P 500 Index.
o o o
The final quarter of '99 was a period of exceptional portfolio performance both
on absolute measurement and in comparison with the benchmark S&P 500 Index.
Although we are not particularly overweighted in technology and communications,
substantive gains in specific portfolio holdings like Nextel, Apple Computer,
Qualcomm and Microsoft accounted for much of the gain and remain viable
positions going forward.
Portfolio emphasis looking ahead is moving further to non-durables and health
care sectors with initial probes into the washed-out insurance and reinsurance
underwriters. We have had our share of high-octane performers in technology and
now it's time to find mid-teens growers at reasonable price-earnings ratios.
Our calls on accelerating worldwide GDP momentum and the Federal Reserve Board's
(FRB) leaning to further tightening were on the money. We think the FRB will
have to confront this situation again early in the New Year. As we don't expect
energy prices to peak much before springtime, another quarter point increase in
money market rates is in the cards. This should keep 30-year Treasuries north of
a 6.50% yield and may contain the equity market near its present level of 1400
on the S&P 500 index.
Whether the market will revert to its early spring of '99 value emphasis remains
iffy. Pricing power for most commodities is minimal and many industries, like
chemicals, are suffering from profit margin pressures on the cost of goods sold
line.
Capacity utilization for the country, while edging up, is hardly above 81
percent. This is more synonymous with recession than inflation. So much money
has poured into capital goods expansion that underutilization of plant and
equipment is continuing for most heartland producers like Deere, Caterpillar
Tractor and even Dow Chemical.
Our reading on corporate earnings remains constructive. The S&P 500 could reach
$55 a share in 2000. This projection is somewhat more optimistic than the
consensus but is reachable. The S&P 500 is dominated by multinationals. In a
recovering worldwide scenario, particularly Europe and the Orient, foreign
earnings source more than half the total for most multinationals and should turn
even more buoyant.
2
<PAGE>
LETTER TO SHAREHOLDERS (CONTINUED)
================================================================================
Calendar 1999 ended with the S&P 500 Index showing another outsized gain of 20
percent -- the fifth big year in a row. The market has certainly exceeded our
most optimistic projections even though we were above consensus on corporate
earnings and below consensus on inflation, but certainly more cautious on
interest rates and FRB policy emphasis.
Looking ahead, we remain cautious on FRB policy, interest rates and CPI
inflation, but fairly confident about corporate earnings power. We expect oil
prices to peak by April and that may coincide with the last increase in rates by
the Fed for this cycle. After all, the dollar remains a strong currency against
everyone except Japan. Our biggest political problem is that the budget surplus
has gotten too big even for our politicians who must decide on debt reduction or
tax cuts, hopefully both. Greenspan needs to see just how much commodity
inflation creeps into the system by next spring. He sees some wage inflation but
nothing serious as yet.
The gradualist policy of the FRB so far has served the country well. But, if
economic momentum remains too robust, inexorably, the Fed will tighten further
and finally end this cycle that's now 10 years old. We are beginning to worry
about this scenario.
The market stands more than 25 times our 2000 earnings projection. To say it's
pricy is to state the obvious. To be sure, the risk premium for equities is in a
secular decline. This will continue just so long as productivity gains are above
average and the return on equity for major corporate properties remains in the
high teens. This is way above the norm of 5 to 10 years ago. Corporations were
better managed this past decade and more bottom-line oriented. Just how much
better, we will find out in the next cyclical downturn. It doesn't seem to be
around the corner, as yet.
