<PAGE>
File Nos. 33-20318
811-5485
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 19 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22
ATLAS ASSETS, INC.
(Exact Name of Registrant as Specified in Charter)
1901 Harrison Street
Oakland, California 94612
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (510) 446-4124
Larry E. LaCasse
Atlas Assets, Inc.
1901 Harrison Street
Oakland, California 94612
(Name and Address of Agent for Service)
Copy to:
Robert Carlson
Paul, Hastings, Janofsky & Walker
555 South Flower Street
Los Angeles, California 90071
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on pursuant to paragraph (b) of Rule 485
----- ----------
X 60 days after filing pursuant to paragraph (a) of Rule 485
-----
on pursuant to paragraph (a) of Rule 485
----- --------------
- --------------------------------------------------------------------------
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940 and
the Rule 24f-2 Notice for the Registrant's most recent fiscal year was filed on
or about February 27, 1996.
Total number of pages ___. Exhibit Index appears at ____.
<PAGE>
ATLAS ASSETS, INC.
CROSS-REFERENCE SHEET
Between Items Enumerated in Form N-1A and
This Registration Statement
Item No. of
Part A of Form N-1A Captions in Prospectus
- ----------------------------------- ------------------------------
1. Cover Page Cover Page
2. Synopsis Atlas Funds at a glance; What
are the Funds' fees and
expenses?; What are the Funds'
investment objectives?
3. Condensed Financial Information Financial Highlights; How can
I interpret a Fund's
performance?
4. General Description of Registrant What Companies are affiliated
with the Funds?; What are the
Funds' investment objectives?;
What are the Funds' investment
limitations?; What are the
Funds' investment policies?;
How are the Funds
administered?; Appendix
5. Management of the Fund What are the Funds' fees and
expenses?; What companies are
affiliated with the Funds?;
What are the Funds' investment
policies?; How are the Funds
administered?; How can I
communicate with the Funds?;
Appendix
6. Capital Stock and Other Securities How are the Funds
administered?; What dividends
and distributions can I
receive?; How can taxes affect
my investment?
7. Purchase of Securities Being Offered What Companies are affiliated
with the Funds?; How are the
Funds administered?; What
price will I pay?; How can I
communicate wiht the Funds?;
How can I invest?; How can I
purchase at a discount?; What
else should I know about
purchases?;
1
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Item No. of
Part A of Form N-1A Captions in Prospectus
- ----------------------------------- ------------------------------
What services are
available?; What dividends
and distributions can I
receive?
8. Redemption or Repurchase What price will I pay?; What
services are available?; How
can I redeem shares?; What
else should I know about
redemptions?
9. Legal Proceedings Inapplicable
Item No. of Captions in Statement of
Part B of Form N-1A Additional Information
- ----------------------------------- ------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Inapplicable
13. Investment Objectives and Policies Description of Certain
Securities and Investment
Policies; Fundamental
Investment Restrictions;
Portfolio Turnover
14. Management of the Fund Management of the Company;
Investment Advisory and Other
Services
15. Control Persons and Principal Management of the Company;
Holders of Securities Investment Advisory and Other
Services
16. Investment Advisory and Other Services Investment Advisory and
Other Services; Additional
Information
17. Brokerage Allocation Execution of Portfolio
Transactions
18. Capital Stock and Other Securities See Part A, Item 6
19. Purchase, Redemption and Pricing How to Invest; Other
of Securities Being Offered Investment and Redemption
Services
2
<PAGE>
Item No. of Captions in Statement of
Part B of Form N-1A Additional Information
- ----------------------------------- ------------------------------
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other
Services
22. Calculation of Performance Investment Results
Data
23. Financial Statements Financial Statements
Item in Part C
- --------------
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signatures
<PAGE>
PART A
ATLAS FUNDS
______________________
PROSPECTUS
______________________
<PAGE>
PROSPECTUS
, 1996
Atlas Funds are NOT FDIC insured, are [LOGO]
NOT guaranteed by World Savings, and NOT FDIC INSURED
are NOT guaranteed against loss.
<PAGE>
[Logo]
ATLAS ASSETS, INC.
1901 Harrison Street
Oakland, CA 94612
1-800-933-ATLAS (1-800-933-2852)
- ----------------------------------------------------
ATLAS ASSETS, INC.
Atlas Assets, Inc. (the "Company") is an open-end, management investment
company, or mutual fund, offering fourteen portfolios (the Atlas "Funds").
The family of Atlas Funds consists of three money market funds (the "Money
Funds"), seven bond funds (the "Bond Funds"), and four funds that invest
primarily in equity securities (the "Stock Funds") as follows:
- ----------------------------------------------
MONEY FUNDS
Atlas U.S. Treasury Money Fund
Atlas National Municipal Money Fund
Atlas California Municipal Money Fund
(California residents only)
- ----------------------------------------------
BOND FUNDS
Atlas U.S. Government Intermediate Fund
(formerly Atlas U.S. Treasury
Intermediate Fund)
Atlas U.S. Government and Mortgage
Securities Fund
Atlas National Insured Intermediate
Municipal Fund
Atlas National Municipal Bond Fund
Atlas California Insured Intermediate
Municipal Fund (California residents only)
Atlas California Municipal Bond Fund
(California residents only)
Atlas Strategic Income Fund
- ----------------------------------------------
STOCK FUNDS
Atlas Balanced Fund
Atlas Growth and Income Fund
Atlas Strategic Growth Fund
Atlas Global Growth Fund
Please read this Prospectus dated April 30, 1996 before investing and keep
it for future reference.
The Prospectus provides important information about the Atlas Funds and will
help you decide which Funds are appropriate for you. A Statement of
Additional Information (the "SAI") further describing the Company and the
Atlas Funds, dated April 30, 1996 was filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference. A copy of
a current SAI is available without charge by calling or writing the Company.
NEITHER ATLAS ADVISERS, INC., THE COMPANY'S INVESTMENT ADVISER, NOR ATLAS
SECURITIES, INC. (DBA ATLAS FUNDS DISTRIBUTORS, INC. IN ARIZONA), THE
DISTRIBUTOR OF THE COMPANY'S SHARES, IS A SAVINGS AND LOAN ASSOCIATION OR A
BANK. THE COMPANY'S SHARES REPRESENT AN INVESTMENT OPPORTUNITY AND, AS SUCH,
ARE NOT BACKED OR GUARANTEED BY A SAVINGS AND LOAN ASSOCIATION OR A BANK AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION'S SAVINGS
ASSOCIATION INSURANCE FUND OR BANK INSURANCE FUND, OR ANY OTHER GOVERNMENTAL
ENTITY INCLUDING THE SECURITIES INVESTOR PROTECTION CORPORATION. ATLAS FUND
SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE
NO ASSURANCE THAT THE MONEY FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. ALTHOUGH THE INTEREST AND PRINCIPAL PAYMENTS
OF INSURED MUNICIPAL SECURITIES ARE GUARANTEED BY PRIVATE INSURANCE
COMPANIES, THIS INSURANCE DOES NOT GUARANTEE THE MARKET VALUE OF THOSE
SECURITIES OR THE VALUE OF SHARES IN A FUND, WHICH WILL VARY IN RESPONSE TO
MARKET CONDITIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
1
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- ----------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
ATLAS FUNDS AT A GLANCE 3
THE FUNDS
What are the Funds' fees and expenses? 5
Financial Highlights 8
What are the Funds' investment objectives? 16
What Companies are affiliated with the
Funds? 20
What are the Funds' investment limitations? 20
What are the Funds' investment policies? 21
How are the Funds administered? 24
INVESTOR'S MANUAL
How can I communicate with the Funds? 29
How can I invest? 30
What price will I pay? 30
What is the Class A sales charge option? 32
What is the Class B sales charge
alternative? 33
What else should I know about purchases? 34
What services are available? 36
How can I redeem shares? 39
What else should I know about redemptions? 40
What dividends and distributions can I
receive? 42
How can taxes affect my investment? 42
How will the Funds communicate with me? 43
How can I interpret a Fund's performance? 44
APPENDIX
Portfolio strategies - All Funds 45
Investment guidelines - All Funds 45
Portfolio strategies - Money Funds 47
Investment guidelines - Money Funds 47
Portfolio strategies - Bond Funds 48
Portfolio strategies - Stock Funds 50
Investment guidelines - Bond and Stock
Funds 50
</TABLE>
COLLECTIVE REFERENCES FOUND IN THE PROSPECTUS:
The "Money Funds", "Bond Funds", and the "Stock Funds" are listed under these
designations on page 1 of the Prospectus.
The "Municipal Funds" are Atlas National Municipal Money Fund, Atlas California
Municipal Money Fund, Atlas National Municipal Bond Fund, Atlas California
Municipal Bond Fund, Atlas National Insured Intermediate Municipal Fund and
Atlas California Insured Intermediate Municipal Fund.
The "National Funds" are Atlas National Municipal Money Fund, Atlas National
Municipal Bond Fund, and Atlas National Insured Intermediate Municipal Fund.
The "California Funds" are Atlas California Municipal Money Fund, Atlas
California Municipal Bond Fund, and Atlas California Insured Intermediate
Municipal Fund.
The "Insured Funds" are Atlas National Intermediate Municipal Fund and Atlas
California Insured Intermediate Municipal Fund.
The "Government Funds" are Atlas U.S. Government Intermediate Fund and Atlas
U.S. Government and Mortgage Securities Fund.
The "Intermediate Funds" are the Insured Funds and Atlas U.S. Government
Intermediate Fund.
The "Municipal Money Funds" are Atlas National Municipal Money Fund and Atlas
California Municipal Money Fund.
[ARTWORK TO COME]
2
<PAGE>
ATLAS FUNDS AT
A GLANCE
- ---------------
For your convenience, Atlas Funds provides this summary of the Prospectus.
The summary is qualified in its entirety by the more detailed information in
the Prospectus itself.
INVESTMENT OBJECTIVES:
The Money Funds seek short-term yields with liquidity and stability of
principal. The Bond Funds seek higher long-term yields for investors who can
accept price fluctuations. In pursuing this objective, the Intermediate
Funds can generally be expected to provide higher yields than the Money
Funds with less price fluctuations than long-term bond funds, and the
Insured Funds seek to minimize credit risk. The Stock Funds seek a varying
mix of long-term capital growth and current income for investors who can
accept price fluctuations. Of course there can be no assurance that a Fund's
investment objectives will be achieved.
SPECIAL RISK CONSIDERATIONS:
The Bond Funds invest in intermediate and long-term debt securities, which
fluctuate in price inversely with interest rate levels. The Stock Funds
invest primarily in common stocks, including the stocks of small unseasoned
companies, preferred stocks and securities convertible into common stocks,
which may fluctuate in price based on market conditions. The Bond and Stock
Funds may engage, to varying extents, in transactions in futures, options,
repurchase agreements, when-issued securities and securities lending, and
may also invest in zero coupon securities. Some of the Bond Funds and all of
the Stock Funds may borrow funds and enter into reverse repurchase and
dollar reverse repurchase agreements, which create leverage. Since these
transactions can increase investment risk, limitations are placed on their
use. Although none of the Bond and Stock Funds trade for short-term profits,
their portfolio turnover in pursuit of their respective objectives is not
limited. A high turnover rate increases transaction costs. The Stock Funds
may purchase foreign securities which are subject to risks different from
those of U.S. securities. The California Funds are not diversified due to
the limited supply of securities meeting those Funds' quality standards. The
Global Growth and Strategic Income Funds can normally be expected to invest
a substantial portion of each of their assets in foreign securities, which
may increase the risks of investing in those Funds and each Fund's operating
costs. THE STRATEGIC INCOME FUND MAY INVEST UP TO 100% OF ITS ASSETS IN
LOWER-RATED, HIGH-YIELD DEBT SECURITIES AND FOREIGN DEBT SECURITIES RATED
BELOW INVESTMENT GRADE. SUCH SECURITIES ARE CONSIDERED SPECULATIVE AND
INVOLVE GREATER RISKS, INCLUDING RISK OF DEFAULT, THAN HIGHER-RATED
SECURITIES. THE STRATEGIC INCOME FUND MAY ALSO INVEST IN A NUMBER OF
DIFFERENT KINDS OF "DERIVATIVE" SECURITIES. For more about special risk
considerations, please see the Appendix.
TAXABILITY OF INCOME:
All Atlas Municipal Funds seek income exempt from federal income tax, and
the Atlas California Funds seek income exempt from California state personal
income tax as well. The Atlas Treasury Money Fund seeks income that,
although subject to federal income tax, is exempt from most states' income
taxes. The Atlas Government Funds and the Atlas Strategic Income Fund seek
taxable current income for investors who desire high pre-tax yield, and the
Stock Funds seek varying levels of taxable current income.
INVESTMENT MANAGERS:
Atlas Advisers, Inc. ("Adviser"), a Golden West Financial Corporation
subsidiary and an affiliate of World Savings and Loan Association ("World"),
was organized solely to manage the Atlas Funds investments and began its
operations with the January 10, 1990 inception of the Company. The Adviser
has retained professionals with substantial fund experience, including
Boston Safe Advisors, Inc., the Subadviser to the Municipal Funds, and
OppenheimerFunds, Inc. (formally Oppenheimer Management Corporation), the
Subadviser to the Stock Funds and the Strategic Income Fund.
3
<PAGE>
HOW TO INVEST:
Call 1-800-933-ATLAS (1-800-933-2852) and speak to an Atlas Investment
Representative or meet with one in person at most World branches. Just call
1-800-933-ATLAS for more information on this Person-to-Person program or to
make an appointment. You can also pick up Atlas Funds literature at any
World branch. The Funds are currently offered exclusively by Atlas
Securities, Inc. (the "Distributor").
Each Fund, except the Municipal Money Funds, offers two classes of shares.
All Bond and Stock Fund shares are sold subject to a sales charge. You may
elect to purchase shares with a sales charge imposed at the time of purchase
(the "Class A shares" or "Class A"), or on a contingent deferred basis (the
"Class B shares" or "Class B"). Class A Money Fund shares can be purchased
at net asset value without any sales charge. Class B Money Fund shares are
subject to a contingent deferred sales charge. Both classes are subject to a
distribution fee, with the Class B fee higher than Class A.
The contingent deferred sales charge (the "CDSC") will be imposed on most
redemptions of Class B shares that occur within five years of purchase. This
alternative purchase arrangement permits you to choose the method of
purchasing shares that is most beneficial depending on the amount of the
purchase, the length of time you expect to hold the shares and other
circumstances.
HOW TO EXCHANGE:
Call or write to us to exchange shares of one Atlas Fund for shares of
another fund in the same Class within the Atlas family or to take advantage
of our Automatic exchange feature. Atlas provides exchange service free of
charge.
DIVIDENDS:
Money Fund income dividends are declared and reinvested daily and
distributed monthly. Bond Fund dividends are declared daily and reinvested
and distributed monthly. Balanced Fund and Growth and Income Fund dividends
are declared, reinvested and distributed quarterly. Strategic Growth Fund
and Global Growth Fund dividends, if any, are declared, reinvested and
distributed annually.
DISTRIBUTIONS:
Capital gains distributions, when available, are normally declared and
distributed annually, although they can be paid more frequently.
REINVESTMENT:
Dividends and capital gains distributions of a Fund will be automatically
reinvested (without sales charge) in additional shares of that Fund, unless
you request to receive them by check or elect to have them invested in
another Atlas Fund of the same class.
FIRST PURCHASE:
$2,500 minimum ($250 for IRAs)
LATER PURCHASES:
$250 minimum
PRICES/YIELDS:
Net asset value is normally calculated each business day at 4:00 pm Eastern
time (1:00 pm Pacific time). For current information on prices and yields,
call toll free: 1-800-933-ATLAS (1-800-933-2852) 24 hours a day, 7 days a
week.
SPECIAL FEATURES:
Bank wire purchase, Telephone redemption, Telephone exchange, Expedited
payment, Automatic purchase, Automatic exchanges, Automatic redemption,
Checkwriting (Class A Money and Bond Funds only)
PRICING OPTIONS:
Volume discounts (Class A only)
Right of accumulation (Class A only)
WorldLink (Class A only)
Letter of intent (Class A only)
Contingent deferred sales charge (Class B only)
Net asset value (Class A only)
4
<PAGE>
THE FUNDS
WHAT ARE THE FUNDS' FEES AND EXPENSES?
The summary below is presented to help you understand the direct and
indirect costs and expenses associated with investing in any of the Atlas
Funds. For a more complete description of fees and expenses, please see "How
are the Funds administered?" and "What price will I pay?"
<TABLE>
<CAPTION>
SUMMARY OF FEES U.S. TREASURY CALIFORNIA MUNICIPAL
AND EXPENSES MONEY FUND FUNDS
INSURED
MONEY INTERMEDIATE
CLASS A CLASS B CLASS A CLASS A CLASS B
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge-purchases...................................... None None None 3.0% None
Sales charge-reinvested dividends................................... None None None None None
Maximum deferred sales charge(1).................................... None 3.0% None None 3.0%
Redemption fee...................................................... None None None None None
Exchange fee........................................................ None None None None None
ANNUAL OPERATING EXPENSES:(after fee/expense reductions)(2)
(as a percentage of average net assets)
Management fees (after fee reduction)(2)............................ 0.34% 0.34% 0.42% 0.47% 0.47%
12b-1 distribution fees (after fee reduction)(2).................... 0.00% 0.60% 0.00% 0.00% 0.53%
Other expenses (after expense reduction)(2)......................... 0.30% 0.30% 0.25% 0.30% 0.30%
Total annual operating expenses(2).................................. 0.64% 1.24% 0.67% 0.77% 1.30%
EXAMPLE OF FUND EXPENSES:(3)
Redeemed end of year 1.............................................. $ 7 $ 43 $ 7 $ 38 $ 43
Redeemed end of year 3.............................................. $20 $ 59 $21 $ 54 $ 61
Redeemed end of year 5.............................................. $36 $ 78 $37 $ 72 $ 81
Redeemed end of year 10............................................. $80 $109 $83 $123 $123
No redemptions end of year 1........................................ $ 7 $ 13 $ 7 $ 38 $ 13
No redemptions end of year 3........................................ $20 $ 39 $21 $ 54 $ 41
No redemptions end of year 5........................................ $36 $ 68 $37 $ 72 $ 71
No redemptions end of year 10....................................... $80 $109 $83 $123 $123
</TABLE>
(1) A contingent deferred sales charge is imposed on the proceeds of Class B
shares redeemed within five years of their purchase, subject to certain
exceptions. That charge is imposed as a percentage of the net asset value
per share at the time of purchase or redemption,
whichever is less, and declines from 3.0% in the first and second years that
shares are held, to 2.0% in the third and fourth years, and 1.0% in the
fifth year. There is no contingent deferred sales charge imposed on Class B
shares held for more than five years. See "What is the Class B sales charge
alternative?".
(2) Expense information is based on results for 1995, except for the Strategic
Income and Global Growth Funds which are estimated expenses for 1996. The
Adviser has voluntarily agreed to limit 1996 total annual operating expenses
for the Strategic Income and Global Growth Funds as set forth in the table.
