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. 5
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 6
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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
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to Rule 485(b)
/X/ on (September 28, 2000) pursuant to Rule 485(b)
/ / 75 days after filing pursuant to Rule 485(a)
/ / on (date) pursuant to Rule 485(a)
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[LOGO]
ATALANTA/SOSNOFF FUND
ATALANTA/SOSNOFF FOCUS FUND
ATALANTA/SOSNOFF VALUE FUND
ATALANTA/SOSNOFF BALANCED FUND
PROSPECTUS
OCTOBER 1, 2000
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
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PROSPECTUS
October 1, 2000
ATALANTA/SOSNOFF INVESTMENT TRUST
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(877)767-6633
--------------------------------------------------------------------------------
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").
ATALANTA/SOSNOFF FUND
ATALANTA/SOSNOFF FOCUS FUND
ATALANTA/SOSNOFF VALUE FUND
ATALANTA/SOSNOFF BALANCED FUND
This Prospectus has information you should know before you invest. Please read
it carefully and keep it with your investment records.
TABLE OF CONTENTS
-----------------
Page
----
RISK/RETURN SUMMARY............................................................3
EXPENSE INFORMATION............................................................5
PRINCIPAL INVESTMENT STRATEGIES................................................6
HOW TO PURCHASE SHARES.........................................................9
HOW TO REDEEM SHARES..........................................................11
SHAREHOLDER SERVICES..........................................................12
EXCHANGE PRIVILEGE............................................................12
DIVIDENDS AND DISTRIBUTIONS...................................................13
TAXES.........................................................................14
SERVICE PLAN..................................................................14
OPERATION OF THE FUNDS........................................................15
CALCULATION OF SHARE PRICE....................................................15
FINANCIAL HIGHLIGHTS..........................................................16
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RISK/RETURN SUMMARY
-------------------
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The ATALANTA/SOSNOFF FUND seeks long-term capital appreciation, through equity
investments in companies which the Adviser believes are entering into a period
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
approximately 30 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.
WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
The Atalanta/Sosnoff Fund and the Atalanta/Sosnoff Focus Fund are both growth
funds that normally invest at least 65% of their total assets in the common
stocks of U.S. large capitalization companies. The Adviser uses quantitative
screening techniques, followed by fundamental analysis, to select stocks for the
Funds. These stocks are then bought and sold based on the relationship of the
stock's current price to its target price (what the Adviser thinks the stock is
worth).
The Atalanta/Sosnoff Value Fund will normally invest at least 65% of its total
assets in common stocks. The Adviser seeks to identify stocks priced below
average in comparison to such factors as earnings and book value.
The Atalanta/Sosnoff Balanced Fund will normally invest 65% (maximum 75%) of its
total assets in common stocks (the "equity segment") and 35% of its total assets
in cash, cash equivalents and fixed-income securities (the "fixed-income
segment"). The Adviser allocates assets between the two segments by analyzing
macroeconomic factors (i.e., inflation, Gross Domestic Product) and individual
securities and attempts to anticipate interest of the Balanced Fund rate changes
and monetary policy decisions. The equity segment is managed in a manner
identical to the Atalanta/Sosnoff Fund, i.e., it employs a growth strategy that
invests primarily in U.S. large capitalization companies. The fixed-income
segment will consist of a mix of federal, agency and corporate securities,
including U.S. Government obligations and corporate debt obligations (such as
bonds and debentures) maturing in more than one year from the date of purchase
and preferred stock of domestic issuers rated at the time of purchase in the
four highest categories assigned by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB). In managing the
fixed-income segment, the Adviser believes the most critical variable is the
overall duration (the time it takes an investor to recoup his or her investment)
of the segment.
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WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
Common stocks and 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 depreciation when interest rates rise. Changes in market prices can
occur at any time. Accordingly, there is no assurance that the Funds will
achieve their investment objectives and there is a risk that you may lose money
by investing in the Funds.
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.
Because the Atalanta/Sosnoff Balanced Fund intends to allocate its assets among
common stocks, 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. The
flow of funds between the equity and fixed-income segments of the Fund is an
ongoing process which depends on the Adviser's ability to correctly anticipate
the relative performance of common stocks, cash, cash equivalents and
fixed-income securities. It should further 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 short-term fixed-income securities. In addition,
the Balanced Fund may invest in preferred stocks and bonds rated Baa or BBB
which have speculative characteristics. 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 or interest or to pay the preferred stock
obligations than is the case with higher grade securities.