With all good wishes,
Martin T. Sosnoff
3
<PAGE>
ATALANTA/SOSNOFF FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF DECEMBER 31, 1999)
[GRAPHIC OMITTED]
TOP TEN HOLDINGS (AS OF DECEMBER 31, 1999)
% of
STOCK SECTOR PORTFOLIO
-----------------------------------------------------------------
Qualcomm Technology 11.3%
AT&T - Liberty Media Group - Cl. A Consumer Staples 5.5%
AMFM Consumer Staples 5.1%
Microsoft Technology 4.7%
Apple Computer Technology 4.3%
Nextel Communications Communications 3.1%
Warner-Lambert Health Care 2.9%
Oracle Technology 2.9%
Johnson & Johnson Health Care 2.8%
Computer Associates International Technology 2.8%
-----
Total: 45.4%
COMPARATIVE PERFORMANCE
<TABLE>
<CAPTION>
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
---------------- --------------------------------
SINCE INCEPTION* YEAR ENDED SINCE INCEPTION*
TO NOV. 30, 1999 DEC. 31, 1999 TO DEC. 31, 1999
---------------- ------------- ----------------
<S> <C> <C> <C>
Atalanta/Sosnoff Fund 39.8% 39.8% 35.8%
Morningstar Large Cap Blend Category n/a 19.1% n/a
Lipper Large-Cap Core Index 26.8% 19.4% 22.0%
S&P 500 Index 30.2% 21.0% 21.8%
</TABLE>
*Inception (June 17, 1998)
4
<PAGE>
ATALANTA/SOSNOFF FOCUS FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF DECEMBER 31, 1999)
[GRAPHIC OMITTED]
TOP TEN HOLDINGS (AS OF DECEMBER 31, 1999)
% of
STOCK SECTOR PORTFOLIO
----- ------ ---------
Qualcomm Technology 12.3%
Apple Computer Technology 6.8%
Oracle Technology 5.1%
Nextel Communications Communications 4.7%
Microsoft Technology 4.5%
AMFM Consumer Staples 4.4%
Johnson & Johnson Health Care 4.2%
Bristol-Myers Squibb Health Care 4.0%
Echostar Communications Communications 3.4%
BMC Software Technology 3.4%
-----
Total: 52.8%
COMPARATIVE PERFORMANCE
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------- ----------------------------
SINCE INCEPTION* SINCE INCEPTION*
TO NOV. 30, 1999 TO DEC. 31, 1999
---------------- ----------------
Atalanta/Sosnoff Focus Fund 15.2% 21.1%
Lipper Large-Cap Core Index 1.7% 9.2%
S&P 500 Index 1.1% 7.1%
*Inception (July 1, 1999)
5
<PAGE>
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF DECEMBER 31, 1999)
[GRAPHIC OMITTED]
TOP TEN HOLDINGS (AS OF DECEMBER 31, 1999)
% of
STOCK SECTOR PORTFOLIO
----- ------ ---------
Apple Computer Technology 6.1%
BMC Software Technology 6.0%
Qualcomm Technology 5.3%
Johnson & Johnson Health Care 5.1%
Bristol-Myers Squibb Health Care 4.5%
Federated Department Stores Consumer Cyclicals 4.3%
R&B Falcon Energy 4.0%
IBM Technology 3.8%
ASM Lithography Holding Technology 3.4%
General Motors Corp. - Cl. H Communications 3.3%
-----
Total: 45.8%
COMPARATIVE PERFORMANCE
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------- ----------------------------
SINCE INCEPTION* SINCE INCEPTION*
TO NOV. 30, 1999 TO DEC. 31, 1999
---------------- ----------------
Atalanta/Sosnoff Value Fund (2.7)% 2.8%
Lipper Large-Cap Value Index (3.7)% (1.3)%
S&P 500 Index 1.1% 7.1%
*Inception (July 1, 1999)
6
<PAGE>
ATALANTA/SOSNOFF BALANCED FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF DECEMBER 31, 1999)
[GRAPHIC OMITTED]
TOP TEN HOLDINGS (AS OF DECEMBER 31, 1999)
% of
STOCK SECTOR PORTFOLIO
----- ------ ---------
Qualcomm Technology 10.6%
Apple Computer Technology 6.7%
Johnson & Johnson Health Care 5.6%
AMFM Consumer Staples 5.5%
Microsoft Technology 5.3%
Oracle Technology 5.1%
AT&T - Liberty Media Group - Cl. A Consumer Staples 4.6%
BMC Software Technology 4.4%
Nextel Communications Communications 4.1%
Bristol-Myers Squibb Health Care 3.9%
-----
Total: 55.8%
COMPARATIVE PERFORMANCE
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------- ----------------------------
SINCE INCEPTION* SINCE INCEPTION*
TO NOV. 30, 1999 TO DEC. 31, 1999
---------------- ----------------
Atalanta/Sosnoff Balanced Fund 22.3% 54.4%
Lehman Brothers Intermediate
Government/Corporate Bond Index 1.3% 2.0%
S&P 500 Index 1.1% 7.1%
65/35 Composite Blend 1.2% 5.3%
*Inception (July 1, 1999)
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999 (UNAUDITED)
=============================================================================================================================
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
<S> ................................................ <C> <C> <C> <C>
At acquisition cost ........................... $ 11,916,242 $ 1,968,651 $ 1,779,684 $ 2,073,144
============ ============ ============ ============
At market value (Note 1) ...................... $ 16,096,123 $ 2,391,096 $ 1,934,077 $ 2,371,693
Interest receivable ................................ 3,014 -- -- --
Dividends receivable ............................... 5,484 922 2,017 993
Receivable from Adviser (Note 3) ................... -- 12,300 13,333 12,120