The Adviser reduced its fees and absorbed certain expenses in 1995. In
addition, the Distributor waived a portion of its distribution fees for
Class A and/or Class B shares of certain of the Funds. Without such
reductions, the Management fees would have been .50% for each of the Money
Funds, .55% for each of the Bond Funds (except for the Strategic Income
Fund) and .70% for each of the Stock Funds (except for the Global Growth
Fund); and the 12b-1 distribution fees would have been .25% for all Class A
shares and .75% for all Class B shares. Without such actions, total
operating expenses would have been as follows for Class A shares:
5
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- --------------------------------------------------------------------------------
WHAT ARE THE FUNDS' FEES AND EXPENSES? (CONTINUED)
<TABLE>
<CAPTION>
CALIFORNIA
MUNICIPAL FUNDS NATIONAL MUNICIPAL FUNDS
INSURED
BOND MONEY INTERMEDIATE BOND
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS A CLASS A CLASS B CLASS A CLASS B
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge-purchases.................. 3.0% None None 3.0% None 3.0% None
Sales charge-reinvested dividends............... None None None None None None None
Maximum deferred sales charge(1)................ None 3.0% None None 3.0% None 3.0%
Redemption fee.................................. None None None None None None None
Exchange fee.................................... None None None None None None None
ANNUAL OPERATING EXPENSES:(after fee/expense
reductions)(2)
(as a percentage of average net assets)
Management fees (after fee reduction)(2)........ 0.55% 0.55% 0.22% 0.40% 0.40% 0.55% 0.55%
12b-1 distribution fees (after fee
reduction)(2)................................... 0.20% 0.73% 0.00% 0.00% 0.52% 0.08% 0.61%
Other expenses (after expense reduction)(2)..... 0.18% 0.18% 0.53% 0.37% 0.37% 0.28% 0.28%
Total annual operating expenses(2).............. 0.93% 1.46% 0.75% 0.77% 1.27% 0.91% 1.44%
EXAMPLE OF FUND EXPENSES:(3)
Redeemed end of year 1.......................... $ 39 $ 45 $ 8 $ 38 $ 43 $ 39 $ 45
Redeemed end of year 3.......................... $ 59 $ 66 $24 $ 54 $ 61 $ 58 $ 66
Redeemed end of year 5.......................... $ 80 $ 90 $42 $ 72 $ 81 $ 79 $ 89
Redeemed end of year 10......................... $141 $128 $93 $123 $122 $139 $133
No redemptions end of year 1.................... $ 39 $ 15 $ 8 $ 38 $ 13 $ 39 $ 15
No redemptions end of year 3.................... $ 59 $ 46 $24 $ 54 $ 41 $ 58 $ 46
No redemptions end of year 5.................... $ 80 $ 80 $42 $ 72 $ 71 $ 79 $ 79
No redemptions end of year 10................... $141 $128 $93 $123 $122 $139 $133
</TABLE>
(2) (CONTINUED) 1.05% for the U.S. Treasury Money Fund; 1.33% for the U.S.
Government Intermediate Fund (formerly the U.S. Treasury Intermediate Fund);
1.00% for the California Municipal Money Fund; 1.11% for the California
Insured Intermediate Municipal Fund; 0.98% for the California Municipal Bond
Fund; 1.29% for the National Municipal Money Fund; 1.19% for the National
Insured Intermediate Municipal Fund; 1.08% for the National Municipal Bond
Fund; 1.04% for the U.S. Government and Mortgage Securities Fund; and 1.69%
for the Strategic Growth Fund. Other expenses would have been 0.54%, 0.53%,
0.31%, and 0.39%, respectively, for the Class A shares of the National
Municipal Money Fund, the U.S. Government Intermediate Fund, the California
Insured Intermediate Municipal Fund and the National Insured Intermediate
Fund. Other expenses and total operating expenses, respectively, would have
been as follows for Class B shares: 2.00% and 3.25% for the Treasury Money
Fund, 1.95% and 3.25% for the California Insured Intermediate Municipal
Fund, the National Insured Intermediate Fund, the National Municipal Bond
Fund and the U.S. Government Intermediate Fund, 0.94% and 2.24% for the
California Municipal Bond Fund, 0.97% and 2.27% for the U.S. Government and
Mortgage Securities Fund; 1.80% and 3.25% for the Balanced Fund and
Strategic Growth Fund, and 0.94% and 2.39% for the Growth and Income Fund.
(3) The above examples are based on a hypothetical $1,000 investment, and assume
that the annual operating expenses remain constant, that each Fund earns a
5% annual rate of return, and that the maximum sales charge was paid on
Class A shares. After 5 full years, Class B shares automatically convert to
Class A shares under the terms and conditions described under "What is the
Class B sales charge alternative?". Therefore, years 6 through 10 reflect
the Class A expenses shown above. The examples should not be considered
representations of future expenses or performance. The actual rates of
return and annual operating expenses of the Funds may vary.
6
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT STRATEGIC INCOME BALANCED FUND GROWTH AND STRATEGIC GROWTH GLOBAL GROWTH
INTERMEDIATE AND MORTGAGE FUND(4) INCOME FUND FUND FUND(4)
FUND SECURITIES FUND
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None
None None None None None None None None None None None None None None
None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0%
None None None None None None None None None None None None None None
None None None None None None None None None None None None None None
0.17% 0.17% 0.55% 0.55% 0.68% 0.68% 0.70% 0.70% 0.70% 0.70%
0.00% 0.52% 0.23% 0.74% 0.15% 0.66% 0.22% 0.73% 0.18% 0.70%
0.52% 0.52% 0.24% 0.24% 0.65% 0.65% 0.32% 0.32% 0.74% 0.74%
0.69% 1.21% 1.02% 1.53% 1.00% 1.50% 1.48% 1.99% 1.24% 1.75% 1.62% 2.14% 1.50% 2.00%
$ 37 $ 42 $ 40 $ 46 $ 40 $ 45 $ 45 $ 50 $ 42 $ 48 $ 46 $ 52 $ 45 $ 50
$ 51 $ 58 $ 61 $ 68 $ 61 $ 67 $ 73 $ 82 $ 68 $ 75 $ 80 $ 87 $ 76 $ 83
$ 67 $ 76 $ 85 $ 93 $ 84 $ 92 $108 $117 $ 96 $105 $115 $125 $109 $118
$113 $112 $151 $133 $149 $147 $202 $141 $175 $160 $216 $203 $204 $187
$ 37 $ 12 $ 40 $ 16 $ 40 $ 15 $ 45 $ 20 $ 42 $ 18 $ 46 $ 22 $ 45 $ 20
$ 51 $ 38 $ 61 $ 48 $ 61 $ 47 $ 73 $ 62 $ 68 $ 55 $ 80 $ 67 $ 76 $ 63
$ 67 $ 66 $ 85 $ 83 $ 84 $ 82 $108 $107 $ 96 $ 95 $115 $115 $109 $108
$113 $112 $151 $135 $149 $147 $202 $191 $175 $160 $216 $203 $204 $187
</TABLE>
7
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FINANCIAL HIGHLIGHTS
The following tables present per share financial information for the Funds'
fiscal years or periods ended December 31, 1990, 1991, 1992, 1993, 1994 and
1995, which information has been audited and reported on by Deloitte &
Touche LLP, the Funds' independent auditors, whose report dated February 2,
1996, appears in the Funds' Annual Report to Shareholders for the year ended
December 31, 1995 and is incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
MONEY FUNDS
U.S. TREASURY MONEY FUND
CLASS A CLASS B
1995(1) 1994(1) 1993(1) 1992(2) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.050 0.036 0.030 0.023 0.044 0.018
Net gain or loss on securities (both realized and
unrealized)............................................... 0.000 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- -------
Total from investment operations.......................... 0.050 0.036 0.030 0.023 0.044 0.018
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net investment income).................... (0.050) (0.036) (0.030) (0.023) (0.044) (0.018)
Distributions (from realized capital gains)............... 0.000 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of realized gains)............... 0.000 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- -------
Total distributions....................................... (0.050) (0.036) (0.030) (0.023) (0.044) (0.018)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total return(6)............................................. 5.13% 3.67% 3.03% 2.32% 4.45% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $51,385 $33,448 $14,168 $ 7,632 $ 113 $ 28
Ratio of expenses to average net assets (annualized)(7)... 0.64% 0.46% 0.15% 0.00% 1.24% 1.13%
Ratio of net investment income to average net assets
(annualized).............................................. 4.99% 3.75% 2.98% 3.32% 4.34% 3.71%
Portfolio turnover rate................................... -- -- -- -- -- --
</TABLE>
(1) For the year ended December 31.
(2) For the period May 1, 1992 (inception of operations) to December 31, 1992.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period January 10, 1990 (effective date of registration) to December
31, 1990.
(5) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(6) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-----------------------------------------------------------------
PERIOD ENDED 1995 1994 1993 1992 1991 1990 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Fund......................................... 1.05% 1.08% 1.10% 1.37% NA NA 3.25% 3.25%
California Municipal Money Fund.................................. 1.00% 1.00% 0.98% 1.03% 1.13% 1.50% NA NA
National Municipal Money Fund.................................... 1.29% 1.25% 1.28% 1.35% 1.51% 1.95% NA NA
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL MONEY FUND NATIONAL MUNICIPAL MONEY FUND
CLASS A CLASS A
1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.032 0.024 0.021 0.027 0.045 0.052 0.032 0.026 0.022 0.029 0.048 0.055
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.032 0.024 0.021 0.027 0.045 0.052 0.032 0.026 0.022 0.029 0.048 0.055
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.032) (0.024) (0.021) (0.027) (0.045) (0.052) (0.032) (0.026) (0.022) (0.029) (0.048) (0.055)
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.032) (0.024) (0.021) (0.027) (0.045) (0.052) (0.032) (0.026) (0.022) (0.029) (0.048) (0.055)
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
3.22% 2.47% 2.13% 2.75% 4.61% 5.40% 3.26% 2.60% 2.25% 2.94% 4.87% 5.66%
$39,439 $42,979 $45,784 $55,890 $59,007 $20,190 $ 7,860 $10,110 $ 9,424 $ 8,139 $ 9,816 $ 4,150
0.67% 0.46% 0.48% 0.46% 0.00% 0.00% 0.75% 0.49% 0.55% 0.54% 0.00% 0.00%
%
3.18 2.44% 2.10% 2.73% 4.47% 5.50% 3.21% 2.57% 2.23% 2.92% 4.71% 5.79%
-- -- -- -- -- -- -- -- -- -- -- --
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUNDS
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL
FUND
CLASS A CLASS B
1995(1) 1994(1) 1993(4) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................................... $ 9.64 $ 10.48 $ 10.01 $ 9.64 $ 9.91
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................................... 0.40 0.42 0.26 0.34 0.17
Net gain or loss on securities (both realized and unrealized)............ 0.73 (0.84) 0.47 0.73 (0.27)
------- ------- ------- ------- -------
Total from investment operations......................................... 1.13 (0.42) 0.73 1.07 (0.10)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net investment income)................................... (0.40) (0.42) (0.26) (0.34) (0.17)
Distributions (from realized capital gains).............................. 0.00 0.00 0.00 0.00 0.00
Distributions (in excess of realized gains).............................. 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Total distributions...................................................... (0.40) (0.42) (0.26) (0.34) (0.17)
------- ------- ------- ------- -------
Net asset value, end of period............................................. $ 10.37 $ 9.64 $ 10.48 $ 10.37 $ 9.64
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(6)............................................................ 11.84% (4.10)% 7.31% 11.26% (1.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................ $24,582 $23,634 $24,235 $ 443 $ 227
Ratio of expenses to average net assets (annualized)(7).................. 0.77% 0.40% 0.32% 1.30% 1.08%
Ratio of net investment income to average net assets (annualized)........ 3.90% 4.16% 4.25% 3.37% 3.62%
Portfolio turnover rate.................................................. 59.28% 31.48% 5.73% 59.28% 31.48%
</TABLE>
(1) For the year ended December 31.
(2) For the period October 5, 1992 (inception of operations) to December 31,
1992.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period June 1, 1993 (effective date of registration) to December 31,
1993.
(5) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(6) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-----------------------------------------------------------------
PERIOD ENDED 1995 1994 1993 1992 1991 1990 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California Insured Intermediate Municipal Fund.... 1.11% 1.11% 1.26% NA NA NA 3.25% 3.25%
National Insured Intermediate Municipal Fund...... 1.19% 1.19% 1.39% NA NA NA 3.25% 3.25%
U.S. Government Intermediate Fund................. 1.32% 1.28% 1.26% 2.09% NA NA 3.25% 3.25%
California Municipal Bond Fund.................... 0.96% 0.97% 0.98% 1.04% 1.14% 1.70% 2.24% 3.25%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INTERMEDIATE FUND
NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND (FORMERLY U.S. TREASURY INTERMEDIATE FUND)
CLASS A CLASS B CLASS A CLASS B
1995(1) 1994(1) 1993(4) 1995(1) 1994(3) 1995(1) 1994(1) 1993(1) 1992(2) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 9.64 $ 10.48 $ 10.02 $ 9.65 $ 9.91 $ 9.32 $ 10.03 $ 9.69 $ 10.00 $ 9.32 $ 9.48
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.41 0.42 0.26 0.36 0.18 0.48 0.46 0.51 0.13 0.43 0.19
0.73 (0.84) 0.46 0.73 (0.26) 0.44 (0.71) 0.41 (0.31) 0.44 (0.16)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
1.14 (0.42) 0.72 1.09 (0.08) 0.92 (0.25) 0.92 (0.18) 0.87 0.03
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.41) (0.42) (0.26) (0.36) (0.18) (0.48) (0.46) (0.51) (0.13) (0.43) (0.19)
0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.07) 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.41) (0.42) (0.26) (0.36) (0.18) (0.48) (0.46) (0.58) (0.13) (0.43) (0.19)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 10.37 $ 9.64 $ 10.48 $ 10.38 $ 9.65 $ 9.76 $ 9.32 $ 10.03 $ 9.69 $ 9.76 $ 9.32
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
12.01% (4.05)% 7.25% 11.43% (0.87)% 10.12% (2.51)% 9.64% (1.83)% 9.54% 0.36%
$15,782 $16,224 $15,535 $ 284 $ 186 $ 8,209 $ 9,699 $ 8,930 $ 3,235 $ 426 $ 321
0.77% 0.43% 0.35% 1.29% 1.09% 0.69% 0.43% 0.23% 0.00% 1.21% 1.08%
4.06% 4.22% 4.28% 3.54% 3.72% 5.03% 4.80% 4.98% 5.50% 4.53% 4.24%
84.85% 32.26% 0.00% 84.85% 32.26% 82.88% 55.09% 37.80% 0.00% 82.88% 55.09%
<CAPTION>
CALIFORNIA MUNICIPAL BOND FUND
CLASS A
1995(1) 1994(1) 1993(1) 1992(1)
<S> <C> <C> <C> <C>
$ 10.31 $ 11.56 $ 10.47 $ 10.64
-------- -------- -------- --------
0.54 0.59 0.59 0.60
0.95 (1.25) 0.83 0.21
-------- -------- -------- --------
1.49 (0.66) 1.42 0.81
-------- -------- -------- --------
(0.54) (0.59) (0.59) (0.60)
0.00 0.00 (0.01) (0.11)
0.00 0.00 0.00 0.00
-------- -------- -------- --------
(0.54) (0.59) (0.60) (0.71)
-------- -------- -------- --------
$ 11.26 $ 10.31 $ 11.56 $ 10.74
-------- -------- -------- --------
-------- -------- -------- --------
14.76% (5.83)% 13.52% 7.86%
$184,283 $171,768 $197,394 $141,108
0.93% 0.57% 0.53% 0.54%
4.98% 5.43% 5.25% 5.66%
25.90% 30.32% 7.44% 46.55%
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUNDS
CALIFORNIA MUNICIPAL BOND FUND NATIONAL MUNICIPAL BOND FUND
CLASS A (CONTINUED) CLASS B CLASS A
1991(1) 1990(3) 1995(1) 1994(2) 1995(1) 1994(1) 1993(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 10.12 $ 10.00 $ 10.32 $ 10.74 $ 10.41 $ 11.61 $ 10.80
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................... 0.66 0.65 0.48 0.25 0.53 0.58 0.60
Net gain or loss on securities (both realized
and unrealized)................................ 0.56 0.12 0.94 (0.42) 0.98 (1.20) 0.82
--------- --------- --------- --------- --------- --------- ---------
Total from investment operations............... 1.22 0.77 1.42 (0.17) 1.51 (0.62) 1.42
--------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends (from net investment income)......... (0.66) (0.65) (0.48) (0.25) (0.53) (0.58) (0.60)
Distributions (from realized capital gains).... (0.04) 0.00 0.00 0.00 0.00 0.00 (0.01)
Distributions (in excess of realized gains).... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
Total distributions............................ (0.70) (0.65) (0.48) (0.25) (0.53) (0.58) (0.61)
--------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period................... $ 10.64 $ 10.12 $ 11.26 $ 10.32 $ 11.39 $ 10.41 $ 11.61
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total return(5).................................. 12.53% 9.38% 14.05% (1.59)% 14.76% (5.41)% 13.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).............. $ 106,592 $ 20,329 $ 3,162 $ 1,416 $ 53,387 $ 50,037 $ 57,590
Ratio of expenses to average net assets
(annualized)(6)................................ 0.00% 0.00% 1.46% 1.28% 0.91% 0.57% 0.50%
Ratio of net investment income to average net
assets (annualized)............................ 6.43% 7.13% 4.42% 4.91% 4.79% 5.35% 5.29%
Portfolio turnover rate........................ 30.61% 64.18% 25.90% 30.32% 53.43% 37.52% 3.72%
</TABLE>
(1) For the year ended December 31.
(2) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(3) For the period January 10, 1990 (effective date of registration) to December
31, 1990.
(4) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(5) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
<CAPTION>
PERIOD ENDED 1995 1994 1993 1992 1991 1990 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California Municipal Bond Fund.............................. 0.96% 0.97% 0.98% 1.04% 1.14% 1.70% 2.24% 3.25%
National Municipal Bond Fund................................ 1.05% 1.06% 1.06% 1.16% 1.33% 2.64% 3.25% 3.25%
U.S. Government and Mortgage Securities Fund................ 1.04% 1.05% 1.05% 1.12% 1.20% 2.15% 2.27% 3.25%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
CLASS B CLASS A CLASS B
1992(1) 1991(1) 1990(3) 1995(1) 1994(2) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(3) 1995(1) 1994(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10.61 $ 10.03 $ 10.00 $10.41 $ 10.76 $ 9.55 $ 10.60 $ 10.57 $ 10.59 $ 10.02 $ 10.00 $ 9.55 $ 9.80
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
0.60 0.68 0.66 0.47 0.24 0.69 0.70 0.74 0.82 0.91 0.92 0.64 0.32
0.32 0.60 0.03 0.98 (0.35) 0.75 (1.05) 0.03 (.02) 0.57 0.02 0.75 (0.25)
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
0.92 1.28 0.69 1.45 (0.11) 1.44 (0.35) 0.77 0.80 1.48 0.94 1.39 0.07
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
(0.60) (0.68) (0.66) (0.47 ) (0.24) (0.69) (0.70) (0.74) (0.82) (0.91) (0.92) (0.64) (0.32)
(0.13) (0.02) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
(0.73) (0.70) (0.66) (0.47 ) (0.24) (0.69) (0.70) (0.74) (0.82) (0.91) (0.92) (0.64) (0.32)
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
$ 10.80 $ 10.61 $ 10.03 $11.39 $ 10.41 $ 10.30 $ 9.55 $ 10.60 $ 10.57 $ 10.59 $ 10.02 $ 10.30 $ 9.55
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- ------- ------- -------
8.97% 13.22% 8.52% 14.16 % (0.99)% 15.50% (3.30)% 7.49% 7.85% 15.53% 10.46% 14.93% 0.69%
$39,463 $26,432 $ 3,261 $1,051 $ 342 $255,614 $245,715 $311,089 $209,593 $114,130 $ 7,387 $ 3,799 $ 1,451
%
0.54 0.00% 0.00% 1.44 % 1.28% 1.02% 0.80% 0.78% 0.60% 0.00% 0.00% 1.53% 1.43%
%
5.61 6.59% 7.20% 4.22 % 4.72% 6.90% 7.05% 6.93% 7.74% 8.79% 9.84% 6.34% 6.82%
39.20% 14.47% 15.37% 54.30 % 37.52% 48.39% 16.33% 25.63% 25.50% 4.35% 12.47% 48.39% 16.33%
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
STOCK FUNDS
BALANCED FUND
CLASS A CLASS B
1995(1) 1994(1) 1993(2) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.23 $ 9.85 $ 10.00 $ 9.22 $ 9.41
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.42 0.44 0.09 0.35 0.10
Net gain or loss on securities (both realized and
unrealized)............................................... 2.02 (0.62) (0.15) 2.03 (0.07)
------- ------- ------- ------- -------
Total from investment operations.......................... 2.44 (0.18) (0.06) 2.38 0.03
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net investment income).................... (0.42) (0.44) (0.09) (0.37) (0.22)
Distributions (from realized capital gains)............... (0.06) 0.00 0.00 (0.06) 0.00
Distributions (in excess of realized gains)............... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Total distributions....................................... (0.48) (0.44) (0.09) (0.43) (0.22)
------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 11.19 $ 9.23 $ 9.85 $ 11.17 $ 9.22
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(6)............................................. 26.76% (1.87)% (0.62)% 26.08% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $13,547 $ 9,654 $ 5,638 $ 1,632 $ 586
Ratio of expenses to average net assets (annualized)(7)... 1.48% 0.80% 0.00% 1.99% 1.48%
Ratio of net investment income to average net assets
(annualized).............................................. 4.15% 4.85% 5.02% 3.66% 4.43%
Portfolio turnover rate................................... 25.84% 29.19% 0.00% 25.84% 29.19%
</TABLE>
(1) For the year ended December 31.