An investment in the Funds is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
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RISK/RETURN BAR CHART AND FEE TABLE
The bar chart and performance table shown below provide an indication of the
risks of investing in the Atalanta/Sosnoff Fund by showing the performance of
the Fund for its first full calendar year of operation and by showing how the
average annual returns of the Fund compare to those of a broad-based securities
market index. How the Fund has performed in the past is not necessarily an
indication of how the fund will perform in the future.
[Bar Chart]
1999 = 39.76%
During the period shown in the bar chart, the highest return for a quarter was
33.47% during the quarter ended December 31, 1999 and the lowest return was
-4.76% for the quarter ended September 30, 1999.
The Atalanta/Sosnoff Fund's year-to-date returns as of June 30, 2000 and August
31, 2000 were -3.43% and 6.24%, respectively.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1999
Since Inception
One Year (June 17, 1998)
-------- ---------------
Atalanta/Sosnoff Fund 39.76% 35.79%
Morningstar Large Cap Blend Category 19.36% N/A
Lipper Large Cap Core Index 22.45% 21.38%
S&P 500 Index 21.04% 23.16%
Pursuant to Securities and Exchange Commission rules, a bar chart and
performance table showing the performance of the Atalanta/Sosnoff Focus,
Atalanta/Sosnoff Value or the Atalanta/Sosnoff Balanced Funds is not permitted
because the Funds have not completed a full calendar year of operation as of the
date of this Prospectus.
EXPENSE INFORMATION
-------------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.
SHAREHOLDER FEES (fees paid directly from your investment):
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None*
* A wire redemption fee is charged by the Funds' Custodian in the case of
redemptions made by wire. Such fee is subject to change. See "How to Redeem
Shares."
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ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Atalanta/ Atalanta/ Atalanta/
Atalanta/ Sosnoff Sosnoff Sosnoff
Sosnoff Focus Value Balanced
Fund Fund Fund Fund
-------- -------- -------- --------
Management Fees .................... .75% .75% .75% .75%
Service (12b-1) Fees ............... .25% .25% .25% .25%
Other Expenses ..................... .95% 3.08% 3.87% 3.23%
-------- -------- -------- --------
Total Annual Fund
Operating Expenses (a) ............. 1.95% 4.08% 4.87% 4.23%
======== ======== ======== ========
Fee Waiver and Expense
Reimbursement (a) .................. .45% 2.58% 3.37% 2.73%
======== ======== ======== ========
Net Expenses (a) ................... 1.50% 1.50% 1.50% 1.50%
======== ======== ======== ========
(a) The Adviser has contractually agreed to limit each Funds' total annual fund
operating expenses to 1.50% through October 1, 2001.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in the respective Fund for the time periods indicated and then redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the respective Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Atalanta/ Atalanta/ Atalanta/
Atalanta/ Sosnoff Sosnoff Sosnoff
Sosnoff Focus Value Balanced
Fund Fund Fund Fund
-------- -------- -------- --------
1 Year $ 153 $ 153 $ 153 $ 153
3 Years 569 1,005 1,162 1,035
5 Years 1,111 1,873 2,174 1,931
10 Years 2,239 4,114 4,716 4,232
PRINCIPAL INVESTMENT STRATEGIES
-------------------------------
The Atalanta/Sosnoff Investment Trust (the "Trust") has four Funds. Each
Fund has its own portfolio and investment objective. 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. Unless otherwise indicated, all
investment practices and limitations of the Funds are nonfundamental policies
which may be changed by the Board of Trustees without shareholder approval.
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PRINCIPAL INVESTMENT STRATEGIES
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
applies a quantitative screening strategy to a large capitalization universe of
stocks by searching for companies which may have the following general
characteristics, among others: market capitalization over $2 billion; earnings
growth rate above market (the S&P 500 Index, industry averages) for at least 12
months; relative price- to-earnings ratio in the lower one-third of the
company's 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 period?
Growth Rate P/E - What price-to-earnings ratio is being paid for the
--------------- company's rate of growth and where does that place
it relative to its peers in its industry and to
the overall market?
Earnings Stability - How consistently has the company been able to grow
------------------ operating income over an economic period and how
consistently has the company met earnings
estimates?
Price Performance - Has the stock outperformed the market indices
----------------- through the current stock market period?
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, the Adviser screens prospective purchases against valuation criteria such
as historical and relative price-to-earnings ratios. Next, specific target
prices (what the Adviser thinks the stock is worth) are established for each
stock. The Adviser buys and sells stocks based upon the relationship of the
stock's current price to its target price. For example, if a stock's target
price is higher than its current price, the Adviser will consider buying the
stock. Conversely, as a stock's current price approaches its target price, the
Adviser will consider selling.