Organization costs, net (Note 1) ................... 40,348 -- -- --
Other assets ....................................... 13,176 3,363 3,363 3,363
------------ ------------ ------------ ------------
TOTAL ASSETS ............................. 16,158,145 2,407,681 1,952,790 2,388,169
------------ ------------ ------------ ------------
LIABILITIES
Payable for securities purchased ................... 157,518 22,753 -- 22,753
Payable to affiliates (Note 3) ..................... 13,539 4,900 4,900 4,900
Other accrued expenses and liabilities ............. 5,676 1,200 1,300 1,210
------------ ------------ ------------ ------------
TOTAL LIABILITIES ............................. 176,733 28,853 6,200 28,863
------------ ------------ ------------ ------------
NET ASSETS ......................................... $ 15,981,412 $ 2,378,828 $ 1,946,590 $ 2,359,306
============ ============ ============ ============
Net assets consist of:
Paid-in capital .................................... $ 12,178,416 $ 2,066,621 $ 2,001,569 $ 2,090,766
Undistributed net investment income (loss) ......... (66,761) (5,586) (2,418) 679
Accumulated net realized losses from
security transactions ......................... (310,124) (104,652) (206,954) (30,688)
Net unrealized appreciation on investments ......... 4,179,881 422,445 154,393 298,549
------------ ------------ ------------ ------------
Net assets ......................................... $ 15,981,412 $ 2,378,828 $ 1,946,590 $ 2,359,306
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) .... 1,143,102 206,429 200,000 208,826
============ ============ ============ ============
Net asset value, offering price and redemption
price per share (Note 1) ...................... $ 13.98 $ 11.52 $ 9.73 $ 11.30
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
====================================================================================================================================
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
---------------------------------------------------------------------------
Six Months Period Period Period
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
1999 1999(a) 1999(a) 1999(a)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Interest ........................................ $ 3,014 $ -- $ -- $ 12,547
Dividends ....................................... 36,160 7,188 9,300 4,506
----------- ----------- ----------- -----------
TOTAL INVESTMENT INCOME .............................. 39,174 7,188 9,300 17,053
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) ............... 52,967 6,387 5,859 6,438
Service plan expense (Note 3) ................... 17,657 2,142 1,967 2,159
Accounting services fees (Note 3) ............... 12,000 10,000 10,000 10,000
Administration fees (Note 3) .................... 11,037 5,000 5,000 5,000
Transfer agent fees (Note 3) .................... 9,000 7,500 7,500 7,500
Trustees' fees and expenses ..................... 10,185 3,248 3,248 3,248
Custodian fees .................................. 5,508 1,673 2,132 1,591
Registration fees ............................... 4,466 1,682 1,682 1,682
Printing of shareholder reports ................. 6,585 1,008 1,008 1,008
Professional fees ............................... 3,326 1,032 1,032 1,032
Organization expense (Note 1) ................... 5,764 -- -- --
Insurance expense ............................... 4,573 -- -- --
Postage and supplies ............................ 3,023 364 364 346
Other expenses .................................. 2,563 233 253 239
----------- ----------- ----------- -----------
TOTAL EXPENSES ............................. 148,654 40,269 40,045 40,243
Fees waived and expenses reimbursed by the
Adviser (Note 3) ........................... (42,719) (27,495) (28,326) (27,369)
----------- ----------- ----------- -----------
NET EXPENSES ............................... 105,935 12,774 11,719 12,874
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ......................... (66,761) (5,586) (2,419) 4,179
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Net realized gains (losses) from
security transactions ...................... 101,960 (104,652) (206,953) (30,688)
Net change in unrealized appreciation/
depreciation on investments ................ 1,854,633 422,445 154,393 298,549
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS ................... 1,956,593 317,793 (52,560) 267,861
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS ................................. $ 1,889,832 $ 312,207 $ (54,979) $ 272,040
=========== =========== =========== ===========
</TABLE>
(a) Represents the period from the initial public offering of shares (July 1,
1999) through November 30, 1999.