(2) For the period October 1, 1993 (inception of operations) to December 31,
1993.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period December 5, 1990 (inception of operations) to December 31,
1990.
(5) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(6) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
<CAPTION>
PERIOD ENDED 1995 1994 1993 1992 1991 1990 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund................................ 1.53% 1.56% 2.04% NA NA NA 3.25% 3.25%
Growth and Income Fund....................... 1.24% 1.28% 1.36% 1.45% 1.66% 3.41% 2.39% 3.25%
Strategic Growth Fund........................ 1.65% 1.74% 2.23% NA NA NA 3.25% 3.25%
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND STRATEGIC GROWTH FUND
CLASS A CLASS B CLASS A CLASS B
1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4) 1995(1) 1994(3) 1995(1) 1994(1) 1993(2) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 13.52 $ 14.01 $ 13.45 $ 13.52 $ 10.04 $ 10.00 $ 13.52 $ 13.04 $ 10.00 $ 10.14 $ 10.00 $ 9.98 $ 9.92
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.20 0.16 0.22 0.25 0.31 0.04 0.10 0.02 0.10 0.11 0.05 0.03 (0.05)
4.26 (0.34) 1.17 (0.07) 3.48 0.04 4.26 0.67 2.82 (0.14) 0.14 2.82 0.21
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
4.46 (0.18) 1.39 0.18 3.79 0.08 4.36 0.69 2.92 (0.03) 0.19 2.85 0.16
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.20) (0.16) (0.22) (0.25) (0.31) (0.04) (0.12) (0.06) (0.09) (0.11) (0.05) (0.06) (0.10)
(1.87) (0.12) (0.59) 0.00 0.00 0.00 (1.87) (0.12) (0.14) 0.00 0.00 (0.14) 0.00
0.00 (0.03) (0.02) 0.00 0.00 0.00 0.00 (0.03) 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(2.07) (0.31) (0.83) (0.25) (0.31) (0.04) (1.99) (0.21) (0.23) (0.11) (0.05) (0.20) (0.10)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 15.91 $ 13.52 $ 14.01 $ 13.45 $ 13.52 $ 10.04 $ 15.89 $ 13.52 $ 12.69 $ 10.00 $ 10.14 $ 12.63 $ 9.98
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
33.06% (1.24)% 10.40% 1.40% 38.15% 0.78% 32.32% 5.32% 29.14% (0.28)% 1.94% 28.58% 1.57%
$93,061 $69,590 $59,392 $38,200 $20,084 $ 1,082 $ 4,292 $ 1,460 $12,223 $ 6,471 $ 4,168 $ 2,332 $ 327
1.24% 1.04% 1.06% 0.87% 0.00% 0.00% 1.75% 1.66% 1.62% 1.17% 0.00% 2.14% 1.80%
1.26% 1.21% 1.59% 2.00% 3.44% 5.20% 0.84% 0.71% 1.03% 1.25% 2.66% 0.56% 0.82%
125.28% 123.64% 178.91% 116.14% 146.31% 14.59% 125.28% 123.64% 73.32% 54.01% 6.41% 73.32% 54.01%
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The table below is designed to help you choose a Fund with investment
objectives that best match your own. Once you decide which Fund(s) best
match your investment objectives, you then need to determine which sales
charge option is most beneficial to you (see "What is the Class A sales
charge option?" and "What is the Class B sales charge alternative?").
<TABLE>
<CAPTION>
U.S. TREASURY NATIONAL MUNICIPAL CALIFORNIA MUNICIPAL
MONEY FUND(1) MONEY FUND(1) MONEY FUND(1)
<S> <C> <C> <C>
SUITABILITY For investors seeking For investors seeking liquidity, higher after
yield combined with tax yield and preservation of principal through
maximum safety, a stable price
liquidity, and
preservation of
principal through a
stable price
INVESTMENT A high level of current A high level of current A high level of current
OBJECTIVES(2) income consistent with income consistent with income consistent with
maximum safety, liquidity and stability liquidity and stability
liquidity and stability of principal, of principal,
of principal, exempt excludable from gross excludable from gross
from state income tax income for federal income for federal and
in most states income tax purposes California income tax
purposes
PORTFOLIO SECURITIES(3) Short-term obligations Short-term municipal Short-term municipal
directly issued by the securities of various securities of
U.S. Treasury issuers California issuers
QUALITY OF DEBT Highest Quality High Quality
SECURITIES(4) -- supported by the -- two highest rating quality grades, such as
full faith and credit Moody's (Aaa, Aa) or S&P (AAA,AA)
of the U.S. Government
</TABLE>
(1) There can be no assurance that a stable net asset value will always be
achieved.
(2) These investment objectives are fundamental and cannot be changed without
shareholder approval.
(3) Please read the Appendix for a more detailed description of securities and
strategies.
(4) Based on ratings of nationally recognized credit rating agencies such as
Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") or, if not rated, of comparable quality in the opinion
of the Adviser, or Subadviser if applicable. Applies only to debt
securities. Rating agencies do not rate equity securities. Please read the
Appendix for a more detailed description of quality standards.
16
<PAGE>
<TABLE>
<CAPTION>
NATIONAL INSURED CALIFORNIA INSURED
U.S. GOVERNMENT INTERMEDIATE INTERMEDIATE NATIONAL MUNICIPAL
INTERMEDIATE FUND MUNICIPAL FUND MUNICIPAL FUND BOND FUND
<S> <C> <C> <C> <C>
For long-term investors seeking liquidity and
For long-term investors higher after-tax yield than comparable For long-term investors
seeking liquidity and investments producing taxable income may seeking liquidity and
higher pre-tax yield provide, minimal credit risk, and who can accept higher after-tax yield
than short-term price fluctuations that should be more moderate than comparable
investments may provide than long-term bond funds investments producing
and who can accept taxable income may
price fluctuations that provide, and who can
should be more moderate accept price
than long-term bond fluctuations
funds
A high level of current A high level of current A high level of current A high level of current
income consistent with income consistent with income consistent with income consistent with
prudent investment prudent investment prudent investment prudent investment
management, minimizing management, minimizing management, minimizing management and
credit risk and credit risk and credit risk and preservation of
preservation of capital preservation of preservation of capital, excludable
capital, excludable capital, excludable from gross income for
from gross income for from gross income for federal income tax
federal income tax federal and California purposes
purposes income tax purposes
Intermediate and Intermediate term Intermediate term Intermediate and
long-term U.S. municipal securities of municipal securities of long-term municipal
Government obligations various issuers, that California issuers that securities of various
and mortgage related are insured as to the are insured as to the issuers
securities issued by timely payment of timely payment of
U.S. Government principal and interest principal and interest
agencies or
instrumentalities or
private issuers
Quality Quality
-- three highest rating -- three highest rating quality grades, such as Moody's (Aaa, Aa, A) or
quality grades, such as S&P (AAA, AA, A)
Moody's (Aaa, Aa, A) or
S&P (AAA, AA, A);
primarily highest
quality
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES? (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND
CALIFORNIA MUNICIPAL MORTGAGE SECURITIES
BOND FUND FUND STRATEGIC INCOME FUND
<S> <C> <C> <C>
SUITABILITY For long-term investors For long-term investors For long-term investors
seeking liquidity and seeking liquidity and seeking high current
higher after-tax yield higher pre-tax yield income who can accept
than comparable than short-term price fluctuations and
investments producing investments may the special risks
taxable income may provide, and who can involved with foreign
provide, and who can accept investing, use of
accept price price fluctuations derivatives and
fluctuations high-yield, lower-rated
securities,
INVESTMENT A high level of current A high level of current A high level of current
OBJECTIVES(2) income consistent with income consistent with income consistent with
prudent investment prudent investment prudent risk management
management and management and and preservation of
preservation of preservation of capital capital
capital, excludable
from gross income for
federal and California
income tax purposes
PORTFOLIO SECURITIES(3) Intermediate and Intermediate and U.S. Government
long-term municipal long-term U.S. securities, debt
securities of Government obligations securities of foreign
California issuers and mortgage related governments and
securities issued by companies, and
U.S. Government lower-rated, high-yield
agencies or debt securities of
instrumentalities or U.S. companies
private issuers
QUALITY OF DEBT Quality Quality Full Range
SECURITIES(4) -- three highest rating -- three highest rating -- All rating quality
quality grades, such as quality grades, such as grades, such as Moody's
Moody's (Aaa, Aa, A) or Moody's (Aaa, Aa, A) or (Aaa, Aa, A, Baa, Ba,
S&P (AAA, AA, A) S&P (AAA, AA, A); B, Caa, Ca, C, D) or
primarily highest S&P (AAA, AA, A, BBB,
quality BB, B, CCC, CC, C, D)
</TABLE>
See Footnotes (2) through (4) on page 16.
18
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND STRATEGIC
BALANCED FUND INCOME FUND GROWTH FUND GLOBAL GROWTH FUND
<S> <C> <C> <C> <C>
For long-term investors For long-term investors For long-term investors For long-term investors
seeking a balance of primarily seeking seeking growth of seeking growth of
capital growth and high growth of capital, with capital only, and who capital only, and who
current income, and who some current income, can accept price can accept price
can accept price and who can accept fluctuations fluctuations and the
fluctuations price fluctuations special risks involved
with substantial
foreign investing
Long-term capital Long-term capital Long-term capital Long-term capital
growth and a high level growth and some current growth, without growth, without
of current income income consistent with consideration of consideration of
consistent with prudent prudent investment current income, current income,
investment management management consistent with prudent consistent with prudent
and preservation of investment management investment management
capital
Common and preferred Common and preferred Common and preferred Common and preferred
stocks, convertible stocks and convertible stocks and convertible stocks and convertible
securities and bonds securities selected securities selected securities of U.S. and
primarily for their solely for their foreign companies
appreciation potential appreciation potential
and, in many instances,
for their dividend
paying ability
Investment Grade
-- four highest rating quality grades such as Moody's (Aaa, Aa, A, Baa) Full Range
or S&P -- All rating quality
(AAA, AA, A, BBB) grades, such as Moody's
(Aaa, Aa, A, Baa, Ba,
B, Caa, Ca, C, D) or
S&P (AAA, AA, A, BBB,
BB, B, CCC, CC, C, D)
</TABLE>
See Footnotes (2) through (4) on page 16.
19
<PAGE>
- ----------------------------------------------
WHAT COMPANIES ARE AFFILIATED WITH THE FUNDS?
Atlas Assets, Inc. (the "Company") was organized by Golden West Financial
Corporation ("Golden West Financial") and is owned by the Atlas Funds'
shareholders. Golden West Financial is a New York Stock Exchange listed
savings and loan holding company, headquartered in Oakland, California, with
assets at December 31, 1995 in excess of $35 billion. The Company has
engaged Atlas Advisers, Inc. (the "Adviser") and Atlas Securities, Inc. (the
"Distributor"), two wholly owned subsidiaries of Golden West Financial, to
provide investment advice and distribution services to the Atlas Funds.
The Adviser is a registered investment adviser. The Adviser has overall
responsibility for the investment advisory services provided to the Atlas
Funds, including formulating the Funds' investment policies, analyzing
market conditions, providing portfolio management services to certain of the
Atlas Funds directly, and monitoring and evaluating the portfolio management
services provided to selected Atlas Funds by others (the "Subadviser" or
"Subadvisers").
The Distributor is a broker-dealer registered with the Securities and
Exchange Commission ("SEC") and maintains membership with the National
Association of Securities Dealers. It is the principal underwriter and sole
distributor of the Company's shares. The Adviser and the Distributor have
contracted with World Savings and Loan Association ("World Savings" or
"World"), Golden West Financial's principal operating subsidiary, for
certain services and facilities to be used in the conduct of mutual fund
operations. The Distributor has established Atlas Investment Centers in
Arizona, California, Colorado, Florida, Kansas, New Jersey and Texas
branches of World Savings, a federally chartered institution with 230
branches in 7 states, as of December 31, 1995. NEITHER THE COMPANY, THE
ADVISER NOR THE DISTRIBUTOR IS A SAVINGS AND LOAN ASSOCIATION OR A BANK, AND
ATLAS FUND SHARES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL OR
PRIVATE INSURANCE FUND.
- ----------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT LIMITATIONS?
All of the Atlas Funds operate under the following fundamental limitations:
Each Atlas Fund will limit its investment in illiquid assets, such as
restricted securities or repurchase agreements and time deposits with more
than seven days to maturity, to no more than 10% of total assets. The Atlas
Balanced, Global Growth, Strategic Growth and Strategic Income Funds have
adopted this restriction as a non-fundamental operating policy.
Each Atlas Fund will limit its investments in the securities of issuers in
any one industry (except for investments in obligations of the U.S.
Government, its agencies or instrumentalities and municipal obligations) to
no more than 25% of net assets.
Each Atlas Fund, except the California Funds, is "diversified." With respect
to at least 75% of a Fund's total assets, each diversified Fund will limit
its purchases of the securities of a single issuer (except securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities) to
no more than 5% of the Fund's total assets and no more than 10% of the
issuer's outstanding voting securities.
The California Funds, due to the limited number of securities available to
meet their investment objectives, are classified as "non-diversified" under
the Investment Company Act of 1940, as amended (the "1940 Act"). This means
they are not limited in the proportion of their respective assets that may
be invested in the obligations of a single issue or issuer. Each California
Fund will, however, comply with diversification requirements imposed by the
Internal Revenue Code of 1986 (the "Code"), in order to pass on the maximum
tax benefits associated with the income earned by each Fund to each
investor. The Atlas California Municipal Bond Fund and the Atlas California
Insured Intermediate Municipal Fund may assume large positions in the
obligations of a small number of issuers which may cause the Fund's share
price to fluctuate to a greater extent than share prices of funds holding
more diversified portfolios.
20
<PAGE>
- ----------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT POLICIES?
The TREASURY MONEY FUND maximizes safety by investing in debt securities
issued by the U.S. Treasury. These securities, the only securities in which
this Fund will invest, are guaranteed as to principal and interest by the
full faith and credit of the U.S. Government and are of the highest possible
credit quality. Though such securities involve little risk of loss of
principal, if held to maturity, like any debt obligation they are subject to
variations in market value due to fluctuations in interest rates. The
Treasury Money Fund reduces this market risk by investing only in securities
maturing in 13 months or less and by maintaining an average weighted
maturity of 90 days or less.
The NATIONAL FUNDS will, under normal market conditions, each invest at
least 80% of its assets in, or derive at least 80% of its income from,
municipal securities which distribute interest that is excludable from gross
income for federal income tax purposes. The Atlas National Municipal Money
Fund reduces its market risk by investing 100% of its assets in securities
maturing in 13 months or less. The Atlas National Insured Intermediate
Municipal Fund seeks to reduce its market risk by maintaining a dollar
weighted average portfolio maturity between three and ten years.
The CALIFORNIA FUNDS will, under normal market conditions, each invest at
least 80% of its assets in, or derive at least 80% of its income from,
municipal securities which in the opinion of bond counsel bear interest that
is excludable from gross income for federal income tax purposes, and is
exempt from California state personal income tax. These may include
securities issued by the Commonwealth of Puerto Rico, U.S Virgin Islands and
Guam. The Atlas California Municipal Money Fund reduces its market risk by
investing 100% of its assets in securities maturing in 13 months or less.
The Atlas California Insured Intermediate Municipal Fund seeks to reduce its
market risk by maintaining a dollar weighted average portfolio maturity
between three and ten years. Factors which affect California municipal
issuers, such as regional economic downturns, voter initiatives limiting
government taxing or spending powers, or legal or regulatory changes, will
have a greater impact on the California Funds than they would on more
geographically diversified tax-free funds.
All six of the MUNICIPAL FUNDS may invest up to 20% of their assets in
taxable securities. The Municipal Funds are not limited with respect to
investments in municipal obligations classified as "private activity bonds"
by the Code. Private activity bonds are subject to federal alternative
minimum tax. For a complete discussion of private activity bonds and their
potential tax effect, please see the Appendix -- "Portfolio Strategies --
Money Funds" and "How can taxes affect my investment?". When, in the opinion
of the Adviser or Subadviser, abnormal market conditions require a temporary
defensive position, each of the Municipal Funds may invest more than 20% of
its assets in taxable obligations of the same quality and maturity standards
as the tax exempt securities in which it normally invests. Please see the
Appendix for additional discussion of the Municipal Money Funds' quality and
maturity standards.
The INSURED FUNDS will, under normal market conditions, each invest at least
65% of its assets in insured municipal securities rated AAA by S&P or Aaa by
Moody's. Such insured municipal securities will be: (i) insured under a
new-issue insurance policy obtained by the issuer of the security at the
time of original issuance ("new-issue insurance"); (ii) insured under a
secondary market insurance policy purchased by the Fund or a previous holder
of the security ("secondary market insurance"); or (iii) insured under an
insurance policy purchased by the Fund ("mutual fund insurance"). Insurance
minimizes the risks to a Fund and its shareholders associated with defaults
of the insured portfolio securities owned by a Fund. Insurance provides for
the timely payment of interest and repayment of
21
<PAGE>
principal; it neither guarantees the market value of the securities in the
Insured Funds' portfolios nor the value of the shares of a Fund.
The ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND will, under normal
market conditions, invest at least 80% of its assets in U.S. Government
securities, mortgage securities, and in repurchase agreements collateralized
by mortgage securities. U.S. Government securities are issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, and include
mortgage-backed securities issued by the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC") (please see the Appendix).
At least 50% of this Fund's assets will be invested in U.S. Government
securities (including GNMA government securities, and FNMA and FHLMC
government agency mortgage securities) and at least 25% of its assets will
be invested in mortgage securities (including U.S. Government and government
agency mortgage securities, and privately issued mortgage related and
mortgage-backed securities).
The ATLAS U.S. GOVERNMENT INTERMEDIATE FUND will, under normal market
conditions, invest at least 65% of its assets in U.S. Government securities
(including GNMA, FNMA and FHLMC obligations). This Fund seeks to reduce its
market risk by maintaining a dollar weighted average portfolio maturity
between three and ten years.
The GOVERNMENT FUNDS may engage in reverse repurchase and dollar reverse
repurchase agreements, when-issued and firm commitment transactions and in
futures and options transactions (please see the Appendix "Investment
Guidelines -- Bond and Stock Funds" for more about these transactions). The
Funds may also anticipate interest rate movements by purchasing
interest-only or principal-only stripped bonds, though there is no assurance
that its predictions will prove accurate.
The ATLAS STRATEGIC INCOME FUND will, under normal market conditions, invest
in each of three market sectors: (1) U.S. Government securities, (2) debt
securities of foreign governments and companies, and (3) lower-rated, high-
yield debt securities of U.S. companies. From time to time the manager will
adjust the amounts the Fund invests in each sector.
By investing in all three sectors, the Fund seeks to reduce the volatility
of fluctuations in its net asset value per share, because the overall
securities price and interest rate movements in each of the different
sectors are not necessarily correlated with each other. Changes in one
sector may be offset by changes in another sector that moves in a different
direction. Therefore, this strategy may help reduce some of the risks from
negative market movements and interest rate changes in any one sector.
However, the Fund may invest up to 100% of its assets in any one sector if
its Subadviser believes that in doing so the Fund can achieve its objective
without undue risk to the Fund's assets.
When investing the Fund's assets, the Subadviser considers many factors,
including general economic conditions in the U.S. and abroad, prevailing
interest rates, and the relative yields of U.S. and foreign securities.
While the Fund may seek to earn income by writing covered call options,
market price movements may make it disadvantageous to do so. The Fund may
also try to hedge against losses by using hedging strategies described
below. When market conditions are unstable, the Fund may invest substantial
amounts of its assets in money market instruments for defensive purposes.
These strategies are described in greater detail in the Appendix and also in
the Statement of Additional Information.
The amount of income the Fund may earn to distribute to shareholders will
fluctuate depending on the securities the Fund owns and the sectors in which
it invests. THE FUND IS NOT A COMPLETE INVESTMENT PROGRAM AND IS DESIGNED
FOR INVESTORS WILLING TO ASSUME A HIGHER DEGREE OF RISK. THERE IS NO
ASSURANCE THAT THE FUND WILL BE ABLE TO ACHIEVE ITS INVESTMENT OBJECTIVE.