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VALUE 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 (shareholders' equity
divided by shares outstanding). Value investing is predicated on the Adviser's
ability to identify undervalued securities. The Adviser emphasizes stocks that
have positive free cash flow, relatively low price-to-earnings ratios and low
debt-to-equity ratios as compared to other companies in the same industry, to
specific competitors and to the overall market. The dividend yield (annual
dividend rate divided by current stock price) 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 analyze company reports and
other public information to develop an opinion on the company's value. The
Adviser's company selection process includes but is not limited to those
companies that demonstrate strong cash flows, significant barriers to
competition, and moderate or low requirements for capital reinvestment.
BALANCED FUND:
ATALANTA/SOSNOFF BALANCED FUND
The Balanced Fund's blend of common stocks (the "equity segment") and cash, cash
equivalents and fixed-income securities (the "fixed-income segment") is
determined by systematically integrating a macroeconomic outlook (which involves
a review of domestic factors such as Gross Domestic Product momentum, interest
rates, inflation and corporate earnings, and a review of international factors
such as geopolitical events, currency parities and other variables) with
individual security analysis. In addition, the Adviser will make asset
allocation decisions in anticipation of interest rate changes and monetary
policy decisions. The Fund will normally invest 65% (maximum 75%) of its total
assets in common stocks and 35% of its total assets in cash, cash equivalents
and fixed-income securities.
The equity segment of the Fund will consist primarily of the common stocks of
larger, more established companies which the Adviser believes are entering into
a period of accelerating earnings momentum. The Adviser uses quantitative
screening techniques, followed by fundamental research analysis, to select the
stocks. In effect, the equity segment's security selection process is identical
to that used by the Atalanta/Sosnoff Fund.
The fixed-income segment of the Fund will consist of a mix of federal, agency
and corporate securities, including U.S. Government obligations and corporate
debt obligations (such as bonds and debentures) maturing in more than one year
from the date of purchase and preferred stock of domestic issuers rated at the
time of purchase in the four highest categories assigned by Moody's Investors
Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Ratings Group (AAA, AA, A
or BBB) or, if unrated, which are determined by the Adviser to be of comparable
quality.
The Adviser's analysis of currencies, inflation rates, Federal Reserve policy,
Gross Domestic Product momentum, interest rates and geopolitical events is
coupled with fundamental bottom-up security research in selecting securities for
the fixed-income segment. The Adviser believes the most critical variable in
managing the fixed-income segment is the overall duration (the time it takes an
investor to recoup his or her investment) of the segment. Thus, the Adviser will
actively manage the duration and maturity of the
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Fund's fixed-income segment and will seek to enhance returns from interest rate
anticipation, sector allocations and individual security analysis. For example,
if the Adviser anticipates a decline in interest rates it will generally extend
the segment's duration. Conversely, if the Adviser anticipates an increase in
interest rates will generally reduce its duration, depending on the Adviser's
analysis. In addition, the Adviser monitors yield disparities among different
asset classes and sectors and will invest the portfolio accordingly. This
determination is a function of the Adviser's assessment of the securities'
credit worthiness and historical yield. For example, if in the opinion of the
Adviser, the disparity between the yield of corporate and federal and agency
securities is historically large (i.e., corporate is higher), then corporate
securities might be more attractive; if the disparity is smaller, federal and
agency securities might be more attractive because of their reduced risk as
compared to corporate securities.
INVESTMENT STRATEGIES APPLICABLE TO EACH FUND
TEMPORARY DEFENSIVE POSITION. When the Adviser believes substantial price risks
exist for common stocks, 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 applicable Fund may
not achieve its investment objective.
PORTFOLIO TURNOVER. Each Fund does not intend to use short-term trading as a
primary means of achieving its investment objective. 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 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.
HOW TO PURCHASE SHARES
----------------------
Your initial investment in the Funds ordinarily must be at least $5,000 ($2,000
for most tax-deferred retirement plans and $500 for Education IRAs). 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 (NAV) 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, Integrated Fund Services, Inc. (the "Transfer Agent"), by 5:00 p.m.,
Eastern time, that day are confirmed at the NAV 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 NAV.
Direct investments received by the
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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 NAV next determined on the
following business day. If you establish your account through a brokerage firm,
you will need to contact your broker to receive account information. The
Transfer Agent will not have access to your individual account information.
INITIAL INVESTMENT BY MAIL. You may open an account and make an initial
investment in the Funds by sending a check and a completed account application
form to Integrated 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.
INITIAL INVESTMENT BY WIRE. 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 provide a
completed, signed account application to the Transfer Agent by mail or
facsimile. Faxed applications must be followed by a mailed copy of the original
document. Your investment will be made at the NAV next determined after your
wire is received together with the required account information. 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. Your bank may
impose a charge for sending your wire. The Trust currently charges no fee for
receipt of wired funds, but the Trust reserves the right to charge shareholders
for this service upon 30 days' prior notice to shareholders.