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
============================================================================================
Atalanta/Sosnoff Fund
------------------------------
Six Months
Ended Period
November 30, Ended
1999 May 31,
(Unaudited) 1999(a)
- --------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C>
Net investment loss ................................ $ (66,761) $ (59,472)
Net realized gains (losses)
from security transactions .................... 101,960 (412,084)
Net change in unrealized appreciation/
depreciation on investments ................... 1,854,633 2,325,249
------------ ------------
Net increase in net assets from operations .............. 1,889,832 1,853,693
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .......................... 1,186,153 11,915,638
Payments for shares redeemed ....................... (574,543) (389,361)
------------ ------------
Net increase in net assets from
capital share transactions ......................... 611,610 11,526,277
------------ ------------
TOTAL INCREASE IN NET ASSETS ............................ 2,501,442 13,379,970
NET ASSETS:
Beginning of period (Note 1) ....................... 13,479,970 100,000
------------ ------------
End of period ...................................... $ 15,981,412 $ 13,479,970
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold ........................................ 96,144 1,120,933
Shares redeemed .................................... (45,496) (38,479)
------------ ------------
Net increase in shares outstanding ................. 50,648 1,082,454
Shares outstanding, beginning of period (Note 1) ... 1,092,454 10,000
------------ ------------
Shares outstanding, end of period .................. 1,143,102 1,092,454
============ ============
</TABLE>
(a) Represents the period from the initial public offering of shares (June 17,
1998) through May 31, 1999.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED NOVEMBER 30, 1999(A) (UNAUDITED)
=================================================================================================================
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Focus Fund Value Fund Balanced Fund
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C>
Net investment income (loss) ....................... $ (5,586) $ (2,419) $ 4,179
Net realized losses from security transactions ..... (104,652) (206,953) (30,688)
Net change in unrealized appreciation/
depreciation on investments ................... 422,445 154,393 298,549
----------- ----------- -----------
Net increase (decrease) in net assets from operations ... 312,207 (54,979) 272,040
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................... -- -- (3,500)
----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .......................... 2,066,621 2,020,000 2,087,266
Net asset value of share issued in reinvestment
of distributions to shareholders .............. -- -- 3,500
Payments for shares redeemed ....................... -- (18,431) --
----------- ----------- -----------
Net increase in net assets from
capital share transactions ......................... 2,066,621 2,001,569 2,090,766
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ............................ 2,378,828 1,946,590 2,359,306
NET ASSETS:
Beginning of period (Note 1) ....................... -- -- --
----------- ----------- -----------
End of period ...................................... $ 2,378,828 $ 1,946,590 $ 2,359,306
=========== =========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold ........................................ 206,429 201,961 208,473
Shares reinvested .................................. -- -- 353
Shares redeemed .................................... -- (1,961) --
----------- ----------- -----------
Net increase in shares outstanding ................. 206,429 200,000 208,826
Shares outstanding, beginning of period (Note 1) ... -- -- --
----------- ----------- -----------
Shares outstanding, end of period .................. 206,429 200,000 208,826
=========== =========== ===========
</TABLE>
(a) Represents the period from the initial public offering of shares (July 1,
1999) through November 30, 1999.
See accompanying notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
ATALANTA/SOSNOFF FUND
FINANCIAL HIGHLIGHTS
=========================================================================================
Six Months
Ended Period
November 30, Ended
1999 May 31,
(Unaudited) 1999(a)
- -----------------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C>
Net asset value at beginning of period .................. $ 12.34 $ 10.00
---------- ----------
Income from investment operations:
Net investment loss ................................ (0.06) (0.05)
Net realized and unrealized gains on investments ... 1.70 2.39
---------- ----------
Total from investment operations ........................ 1.64 2.34
---------- ----------
Net asset value at end of period ........................ $ 13.98 $ 12.34
========== ==========
Total return ............................................ 13.29%(b) 23.40%(b)
========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) ..................... $ 15,981 $ 13,480
========== ==========
Ratio of net expenses to average net assets(c)(d) ....... 1.50% 1.50%
Ratio of net investment loss to average net assets(d) ... (0.94%) (0.60%)
Portfolio turnover rate(d) .............................. 114% 124%
</TABLE>
(a) Represents the period from the initial public offering of shares (June 17,
1998) through May 31, 1999.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 2.10%(d) and 2.54%(d) for
the periods ended November 30, 1999 and May 31, 1999, respectively (Note
3).
(d) Annualized.