THE HIGH-YIELD, LOWER-
22
<PAGE>
RATED SECURITIES IN WHICH THE FUND INVESTS, ARE CONSIDERED SPECULATIVE
INVESTMENTS. SEE INVESTMENT GUIDELINES -- BOND AND STOCK FUNDS, "SPECIAL
RISKS OF LOWER RATED SECURITIES," FOR A DISCUSSION OF THESE RISKS.
The ATLAS BALANCED FUND will, under normal market conditions, invest
primarily in a combination of income-producing equity securities (defined as
common stocks, preferred stocks, and securities having the investment
characteristics of common stock, such as securities convertible into common
stock). To achieve its additional objective of conserving principal while
seeking moderate capital appreciation, the Fund will invest in securities of
the type described above thought by the Fund's Subadviser to provide
opportunities for growth without undue risk. The proportion of this Fund's
assets invested in the particular types of securities described above will
vary from time to time, with emphasis on income producing equity securities
but with at least 25% of assets invested in fixed income senior debt.
The ATLAS GROWTH AND INCOME FUND will, under normal market conditions,
invest at least 65% of its assets in equity securities (as previously
defined) expected to grow at a rate that outperforms the general market over
the long-term. Many of these securities will pay dividends. Companies will
be evaluated by the Fund's Subadviser based on a variety of factors
including: quality of management, undervalued assets, or higher projected
earnings growth relative to recognized market benchmark indicators such as
the Standard & Poor's 500 composite index of companies.
The ATLAS STRATEGIC GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) considered by the
Fund's Subadviser to have better-than-expected earnings prospects and below-
normal valuations. Current income will not be a consideration in selecting
portfolio securities.
The ATLAS GLOBAL GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) of growth-oriented
companies that are traded in markets of at least three different countries
(which may include the United States). These securities tend to be issued by
companies that may be developing new products or services, or expanding into
new markets for their products. The Fund may invest in securities of
smaller, less well-known companies as well as those of large, well-known
companies. Current income is not a consideration in selecting
portfolio securities.
The Fund's Subadviser currently employs an investment strategy in selecting
foreign and domestic securities that considers the effects of worldwide
trends on the growth of various business sectors. These trends or "global
themes" currently include telecommunications expansion, emerging consumer
markets, infrastructure development, natural resource use and development,
corporate restructuring, capital market development in foreign countries,
health care expansion, and global integration. These trends, which may
affect the growth of companies having business in these sectors, may suggest
opportunities for investing the Fund's assets. The Subadviser does not
invest a fixed or specific amount of the Fund's assets in any one sector,
and these themes or this approach may change over time.
The Fund may also seek to take advantage of changes in the business cycle by
investing in companies that are sensitive to those changes as well as in
"special situations" the Subadviser believes present opportunities for
capital growth. For example, when a country's economy is expanding,
companies in the financial services and consumer products industries may be
in a position to benefit from changes in the business cycle and may present
long-term
growth opportunities.
When investing the Fund's assets, the Subadviser considers many factors,
including the global themes discussed above, general economic conditions
abroad relative to the U.S. and the trends in foreign and domestic stock
markets. THE FUND IS NOT A COMPLETE
23
<PAGE>
INVESTMENT PROGRAM AND IS DESIGNED FOR INVESTORS WILLING TO ASSUME A HIGHER
DEGREE OF RISK. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO ACHIEVE
ITS INVESTMENT OBJECTIVE. SEE INVESTMENT GUIDELINES -- BOND AND STOCK FUNDS,
"RISKS OF FOREIGN SECURITIES," FOR A DISCUSSION OF THESE SPECIAL RISKS.
Each Stock Fund may seek investment opportunities among securities of
smaller, less well known ("unseasoned") companies as well as securities of
large, well known companies. Each Stock Fund may also invest in investment
grade bonds and notes issued by U.S. and foreign governments and
corporations, and money market securities.
At times one or more of the Stock Funds may judge that conditions in the
securities markets make pursuing its basic investment strategy inconsistent
with the best interests of its shareholders. At such times, each Fund may
invest up to 100% of its assets in debt securities and money market
instruments, as a temporary defensive measure, and may hold a significant
portion of its assets in cash or money market instruments. The Bond Funds
and the Stock Funds may, for hedging purposes, engage in certain futures,
options on futures and options on securities transactions and the Stock
Funds and the Strategic Income Fund may enter into foreign securities
transactions and currency exchange contracts. For a detailed discussion of
these strategies, please see the Appendix.
The investment objectives listed in "What are the Funds' investment
objectives?" and the investment limitations listed in "What are the Funds'
investment limitations?" are fundamental and cannot be changed without
shareholder approval. All other investment policies and practices described
in this Prospectus and in the Statement of Additional Information (the
"SAI"), unless specifically designated as fundamental, are not fundamental
and can be changed by the Company's Board of Directors without shareholder
approval.
Any investment involves risk and there can be no assurance that a Fund will
achieve its investment objectives. The market value of fixed-income
securities (which constitute the primary investments of the Money and Bond
Funds) can be expected to vary inversely in response to changes in
prevailing interest rates. Generally, the effect of these changes is not
significant on money market instruments, but for longer term securities the
effect is greater. Because of this, the Bond Funds (including the
Intermediate Funds) should be considered as long-term investments.
Shareholders of the Municipal Funds, if they are subject to a federal
alternative minimum tax, may pay an increased alternative minimum income tax
depending on the amount and type of dividends received from those Funds.
Potential investors in the California Funds should consider the possibly
greater risk arising from the geographic concentration and non-diversified
structure of their investments, as well as the current and past financial
condition of California municipal issuers.
The market value of equity securities (which constitute the primary
investments of each of the Stock Funds) may fluctuate over shorter or longer
periods with changing market and economic conditions. Therefore, the Stock
Funds are not suitable investments for anticipating short-term market swings
or for short-term financial needs, and should not be considered a substitute
for a fixed-income investment. Additional information about investment
strategies and policies that one or more of the Funds may employ appears in
the Appendix to this Prospectus and in the SAI.
- ----------------------------------------------
HOW ARE THE FUNDS ADMINISTERED?
The Board of Directors supervises the business activities of the Company,
which include the hiring and supervision of professionals to administer the
Atlas Funds, approval of contracts, election of officers, and approval of
auditor selection and reports. The Directors
24
<PAGE>
bring to the Funds extensive experience in investments, financial services
management, economics, and accounting. Their primary responsibility in
overseeing the Atlas Funds is to serve the investors' best interests. You
will find information about each Director's background in the SAI.
THE ADVISER
The Adviser provides portfolio management services to the Treasury Money
Fund and the Government Funds, and supervises the provision of similar
services to the Municipal Funds by Boston Safe Advisors, Inc. (the
"Municipal Funds' Subadviser") located at One Boston Place, Boston,
Massachusetts 02108, and to the Stock Funds by Oppenheimer Management
Corporation (the "Stock Funds' Subadviser") located at Two World Trade
Center, New York, New York 10048. The Adviser, established by Golden West
Financial to provide investment advisory and portfolio management services
to the Atlas Funds, began operations at the Company's January 10, 1990
inception. To provide services to its sole client, the Adviser has retained
investment professionals with substantial experience in managing
institutional and individual investments.
Marion O. Sandler, Chairman and Chief Executive Officer of Golden West
Financial and World Savings, is Chairman of the Board, Chief Executive
Officer and President of the Adviser, the Distributor and the Company.
Roberta A. Conger, Senior Vice President and Treasurer for World Savings, is
the person primarily responsible for the day-to-day management of the
portfolios of the Government Funds and the Treasury Money Fund. Ms. Conger
has more than 25 years experience as a trader and portfolio manager of
fixed-income securities, including the last 11 years involved in managing
the investments of Golden West Financial's over $2 billion portfolio of
mortgage-backed and mortgage related securities, money market instruments,
bonds, other debt obligations, and U.S. Government securities.
The Municipal Funds' Subadviser is a wholly owned subsidiary of The Boston
Company, Inc., an indirect wholly owned subsidiary of Mellon Bank
Corporation, a publicly owned multibank holding company ("Mellon"). As of
December 31, 1995, Mellon, through its subsidiaries, including the Municipal
Funds' Subadviser, provided investment advisory services to investment
company portfolios with aggregate assets in excess of $81 billion, of which
over $5 billion was in fixed-income assets and over $27 billion was in
tax-exempt assets. John F. Flahive, a Vice President with the Municipal
Funds' Subadviser, has been the person primarily responsible for the
day-to-day management of the Municipal Funds since November 1, 1994. Prior
to joining Mellon in October, 1994, Mr. Flahive was a Senior Portfolio
Manager at Neuberger & Berman for approximately one year. Prior to that, Mr.
Flahive was in the municipal bond departments of T. Rowe Price and Dean
Witter for approximately 8 years.
The Stock Funds' Subadviser is owned by Oppenheimer Acquisition Corp., a
holding company owned in part by senior management of the Stock Funds'
Subadviser and ultimately controlled by Massachusetts Mutual Life Insurance
Company, a mutual life insurance company which also advises pension plans
and investment companies. As of December 31, 1995, the Stock Funds'
Subadviser and its affiliates advised U.S. investment companies with
aggregate assets in excess of $29 billion, of which approximately $11
billion was invested in equity funds. The Portfolio Managers of the Atlas
Growth and Income Fund are Bruce Bartlett and Diane L. Sobin. They have been
the persons principally responsible for the day-to-day management of that
Fund since July 5, 1995. During the past five years, Mr. Bartlett, a Vice
President and Portfolio Manager of the Stock Funds' Subadviser, was
previously a Vice President and Senior Portfolio Manager with First of
America Investment Corporation. During the past five years, Ms. Sobin, a
Vice President and Portfolio Manager of the Stock Funds' Subadviser, was
previously a Vice President and Senior Portfolio Manager with Dean Witter
InterCapital, Inc. John P. Doney, Vice President and Portfolio Manager of
the Stock Funds'
25
<PAGE>
Subadviser, and Robert C. Doll, Jr., Executive Vice President and Portfolio
Manager of the Stock Funds' Subadviser, have been the persons primarily
responsible for the day-to-day management of the Atlas Balanced Fund and the
Atlas Strategic Growth Fund, respectively, since each Fund's inception of
operations on October 1, 1993. William L. Wilby has been the person
primarily responsible for the day-to-day management of the Atlas Global
Growth Fund since that Fund's inception of operations. During the past five
years, Mr. Wilby, a Senior Vice President and Portfolio Manager of the Stock
Funds' Subadviser, has served as an officer and portfolio manager for
various funds managed by the Stock Funds' Subadviser, prior to which he was
an international investment strategist at Brown Brothers, Harriman & Co. and
a Managing Director and Portfolio Manager at AIG Global Investors.
Arthur P. Steinmetz and David P. Negri have been the individuals primarily
responsible for the day-to-day management of the Atlas Strategic Income Fund
since that Fund's inception of operations. During the past five years, Mr.
Steinmetz, a Senior Vice President and Portfolio Manager of the Stock Funds'
Subadviser, and Mr. Negri, a Vice President and Portfolio Manager of the
Stock Funds' Subadviser have each served as officers and portfolio managers
of various funds managed by the Stock Funds' Subadviser.
A Subadviser may be removed by the Adviser or by the Company at any time, in
which event the Adviser would directly manage the Fund or another Subadviser
would be engaged for that purpose.
Each Fund pays the Adviser a management fee for investment management
services. The Adviser, in turn, pays a Subadviser for its portfolio
management services. The management fee is an annual rate, equal to a
percentage of each Fund's average net assets and paid monthly as follows:
ANNUAL MANAGEMENT FEES
<TABLE>
<CAPTION>
Assets over
$100 million Assets over
Assets up to and up to $500
Funds $100 million $500 million million
<S> <C> <C> <C>
- ---------------------------------------------------------------
Money Funds .50% .50% .475%
Bond Funds
(other than the
Strategic
Income Fund) .55% .55% .50%
Strategic Income
Fund .75% .70% .65%
Stock Funds
(other than the
Global Growth
Fund) .70% .60% .50%
Global Growth
Fund .80% .75% .70%
</TABLE>
Additionally, the Adviser oversees the transfer agent services provided to
the Funds by State Street Bank and Trust Company ("SSB&T"), and by SSB&T's
designated Shareholder Services Agent, National Financial Data Services
("NFDS"), and the custodial and accounting services provided by Investors
Bank and Trust Company ("IBT").
In addition to the management fee, each Fund will pay directly or reimburse
the Adviser for expenses incurred on a Fund's behalf. These expenses
include, but are not limited to: fees for custody, transfer agency, dividend
disbursement, accounting, pricing, legal and auditing services; filing and
registration fees; shareholder reports; printing and postage; office
facilities, stationery and supplies; the clerical, executive and
administrative costs incurred by the Adviser in overseeing or administering
all of the above; and other direct administrative and service costs. Common
expenses will be allocated to each Fund on a basis the Company's Directors
deem fair and equitable.
26
<PAGE>
THE DISTRIBUTOR AND DISTRIBUTION PLANS
The shares of each Atlas Fund are distributed by Atlas Securities, Inc. (the
"Distributor"), which serves as the principal underwriter of each Fund's
shares, pursuant to a Principal Underwriting Agreement which provides for a
commission to be paid at the time of purchase of Class A shares of the Bond
and Stock Funds and on a contingent deferred basis upon the redemption of
Class B shares of those Funds and the Atlas U.S. Treasury Money Fund (please
see "What price will I pay?" for more information). The Distributor may also
receive payments under separate Distribution Plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act"), approved by the Company's Board of Directors,
which are subject to annual renewal. The combination of CDSC and
distribution fees retained by the Distributor (as described under "Class B
Distribution Plan") facilitate the sale of Class B shares without a sales
charge being deducted at the time of purchase.
Under the Class A Distribution Plan, the Company may reimburse the
Distributor up to a maximum of .25% per year of average daily net assets of
all Class A shares outstanding for each Fund, payable on a quarterly basis,
for actual costs expended on behalf of that Fund for advertising, marketing,
distribution, shareholder services and the printing and distributing of the
Company's Prospectus, Statement of Additional Information and sales
literature. Reimbursements from one Atlas Fund will not be expended for
expenses of another Atlas Fund. The Distributor may, in turn, make payments
up to a maximum of .25% per year to securities dealers for distribution
services, though shares are currently offered only through the Distributor.
Under the Class B Distribution Plan, the Distributor is compensated for its
services and costs incurred in connection with the distribution of and
distribution-related services for the Funds' Class B shares. Pursuant to the
Class B Plan, each Fund that has sold Class B shares will, on a monthly
basis, pay the Distributor a distribution fee of 1/12 of the annual fee
computed on the average net asset value of all Class B shares outstanding
for the month. The Plan limits the distribution fee to 0.75% per annum.
Distribution fee payments attributable to Class B shares are designed to
permit an investor to purchase shares of a Fund without the assessment of a
front-end sales charge and at the same time permit the Distributor to
compensate its investment representatives in connection with the sale of
Class B shares of a Fund. The Distributor's actual distribution expenses for
any given year may exceed the aggregate of payments received pursuant to the
Class B Plan, and such expenses may be carried forward and paid in future
years. The Class B Plan has the effect of increasing annual expenses of
Class B shares of a Fund from what its expenses would otherwise be and
thereby decreasing income dividends, if any.
THE FUNDS
The Company was organized as a Maryland corporation on November 19, 1987.
The Company's shares are currently issued in fourteen series and, except as
otherwise indicated below, have equal rights and privileges. Each share
represents an interest only in one particular Atlas Fund. When issued,
shares are fully-paid and nonassessable, and have no preemptive,
subscription, or cumulative voting rights. The Company's Articles of
Incorporation, as amended, allow the Board of Directors to issue one billion
shares, to increase this amount and to establish additional Atlas Funds.
Each shareholder of a Fund is entitled to a proportionate share of that
Fund's dividends and distributions and net distributable assets upon
liquidation.
The Company's Board of Directors has authorized two classes of stock (Class
A and Class B) for each Fund, which constitute the Company's shares of
capital stock. As of April 19, 1994, all of the previously outstanding
shares of each Fund were redesignated as Class A shares without any other
changes. As described in this Prospectus, each class has different
dividends, distributions and expenses and may have different net asset
values. Class B shares will
27
<PAGE>
automatically convert to Class A shares sixty months after an investor's
purchase order for Class B shares is accepted. See "What is the Class B
sales charge alternative?".
The Company does not normally hold annual shareholders meetings. Meetings of
shareholders will be held as determined by the Board of Directors or as
required by the 1940 Act or other applicable law. The Board of Directors is
committed to keeping you well informed about your Fund investments through
regular reports. Shareholder meetings may be called for such matters as
electing Directors, approving investment advisory agreements or making a
change to a Fund's fundamental policies. Each shareholder is entitled to one
vote per share on matters affecting that Fund and on general matters.
Shareholders of a particular Class have the exclusive right to vote by Class
on matters determined by the Board to affect only that Class. On all other
matters submitted to a vote of the stockholders, the holders of separate
Classes of shares of a Fund vote together as a single Class. A meeting must
be held within 60 days in the event that, at any time, less than a majority
of the Directors holding office were elected by shareholders. Holders of 10%
of the shares of a Fund may require a shareholder meeting for any reason,
including removal of a Director.
28
<PAGE>
INVESTOR'S MANUAL
- --------------------------------
HOW CAN I COMMUNICATE WITH
THE FUNDS?
An Atlas Investment Representative will always be happy to help you and
answer any questions you may have. To talk to an Atlas Investment
Representative, please call 1-800-933-ATLAS (1-800-933-2852). Atlas
Securities, Inc. is headquartered at:
1901 Harrison Street
Oakland, California 94612
You can deliver your payment and any related documents to Atlas headquarters
or to the World branch nearest you. The Distributor will forward those
payments and documents to the Shareholder Services Agent (the "Agent") for
pricing and investment purposes. Normally, your forwarded documents will
reach the Agent within three business days, although this cannot be
guaranteed. Of course, you can always send New Account Forms, checks,
written requests, instructions or inquiries by regular mail or by special
overnight, certified or registered delivery, directly to the Agent at the
following addresses:
REGULAR MAIL
Atlas Funds
P.O. Box 419056
Kansas City, MO 64141-6056
SPECIAL DELIVERY
Atlas Funds
c/o NFDS
1004 Baltimore
Kansas City, MO 64105-1807
The New Account Form is an important way for you to communicate with a Fund.
For IRAs, the IRA Adoption Agreement & Transfer Form serves the same
purpose. The New Account Form is enclosed with this Prospectus and serves
several purposes:
/ /The New Account Form tells the Agent how you
want the account registered. The account registration is the name, mailing
address, and type of account, such as individual, joint or corporate. This
identifies the legal owner of the shares and tells the Agent how to
communicate with the owner.
/ /The New Account Form tells the Agent what
your social security or taxpayer identification number is and provides the
tax status information and certification required by the Internal Revenue
Service.
/ /The New Account Form tells the Agent which
service features you wish to select, such as Telephone Exchange, Expedited
Payment and Checkwriting, if available (please see "What services are
available?").
/ /The New Account Form provides the Agent with
the signatures and authorizations required to carry out your instructions.
29
<PAGE>
- --------------------------------------------------------------------------------
HOW CAN I INVEST?
There are several options available to you for investing in an Atlas Fund.
If you are purchasing an Atlas Bond or Stock Fund, you will need to decide
whether Class A shares, which are subject to a front-end sales charge, or
Class B shares, which are subject to a contingent deferred sales charge, are
best for you.
Additional information is contained in "What price will I pay?", "What is
the Class A sales charge option?", "What is the Class B sales charge
alternative?", "What else should I know about purchases?" and "What services
are available?". If you have any questions or
wish to schedule an appointment with an Atlas Investment Representative at a
World branch, just call 1-800-933-ATLAS (1-800-933-2852) for assistance.
OPENING YOUR ACCOUNT -- You can deliver your check and New Account Form in
person to your World branch for forwarding to the Agent or mail your check,
New Account Form and any other related documents to the address listed on
the Information and Instructions to the New Account Form. The minimum
initial investment is $2,500 ($250 for IRAs and accounts of officers,
directors, current regular full-time employees and regular part-time
employees, or retired employees of Golden West Financial companies "employee
accounts").
SUBSEQUENT PURCHASES -- The minimum subsequent investment is $250 ($50 for
employee accounts). You can deliver your check in person or mail it to the
address printed on your last confirmation statement. Please indicate the
name of the Fund, Class of shares and account number on your check, or in
your written request, or include a stub from a prior statement.