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account by mail
or by bank wire. Checks should be sent to Integrated 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.
GENERAL. The Trust mails you confirmations of all purchases or redemptions of
the Funds' shares. Certificates representing shares are not issued. The Trust
and the Trust's principal underwriter, Atalanta/Sosnoff Management Corporation
(the "Distributor") reserve the right 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.
If an order to purchase shares is 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.
HOW TO REDEEM SHARES
--------------------
BY MAIL. 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
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to be redeemed and your account number. The request must be signed exactly as
your name appears on the Trust's account records.
BY WIRE. 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 a charge by the
Custodian for processing wire redemptions. The Transfer Agent reserves the
right, upon 30 days' written notice, to change the processing fee. All charges
will be deducted from your account by redemption of shares in your account. Your
bank or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
THROUGH BROKER-DEALERS. 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. If 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 your shares will be redeemed. 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 those
applicable to shareholders who redeem shares directly through the Transfer
Agent.
ADDITIONAL INFORMATION. If your 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.
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 $5,000 (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 60 days to increase the value of your account to
the minimum amount.
You will receive the NAV per share next determined after receipt by the Transfer
Agent of your redemption request in the form described above. Payment is
normally made within 3 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 15 days from the purchase
date. To eliminate this delay, you may purchase shares of the Funds by certified
check or wire.
The Trust reserves the right to suspend the right of redemption or to postpone
the date of payment for more than 3 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.
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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 30 days' written
notice, to make reasonable charges for this service. Your depository institution
may impose its own charge for debiting your account which would reduce your
return from an investment in the Funds.
EXCHANGE PRIVILEGE
------------------
Shares of the Funds may be exchanged for each other at NAV. 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 NAV after the Transfer Agent receives your
request.
You may only exchange shares into a Fund which is authorized for sale in your
state of residence and you must
12
<PAGE>
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.
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.
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 or you have established your account through a
brokerage firm, distributions will automatically be reinvested in additional
shares. All distributions will be based on the NAV 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 6 months, your
dividends may be reinvested in your account at the then current NAV and your
account will be converted to the Share Option. No interest will accrue on
amounts represented by uncashed distribution checks.
13
<PAGE>
TAXES
-----
The Atalanta/Sosnoff Fund has qualified and 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.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over net short-term capital losses) by a Fund are taxable to you as
capital gains, without regard to the length of time you have held your Fund
shares. 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.
Redemptions and exchanges of Fund shares are taxable events on which you may
realize a gain or loss. 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.
The Funds will mail a statement to you annually indicating the amount and
federal income tax status of all distributions made during the year. In addition
to federal taxes, you may be subject to state and local taxes on distributions.
You should consult your 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.
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. Because these fees are paid pursuant to the Plan and are paid out of
the Funds' assets on an ongoing basis, over time they will increase the cost of
your investment and may cost you more than paying other types of sales charges.
14
<PAGE>
OPERATION OF THE FUNDS
----------------------
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. 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 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.
Each Fund pays the Adviser a fee, payable monthly, at the annual rate of .75% of
the average value of its daily net assets. The Adviser has contractually agreed
to waive its fees and reimburse each Fund's expenses to the extent necessary to
limit each Fund's total annual fund operating expense ratios to 1.50% through
October 1, 2001.
Atalanta/Sosnoff Management Corporation, 101 Park Avenue, New York, New York
10178 (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, C.F.A., Chairman of the Board of the Adviser and the
Distributor, 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.
CALCULATION OF SHARE PRICE
--------------------------
On each day that the Trust is open for business, the share price (NAV) 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. The NAV 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. The price at which a
purchase or redemption of a Fund's shares is effected is based on the next
calculation of NAV after the order is placed.
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
15
<PAGE>
are being valued, or, if not traded on a particular day, at the closing bid
price, (2) securities traded in the over-the-counter market, and which are not
quoted by NASDAQ, are valued at the last sale price (or, if the last sale price
is not readily available, at the last bid price as quoted by brokers that make
markets in the securities) as of the close of the regular session of trading on
the New York Stock Exchange on the day the securities are being valued, (3)
securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market,
and (4) securities (and other assets) for which market quotations are not
readily available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees. The NAV per share of a Fund will
fluctuate with the value of the securities it holds.