12
<PAGE>
ATALANTA/SOSNOFF FOCUS FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
November 30,
1999(a)
(Unaudited)
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
Net asset value at beginning of period ......................... $ 10.00
---------
Income from investment operations:
Net investment loss ....................................... (0.03)
Net realized and unrealized gains on investments .......... 1.55
---------
Total from investment operations ............................... 1.52
---------
Net asset value at end of period ............................... $ 11.52
=========
Total return(b) ................................................ 15.20%
=========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) ............................ $ 2,379
=========
Ratio of net expenses to average net assets(c)(d) .............. 1.49%
Ratio of net investment loss to average net assets(d) .......... (0.65%)
Portfolio turnover rate(d) ..................................... 120%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through November 30, 1999.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 4.69%(d) for the period
ended November 30, 1999 (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
13
<PAGE>
ATALANTA/SOSNOFF VALUE FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
November 30,
1999(a)
(Unaudited)
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
Net asset value at beginning of period ......................... $ 10.00
---------
Income from investment operations:
Net investment loss ....................................... (0.01)
Net realized and unrealized losses on investments ......... (0.26)
---------
Total from investment operations ............................... (0.27)
---------
Net asset value at end of period ............................... $ 9.73
=========
Total return(b) ................................................ (2.70%)
=========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) ............................ $ 1,947
=========
Ratio of net expenses to average net assets(c)(d) .............. 1.49%
Ratio of net investment loss to average net assets(d) .......... (0.31%)
Portfolio turnover rate(d) ..................................... 256%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through November 30, 1999.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 5.09%(d) for the period
ended November 30, 1999 (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
14
<PAGE>
ATALANTA/SOSNOFF BALANCED FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
November 30,
1999(a)
(Unaudited)
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
Net asset value at beginning of period ......................... $ 10.00
---------
Income from investment operations:
Net investment income ..................................... 0.02
Net realized and unrealized gains on investments .......... 1.30
---------
Total from investment operations ............................... 1.32
---------
Less distributions:
Dividends from net investment income ...................... (0.02)
---------
Net asset value at end of period ............................... $ 11.30
=========
Total return(b) ................................................ 13.20%
=========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) ............................ $ 2,359
=========
Ratio of net expenses to average net assets(c)(d) .............. 1.49%
Ratio of net investment income to average net assets(d) ........ 0.48%
Portfolio turnover rate(d) ..................................... 159%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through November 30, 1999.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 4.65%(d) for the period
ended November 30, 1999 (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
15
<PAGE>
ATALANTA/SOSNOFF FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1999 (UNAUDITED)
================================================================================
Market
COMMON STOCKS -- 96.9% Shares/Par Value
- --------------------------------------------------------------------------------
COMMUNICATION SERVICES -- 6.0%
Globalstar Telecommunications Limited* ........... 8,500 $ 204,000
Nextel Communications* ........................... 5,500 545,187
Sprint ........................................... 3,000 208,125
------------
957,312
------------
CONSUMER CYCLICALS -- 3.7%
Costco Wholesale* ................................ 3,500 320,906
Wal-Mart Stores .................................. 4,600 265,075
------------
585,981
------------
CONSUMER STAPLES -- 22.1%
AMFM* ............................................ 11,700 827,044
AT&T - Liberty Media Group - Class A* ............ 17,400 727,538
Cablevision Systems - Class A* ................... 4,900 335,956
CBS* ............................................. 6,200 322,400
Comcast - Class A* ............................... 3,400 153,637
Fox Entertainment Group - Class A* ............... 10,000 230,000
Infinity Broadcasting* ........................... 4,500 163,969
Kimberly-Clark ................................... 3,600 229,950
MediaOne Group* .................................. 4,200 332,850
News Corporation Limited - ADR ................... 7,000 216,563
------------
3,539,907
------------
FINANCIAL -- 8.8%
Ace Limited ...................................... 9,000 153,000
American International Group ..................... 1,575 162,619
Capital One Financial ............................ 3,300 153,656
CIT Group - Class A .............................. 11,000 228,250
Citigroup ........................................ 3,250 175,094