TELEPHONE ORDERS -- FOR WORLD'S INSURED MONEY MARKET ACCOUNT BANK
WIRES: call 1-800-933-ATLAS and an Atlas Investment Representative will help
you set up your Fund account and complete the wire transfer for $2,500 or
more ($1,000 or more for subsequent purchases). FOR ALL OTHER BANK WIRES:
call 1-800-933-2852 for an account number and to notify us of the wire, then
instruct your bank to wire $2,500 or more ($1,000 or more for subsequent
purchases) to:
INVESTORS BANK & TRUST COMPANY
ABA#011001438
ACCOUNT #188888888
FUND NAME:
CLASS OF SHARES: (PLEASE SPECIFY A OR B)
CUSTOMER NAME:
FUND ACCOUNT #:
Your bank may charge you a fee for this service.
Please see "What services are available? -- Telephone transactions" for
information on World's Insured Money Market Account one-call wire feature.
All other wires from any bank or savings institution, including those from
other World accounts, will require you to contact Atlas and also coordinate
with your bank or savings institution to have the money wired.
ORDER PROCESSING -- All Bond and Stock Fund payments received in good order
by the Agent by 4:00 pm Eastern time (1:00 pm Pacific time) on any day the
New York Stock Exchange is open for normal trading will be invested at the
next determined price. Money Fund payments received by bank wire will be
invested at the next determined price. Money Fund payments received by check
or draft will be invested at the next determined price after conversion to
federal funds, which normally occurs on the business day following the
Agent's receipt of the payment in good order.
- ----------------------------------------------
WHAT PRICE WILL I PAY?
The value of each share you own is referred to as its net asset value, which
is determined by deducting portfolio liabilities from portfolio assets and
dividing the net amount by the number of shares outstanding. Net asset value
per share is calculated at the close of regular trading, normally 4:00 pm
Eastern time (1:00 pm Pacific time), each business day the New York Stock
Exchange is open for normal trading. The net asset values of Class A shares
and Class B shares may diverge due to the different
30
<PAGE>
distribution and other expenses of each class of shares. Each Fund, other
than the Atlas Municipal Money Funds, which only offer Class A shares,
offers both Class A and Class B shares.
MONEY FUND PRICES --You can buy Class A shares of each of the three Money
Funds at net asset value without a sales charge. The Municipal Money Funds
are only available in Class A. Class B shares of the Atlas U.S. Treasury
Money Fund are sold without an initial sales charge, but are subject to the
same contingent deferred sales charge and distribution fee as described
below for Class B shares of Bond and Stock Funds. As a result, DIRECT
PURCHASES OF CLASS B SHARES OF THE ATLAS U.S. TREASURY MONEY FUND ARE
DISCOURAGED BECAUSE IT GENERALLY WILL BE MORE ADVANTAGEOUS FOR YOU TO
PURCHASE CLASS A SHARES. Each Money Fund attempts to maintain a constant net
asset value of $1.00 per share, though there can be no assurance that this
will always be achieved. The Money Funds value portfolio holdings by the
amortized cost method which is based on the cost of the security and assumes
a constant amortization to maturity of any discount or premium.
BOND AND STOCK FUND PRICES -- If you purchase Class A shares you will pay a
sales charge at the time of purchase of up to 3.00% of the public "offering
price" per share. As a result, Class A shares are not subject to any charges
when they are redeemed. Purchases of Class A shares may also qualify for
reduced sales charges (see "What is the Class A sales charge option?").
Class A shares have lower expenses than Class B shares because they pay a
lower distribution fee. Therefore, Class A shares pay correspondingly higher
dividends per share than Class B shares, to the extent any dividends are
paid. However, because a sales charge is deducted from your Class A share
investment at the time of purchase, you would initially own fewer shares of
Class A than if you purchased Class B shares, which under certain
circumstances could mean that Class B share purchases might be more
advantageous than Class A.
Class B shares are sold without an initial sales charge, but are subject to
a contingent deferred sales charge, payable at the time of redemption and
adjustable based on your holding period. This "adjustable load" starts at
3.00% for shares redeemed within two years of purchase, and gradually
reduces to 0% for shares held over five years. Class B shares are subject to
a distribution fee at the annual rate of up to 0.75% of the average net
assets attributable to the Class B shares. Class B shares will automatically
convert into Class A shares, based on relative net asset values, at the end
of the fifth year after purchase (see "What is the Class B sales charge
alternative?"). Class B shares provide the benefit of putting all of the
investor's dollars to work from the time the investment is made but, until
conversion into Class A shares, will have higher expenses and, therefore,
lower dividends than Class A shares due to the higher Class B distribution
fee. If Class B shares are not held for a full five years after purchase,
the contingent deferred sales charge, or adjustable load, applied at the
time of redemption could result in a Class B purchase being less
advantageous for an investor than Class A.
CLASS A OR CLASS B? -- The decision as to which Class of shares provides a
more suitable investment for you depends on a number of factors, including
the Fund being purchased and the amount and intended length of the
investment. DUE TO THE LOWER DISTRIBUTION FEE, CLASS A SHARE INCOME
DIVIDENDS WILL BE HIGHER THAN THOSE FOR CLASS B SHARES. HOWEVER, BECAUSE NO
FRONT-END SALES CHARGE IS PAID ON CLASS B SHARES AT THE TIME OF PURCHASE,
THE SAME INITIAL INVESTMENT WILL PURCHASE MORE CLASS B SHARES THAN CLASS A
SHARES. If you are making an investment that qualifies for a significantly
reduced sales charge or do not intend to leave your principal investment in
the Fund for a minimum of five years, you should consider purchasing Class A
shares. If you prefer not to pay an initial sales charge and plan to hold
your investment for more than five years, you should consider Class B
shares. WHEN PURCHASING SHARES OF A FUND, YOU MUST SPECIFY WHETHER YOU WISH
TO PURCHASE CLASS A OR CLASS B SHARES. ORDERS FOR CLASS B SHARES OF THE
ATLAS BOND AND STOCK FUNDS THAT WOULD QUALIFY FOR A
31
<PAGE>
CLASS A BREAKPOINT SALES CHARGE REDUCTION AT THE $100,000 LEVEL OR ABOVE
WILL BE DISCOURAGED. IT GENERALLY WILL BE MORE ADVANTAGEOUS FOR SUCH
PURCHASES TO BE MADE IN CLASS A SHARES. Your Atlas Investment Representative
will be happy to assist you in determining whether a Class A or Class B
purchase is best for you. You can visit your Atlas Investment Representative
in a World branch near you or call 1-800-933-ATLAS (1-800-933-2852) to make
an appointment with an Atlas Investment Representative or have one of our
Representatives help you over the telephone.
- ----------------------------------------------
WHAT IS THE CLASS A SALES CHARGE OPTION?
Class A shares of the Bond and Stock Funds are sold at their net asset value
plus a front-end sales charge imposed at the time of purchase.
SALES CHARGE DISCOUNTS -- Volume purchases of Class A Bond and Stock Fund
shares qualify you for a sales charge reduction if you reach one of the
"breakpoints" shown in the following table. The table shows the sales charge
for Class A shares as a percentage of the offering price, which is the total
amount you pay, including the sales charge, and as a percentage of the net
amount invested, which is what remains after the sales charge is deducted.
<TABLE>
<CAPTION>
Breakpoint Sales charge -- Class A
based on Shares
amount of Class A (as a % of)
shares purchase Offering Net amount
(at offering price) price invested
<S> <C> <C>
Less than $25,000 3.00% 3.09%
$25,000 to $49,999 2.75% 2.83%
$50,000 to $99,999 2.50% 2.56%
$100,000 to $249,999 2.00% 2.04%
$250,000 to $499,999 1.50% 1.52%
$500,000 to $999,999 0.75% 0.76%
$1,000,000 and over 0.50% 0.50%
</TABLE>
You can combine all of your Atlas Fund purchases of Class A shares and the
balances of your other Class A and Class B share Atlas Funds' accounts with
accounts of your spouse, your children under the age of 21, your employee
benefit plan, and any trust or custodial accounts for which you, your spouse
or your children under the age of 21 are beneficiaries (collectively
referred to as "related purchases" or "related accounts") in order to
qualify for a sales charge reduction.
RIGHT OF ACCUMULATION -- You can qualify for a breakpoint sales charge
reduction by combining all Class A Bond and Stock Fund related purchases
with the current net asset value of all Class A and Class B share Bond,
Stock and Money Fund related accounts.
WORLDLINK -- If your Class A Atlas Fund purchase is made with a check or
bank wire from a financial institution other than World Savings ("World"),
you can include the balances in your World Accounts, with the related
accounts described in "Right of accumulation" above to qualify for an even
greater breakpoint sales charge reduction. Besides investing with money from
an institution other than World, you must submit a completed WorldLink Form
with each Class A share purchase to qualify for the discount. The WorldLink
Form, your check, and New Account Form if applicable, must be dropped off at
your World Branch. They will be forwarded to World's Headquarters where your
World account balances will be verified as of the business day before the
Agent processes your investment. Because balances must be verified at
World's Headquarters, Class A share purchases mailed directly to the Agent
will not qualify for a WorldLink sales charge reduction. A WorldLink Form
can be found in the back of this prospectus and is available at your World
Branch or from your Atlas Investment Representative.
LETTER OF INTENT -- You can qualify for additional breakpoint sales charge
reductions if you plan to spread your Class A Bond or Stock Fund investments
over a period of time by agreeing to a nonbinding Letter of Intent ("LOI").
You may combine the amount of all intended Bond or Stock Fund related Class
A purchases over a 13-month period with the net asset value of all Class A
and Class B share Bond, Stock and Money Fund related accounts (but not World
32
<PAGE>
Savings Accounts), as of the starting date of the LOI, to determine the
sales charge applicable to each of the intended Class A Bond or Stock Fund
purchases. You may choose to start a LOI on the date your LOI is received by
the Agent or you may choose a starting date within 90 days preceding receipt
of your LOI to make earlier Class A Bond and Stock Fund purchases eligible
for the breakpoint sales charge level you expect to reach.
The Agent will hold in escrow sufficient shares to equal 5% of the expected
LOI amount (the "escrowed shares"), for subsequent payment of a higher sales
charge if you do not reach the expected LOI amount within the 13 months. The
escrowed shares will be released for your use after you have completed the
LOI. The SAI provides more detailed information on the LOI.
NET ASSET VALUE PURCHASES -- Class A shares of any Bond or Stock Fund may
also be purchased at net asset value (without a sales charge): by companies
affiliated with Golden West Financial; by investment accounts managed by the
affiliated companies; by affiliated company officers, directors, current
regular full-time and regular part-time employees (including certain members
of their families and certain of their trusts and employee benefit plans);
by any state, county, or city (including its agencies, instrumentalities or
authorities) which is prohibited by law from paying a sales charge in
connection with the purchase of shares of a mutual fund; on purchases for
individual retirement accounts, simplified employee pension plans or other
qualified retirement plans; and by individuals who pay with the proceeds
from a redemption, dividend, or distribution of shares of a non-affiliated,
non-money market mutual fund issued within the preceding 30 days and
accompanied by a confirmation or other satisfactory evidence of the
transaction from the non-affiliated, non-money market mutual fund. Use of a
non-affiliated money market fund as a conduit is permissible as long as it
can be shown that the proceeds previously resided in a non-affiliated,
non-money market mutual fund no more than 30 days prior to the Atlas Class A
Bond or Stock Fund share purchase. In all cases you must inform Atlas at the
time you invest of your eligibility for the sales charge waiver. The
categories of net asset value purchases are subject to change or elimination
by the Distributor at its sole discretion.
- ----------------------------------------------
WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?
You can buy Class B shares of Bond and Stock Funds at the net asset value
per share, without the imposition of a sales charge at the time of purchase.
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge (the
"CDSC") will be deducted from the redemption proceeds of Class B shares
redeemed within five years of their purchase, excluding shares purchased by
reinvestment of dividends or distributions. The CDSC will be charged on the
lesser of the net asset value per share on the redemption date or the
original purchase price per share of the shares being redeemed. No CDSC will
be imposed on increases in the principal value of your shares or on shares
acquired through the reinvestment of dividends and distributions. In order
to minimize the amount of CDSC to be paid, Class B shares will be redeemed
by first taking all shares acquired through the reinvestment of dividends or
distributions, which are never subject to a CDSC, followed by those shares
held the longest and therefore subject to the lowest CDSC.
The contingent deferred sales charge you pay will vary depending on the
number of years that elapse between the time you pay for Class B shares and
the time those shares are redeemed. That is why we refer to the CDSC as an
adjustable load. Solely for purposes of determining the number of years that
have elapsed since a purchase was made, all payments made during a month
will be aggregated and treated as made
33
<PAGE>
on the first day of the month. Any CDSC imposed on Class B share redemptions
will be assessed according to the following schedule:
<TABLE>
<CAPTION>
Contingent
deferred
sales charge on
redemption in
that year
(as % of
Year(s) since purchase applicable
order was accepted proceeds)
<S> <C>
One 3%
Two 3%
Three 2%
Four 2%
Five 1%
After five years None
</TABLE>
An ongoing distribution fee at an annual rate of up to 0.75% of average
daily net assets will be paid on all Class B shares. This fee will cause
Class B shares to have higher expenses and pay lower dividends than Class A
shares of the same Fund.
The following example may help you to understand how the CDSC works.
CDSC EXAMPLE -- Assume you purchased 100 Class B shares at $10 apiece and,
two years later, another 100 shares at $9 each. Three years after your
initial purchase, you have earned 15 shares through dividend reinvestment
and your shares are now valued at $12 a share. If you want to redeem 50
shares, the first 15 would be your dividend shares, since they are not
subject to a CDSC. The remaining 35 shares would come from your initial
purchase because those shares have been held the longest, three years, and
would only be subject to a 2% CDSC. Since your purchase price was lower than
the current value of $12 a share, the CDSC would be based on the purchase
price. For a redemption of 150 shares, the 15 dividend shares would still be
used first, free of CDSC. The 100 shares, which are three years old and have
been held the longest, would be used next, subject to a 2% CDSC. The
remaining 35 shares would come from your second purchase, subject to a 3%
CDSC for shares held two years or less. Since both purchase prices were
below the current value of $12 a share, the CDSC would be based on the
purchase prices. Your Atlas Investment Representative can provide additional
information for you or answer any further questions you may have on the
CDSC.
CLASS B AUTOMATIC CONVERSION FEATURE -- Sixty months after a purchase order
for Class B shares is accepted, such Class B shares will automatically
convert to Class A shares, on the basis of the relative net asset values of
the two classes, without the imposition of any sales charge or other fee.
Each time Class B shares convert to Class A, a pro rata portion of the Class
B shares acquired by the reinvestment of dividends or distributions that are
still held in your account will also convert to Class A shares, on the same
basis. The conversion feature is intended to relieve holders of Class B
shares of the higher distribution fee as soon as those shares are over five
years old and no longer subject to a CDSC.
WAIVERS OF CONTINGENT DEFERRED SALES CHARGE -- The CDSC will be waived on
redemptions made within one year of the death or total disability (as
evidenced by a determination of total disability by the U.S. Social Security
Administration) of all shareholders on the account, on the portion of
redemptions that represent the minimum required distribution from an
individual retirement account or other qualified retirement plan for a
shareholder who has attained the age of 70 1/2, and for involuntary
redemptions as a result of an account's balance remaining below $1,250 after
sixty days written notice.
- ----------------------------------------------
WHAT ELSE SHOULD I KNOW ABOUT PURCHASES?
GOOD ORDER -- means that you have provided the Shareholder Services Agent
(the "Agent") all the correct and complete information, documents, and
signatures required to process your purchase, and that your check or bank
wire payment is properly drawn on a U.S. bank and collectable in U.S.
dollars. We will gladly accept endorsed second party checks (those
originally made payable to you), but we cannot accept third party checks
(where the original payee endorsed the check for you). YOU MUST SPECIFY AT
THE
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TIME OF INVESTMENT WHETHER YOU ARE PURCHASING CLASS A OR CLASS B SHARES.
Corporations, trusts or other entities need to provide a Securities
Transactions Form to verify the persons authorized to give instructions on
the account. You can find a Securities Transactions Form in the back of this
Prospectus. If you have any questions, please call 1-800-933-2852 and an
Atlas Investment Representative will be happy to help you. To protect a Fund
and its shareholders, Atlas Funds or its agents may refuse any specific
purchase or exchange order.
EXCHANGE -- is a switch of all or part of your investment from one Atlas
Fund into another Atlas Fund. An exchange consists of a simultaneous
redemption of one Fund's shares and a purchase of shares of another Fund
with the redemption proceeds. CLASS A SHARES CAN ONLY BE EXCHANGED FOR CLASS
A SHARES OF ANOTHER FUND AND CLASS B SHARES CAN ONLY BE EXCHANGED FOR CLASS
B SHARES OF ANOTHER FUND. Shares of one Fund may not be exchanged for shares
of another Fund unless the amount exchanged satisfies the minimum investment
requirement of the other Fund.
You will never have to pay a sales charge more than once on Class A shares
you exchange, no matter how many times you exchange them, and you will never
pay a sales charge on Class A shares representing reinvested dividends and
distributions or on Class A Bond or Stock Fund shares purchased at net asset
value. However, if you exchange Class A Money Fund shares, on which a sales
charge has never been paid, for Class A shares in a Bond or Stock Fund, you
will pay the appropriate sales charge at the time of the exchange (please
see "What price will I pay?").
An exchange of Class B shares from one Fund to another has no effect on the
age of the Class B shares being exchanged and, therefore, does not cause the
remaining portion of the five year holding period to be modified in any way.
The age of all Class B shares is measured from the date they were originally
acquired in the first Class B Atlas Fund. The contingent deferred sales
charge is not imposed on an exchange of Class B shares.
To protect Fund performance and to minimize costs, a Fund may modify,
suspend or discontinue the exchange feature or a shareholder's use of it at
any time. During periods of market volatility or unusual redemption demand,
the Fund may delay processing the redemption portion of an exchange for up
to seven calendar days, which would delay the processing of the purchase
portion as well, or the Fund may process the purchase portion of the
exchange at a later date than the related redemption. For more about
exchanges, please see "What services are available?". Before you decide to
make an exchange, please read about the Fund you want to purchase in the
current Prospectus. You may only exchange to a Fund that has qualified its
shares for sale in the state in which you reside.
MINIMUM BALANCE -- is needed in order to keep your account open. If your
account balance is reduced below $1,250 as a result of redemptions or
exchanges, your Fund may close your account and mail the proceeds to you.
Before taking action, however, the Fund will give you 60 days' written
notice and the opportunity to make an additional investment at net asset
value to increase your account balance to the $2,500 minimum investment
amount.
REVERSING UNCOLLECTED PURCHASES -- may cause a Fund or its agent to incur a
bank charge and a loss in reversing your purchase if your check doesn't
clear. Since bank charges or losses would harm a Fund's other investors,
each Fund reserves the right to recover such charges or losses by selling
shares in your account, and by holding you responsible for any remaining
amount required for full recovery.
SIGNATURE GUARANTEES -- protect you and the Funds by providing verification
that the signature on instructions involving your account is yours.
Signature guarantees are necessary when you:
/ /Make any change to your account ownership
more than 30 days after you open your account.
/ /Make any change to Telephone Transaction,
Automatic Redemption or Expedited Payment
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service features (please see "What services are available?") more than 30
days after you have elected the feature.
Please see "What else should I know about redemptions? -- Signature
guarantees" for more information on signature guarantees.
- ----------------------------------------------
WHAT SERVICES ARE AVAILABLE?
The Funds offer a number of convenient service features making investing in
an Atlas Fund easy and flexible. The New Account Form is designed to make it
convenient for you to designate the service features you wish to select at
the time you establish your account. You can terminate or modify service
features at any time by sending the Shareholder Services Agent a written
request. Please remember that it can take up to ten days' prior notice to
the Shareholder Services Agent before changes to the "Automatic
transactions" described below can take effect.
TELEPHONE TRANSACTIONS
BANK WIRE PURCHASE -- enables you to buy shares of any Atlas Fund without
worrying about mail or check clearing delays. World offers the Insured Money
Market Account, which earns interest at a competitive money market rate and
is insured by the Federal Deposit Insurance Corporation ("FDIC") to the
extent provided by law. You can quickly and easily buy Atlas Fund shares
with a wire transfer of $2,500 or more for your initial investment, or
$1,000 or more for subsequent investments, from this account to your Atlas
Fund account (WHICH IS NOT A BANK OR SAVINGS AND LOAN ACCOUNT OR INSURED BY
THE FDIC) with one call to an Atlas Investment Representative (please see
"How can I communicate with the Funds?"). In order to take advantage of this
one-call feature, you must have elected the bank wire option on your World
Insured Money Market Account.