FINANCIAL HIGHLIGHTS
--------------------
The financial highlights table is intended to help you understand the Funds'
financial performance. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen LLP, whose report, along with the Funds' financial
statements, are included in the Statement of Additional Information, which is
available upon request. (To be inserted)
16
<PAGE>
<TABLE>
<CAPTION>
ATALANTA/SOSNOFF FUND
FINANCIAL HIGHLIGHTS
========================================================================================
YEAR PERIOD
ENDED ENDED
MAY 31, MAY 31,
2000 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 ............................... (0.12) (0.05)
Net realized and unrealized gains on investments .. 2.71 2.39
---------- ----------
Total from investment operations ..................... 2.59 2.34
---------- ----------
Net asset value at end of period ..................... $ 14.93 $ 12.34
========== ==========
Total return ......................................... 20.99% 23.40%(b)
========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) .................. $ 18,485 $ 13,480
========== ==========
Ratio of net expenses to average net assets(c) ....... 1.50% 1.50%(d)
Ratio of net investment loss to average net assets ... (0.88%) (0.60%)(d)
Portfolio turnover rate .............................. 143% 124%(d)
</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 2.54%(d) and 1.95% for the
periods ended May 31, 1999 and 2000, respectively.
(d) Annualized.
<PAGE>
ATALANTA/SOSNOFF FOCUS FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
May 31,
2000(a)
--------------------------------------------------------------------------------
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 ........................................ (0.08)
Net realized and unrealized gains on investments ........... 2.24
----------
Total from investment operations ............................. 2.16
----------
Net asset value at end of period ............................. $ 12.16
==========
Total return(b) .............................................. 21.60%
==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) .......................... $ 2,598
==========
Ratio of net expenses to average net assets(c)(d) ............ 1.50%
Ratio of net investment loss to average net assets(d) ........ (0.78%)
Portfolio turnover rate(d) ................................... 188%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through May 31, 2000.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 4.08%(d) for the period
ended May 31, 2000.
(d) Annualized.
<PAGE>
ATALANTA/SOSNOFF VALUE FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
May 31,
2000(a)
--------------------------------------------------------------------------------
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 losses on investments .......... 0.71
----------
Total from investment operations ............................. 0.68
----------
Net asset value at end of period ............................. $ 10.68
==========
Total return(b) .............................................. 6.80%
==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) .......................... $ 2,137
==========
Ratio of net expenses to average net assets(c)(d) ............ 1.50%
Ratio of net investment loss to average net assets(d) ........ (0.38%)
Portfolio turnover rate(d) ................................... 416%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through May 31, 2000.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 4.87%(d) for the period
ended May 31, 2000.
(d) Annualized.
<PAGE>
ATALANTA/SOSNOFF BALANCED FUND
FINANCIAL HIGHLIGHTS
================================================================================
Period
Ended
May 31,
2000(a)
--------------------------------------------------------------------------------
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 ...................................... 0.03
Net realized and unrealized gains on investments ........... 1.27
----------
Total from investment operations ............................. 1.30
----------
Less distributions:
Dividends from net investment income ....................... (0.03)
----------
Net asset value at end of period ............................. $ 11.27
==========
Total return(b) .............................................. 12.98%
==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) ......................... $ 2,362
==========
Ratio of net expenses to average net assets(c)(d) ............ 1.50%
Ratio of net investment income to average net assets(d) ...... 0.33%
Portfolio turnover rate(d) ................................... 200%
(a) Represents the period from the initial public offering of shares (July 1,
1999) through May 31, 2000.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 4.23%(d) for the period
ended May 31, 2000.
(d) Annualized.
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue o New York, New York 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 CORPORATION (DELAWARE)
101 Park Avenue o New York, New York 10178
212-867-5000
DISTRIBUTOR
ATALANTA/SOSNOFF MANAGEMENT CORPORATION
101 Park Avenue o New York, New York 10178
TRANSFER AGENT
INTEGRATED FUND SERVICES, INC.
P.O. Box 5354 o Cincinnati, Ohio 45201-5354
Shareholder Services
--------------------
Nationwide: (Toll-Free) 1-877-SOSNOFF
1-877-767-6633
Additional information about the Funds is included in the Statement of
Additional Information ("SAI") and which is incorporated by reference in its
entirety. Additional information about the Atalanta/Sosnoff Funds' investments
is available in the Funds' annual and semiannual reports to shareholders. In the
Funds' annual report, you will find a discussion of the market conditions and
strategies that significantly affected the Funds' performance during the last
fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Funds, or to make inquiries about the Funds, please call
1-800-320-2217 (Nationwide Toll -Free).
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's public reference room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the Commission at 1-202-942-8090. Reports and other
information about the Funds are available on the EDGAR Database on the
Commission's Internet site at http://www.sec.gov. Copies of information on the
Commission's Internet site may be obtained, upon payment of a duplicating fee,
by electronic request at the following e-mail address: [email protected], or by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-0102.