Heller Financial ................................. 9,200 203,550
Providian Financial .............................. 4,200 332,325
------------
1,408,494
------------
HEALTH CARE -- 16.9%
Bristol-Myers Squibb ............................. 6,000 438,375
ICN Pharmaceuticals .............................. 8,300 201,794
Johnson & Johnson ................................ 5,500 570,625
Medtronic ........................................ 6,606 256,808
Merck ............................................ 6,200 486,700
Pfizer ........................................... 4,800 173,700
Warner-Lambert ................................... 6,400 574,000
------------
2,702,002
------------
16
<PAGE>
ATALANTA/SOSNOFF FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
Market
COMMON STOCKS -- 96.9% Shares/Par Value
- --------------------------------------------------------------------------------
TECHNOLOGY -- 39.4%
ASM Lithography Holding N.V.* .................... 6,500 $ 608,562
America Online* .................................. 3,800 276,213
Apple Computer* .................................. 7,500 734,062
BMC Software* .................................... 6,000 436,875
Cisco Systems* ................................... 1,800 160,538
Computer Associates International ................ 7,300 474,500
EMC* ............................................. 1,000 83,562
First Data ....................................... 3,500 151,375
IBM .............................................. 3,800 391,638
Lucent Technologies .............................. 2,300 168,044
Microsoft* ....................................... 7,300 664,642
National Semiconductor* .......................... 10,800 459,000
Oracle* .......................................... 4,600 311,937
QUALCOMM* ........................................ 2,900 1,050,706
Sun Microsystems* ................................ 2,500 330,625
------------
6,302,279
------------
Total Common Stocks (Cost $11,334,595) $ 15,495,975
------------
CONVERTIBLE CORPORATE BONDS -- 1.4%
CD Radio, 8.75%, 9/29/09 (Cost $200,000) ......... 200,000 $ 218,500
------------
CASH EQUIVALENTS -- 2.4%
Star Treasury Fund (Cost $381,647) ............... 381,647 $ 381,647
------------
TOTAL INVESTMENT SECURITIES -- 100.7% (Cost $11,916,242) $ 16,096,123
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%) .. (114,711)
------------
NET ASSETS -- 100.0% ............................. $ 15,981,412
============
* Non-income producing security.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
17
<PAGE>
ATALANTA/SOSNOFF FOCUS FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1999 (UNAUDITED)
================================================================================
Market
COMMON STOCKS -- 97.5% Shares Value
- --------------------------------------------------------------------------------
COMMUNICATION SERVICES -- 6.7%
Globalstar Telecommunications Limited* ........... 1,300 $ 31,200
Nextel Communications* ........................... 1,300 128,862
------------
160,062
------------
CONSUMER STAPLES -- 19.6%
AMFM* ............................................ 1,600 113,100
AT&T - Liberty Media Group - Class A* ............ 1,600 66,900
Cablevision Systems - Class A* ................... 900 61,706
CBS* ............................................. 900 46,800
Fox Entertainment Group - Class A* ............... 2,300 52,900
Infinity Broadcasting* ........................... 1,400 51,012
Kimberly-Clark ................................... 600 38,325
Sirius Satellite Radio* .......................... 1,300 34,938
------------
465,681
------------
FINANCIAL -- 5.4%
Ace Limited ...................................... 1,300 22,100
Citigroup ........................................ 1,100 59,262
Providian Financial .............................. 600 47,475
------------
128,837
------------
HEALTH CARE -- 19.2%
Bristol-Myers Squibb ............................. 1,800 131,513
ICN Pharmaceuticals .............................. 1,900 46,194
Johnson & Johnson ................................ 1,300 134,875
Merck ............................................ 800 62,800
Warner-Lambert ................................... 900 80,719
------------
456,101
------------
TECHNOLOGY -- 46.6%
ASM Lithography Holding N.V.* .................... 900 84,262
America Online* .................................. 600 43,613
Apple Computer* .................................. 1,900 185,962
BMC Software* .................................... 1,200 87,375
Computer Associates International ................ 1,100 71,500
First Data ....................................... 1,000 43,250
IBM .............................................. 800 82,450
Microsoft* ....................................... 1,100 100,152
National Semiconductor* .......................... 1,600 68,000
Oracle* .......................................... 1,300 88,156
QUALCOMM* ........................................ 700 253,619
------------
1,108,339
------------
18
<PAGE>
ATALANTA/SOSNOFF FOCUS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
Market
COMMON STOCKS -- 97.5% Shares Value
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $1,896,575) ............ $ 2,319,020
------------
CASH EQUIVALENTS -- 3.0%
Star Treasury Fund (Cost $72,076) ................ 72,076 $ 72,076
------------
TOTAL INVESTMENT SECURITIES -- 100.5% (Cost $1,968,651) 2,391,096
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%) .. (12,268)
------------
NET ASSETS -- 100.0% ............................. $ 2,378,828
============
* Non-income producing security.
See accompanying notes to financial statements.