Wire transfers from other bank and savings institution accounts, including
other World accounts, will require you to coordinate directly with Atlas and
your bank or savings institution in order to complete the wire transfer.
Please remember that, regardless of what account a bank wire purchase comes
from, it must be $2,500 or more for initial investments, or $1,000 or more
for subsequent investments, and your bank or savings institution must be a
member of the Federal Reserve System or have a correspondent bank that is a
member. The Funds do not charge you for this service, but your bank or
savings institution might require you to pay a wire fee.
TELEPHONE REDEMPTION -- enables your redemption of $1,000 or more to be
processed on the business day you call, as long as you meet the requirements
discussed in the "How can I redeem shares?". There is no charge for this
service. However, PLEASE REMEMBER THAT ANY CLASS B SHARES REDEEMED OVER THE
TELEPHONE MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE (PLEASE SEE
"WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?"). You may also use this
feature with the "Expedited Payment" feature described later to speed
delivery of your redemption proceeds. For your protection, telephone
redemptions can not be requested for four months after a change of address.
During that time, requests to redeem must be submitted in writing with a
signature guarantee (please see "What else should I know about redemptions?
-- Signature guarantees"). You will not be able to use this feature to
redeem shares for which certificates have been issued. Those shares can be
redeemed with a written request accompanied by the certificate(s) (please
see "What else should I know about redemptions? -- Certificates").
TELEPHONE EXCHANGE -- enables you to exchange some or all of the shares in
your
account with a telephone call. If you are only
exchanging a portion of your account, please be sure you leave the minimum
balance of $1,250. Each exchange purchase should meet the appropriate
initial or additional minimum investment requirements as well. SHARES OF A
SPECIFIC CLASS OF ONE FUND MAY ONLY BE EXCHANGED FOR SHARES OF THAT SAME
CLASS OF ANOTHER FUND. Shares for which certificates have been issued cannot
be exchanged by telephone. They can be exchanged with a written request,
accompanied by the Certificate(s) (please see "What else should I know about
redemptions? -- Certificates").
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ABNORMAL MARKET CONDITIONS -- may make it difficult for you to implement a
telephone transaction because the telephone lines may be operating at
capacity. Under these circumstances you should consider mailing your
transaction request or, perhaps, sending the request by overnight delivery
to the Shareholder Services Agent. Of course, you can always drop off your
transaction request at your World branch to be forwarded through the
Distributor to the Shareholder Services Agent (please see "How can I
communicate with the Funds?").
EXPEDITED PAYMENT
Redemption checks are normally mailed to you, but you can request to speed
delivery, if your redemption proceeds are $1,000 or more, with an Expedited
Payment which will avoid mail and check clearing delays. You may use this
bank wire feature to quickly and easily transfer proceeds to your World
Insured Money Market Account or any other pre-designated bank or savings
institution account you choose. You will need to contact the Shareholder
Services Agent at 1-800-872-5368 and also coordinate with your bank or
savings institution for proper receipt and disposition of the proceeds. Your
bank or savings institution, or its correspondent, must be a member of the
Federal Reserve System. THERE IS A $10 BANK WIRE CHARGE FOR THIS SERVICE,
WHICH WILL BE DEDUCTED FROM YOUR REDEMPTION PROCEEDS BEFORE WIRING.
If you elect Expedited Payment when you open your account, you will not have
to provide signature guarantees. However, if you make the election more than
30 days after you open your account, or make any change or addition to your
bank account designation, you will need to provide signature guarantees on
your written request to make this feature effective.
AUTOMATIC TRANSACTIONS
REINVESTMENT -- of your dividends and distributions will be automatic, in
additional full and fractional shares credited to your account, unless you
elect on the New Account Form, or later in writing, to receive dividends and
distributions in cash. There is no charge for this service. Dividends and
distributions, regardless of share Class, are reinvested at net asset value,
without a sales charge of any kind.
DIRECTED DIVIDENDS/DISTRIBUTIONS -- your dividends and distributions paid by
an Atlas Fund can be used to purchase the same class of shares of another
Atlas Fund in one of your other existing Atlas Fund accounts, at net asset
value without a sales charge. There is no charge for this service. To elect
this option simply complete the appropriate section on your New Account
Form, requesting that your income dividends and/or capital gains
distributions be paid in cash and indicating which account you would like
those dividends and distributions directed to. You cannot direct dividends
or distributions between a non-IRA account and an Atlas Funds IRA account.
AUTOMATIC PURCHASE PLAN -- a plan for periodic purchases of more shares, can
be elected when you open your account after you have made your initial
minimum investment. If you elect the automatic purchase plan feature, a
fixed amount of $250 or more will be automatically deducted from your bank
or savings institution account, to purchase shares for your Atlas Fund
account on any day of any months you choose (or the next business day if the
date you select falls on a weekend or holiday). All you need do is select
the purchase date, the months and the amount of your periodic investment
when you complete your New Account Form and attach a voided check or deposit
slip that indicates your bank or savings institution's name, address, and
routing number and your bank account number. Your purchase payment will be
automatically transferred from your bank account to your Atlas Fund account
to buy additional shares. The Atlas Funds do not charge for this service.
However, your bank or savings institution may charge you a fee.
Officers, directors, current regular full-time and regular part-time
employees, and retired employees of Golden West Financial companies can open
an automatic purchase plan for fixed amounts of $50 or more.
AUTOMATIC EXCHANGE PLAN -- a plan for periodic exchanges can be elected to
automatically
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exchange a specified dollar amount (at least $250 per exchange) of shares of
one of your Atlas Fund accounts for investment in the same class of shares
of another Atlas Fund in one or more of your other existing Atlas Funds
accounts. The automatic exchange plan provides for an exchange to be made on
the 15th of each month you choose (or the next business day if the 15th
falls on a weekend or holiday). There is no charge for this service.
However, exchanges of shares from Atlas Class A Money Funds to Atlas Class A
Bond and Stock Funds will be subject to the applicable sales charge, unless
the shares being exchanged have previously paid the sales charge. You cannot
make automatic exchanges between non-IRA and IRA Atlas Fund accounts.
AUTOMATIC REDEMPTION PLAN -- a plan for periodic redemptions can be elected
to automatically redeem fixed amounts of $100 or more from your Atlas Fund
account at monthly, quarterly or yearly intervals. To elect the automatic
redemption plan feature, your initial account balance must be at least
$10,000. All you need to do is select the amount you wish to receive when
you complete your New Account Form. Sufficient full and fractional shares
from your account will be liquidated to meet your requested redemption
amount on the 20th of each month you want payments to be made, or the
previous business day in the case of weekends or holidays. Atlas Funds does
not charge for this service. Of course, no payment can be made if there are
insufficient shares on deposit in your Fund account on the scheduled
withdrawal date.
Depending on the balance in your Fund account and the amount of your
periodic redemption, systematic withdrawals may deplete your investment.
Because of sales charges, it is normally not advisable to elect the
automatic redemption plan in a Bond or Stock Fund account if you also intend
to add regular purchases to the account. Use of the automatic redemption
plan would generally be disadvantageous for Class B shares due to the
imposition of the contingent deferred sales charge. For this reason,
AUTOMATIC REDEMPTIONS OF CLASS B SHARES ARE PERMITTED ONLY FOR MINIMUM
REQUIRED DISTRIBUTIONS FROM A RETIREMENT PLAN ACCOUNT FOR A SHAREHOLDER WHO
HAS ATTAINED THE AGE OF 70 1/2. An automatic redemption plan can only be
established for accounts that do not have any certificates issued.
CHECKWRITING
Unlimited checkwriting is available to Class A Money and Bond Fund
shareholders. The Class A Stock Funds do not offer the Checkwriting feature.
CHECKWRITING IS NOT AVAILABLE FOR CLASS B SHARES OF ANY FUND. If you elect
Checkwriting, your Money or Bond Fund will furnish you with a free book of
redemption drafts ("checks") for your Fund account, drawn on the Fund's
bank. Use these drafts as you would normal checks, but remember that each
check must be written for $500 or more. Atlas Funds do not charge for this
service. When a check is presented for payment by the Fund's bank, the
Shareholder Services Agent will redeem a sufficient number of full and
fractional shares to cover the amount of the check. You earn dividends on
your shares through the day the redemption is processed.
Checkwriting is not available for accounts with any shares in certificate
form or for retirement plan accounts. You should not try to close your
account in a Money or Bond Fund by writing an Atlas Fund check, since you
cannot predict the exact value of the account on the day the check clears.
You also should not write an Atlas Fund check for an amount close to the
total value of a Bond Fund account, since the fluctuating prices of this
Fund can cause your check to be returned unprocessed. Checks will not be
honored for redemption of shares held less
than fifteen (15) days, unless such shares were
paid for by bank wire. THE CHECKWRITING FEATURE IS NOT AVAILABLE TO BOND
FUND SHAREHOLDERS WHO ARE SUBJECT TO INTERNAL REVENUE SERVICE BACK-UP
WITHHOLDING.
REINSTATEMENT
For up to 30 days after you redeem Class A shares in a Bond or Stock Fund,
you may choose to reinstate all or part of your proceeds in Class A shares
of any Bond or Stock Fund. Similarly, for up to 30 days after you redeem
Class B shares in a Fund, you may reinstate all or part of your proceeds in
Class B shares of any Fund. A reinstatement will be done at net asset
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value, without payment of a sales charge or any service charge, but will be
subject to the applicable minimum investment requirements. In the case of a
reinstatement of your investment in Class B shares, the Distributor will
refund the applicable CDSC imposed at the time of redemption by crediting
your account with additional shares in an amount equal to the CDSC. Upon the
reinstatement of Class B shares, your account will be subject to the same
CDSC it was prior to the redemption, and the time remaining on your five
year holding period will be exactly as it was prior to the redemption of
those shares.
Simply send back the original redemption check, or your own check if the
original is not available, with a written reinstatement request (please see
"How can I communicate with the Funds?"). Your reinstatement will be
processed at the net asset value next determined after the Shareholder
Services Agent's receipt in good order of your request. You may exercise
this Reinstatement feature once for each account you own. However, the
reinstatement of mandatory IRA or SEP account distributions are not subject
to the "one time per account" limitation. All such mandatory distributions
may be reinstated in a non-IRA or -SEP account, subject to the minimum
investment requirement, for up to 30 days after such distribution, at net
asset value.
RETIREMENT PLANS
Individual Retirement Accounts (IRAs) and Simplified Employee Pension Plans
(SEPs) are available. Simply call 1-800-933-2852 and an Atlas Investment
Representative will provide you with information about agreements,
applications and annual fees. Some Atlas Funds may not be appropriate
investments for a qualified retirement plan. If you have any questions about
your tax situation, you should consult with your tax adviser.
GENERAL INFORMATION ABOUT SERVICE FEATURES
To protect Fund performance and to minimize transaction costs, each Fund
may, at any time, change, suspend or discontinue any of these service
features, charges, or terms and conditions; or deny the use of any feature
to any shareholder who uses it to the detriment of the Fund or other
shareholders.
Should a Fund choose to discontinue or modify a service feature affecting
all shareholders, it will provide 30 days' prior written notice. If you wish
to add, change or discontinue any service feature, you can easily accomplish
this by sending a written request to the Shareholder Services Agent. If it
has been more than 30 days since you established the feature, you will need
to provide a signature guarantee on your written request to effect changes
to Telephone Transaction, Automatic Redemption Plan, and Expedited Payment
features. A signature guarantee is required to protect you, since it
verifies to the Fund that the signature on the written request is yours
(please see "What else should I know about purchases?" and "What else should
I know about redemptions?" for more information about signature guarantees).
If you have any questions, call an Atlas Investment Representative at
1-800-933-ATLAS (1-800-933-2852).
THE FUNDS WILL NOT BE LIABLE FOR ANY LOSSES THAT MAY RESULT FROM FOLLOWING
INSTRUCTIONS COMMUNICATED BY TELEPHONE THAT THEY REASONABLY BELIEVE TO BE
GENUINE AS A CONSEQUENCE OF YOUR ELECTION OF TELEPHONE OR AUTOMATIC
TRANSACTIONS OR CHECKWRITING, FROM YOUR REQUEST TO ALLOW TRANSACTIONS
AUTHORIZED BY LESS THAN ALL REGISTERED OWNERS, OR FROM TRANSACTIONS
PROCESSED WITHOUT SIGNATURE GUARANTEES. AS A RESULT OF THIS POLICY,
SHAREHOLDERS WHO ELECT THESE SERVICES BEAR THE RISK OF LOSS FOR UNAUTHORIZED
TRANSACTIONS. FOR YOUR PROTECTION AND TO REVIEW OR CLARIFY TELEPHONE
REQUESTS, THE FUNDS AND THEIR AGENT(S) RESERVE THE RIGHT TO RECORD ALL
CALLS. THE FUNDS MAY EMPLOY ADDITIONAL PROCEDURES, SUCH AS REQUIRING THE
CALLER TO PROVIDE A FORM OF PERSONAL IDENTIFICATION PRIOR TO ACTING ON
TELEPHONE INSTRUCTIONS, IN ORDER TO CONFIRM THAT SUCH INSTRUCTIONS ARE
GENUINE AND, IF THEY DO NOT EMPLOY REASONABLE PROCEDURES, THEY MAY BE LIABLE
FOR ANY LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT INSTRUCTIONS.
- ----------------------------------------------
HOW CAN I REDEEM SHARES?
Unexpected circumstances or changing investment goals may require you to
sell a portion or all of your investment or to modify your
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investment mix. The Funds offer you several ways to redeem shares. The
following information should be read in conjunction with "What else should I
know about redemptions?" and "What services are available?". PLEASE REMEMBER
CLASS B SHARES ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE UPON
REDEMPTION (SEE "WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?"). If you
have any questions, just call an Atlas Investment Representative at
l-800-933-ATLAS (1-800-933-2852) for assistance.
BY MAIL -- Send a letter of instructions to the Shareholder Services Agent
(the "Agent") specifying the Atlas Fund, share or dollar amount, and account
name and number to be redeemed. The letter should be signed by all persons
authorized to redeem the account, exactly as their names appear on the
account. Redemptions of $25,000 or more and redemptions being sent to an
address or a predesignated payee that has been changed within the last four
months or one that is not recorded on your account will need a signature
guarantee (please see "How can I communicate with the Funds?" for mailing
address).
BY TELEPHONE -- To redeem $1,000 or more
call 1-800-933-2852. Redemption requests within four months of a change in
address
must be in writing with a signature guarantee (please see "What services are
available? -- Telephone redemptions").
BY CHECK -- CHECKWRITING IS AVAILABLE ONLY FOR CLASS A MONEY AND BOND FUNDS.
With your free Class A Fund checkbook, you can write a check, payable to
anyone you choose, for $500 or more. There is no charge for this service.
PROCESSING -- Redemption requests received in good order by the Agent, prior
to 4:00 pm Eastern time (1:00 pm Pacific time) on a day the New York Stock
Exchange is open for normal trading, will be processed that day. Otherwise
processing will occur on the next business day.
Redemption amounts of $1,000 or more can be wired to a predesignated bank
account on the business day following processing. To activate this feature,
please specify in your instructions to the Agent that you want the money
wired to your predesignated bank account. THERE IS A $10 CHARGE FOR THIS
SERVICE.
Unless instructed to expedite, the Agent will mail a check, normally the
business day after processing the redemption to the name(s) and address
recorded on the account for receipt of redemption proceeds.
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WHAT ELSE SHOULD I KNOW ABOUT REDEMPTIONS?
GOOD ORDER -- means that you have provided the Shareholder Services Agent
all the correct and complete information, documents, signatures, signature
guarantees, Certificates, and Certificate endorsements required to process
the redemption. YOU MUST SPECIFY WHETHER YOU ARE REDEEMING CLASS A OR CLASS
B SHARES. IF YOU ARE REDEEMING CLASS B SHARES, THOSE SHARES WILL BE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE WHICH WILL BE DEDUCTED FROM THE
PROCEEDS OF YOUR REDEMPTION. Written redemption requests should be signed by
all owners exactly as their names appear on the account. Money and Bond Fund
checks may be signed by fewer owners than appear on the account, if you
elected that option on your New Account Form. A corporation, trust or other
entity may need to update its Securities Transactions Form or provide other
documents before redeeming shares. If you have any questions call
1-800-933-2852 and an Atlas Investment Representative will be happy to help
you.
EXCHANGES -- are taxable transactions. The Internal Revenue Service ("IRS")
treats all shareholder initiated and automatic exchanges, whether of Class A
or Class B shares, as a redemption and subsequent purchase of shares.
Therefore, an exchange is subject to taxation on capital gains. However, the
IRS has indicated that Class B automatic conversions are not considered
shareholder initiated exchanges and, therefore, are not taxable. A change in
the IRS's position is possible in the future, although the Adviser believes
such a change unlikely (please see "Taxes" in the Statement of Additional
Information for more information).
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PROCESSING DELAYS -- are possible. Each Fund normally sends your redemption
proceeds to you on the next business day after processing your request, if
received in good order. Redemption processing or payment may be postponed up
to seven days if making immediate payment could adversely affect a Fund.
When regular trading on the New York Stock Exchange is closed or restricted
for any reason other than its customary weekend or holiday closings, or
there is any emergency as determined by the SEC, redemptions may be
suspended or payment dates may be further postponed.
SHARES PAID FOR BY CHECK OR BANK WIRE -- redemptions of shares recently
purchased by check will not be processed until a Fund is reasonably
satisfied that your purchase check for those shares has cleared, normally
not more than 15 days. Shares paid for by bank wire may not be redeemed
until the New Account Form has been received for the account.
SIGNATURE GUARANTEES -- protect you and the Funds by providing verification
that the signature on your written redemption request and Certificate
endorsement (please see "Certificates" below) is yours. Signature guarantees
are necessary when you:
/ /Redeem within four months of making an
address change
/ /Redeem $25,000 or more
/ /Want payment made to a name or address not
designated on your account.
The following institutions should be able to provide you with a signature
guarantee:
/ /Federal or state commercial banks
/ /Federal or state savings and loan associations
/ /Trust companies
/ /Credit unions
/ /Member firms of domestic securities exchanges.
Since a Notary Public certification is not equivalent to a signature
guarantee, the Funds are unable to accept such certification (please see
"What else should I know about purchases? -- Signature guarantees" for more
information).
CERTIFICATES -- represent your ownership of Class A shares and, upon your
written request, are issued at no charge in the name(s) in which your
account is registered. CERTIFICATES WILL NOT BE ISSUED FOR CLASS B SHARES.
Certificates are not necessary to evidence your ownership of shares since
they are registered on the Shareholder Services Agent's books in the name of
the legal owner and the confirmation statement provided after each
transaction confirms your ownership of the shares. Please note that when you
redeem or exchange certificated shares, you must accompany the redemption
request with the Certificate endorsed as specified on the back of the
Certificate. It should be signed by all owner(s) exactly as reflected on the
face of the certificate(s), with all signatures guaranteed. You may not use
the Telephone Redemption and Telephone Exchange service features for shares
issued in certificate form. Accounts with Checkwriting and Automatic
Redemption Plan service features, as well as retirement plan accounts, are
not permitted to have any shares issued in certificate form.
CONDITIONAL REDEMPTIONS -- are redemptions that are requested on the
condition of a specified price, date or event. Conditional redemptions
cannot be accepted by the Funds.
CHECKWRITING -- or the election of the Checkwriting feature does not create
a bank or savings and loan checking account or any banking relationship
between you and a Money or Bond Fund or any bank or savings and loan
association. THE CHECKWRITING FEATURE IS NOT AVAILABLE FOR THE STOCK FUNDS
AND IS NOT AVAILABLE FOR CLASS B SHARE ACCOUNTS. A "check" is simply a draft
instructing the Shareholder Services Agent to process a redemption. Since
the Shareholder Services Agent is not a depository institution, it can give
no assurance that a stop payment order may be effective. If you want copies
of specific cancelled checks, you may request them by calling your Atlas
Investment Representative at 1-800-933-2852. Redemptions by Checkwriting
will not generate confirmation statements, but are recorded and will appear
on the next normal statement you receive for activity other than
Checkwriting. If the shares being redeemed were purchased by check and have
been in your account for less
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than 15 days, or if the amount of your Checkwriting draft is greater than
the value of your account, the draft will not be honored. It will be
returned to you and you may be subject to extra charges by the payee's bank.