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
October 1, 2000
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 October 1, 2000. A copy of the Trust's Prospectus can be obtained
by writing the Trust at 221 East Fourth Street, Suite 200, 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......................................................................3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS..................................3
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS........................9
INVESTMENT LIMITATIONS........................................................12
TRUSTEES AND OFFICERS.........................................................13
THE INVESTMENT ADVISER........................................................15
THE DISTRIBUTOR...............................................................16
SERVICE PLAN..................................................................16
SECURITIES TRANSACTIONS.......................................................17
PORTFOLIO TURNOVER............................................................18
CALCULATION OF SHARE PRICE....................................................18
TAXES.........................................................................19
REDEMPTION IN KIND............................................................20
HISTORICAL PERFORMANCE INFORMATION............................................20
PRINCIPAL SECURITY HOLDERS....................................................22
CUSTODIAN.....................................................................22
AUDITORS......................................................................22
INTEGRATED FUND SERVICES, INC.................................................22
FINANCIAL STATEMENTS..........................................................23
-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. The Atalanta/Sosnoff Focus Fund is a
non-diversified series of the Trust.
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 "Risk/Return Summary" and
"Principal Investment Strategies") 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).
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 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
-3-
<PAGE>
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.
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 (the "1940 Act"), 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 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
-4-
<PAGE>
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 below. 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 receive 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.
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.
-5-
<PAGE>
The rating of Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. Among the factors considered by Moody's in
assigning ratings are the following: valuation of the management of the issuer;
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; evaluation of the
issuer's products in relation to competition and customer acceptance; liquidity;
amount and quality of long-term debt; trend of earnings over a period of 10
years; financial strength of the parent company and the relationships which
exist with the issuer; and recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. These factors are all considered in
determining whether the commercial paper is rated Prime-1. Commercial paper
rated A-1 (highest quality) by Standard & Poor's Ratings Group has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances; typically, the issuer's industry is
well established and the issuer has a strong position within the industry; and
the reliability and quality of management are unquestioned. The relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated A-1.
FOREIGN SECURITIES. Subject to the 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 required to deposit
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<PAGE>
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.
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.
-7-
<PAGE>
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.
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.
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<PAGE>
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.
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, but 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:
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Moody's Investors Service, Inc.
-------------------------------
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
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.
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.
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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.
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.
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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;
(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);
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<PAGE>
(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.
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 1940 Act, is indicated by an asterisk.
Annual
Compensation
Name Age Position Held From the Trust
---- --- ------------- --------------
*Anthony G. Miller 40 Chairman, $ 0
President and Trustee
*Toni E. Sosnoff 56 Vice President 0
and Trustee
+Howard A. Drucker 57 Trustee 8,000
+Irving L. Straus 78 Trustee 8,000
+Aida L. Wilder 51 Trustee 8,000
Lisa R. Oliverio 30 Treasurer 0
Tina D. Hosking 32 Secretary 0
* Mr. Miller and Mrs. Sosnoff, as affiliated persons of Atalanta/Sosnoff
Capital Corporation (Delaware), the Funds' investment adviser, and Mr.
Miller is an affiliated person of Atalanta/Sosnoff Management Corporation,
the Funds' principal underwriter, are "interested persons" of the Trust
within the meaning of Section 2(a)(19) of the 1940 Act.
+ Member of Audit Committee.
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<PAGE>
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.
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.
TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio, is Vice President and
Associate General Counsel of Integrated Fund Services, Inc. (a registered
transfer agent) and IFS Fund Distributors, Inc. (a registered broker-dealer).
She is also Secretary of Touchstone Investment Trust, Touchstone Strategic
Trust, Touchstone Tax-Free Trust and Touchstone Variable Series Trust.
LISA R. OLIVERIO, 312 Walnut Street, Cincinnati, Ohio, is the Financial
Reporting Manager of Integrated Fund Services, Inc.
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.
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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.
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. For the fiscal years ended May 31, 1999 and 2000,
the Atalanta/Sosnoff Fund accrued advisory fees of $74,620 and $122,517. In
order to reduce the Fund's operating expenses, the Adviser voluntarily waived
its entire advisory fee in 1999 and reimbursed $29,749 of the Fund's operating
expenses for the fiscal year ended May 31, 1999 and voluntarily waived its
investment advisory fees of $43,963 and reimbursed $28,595 of other operating
expenses for the fiscal year ended May 31, 2000. For the period ended May 31,
2000, the Atalanta/Sosnoff Focus, Atalanta/Sosnoff Value and Atalanta/Sosnoff
Balanced Funds accrued $16,649, $13,419 and $15,837 of expenses, respectively.