19
<PAGE>
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1999 (UNAUDITED)
================================================================================
Market
COMMON STOCKS -- 94.3% Shares Value
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 2.0%
Coca-Cola Enterprises ............................ 1,800 $ 38,138
------------
COMMUNICATIONS -- 5.6%
GTE .............................................. 1,500 109,500
------------
CONSUMER CYCLICALS -- 6.6%
Abercrombie & Fitch* ............................. 1,500 48,563
Federated Department Stores* ..................... 1,700 80,006
------------
128,569
------------
CONSUMER STAPLES -- 8.0%
AMFM* ............................................ 500 35,344
Infinity Broadcasting* ........................... 600 21,862
Kimberly-Clark ................................... 300 19,162
Pepsi Bottling Group ............................. 4,500 78,750
------------
155,118
------------
ENERGY -- 5.0%
Global Marine* ................................... 1,500 22,969
R&B Falcon* ...................................... 6,000 74,250
------------
97,219
------------
FINANCIAL -- 13.0%
Ace Limited ...................................... 2,000 34,000
Bank of America .................................. 300 17,550
Capital One Financial ............................ 400 18,625
CIT Group - Class A .............................. 1,000 20,750
Citigroup ........................................ 600 32,325
Heller Financial ................................. 800 17,700
Metris Companies ................................. 1,200 37,950
Providian Financial .............................. 700 55,387
Wells Fargo ...................................... 400 18,600
------------
252,887
------------
HEALTH CARE -- 21.0%
American Home Products ........................... 400 20,800
Becton, Dickinson and Company .................... 1,400 38,150
Bristol-Myers Squibb ............................. 1,400 102,288
ICN Pharmaceuticals .............................. 1,700 41,331
Johnson & Johnson ................................ 1,100 114,125
Merck ............................................ 500 39,250
Warner-Lambert ................................... 600 53,812
------------
409,756
------------
20
<PAGE>
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
Market
COMMON STOCKS -- 94.3% Shares Value
TECHNOLOGY -- 33.1%
ASM Lithography Holding N.V.* .................... 1,300 $ 121,712
Apple Computer* .................................. 1,200 117,450
BMC Software* .................................... 1,500 109,219
Computer Associates International ................ 900 58,500
First Data ....................................... 400 17,300
IBM .............................................. 700 72,144
National Semiconductor* .......................... 2,200 93,500
QUALCOMM* ........................................ 150 54,347
------------
644,172
------------
Total Common Stocks (Cost $1,680.966) ............ 1,835,359
------------
CASH EQUIVALENTS -- 5.1%
Star Treasury Fund (Cost $98,717) ................ 98,717 98,717
------------
TOTAL INVESTMENT SECURITIES -- 99.4% (Cost $1,779,684) 1,934,076
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.6% .... 12,514
------------
NET ASSETS -- 100.0% ............................. $ 1,946,590
============
* Non-income producing security.
See accompanying notes to financial statements.
21
<PAGE>
ATALANTA/SOSNOFF BALANCED FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1999 (UNAUDITED)
================================================================================
Market
COMMON STOCKS -- 74.7% Shares/Par Value
- --------------------------------------------------------------------------------
COMMUNICATION SERVICES -- 4.7%
Globalstar Telecommunications Limited* ........... 1,300 $ 31,200
Nextel Communications* ........................... 800 79,300
------------
110,500
------------
CONSUMER STAPLES -- 15.8%
AMFM* ............................................ 1,400 98,963
AT&T - Liberty Media Group - Class A* ............ 1,600 66,900
Cablevision Systems - Class A* ................... 900 61,706
CBS* ............................................. 900 46,800
Infinity Broadcasting* ........................... 700 32,944
Kimberly-Clark ................................... 600 38,325
Pepsi Bottling Group ............................. 1,600 28,000
------------
373,638
------------
FINANCIAL -- 4.5%
Ace Limited ...................................... 1,300 22,100
CIT Group - Class A .............................. 1,000 20,750
Citigroup ........................................ 800 43,100
Heller Financial ................................. 900 19,912
------------
105,862
------------
HEALTH CARE -- 16.4%
Bristol-Myers Squibb ............................. 1,200 87,675
ICN Pharmaceuticals .............................. 1,300 31,606
Johnson & Johnson ................................ 1,200 124,500
Merck ............................................ 800 62,800
Warner-Lambert ................................... 900 80,719
------------
387,300
------------
TECHNOLOGY -- 33.3%
ASM Lithography Holding N.V.* .................... 700 65,537
America Online* .................................. 600 43,613
Apple Computer* .................................. 1,300 127,238
BMC Software* .................................... 900 65,531
Computer Associates International ................ 900 58,500
First Data ....................................... 500 21,625
IBM .............................................. 500 51,531
Microsoft* ....................................... 900 81,942
National Semiconductor* .......................... 1,500 63,750
Oracle* .......................................... 900 61,031
QUALCOMM* ........................................ 400 144,925
------------
785,223
------------
22
<PAGE>
ATALANTA/SOSNOFF BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
Market
COMMON STOCKS -- 74.7% Shares/Par Value
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $1,463,581) ............ $ 1,762,523
------------
U. S. TREASURY BILLS -- 24.8%
U. S. Treasury Bill, 5/18/00 (Amortized Cost $585,409) 600,000 $ 585,016
------------
CASH EQUIVALENTS -- 1.0%
Star Treasury Fund (Cost $24,154) ................ 24,154 $ 24,154
------------
TOTAL INVESTMENT SECURITIES -- 100.5% (Cost $2,073,144) $ 2,371,693
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%) .. (12,387)
------------
NET ASSETS -- 100.0% ............................. $ 2,359,306
============
* Non-income producing security.
See accompanying notes to financial statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999 (UNAUDITED)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
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) are each a no-load 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 Atalanta/Sosnoff 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 per share.