- ----------------------------------------------
WHAT DIVIDENDS AND DISTRIBUTIONS CAN I RECEIVE?
DIVIDENDS -- represent the payment of net investment income, after all
expenses. The Money Funds ordinarily declare and reinvest dividends daily
and distribute them monthly. The Bond Funds ordinarily declare dividends
daily and reinvest and distribute them monthly. The Atlas Balanced and the
Atlas Growth and Income Funds normally declare, reinvest and distribute
dividends quarterly. The Atlas Strategic Growth and Global Growth Funds do
not intend to seek net investment income but, should they earn income, they
would declare a dividend annually (please see "What services are
available?--Automatic transactions"). Money and Bond Fund dividends will
commence on the next business day following the date shares are posted to
your account and will continue through the day shares are redeemed.
Dividends paid by a Fund, if any, with respect to Class A and Class B
shares, will be calculated in the same manner at the same time on the same
day, except that distribution fees will be different for each Class and paid
separately by the appropriate Class. THE PER SHARE INCOME DIVIDENDS, IF ANY,
ON CLASS B SHARES WILL BE LOWER THAN THE PER SHARE INCOME DIVIDENDS, IF ANY,
ON CLASS A SHARES AS A RESULT OF THE HIGHER DISTRIBUTION FEE APPLICABLE TO
CLASS B SHARES.
DISTRIBUTIONS -- of capital gains represent the payment of net realized
profits on portfolio securities that are sold. If any such distributions are
made, they are normally declared and paid once a year. All such
distributions paid by a Fund with respect to Class A and Class B shares will
be calculated in the same manner at the same time on the same day. A Fund
may make more frequent distributions to avoid taxation under the Internal
Revenue Code (the "Code") and in a manner consistent with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act") (please see
"What services are available? -- Automatic transactions").
If you buy shares just before a Fund deducts a capital gain distribution
from its net asset value, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
- ----------------------------------------------
HOW CAN TAXES AFFECT MY INVESTMENT?
HOW ARE THE FUNDS TAXED?
It is the intention of the Company that each Atlas Fund will qualify and
elect to be treated as a "regulated investment company" under Sub-Chapter M
of the Code, which sets requirements for mutual funds on timing of dividends
and distributions, sources of income and diversification of assets. If a
Fund meets these requirements, it will not be liable for federal corporate
income tax with respect to dividends and distributions paid to shareholders.
The Company also intends to have each Fund make any distribution necessary
to avoid the application of federal excise taxes, if such payments
are deemed to be in the best interests of a Fund's shareholders.
HOW ARE SHAREHOLDERS TAXED?
TAX-EXEMPT DIVIDENDS -- by seeking to meet certain Code requirements, the
Municipal Funds intend to pay dividends which, to the extent they are
derived from income excludable from federal gross income, will not have to
be included in your gross income for federal income tax purposes. Dividends
paid to you by the California Funds, to the extent derived from interest
income exempt from California income tax and to the extent the Funds meet
certain State of California requirements, will be exempt from California
personal income tax as well. Certain Municipal Fund individual and corporate
shareholders may be required to include dividends, normally excluded from
gross income, as a component in determining their federal alternative
minimum taxable income.
The Treasury Money Fund intends to pay dividends that are exempt from state
income tax in most states because the dividends consist of
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interest on U.S. Treasury securities passed directly through to the
investor. Most states with an income tax recognize this "pass-through" of
interest, including Arizona, California, Colorado, Kansas, Missouri, and New
Jersey. As of December 31, 1995, certain states, including Florida and
Texas, did not impose a state income tax. Because state laws can change, you
should consult your tax adviser regarding the tax status of the dividends
paid by the Treasury Money Fund.
TAXABLE DIVIDENDS -- which are derived from income earned from a Fund's
taxable investments, are taxable to you as ordinary income, regardless of
whether received in cash, reinvested in additional Fund shares or directed
to purchase shares of another Fund. These dividends may not be included by a
corporate shareholder for purposes of the corporate dividend deduction. The
Municipal Funds may invest to some degree in taxable securities. The income
from a Municipal Fund's investment in certain private activity bonds, such
as those used to finance airports and industrial facilities, is a tax
preference item which may subject a shareholder to increased individual and
corporate alternative minimum tax ("AMT"), depending on the amount and type
of dividends received. The Treasury Money Fund's income dividends are
subject to federal income tax.
CAPITAL GAINS DISTRIBUTIONS -- which are derived from net short-term capital
gains are taxable to you as ordinary income. Distributions from net
long-term capital gains are treated as such for the purpose of calculating
your total gains and losses each year. Such gains are currently taxable at
ordinary income tax rates not to exceed 28%. It is possible, because of
Internal Revenue Code requirements, that certain distributions may not be
paid to you until shortly after year-end but will be treated, for tax
purposes, as though you received them before the end of December. If a Fund
has a current capital loss or capital loss carryover, the Fund may offset
any capital gains against that loss. Capital gains, if any, will be
distributed at least once a year and can be distributed more frequently.
BACK-UP WITHHOLDING -- which is required by the Internal Revenue Service,
obligates a Fund to withhold 31%, subject to certain exemptions, of taxable
dividends or distributions paid to shareholders who fail to provide a Fund
with a correct tax-payer identification number (social security number) or
certify to the Fund that they are not subject to back-up withholding.
HOW CAN I DETERMINE THE TAX IMPACT OF
MY INVESTMENT?
The tax consequences of your investment will vary with your state of
residence, the Fund you invest in and your particular tax status. In some
states shareholders are subject to state and local taxes with respect to
ownership of Fund shares as well as distributions from a Fund. We urge you
to consult your tax adviser about the applicability of various state and
federal tax laws governing dividends, distributions, exchanges, proceeds
from the redemption of shares, and ownership of shares.
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HOW WILL THE FUNDS COMMUNICATE WITH ME?
The Company is committed to keeping you advised of the status of the Atlas
Funds and your investment and will do so in the following ways:
CONFIRMATION STATEMENTS
The Shareholder Services Agent will send you a confirmation statement
whenever you purchase, redeem (except via Checkwriting) or exchange Atlas
Fund shares; change account information; or receive an income dividend or
capital gains distribution, either paid to you in cash or reinvested to your
account. The statement will show all recent transactions, along with a
summary of the status of your account, as of the most recent transaction
date.
FINANCIAL STATEMENTS
Twice a year you will receive financial statements with a summary of your
Fund's portfolio holdings and performance. One of those statements will be
sent to you in the form of the Company's Annual Report. To reduce expenses,
only one copy of most reports, such as the Annual Report, may be mailed to
your household. To order additional copies, simply call an Atlas Investment
Representative at 1-800-933-2852.
TAX FORMS
If you have received taxable income or income subject to the alternative
minimum tax calculation, your Fund will send you (shortly after the
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close of each calendar year) one or more tax forms or notices, depending
upon the number of accounts you own and your transactions that tax year. The
Form 1099-DIV will let you know the federal income tax status of your
dividends and distributions, and Form 1099-B will inform you of any
redemption or exchange transactions you are required to report to the
Internal Revenue Service. Retirement accounts will receive a year-end
valuation statement shortly after the close of the calendar year.
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HOW CAN I INTERPRET A FUND'S PERFORMANCE?
From time to time you may see Atlas Fund performance figures quoted in
reports to shareholders, advertising and sales literature. Each Atlas Fund
calculates its performance in terms of yield and total return. Performance
information is computed separately for each class of shares of each Fund. A
Fund's performance will vary as a function of investment results, operating
expenses, and market conditions. You should be aware that performance
figures reflect past results. Future results may vary from past performance.
Following are summary descriptions of what the various performance figures
represent. You will find a more detailed description of how performance is
calculated in the current Statement of Additional Information. Each Fund
will include performance data for its Class A and Class B shares in any
advertisement or information including performance data of the Fund. Further
information about the Funds' performance is contained in the Company's
Annual Report, which may be obtained without charge.
YIELD CALCULATIONS
YIELD -- the net investment income per share earned on a hypothetical
investment made at the full offering price (including the maximum sales
charge), over a recent seven-day period (for the Money Funds) or a 30-day
period (for the Bond and Stock Funds), projected over one
year and expressed as a percentage of a hypothetical investment.
EFFECTIVE YIELD -- calculated in the same way as yield, but with the
additional assumption that dividends and distributions are reinvested. The
effective yield will be slightly higher than yield because of the
compounding effect of the reinvested income.
TAX EQUIVALENT YIELD -- the amount of yield an investment in a fully taxable
Fund would have to produce to achieve the same results as an investment in a
fully or partially tax-exempt Fund. Tax equivalent yield is calculated by
dividing the tax exempt portion of a Fund's yield by one minus a stated
income tax rate and adding the result to the taxable portion, if any, of the
Fund's yield.
TAX EQUIVALENT EFFECTIVE YIELD -- a Fund's tax equivalent effective yield is
calculated in the same way as tax equivalent yield, with the additional
assumption that dividends and distributions are reinvested.
TOTAL RETURN CALCULATION
An Atlas Fund's total return and its average annual total return are the
investment results produced by changes in share price and reinvestment of
dividends and distributions on a hypothetical investment over one, three,
five or ten years or the life of the Fund. Unless otherwise specified, the
return figures are calculated on the assumptions that the current maximum
sales charge applicable to Class A shares, or the Class B CDSC applicable to
the period for which the Class B shares were held, was paid on the shares
and that all dividends and distributions were reinvested at net asset value.
A Fund may also use aggregate total return figures for various periods
representing the cumulative change in value of an investment in a class of
the Fund's shares for the specified period.
DISTRIBUTION RATE CALCULATIONS
DISTRIBUTION RATE -- is calculated by annualizing the aggregate per share
dollar amount of actual distributions made over a 30 day period by a Bond or
Stock Fund divided by the net asset value per share at the end of the
period.
TAX-EQUIVALENT DISTRIBUTION RATE -- will be computed by dividing the tax
exempt portion of the distribution rate by one minus a stated income tax
rate and adding the result to the taxable portion, if any, of the related
distribution rate.
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APPENDIX
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The Funds' investment strategies will encompass the following securities,
techniques and considerations:
PORTFOLIO STRATEGIES -- ALL FUNDS
All Atlas Funds may, to varying degrees, invest in U.S. dollar denominated,
highly liquid, short-term (13 months or less) money market instruments
issued by the U.S. Government, its agencies or instrumentalities; U.S.
corporations and their foreign affiliates; U.S. banks and thrifts and their
foreign branches; and foreign banks (collectively referred to as "money
market securities"). However, the Treasury Money Fund will only invest in
those money market securities that are directly issued by the U.S. Treasury
and backed by the full faith and credit of the U.S. Government. Money market
securities include the following:
U.S. GOVERNMENT SECURITIES -- short-term securities guaranteed by the U.S.
Government including (1) direct obligations of the U.S. Treasury such as
Treasury bills and (2) federal agency obligations guaranteed as to principal
and interest such as Government National Mortgage Association ("GNMA")
certificates (described in "Portfolio strategies -- Bond Funds: Atlas
Government Funds") and Federal Housing Administration debentures. In these
securities, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality.
U.S. Government securities also include short-term securities issued by U.S.
Government instrumentalities and certain federal agencies which are neither
direct obligations of, nor guaranteed by, the Treasury. However, they
generally involve federal sponsorship in one way or another: some are backed
by specific types of collateral; some are supported by the issuer's right to
borrow from the Treasury; some are supported by the discretionary authority
of the Treasury to purchase certain obligations of the issuer; others are
supported only by the credit of the issuing government agency or
instrumentality. These agencies and instrumentalities include, but are not
limited to, the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC").
BANK AND THRIFT OBLIGATIONS -- short-term obligations which include
certificates of deposit, time deposits, letters of credit, and bankers'
acceptances, or instruments secured by such obligations. Only obligations of
commercial banks and thrift with $1 billion or more in assets will normally
be considered. Obligations of smaller institutions will only be acquired in
amounts not exceeding the federal insurance coverage as to principal.
CORPORATE OBLIGATIONS -- short-term corporate notes, bonds, debentures and
commercial paper.
INVESTMENT GUIDELINES -- ALL FUNDS
BROKERAGE ALLOCATION -- which involves the selection of brokers and dealers
who will effect portfolio transactions in each Fund, is the responsibility
of the Adviser, or Subadviser if applicable. Each Fund's policy is to seek
the best price and execution for each transaction. If more than one broker
is able to provide the best price and execution, the Adviser, or Subadviser
if applicable, may consider the receipt of quotations, market research and
other market services as factors in selecting a broker.
PORTFOLIO TURNOVER -- measures the percentage of a portfolio's securities
that are replaced within one year. The regulatory definition of turnover
excludes securities with a remaining maturity at the time of purchase of one
year or
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less. Under this definition, the Money Funds have a zero turnover rate. In
taking advantage of investment opportunities consistent with their
respective investment objectives and policies, the Bond and Stock Funds will
not consider portfolio turnover rates a limiting factor. A high turnover
rate will increase transaction costs. Portfolio turnover may result in net
long-term or short-term capital gains taxable to shareholders and could
affect a Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code.
For the years or periods ended December 31, 1994 and 1995, respectively, the
portfolio turnover rate was 31.48% and 59.28% for the Atlas California
Insured Intermediate Municipal Fund; 32.26% and 84.85% for the Atlas
National Insured Intermediate Municipal Fund; 55.09% and 82.88% for the
Atlas U.S. Government Intermediate Fund (formerly the Atlas U.S. Treasury
Intermediate Fund); 30.32% and 25.90% for the Atlas California Municipal
Bond Fund; 37.52% and 53.43% for the Atlas National Municipal Bond Fund; and
16.33% and 48.39% for the Atlas U.S. Government and Mortgage Securities
Fund. The Atlas Strategic Income Fund is expected to trade its portfolio
actively to try to benefit from short-term yield differences among debt
securities and as a result the Fund's portfolio turnover may be higher than
other mutual funds.
The Stock Funds will not trade in securities for short-term profits, but
when the Stock Funds' Subadviser believes doing so will further a Fund's
objectives it may trade securities regardless of how long they have been
held. Therefore, the portfolio turnover for each Stock Fund may vary widely
from year to year. For the years or periods ended December 31, 1994 and
1995, respectively, the portfolio turnover rate for the Atlas Growth and
Income Fund was 123.64% and 125.28%; 29.19% and 25.84% for the Atlas
Balanced Fund; and 54.01% and 73.32% for the Atlas Strategic Growth Fund.
The annual portfolio turnover rate for the Atlas Global Growth Fund is
expected to be less than 100%.
REPURCHASE AGREEMENTS (ALL ATLAS FUNDS, EXCEPT THE TREASURY MONEY FUND, CAN
UTILIZE REPURCHASE AGREEMENTS) -- a purchase and simultaneous collateralized
contract to resell securities to the vendor typically within one to five
days and at a price which reflects interest on what is in effect a loan. The
value of the collateral will at all times equal or exceed the repurchase
price, and the Funds will obtain effective custody of the collateral.
Repurchase agreements will only be entered into with broker-dealers with
excess net capital of at least $100 million and selected commercial banks
and thrift institutions with at least $1 billion in capital, or with
broker-dealers, banks and thrift institutions with outstanding commercial
paper rated in the top rating quality grade or outstanding debt obligations
rated in the top two rating quality grades. If a vendor fails to fulfill its
obligations, a Fund may incur costs and delays in foreclosing upon and
disposing of the collateral. The Adviser, or Subadviser if applicable, will
monitor the creditworthiness of firms with which it engages in these
transactions.
PORTFOLIO SECURITIES LOANS -- have to meet certain criteria. The Funds can
lend portfolio securities to qualified broker-dealers or other institutional
investors, if the loan is collateralized in accordance with then current
regulatory requirements and if, after any loan, the value of the securities
loaned does not exceed 25% of the total assets of the Fund lending the
securities. Such loans involve risks of delay in receiving additional
collateral if the value of the collateral declines, or in recovering the
securities loaned or losing rights in the collateral if the borrower fails
financially. The Adviser, or Subadviser if applicable, will monitor the
creditworthiness of firms with which they engage in these transactions.
WHEN-ISSUED OR FIRM COMMITMENT TRANSACTIONS -- are a purchase or a sale of
securities at a fixed price with settlement at a later date. There is a risk
in these transactions that the value of the securities at settlement may be
more or less than the agreed upon price, or that
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the party with whom a Fund enters into such a transaction may not perform
its commitment. Such a failure to perform could result in a gain or loss to
a Fund. The Funds will normally enter into these transactions with the
intention of actually receiving or delivering the securities. A Fund may
sell the securities before the settlement date. A Fund may also enter into a
new commitment to extend the delivery date, sometimes referred to as a
"roll" transaction. Cash, U.S. Government securities or other high quality,
liquid debt securities will be segregated to meet these obligations when
due. A Fund will limit these transactions to a value of no more than
one-third of its assets.
PORTFOLIO STRATEGIES -- MONEY FUNDS
ATLAS U.S. TREASURY MONEY FUND -- will invest in securities issued by the
U.S. Treasury, including Treasury Bills, Treasury Notes and Treasury Bonds,
which are protected by the "full faith and credit" pledge of the U.S.
Government. These are the only types of securities the Fund will purchase.
The Fund will not participate in repurchase agreements. Interest on Treasury
securities is subject to federal income tax but exempt from most states'
income tax (please see "How can taxes affect my investment? -- Tax-exempt
dividends"). The dollar weighted average portfolio maturity of the Fund will
not exceed 90 days and 100% of the assets will be invested in short-term
(maturing in 13 months or less) securities.
ATLAS NATIONAL MUNICIPAL MONEY FUND -- will, as determined at the time of
purchase, normally invest at least 80% of its assets in high quality
municipal obligations, the interest on which is excluded from gross income
for federal income tax purposes. The dollar weighted average portfolio
maturity will not exceed 90 days and 100% of the assets will be invested in
short-term (maturing in 13 months or less) securities. Such obligations are
issued by or on behalf of states and their political subdivisions; agencies
and instrumentalities of the state or its political subdivisions;
territories and possessions of the United States; and the District of
Columbia. Municipal securities include general obligation issues, for which
the payment of principal and interest is secured by the issuer's taxing
power; revenue issues, for which payment of principal and interest depends
upon a specific public or private revenue source; tax-exempt commercial
paper; tax-exempt variable or floating rate securities; and participation
interests (collectively referred to as "municipal securities").
The Code classifies certain municipal obligations as private activity bonds.
Payments of principal and interest on private activity bonds are supported
by the revenues of a private issuer (for example, airport authority bonds
supported by airport user fee revenues), rather than the taxing powers of a
government subdivision or authority. The interest received on certain
private activity bonds is a tax preference item subject to the federal
alternative minimum tax on corporations and individuals. The Fund is not
limited in the amount of its assets it may invest in such bonds.
ATLAS CALIFORNIA MUNICIPAL MONEY FUND -- will, as determined at the time of
purchase, normally invest at least 80% of its assets in high quality
municipal securities of the same type as the Atlas National Municipal Money
Fund, including private activity bonds, but issued by or on behalf of the
State of California, its agencies, instrumentalities or political
subdivisions. The maximum and dollar weighted average portfolio maturities
are the same as the Atlas National Municipal Money Fund. The interest on
these securities is excluded from California state personal income tax, in
addition to the federal tax treatment noted in the preceding paragraph.
INVESTMENT GUIDELINES -- MONEY FUNDS
QUALITY -- of municipal and other securities in the Municipal Money Fund
portfolios will be rated, at the time of purchase, in the two highest
quality rating grades by two nationally recognized statistical rating
organizations
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("NRSRO"), such as Moody's Investor Services, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P"), or by one NRSRO if only rated by one, or of
comparable quality in the opinion of the Adviser, or Subadviser if
applicable. This includes Prime 1 or Prime 2 by Moody's or A-1 or A-2 by S&P
for commercial paper, MIG-1 or MIG-2 by Moody's or SP-1 or SP-2 by S&P for
notes, VMIG-1 or VMIG-2 by Moody's for variable or floating rate securities,
Aaa or Aa by Moody's or AAA or AA by S&P for bonds. Of course, the
securities in the Atlas U.S. Treasury Money Fund portfolio are of the
highest quality, backed by the full faith and credit of the U.S. Government.