For that same period, in order to reduce the Funds' operating expenses, the
Adviser waived its entire advisory fee for each Fund and reimbursed $41,434,
$47,597 and $42,518 of each Fund's operating expenses, respectively.
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.
Each Fund's advisory agreement was initially approved for a two year term
and 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 agreement 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 agreements automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.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 agreement 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 agreements automatically terminates in the event of its
assignment, as defined by the 1940 Act and the rules thereunder.
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<PAGE>
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.
SERVICE PLAN
------------
As stated in the Prospectus, the Trust has adopted a service plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act 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. For the period ended May 31, 1999,
the Atalanta/Sosnoff Fund incurred expenses of $15,460 under the Plan. For the
fiscal year ended May 31, 2000, the Atalanta/Sosnoff Fund, Atalanta/Sosnoff
Focus Fund, the Atalanta Value Fund and the Atalanta/Sosnoff Balanced Fund
incurred expenses under the Plan of $40,815, $5,560, $4,481 and $5,288,
respectively.
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.
-16-
<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.
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
-17-
<PAGE>
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 Advisor and the Distributor have adopted
Codes of Ethics under Rule 17j-1 of the 1940 Act which permit personnel subject
to the Codes to invest in securities, including securities that may be purchased
or held by the Funds. The Codes of Ethics adopted by the Trust, the Advisor and
the Distributor are on public file with, and are available from, the SEC.
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.
-18-
<PAGE>
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.
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.
As of May 31, 2000, the Atalanta/Sosnoff Value Fund had capital loss
carryforwards for federal income tax purposes of $135,920, which expire May 31,
2008. These capital loss carryforwards may be utilized in future years to offset
net realized gains prior to distributing any such gains to shareholders.
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.
-19-
<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.
-20-
<PAGE>
Based on the forgoing calculations, the average annual total returns for
the Atalanta/Sosnoff Investment Trust as of June 30, 2000 are as follows:
One Year Since Inception*
-------- ----------------
Atalanta/Sosnoff Fund 22.76% 23.87%
Atalanta/Sosnoff Focus N/A 27.61%
Atalanta/Sosnoff Value N/A 6.78%
Atalanta/Sosnoff Balanced N/A 16.46%
*The initial public offering of Atalanta/Sosnoff Fund was June 17, 1998.
The initial public offering of Atalanta/Sosnoff Focus Fund, Atalanta/Sosnoff
Value Fund and Atalanta/Sosnoff Balanced Fund was July 1, 1999.
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.
-21-
<PAGE>
PRINCIPAL SECURITY HOLDERS
--------------------------
As of September 1, 2000, the Distributor owned of record 69.13% of the
Atalanta/Sosnoff Fund's outstanding shares and the Adviser owned 100%, 95.57%
and 92.19% of the Atalanta/Sosnoff Value Fund, Atalanta/Sosnoff Focus Fund and
the Atalanta/Sosnoff Balanced Fund, respectively. As of the share date, the
Trustees and officers of the Trust owned of record beneficially less than 1% of
the outstanding shares of the Trust.
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, 2001. 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.
INTEGRATED FUND SERVICES, INC.
------------------------------
The Trust has retained Integrated Fund Services, Inc. (the "Transfer
Agent") to act as each Fund's transfer agent. Integrated Fund Services, Inc. is
a wholly-owned indirect subsidiary of The Western and Southern Life Insurance
Company. 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.
-22-
<PAGE>
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
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. For the fiscal years ended May 31, 1999 and 2000, the Transfer
Agent received $52,574 and $66,908, respectively, for the Atalanta/Sosnoff Fund.
For the period ended May 31, 2000, the Transfer Agent received $49,500 for each
of the Atalanta/Sosnoff Focus Fund, the Atalanta/Sosnoff Value Fund and Balanced
Fund.
FINANCIAL STATEMENTS
--------------------
The Atlanta/Sosnoff Investment Trust's audited annual financial statements
dated May 31, 2000, are incorporated by reference from the Trust's May 31, 2000
Annual Report to Shareholders.
-23-
<PAGE>
ATALANTA/SOSNOFF INVESTMENT TRUST
---------------------------------
PART C. OTHER INFORMATION
------- -----------------
Item 23. Exhibits
--------
(a) Agreement and Declaration of Trust*
(b) Bylaws*
(c) Incorporated by reference to Agreement and Declaration of
Trust and Bylaws
(d) Advisory Agreement with Atalanta/Sosnoff Capital Corporation
(Delaware)*
(e) Underwriting Agreement with Atalanta/Sosnoff Management
Corporation*
(f) Inapplicable
(g) Custody Agreement with Firstar Bank, N.A.*
(h)(i) Administration Agreement with Integrated Fund Services,
Inc.(formerly Countrywide Fund Services, Inc.)*
(ii) Accounting Services Agreement with Integrated Fund Services,
Inc.(formerly Countrywide Fund Services, Inc.)*
(iii) Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement with Integrated Fund Services, Inc.