The public offering of shares of the Atalanta/Sosnoff Focus Fund, the
Atalanta/Sosnoff Value Fund and the Atalanta/Sosnoff Balanced Fund commenced on
July 1, 1999, when the Adviser purchased the initial 200,000 shares of each Fund
at $10 per share. The public offering of shares of the Atalanta/Sosnoff Fund
commenced on June 17, 1998. The Funds had no operations prior to the public
offering of their respective shares except for the initial issuance of shares.
The Atalanta/Sosnoff Fund seeks long-term capital appreciation, through equity
investments in companies 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
period 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 Atalanta/Sosnoff Balanced Fund seeks to preserve capital while producing
long-term capital appreciation by investing in a blend of common stocks and
fixed-income securities.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange (normally
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 each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of each 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 -- For the Atalanta/Sosnoff Fund, the
Atalanta/Sosnoff Focus Fund and the Atalanta/Sosnoff Value Fund dividends
arising from net investment income, if any, are declared and paid annually to
shareholders of each Fund. For the Atalanta/Sosnoff Balanced Fund dividends
arising from net income, if any, are declared and paid quarterly 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.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are determined on a specific identification basis.
Organization costs -- Costs incurred by the Atalanta/Sosnoff 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.
Federal income tax -- It is each 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 a 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 each 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.
The following information is based upon the federal income tax cost of the
investment securities as of November 30, 1999:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation ... $ 4,426,086 $ 490,024 $ 238,605 $ 346,963
Gross unrealized depreciation ... (294,719) (69,242) (92,014) (48,414)
------------ ----------- ----------- -----------
Net unrealized appreciation ..... $ 4,131,367 $ 420,782 $ 146,591 $ 298,549
============ =========== =========== ===========
Federal income tax cost ......... $ 11,964,756 $ 1,970,314 $ 1,787,486 $ 2,073,144
============ =========== =========== ===========
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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.
As of May 31, 1999, the Atalanta/Sosnoff Fund had capital loss carryforwards for
federal income tax purposes of $393,544, which expire May 31, 2007. These
capital carryforwards may be utilized in the current year and future years to
offset net realized gains prior to distributing any such gains to shareholders.
2. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the period ended November 30, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff Atalanta/Sosnoff
Fund Focus Fund Value Fund Balanced Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities ............. $8,519,931 $2,815,889 $3,442,083 $2,289,627
Proceeds from sales of investment securities ... $7,888,176 $ 814,663 $1,554,164 $ 795,472
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
3. TRANSACTIONS WITH AFFILIATES
The President of the Trust is also Executive Vice President of the Adviser and
the President and Chief Executive Officer of Atalanta/Sosnoff Management
Corporation (the Distributor), the principal underwriter for each 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 Funds' investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement. Each 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 each Fund.
The Adviser currently intends to voluntarily waive its investment advisory fees
and reimburse the Funds for expenses incurred to the extent necessary to limit
total operating expenses of each Fund to a maximum level of 1.50% of each Fund's
average daily net assets. Accordingly, the Adviser waived investment advisory
fees of $33,742 and reimbursed $8,977 of other operating expenses for the
Atalanta/Sosnoff Fund, waived its investment advisory fees of $6,387 and
reimbursed $21,108 of other operating expenses for the Atalanta/Sosnoff Focus
Fund, waived its investment advisory fees of $5,859 and reimbursed $22,467 of
other operating expenses for the Atalanta/Sosnoff Value Fund and waived its
investment advisory fees of $6,438 and reimbursed $20,931 of other operating
expenses for the Atalanta/Sosnoff Balanced fund during the period ended November
30, 1999.
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 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 these
services, CFS receives a monthly fee at an annual rate of 0.15% on each 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 for each Fund.
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 each
Fund. For these services, CFS receives a fee, based on current asset levels, of
$2,000 per month from each Fund. In addition, each Fund reimburses CFS for
out-of-pocket expenses related to the pricing of each 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 each 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 each Fund, subject to a $1,500 minimum monthly fee for each Fund.
In addition, each Fund reimburses CFS for out-of-pocket expenses including, but
not limited to, postage and supplies.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
SERVICE PLAN
The Trust has adopted a service plan (the Plan) under which each Fund
compensates the Distributor for services related to the distribution and
promotion of Fund shares. Each Fund pays the Distributor a fee, computed and
accrued daily and paid monthly, at an annual rate of 0.25% of the average daily
net assets of each Fund. During the period ended November 30, 1999, the
Atalanta/Sosnoff Fund, the Atalanta/Sosnoff Focus Fund, the Atalanta/Sosnoff
Value Fund and the Atalanta/Sosnoff Balanced Fund incurred expenses of $17,657,
$2,142, $1,967 and $2,159, respectively, under the Plan.