(formerly Countrywide Fund Services, Inc.)*
(i) Opinion and Consent of Counsel*
(j) Consent of Independent Auditor
(k) Inapplicable
(l) Agreement Relating to Initial Capital*
(m) Service Plan Pursuant to Rule 12b-1*
(n) Inapplicable
(o) Inapplicable
(p) Code of Ethics of Atalanta/Sosnoff Investment Trust,
Atalanta/Sosnoff Capital Corporation (Delaware), Atalanta/
Sosnoff Capital Corporation and Atalanta/Sosnoff Management
Corporation.*
--------------------------------------
* Incorporated by reference to the Trust's registration statement on Form N-1A.
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
------- -------------------------------------------------------------
None.
Item 25. Indemnification
-------- ---------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
"Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to and except as otherwise provided in the Securities Act
of 1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person") against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.
Section 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
any such person."
<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 "Distributor"). Coverage
under the policy will include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect or breach of
duty.
The Advisory Agreement with the Adviser provides that the Adviser
shall not be liable for any action taken, omitted or suffered to be
taken by it in its reasonable judgment, in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have resulted
from the Adviser's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to
the Adviser in its actions under this Agreement or breach of its duty
or of its obligations hereunder.
Item 26. 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.
<PAGE>
(b) The directors and officers of the Adviser and any other business,
profession, vocation or employment of a substantial nature
engaged in at any time during the past two years:
(i) Martin T. Sosnoff - Chairman & Director of the Adviser.
Chairman, Director and Controlling Shareholder of
Atalanta/Sosnoff Capital Corporation ("A/SCC"), the
Adviser's parent company.
(ii) Craig B. Steinberg - President and Director of the Adviser.
(iii)Anthony G. Miller - Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the
Adviser, A/SCC and President, Chief Operating Officer and
Chief Financial Officer of A/S Management Corporation, the
Trust's principal underwriter (the "Distributor"). Chairman,
President and a Trustee of the Trust.
(iv) Paul P. Tanico - Executive Vice President of the Adviser.
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 27. Principal Underwriters
-------- ----------------------
(a) Inapplicable
Position Position
with with
(b) Name Underwriter Registrant
---- ----------- ----------
Anthony G. Miller President, Chief Chairman,
Operating Officer President and
and Chief a Trustee
Financial Officer
<PAGE>
The address of all of the above-named persons is 101 Park Avenue,
New York, New York 10178.
(c) Inapplicable
Item 28. 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 P.O.
Box 5354, Cincinnati, Ohio 45201-5354.
Item 29. Management Services
------- --------------------
Inapplicable
Item 30. Undertakings
-------- ------------
Inapplicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of the Registration Statement pursuant to the
Rule 485(b) under the Securities Act of 1933 and 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
1st day of October, 2000.
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, September 28, 2000
--------------------- President
Anthony G. Miller and Trustee
/s/ Lisa R. Oliverio Treasurer September 28, 2000
---------------------
Lisa R. Oliverio
Trustee /s/ Tina D. Hosking
--------------------- ---------------------
Howard A. Drucker* Tina D. Hosking
Attorney-in-fact*
September 28, 2000
Trustee
---------------------
Toni E. Sosnoff*
Trustee
---------------------
Irving L. Straus*
Trustee
---------------------
Aida L. Wilder*
<PAGE>
INDEX TO EXHIBITS
-----------------
(a) Agreement and Declaration of Trust*
(b) Bylaws*
(c) Incorporated by reference to Agreement and Declaration of Trust and
Bylaws
(d) Advisory Agreement*
(e) Underwriting Agreement*
(f) Inapplicable
(g) Custody Agreement*
(h)(i) Administration Agreement*
(ii) Accounting Services Agreement*
(iii) Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement*
(i) Opinion and Consent of Counsel*
(j) Consent of Independent Auditor
(k) Inapplicable
(l) Agreement Relating to Initial Capital*
(m) Service Plan Pursuant to Rule 12b-1*
(n) Inapplicable
(o) Inapplicable
(p) Code of Ethics of Atalanta/Sosnoff Investment Trust, Atalanta/Sosnoff
Capital Corporation (Delaware), Atalanta/ Sosnoff Capital Corporation
and Atalanta/Sosnoff Management Corporation.*
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* Incorporated by reference to the Trust's registration statement on Form N-1A.