PORTFOLIO STRATEGIES -- BOND FUNDS
GOVERNMENT FUNDS -- will, as determined at the time of purchase, normally
invest primarily in a combination of intermediate-term (3-10 years) and
long-term (over 10 years) U.S. Government securities, including direct
obligations of the U.S. Treasury and mortgage-backed securities that are
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (please see "U.S. Government securities" in "Portfolio
strategies -- All Funds"); privately issued mortgage related securities,
including securities issued by commercial banks, savings and loan
institutions, securities broker-dealers, and mortgage bankers; and
repurchase agreements collateralized by mortgage securities. The dollar
weighted average portfolio maturity of the Atlas U.S. Government
Intermediate Fund will normally be between three and ten years. Under normal
conditions, the Atlas U.S. Government and Mortgage Securities Fund and the
Atlas U.S. Government Intermediate Fund will invest at least 50% and 65% of
their respective assets in U.S. Government securities, including GNMA
securities and government agency mortgage securities such as FNMA and FHLMC
securities. At least 25% of the assets of the U.S. Government and Mortgage
Securities Fund will be invested in mortgage securities, including U.S.
Government mortgage securities, such as GNMA, FNMA, and FHLMC securities,
and privately issued mortgage securities.
The Government Funds may invest substantially in mortgage-backed securities
issued by GNMA, FNMA and FHLMC. Mortgage-backed securities are backed by a
pool of mortgage loans and provide a monthly payment of principal and
interest, which is passed through as payments are made on the underlying
mortgages. Additional payments may be made from unscheduled repayments of
principal due to refinancing, sale or foreclosure of the underlying
property.
If interest rates decline, these prepayments tend to increase due to
refinancing of mortgages. Therefore, the average life, or effective maturity
of mortgage-backed securities is normally shorter than the typical 30-year
maturity of the underlying mortgages. Since the prepayment rate varies with
market conditions, it is not possible to accurately anticipate what the
average maturity of the portfolio will be. The yield of the Funds will be
affected by reinvestment of prepayments at higher or lower rates than the
original investment. Also, to the extent the Funds purchase mortgage
securities at a premium, prepayments will result in some loss to the extent
of the premium. Like other debt securities, mortgage related securities'
values, including government related mortgage securities, fluctuate
inversely in response to interest rates.
Prompt payment of principal and interest on GNMA certificates is backed by
the full faith and credit of the United States. FNMA guaranteed pass-through
certificates and FHLMC participation certificates are supported by the
credit of the issuing agency. The U.S. Government is not legally obligated
to provide financial support to FNMA and FHLMC, but may do so in its
discretion.
Privately issued mortgage related bonds and mortgage-backed securities are
issued by financial institutions such as commercial banks, thrift
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institutions, mortgage bankers and securities broker-dealers. Mortgage
related bonds are general obligation, fixed-income securities collateralized
by mortgages. These securities include collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") as
authorized under the Internal Revenue Code.
CMOs are a type of bond secured by an underlying pool of mortgages or
mortgage pass-through certificates that are structured to direct payments on
underlying collateral to different series or classes of the obligations.
CMO's may be issued by a U.S. Government agency such as FHLMC and
collateralized by U.S. Government or government agency mortgage securities,
or by private issuers and collateralized by U.S. Government and/or
government agency mortgage securities or by privately issued mortgage
securities. The Government Funds will not invest more than 15% of their
total assets in CMOs.
The Government Funds may invest in other mortgage related debt obligations
secured by mortgages on commercial or residential properties and may
purchase securities known as "strips." Strips are securities from which the
unmatured interest coupons have been "stripped" from the principal portion
and sold separately. The Funds may invest in the principal portion or in the
interest coupons of U.S. Government and mortgage securities or in receipts
or certificates representing interests in stripped securities or interest
coupons. The principal portion of a stripped security pays no interest to
its holder during its life, and its value consists of the difference between
its face value at maturity and its acquisition price. Mortgage-backed
securities strips are subject to increased volatility in price due to
interest rate changes, the risk that the security will be less liquid during
demand or supply imbalances, and the risk that, due to unscheduled
prepayments, the maturity date will be shorter than anticipated and
reinvestment of the proceeds may only be possible at a lower yield. The
Funds will not purchase strips on mortgage securities in excess of 15% of
assets. As with any debt obligation, the value of U.S. Government and
mortgage securities will fluctuate with changes in interest rates or market
perceptions of the creditworthiness of the issuer.
ATLAS STRATEGIC INCOME FUND -- will normally invest principally in three
market sectors: (1) U.S. Government securities, (2) debt securities of
foreign governments and companies, and (3) lower-rated, high-yield debt
securities of U.S. companies. The Fund will normally invest in each of these
three sectors, but from time to time the Subadviser will adjust the amounts
the Fund invests in each sector and may invest up to 100% in any one sector.
The Fund may without limitation invest in U.S. Government securities,
mortgage-backed securities issued by GNMA, FNMA, and FHLMC, CMOs and strips,
all as described above under "Portfolio strategies -- Bond Funds, Government
Funds." The Fund may invest in debt securities and dividend-paying common
stocks issued by U.S. companies, including bonds, debentures, notes,
preferred stocks, zero coupon securities, participation interests, asset-
backed securities and sinking fund and callable bonds. The Fund may purchase
these securities in public offerings or through private placements. The Fund
has no limitations on the maturity, market capitalization of the issuer or
credit rating of the domestic debt securities in which it invests, although
it is expected that most issuers will have total assets in excess of $100
million.
ATLAS NATIONAL MUNICIPAL BOND FUND -- will normally invest at least 80% of
its assets in the same types of municipal securities as Atlas National
Municipal Money Fund, including private activity bonds, but with the three
highest quality rating grades for municipal bonds with intermediate (3-10
years) and long-term (over 10 years) maturities, as determined at the time
of purchase.
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ATLAS CALIFORNIA MUNICIPAL BOND FUND -- will normally invest at least 80% of
its assets in the same type of municipal securities as the Atlas California
Municipal Money Fund, including private activity bonds, but with the three
highest quality rating grades for municipal bonds with intermediate (3-10
years) and long-term (over 10 years) maturities, as determined at the time
of purchase.
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND -- will normally invest
at least 80% of its assets in the same types of municipal securities as the
other National Funds, including private activity bonds. This Fund will
invest primarily in insured municipal securities of the highest quality, as
determined at the time of purchase, and maintain a dollar weighted average
portfolio maturity between three and ten years.
ATLAS CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND -- will normally invest
at least 80% of its assets in the same types of municipal securities as the
other California Funds, including private activity bonds. This Fund will
invest primarily in insured municipal securities of the highest quality, as
determined at the time of purchase, and maintain a dollar weighted average
portfolio maturity between three and ten years.
As a temporary defensive strategy, each Bond Fund may also invest up to 100%
of its Assets in short-term debt securities or money market instruments when
market conditions make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders.
PORTFOLIO STRATEGIES -- STOCK FUNDS
ATLAS BALANCED FUND -- will normally invest primarily in income-producing
equity securities (defined as common stocks, preferred stocks, and
securities convertible into common stocks). The Fund will utilize a
conservative investment selection process focusing on companies in basic
industries. The Fund will maintain at least 25% of its assets in fixed
income senior debt securities.
ATLAS GROWTH AND INCOME FUND -- will normally invest at least 65% of its
assets in a combination of growth-oriented and dividend-paying equity
securities. Besides dividend paying equity securities, the Fund will also
utilize convertible securities to generate some current income.
ATLAS STRATEGIC GROWTH FUND -- will normally invest at least 65% of its
assets in a diversified portfolio of growth-oriented equity securities. Many
of these companies will, in the opinion of the Fund's Subadviser, have
better-
than-expected earnings prospects and be considered undervalued.
ATLAS GLOBAL GROWTH FUND -- will normally invest primarily in a diversified
portfolio of growth oriented equity securities (defined as common stocks and
securities convertible to common stocks) of issues traded in at least three
different countries (which may include the United States).
Each of the Stock Funds may invest in corporate and taxable government debt
securities and money market instruments. As a temporary defensive strategy,
each Stock Fund may also invest up to 100% of its assets in debt securities
or money market instruments when market conditions make pursuing the Fund's
basic investment strategy inconsistent with the best interests of its
shareholders. Except for the Global Growth Fund, debt obligations purchased
will be investment grade or better, or of comparable quality in the opinion
of the Adviser or Subadviser. However, the Global Growth Fund may invest in
below investment grade debt obligations. Please see "Investment guidelines
-- Bond and Stock Funds".
INVESTMENT GUIDELINES -- BOND AND STOCK FUNDS
QUALITY -- of senior debt obligations in the portfolios of the Bond Funds
(except the Strategic Income Fund) will, as determined at
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the time of purchase, be rated in the upper medium grade, that is, the three
highest quality rating grades by a nationally recognized statistical rating
organization, such as Moody's or S&P - Aaa, Aa, or A by Moody's or AAA, AA,
or A by S&P - or of comparable quality in the opinion of the Adviser, or
Subadvisers if applicable. The Strategic Income Fund is not limited by a
minimum rating grade. In addition to upper medium grade debt obligations,
the Stock Funds may invest in senior debt obligations rated, at the time of
purchase, in the fourth highest quality rating grade-Baa by Moody's or BBB
by S&P-or of comparable quality in the opinion of the Stock Funds'
Subadviser. Debt rated in the fourth highest quality rating grade, referred
to as investment grade, may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case
with higher grade bonds. Fixed-income securities, including U.S. Government
securities, corporate debt obligations and municipal securities, fluctuate
in value inversely with changes in interest rates, and also change with
market perceptions of the creditworthiness of the issuer. If a debt
obligation's credit rating falls below the applicable minimum rating grade,
the Bond or Stock Fund may retain or dispose of it, depending on the
circumstances. The Global Growth Fund is not limited by a minimum rating
grade.
Such ratings generally do not apply to investments in convertible
securities. In making its investments in convertible securities on behalf of
the Funds, the Subadviser looks primarily to the conversion feature and
treats convertible securities as equity securities. For details, see
"Description of Certain Securities and Investment Policies -- Convertible
Securities" in the SAI.
SPECIAL RISKS OF LOWER-RATED SECURITIES -- In seeking high current income,
the Strategic Income Fund may invest in higher-yielding, lower-rated debt
securities. There is no restriction on the amount of the Fund's assets that
could be invested in these types of securities. The Global Growth Fund may
also invest in lower-rated securities, but to a much more limited extent.
Lower-rated debt securities are those rated below "investment grade," such
as debt securities that have a rating lower than "Baa" by Moody's Investors
Services, Inc. ("Moody's") or "BBB" by Standard & Poor's Corporation
("S&P"). These securities may be rated as low as "C" or "D" or may be in
default at the time of purchase.
The Subadviser does not rely solely on ratings of securities by rating
agencies when selecting investments for a Fund, but evaluates other economic
and business factors as well. The Funds may invest in unrated securities
that the Subadviser believes offer yields and risks comparable to rated
securities. High yield, lower-grade securities, whether rated or unrated,
often have speculative characteristics. Lower-grade securities have special
risks that make them riskier investments than investment grade securities.
They may be subject to greater market fluctuations and risk of loss of
income and principal than lower yielding, investment grade securities. There
may be less of a market for them and therefore they may be harder to sell at
an acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest due
on the bonds. The issuer's low creditworthiness may increase the potential
for its insolvency ("credit risk"). All corporate debt securities (whether
foreign or domestic) are subject to some degree of credit risk.
These risks mean that a Fund may not achieve the expected income from
lower-grade securities, and that a Funds' net asset value per share may be
affected by declines in value of these securities. The Funds are not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. These risks are discussed in more detail
in the Statement of Additional Information.
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INSURANCE -- the principal and interest payments on the insured municipal
securities in the portfolios of the Insured Funds will generally be insured
by new-issue, secondary market, or mutual fund insurance. All of the
insurance policies used by the Insured Funds will be obtained only from
insurance companies whose claims-paying ability is rated Aaa by Moody's or
AAA by Standard & Poors, resulting in Aaa or AAA ratings for such insured
municipal securities.
New-issue insurance is purchased by a bond issuer seeking to enhance the
credit quality of a security. By paying a premium and meeting the insurer's
underwriting standards, the bond issuer can obtain a credit rating for its
bonds comparable to the rating assigned to the insurer's claims-paying
ability. New issue insurance policies cannot be cancelled and continue in
force as long as the bonds are outstanding.
A secondary market insurance policy is purchased by an investor subsequent
to a security's original issuance and generally insures a particular bond
for the remainder of its term. The Insured Funds may purchase securities
which have already been insured under a secondary market insurance policy by
a prior investor, or an Insured Fund may itself purchase such a policy for
securities which are currently uninsured.
A mutual fund insurance policy may be used to guarantee specific securities
only while owned by an Insured Fund. Insurance premiums, if any, paid by a
Fund for mutual fund insurance will be treated as a Fund expense, reducing
the Fund's net investment income and, therefore, its yield.
An insured municipal security in an Insured Fund's portfolio will typically
be covered by only one of the three types of policies. For instance, if a
bond is already covered by a new issue insurance policy or a secondary
market insurance policy, then that security will not be insured under the
Insured Fund's mutual fund insurance policy. Each Insured Fund may invest
more than 25% of its assets in municipal securities insured by the same
insurance company.
ILLIQUID AND RESTRICTED SECURITIES -- each Stock Fund and the Strategic
Income Fund have a policy limiting its investment in illiquid assets as set
forth under "What are the Funds' investment limitations?" does not limit its
acquisition of restricted securities eligible for resale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act of
1933 provided such securities are determined to be liquid by the Company's
Board of Directors, or by the Adviser or a Subadviser under Board-approved
guidelines. Such guidelines take into account trading activity for such
securities and the availability of reliable pricing information, among other
factors. If there is a lack of trading interest in particular Rule 144A
securities, a Fund's holdings of those securities may be illiquid. Due to
various state regulations, the Balanced, the Strategic Growth, Global Growth
and Strategic Income Funds each will conform as a matter of operating policy
to the policy of the other Atlas Funds of not investing more than 10% of its
net assets in illiquid securities. If, due to changes in relative values,
more than 10% of the value of a Fund's net assets consisted of illiquid
securities, the Subadviser together with the Adviser would consider
appropriate steps to protect the Fund's flexibility. There may be
undesirable delays in selling such securities at a price representing their
fair value. See "Illiquid and Restricted Securities" in the SAI for
further details.
REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS -- may be engaged in by the
Government and Strategic Income Funds. These Funds may purchase
mortgage-backed securities together with an agreement to sell similar
securities at a future date. Such reverse dollar reverse repurchase
agreements are subject to the same risks and restrictions as repurchase
agreements. Cash, U.S. Government securities or other high quality, liquid
debt securities will
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be segregated to meet these obligations when due. The Funds will not engage
in these transactions in an amount that exceeds one-third of each of their
assets.
CONVERTIBLE SECURITIES -- Each Stock Fund and the Strategic Income Fund may
invest in convertible securities, including both corporate bonds and
preferred stocks. These securities are generally convertible into shares of
common stock at a stated price or rate. The price of a convertible security
varies inversely with interest rates and, because of the conversion feature,
also normally varies with changes in price of the underlying common stock.
FOREIGN SECURITIES -- Each Stock Fund and the Strategic Income Fund may
purchase "foreign securities," which are equity or debt securities issued by
companies organized under the laws of countries other than the United
States. These securities are listed on one or more foreign securities
exchanges or are traded in the foreign over-the-counter markets. Securities
of foreign issuers represented by American Depository Receipts, traded in
the U.S. over-the-counter markets, or listed on a U.S. securities exchange
are not considered to be "foreign securities" because they are not subject
to many of the special considerations and risks that apply to investments in
foreign securities traded and held abroad. If a Fund's securities are held
abroad, the countries in which such securities may be held and the
sub-custodians holding them must be approved by the Fund's Board of
Directors under applicable SEC Rules. Foreign securities that a Fund may
purchase include securities issued by issuers in developed or underdeveloped
countries. The Stock Funds have no restriction on the amount of assets that
may be invested in foreign securities, although it is currently anticipated
that no Stock Fund, other than the Global Growth Fund, will invest in excess
of 15% of its assets in foreign securities. The Global Growth Fund normally
invests a substantial portion of its assets in foreign securities.
The Strategic Income Fund may invest in debt securities issued or guaranteed
by foreign companies, "supranational" entities such as the World Bank, and
foreign governments or their agencies. These foreign securities may include
debt obligations such as government bonds, debentures issued by companies,
as well as notes. Some of these debt securities may have variable interest
rates or "floating" interest rates that change in different market
conditions. Those changes will affect the income the Fund receives. The Fund
will not invest more than 25% of its total assets in government securities
of any one foreign country. Otherwise, the Fund is not restricted in the
amount of its assets it may invest in foreign countries or in any single
country and has no limitations on the maturity or capitalization of the
issuer of the foreign debt securities in which it invests, although it is
expected that most issuers will have total assets or market capitalization
in excess of $100 million.
RISKS OF FOREIGN SECURITIES -- Investing in foreign securities, especially
those issued in underdeveloped countries, generally involves special risks.
The risks of investing in foreign securities may include foreign taxation,
changes in currency rates or currency blockage, currency exchange costs,
possibilities in some countries of expropriation or nationalization of
assets, political, financial or social instability or adverse diplomatic
developments and differences between domestic and foreign legal, auditing,
brokerage and economic standards. Investment in emerging markets involves
added risks, including less-developed legal and economic structures, less
stable political systems, illiquid securities markets, and greater
volatility of prices. See "Foreign Securities" in the SAI for further
discussion of the possible rewards and risks of investing in foreign
securities.
ZERO COUPON SECURITIES -- Each Stock and Bond Fund may invest in zero coupon
securities issued by the U.S. Treasury, municipalities or private issuers.
The Strategic Income Fund may also invest zero coupon securities issued by
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foreign governments and companies. Because a zero coupon security pays no
interest to its holder during its life or for a substantial period of time,
it usually trades at a discount from its face or par value, does not pay
current cash income, and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. In
addition, corporate zero coupon securities are subject to the risk of the
issuer's failure to pay interest and repay principal in accordance with the
terms of the obligation. See "Zero Coupon Securities" in the SAI for further
information.
ASSET-BACKED SECURITIES -- The Strategic Income Fund can invest in
asset-backed securities which are fractional interests in pools of consumer
loans and other trade receivables, similar to mortgage-backed securities.
They are issued by trusts and special purpose corporations. They are backed
by a pool of assets, such as credit card or auto loan receivables, which are
the obligations of a number of different parties. The income from the
underlying pool is passed through to holders, such as the Fund. These
securities are frequently supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the extent of
the credit enhancement may be different for different securities and
generally applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in the
related collateral. Thus, corporate asset-backed securities are ultimately
dependent upon payment of consumer loans by the individual borrowers.
PARTICIPATION INTERESTS -- The Strategic Income Fund may acquire
participation interests in loans that are made to U.S. or foreign companies
(each a "borrower"). They may be interests in, or assignments of, the loan
and are acquired from banks or brokers that have made the loan or are
members of the lending syndicate. No more than 5% of the Fund's net assets
can be invested in participation interests of the same borrower. The
Subadviser has set certain creditworthiness standards for issuers of loan
participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers may have
difficulty making payments. If a borrower fails to make scheduled interest
or principal payments, the Fund could experience a decline in the net asset
value of its shares. Some borrowers may have senior securities rated as low
as "C" by Moody's or "D" by Standard & Poor's, but may be deemed acceptable
credit risks. Participation interests are subject to the Fund's limitations
on investments in illiquid securities.
DERIVATIVE INVESTMENTS -- The Strategic Income Fund can invest in a number
of different kinds of "derivative investments." The Fund may use some types
of derivatives for hedging purposes, and may invest in others because they
offer the potential for increased income and principal value. In general, a
"derivative investment" is a specially-designed investment whose performance
is linked to the performance of another investment or security, such as an
option, future, index or currency. In the broadest sense, derivative
investments include exchange-traded options and futures contracts. See
"Investment guidelines -- Bond and Stock Funds, options and futures
strategies" for a discussion of conventional derivative securities.
One risk of investing in derivative investments is that the company issuing
the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the Subadviser expected it to perform.
The performance of derivative investments may also be influenced by interest
rate changes in the U.S. and abroad. All of these risks can mean that the
Fund will realize less income than expected from its investments, which will
affect the Fund's share price. Certain derivative
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investments held by the Fund may trade in the over-the-counter markets and
may be illiquid. If that is the case, the Fund's investment in them will be
limited.
Another type of derivative the Fund may invest in is an "index-linked" note.
On the maturity of this type of debt security, payment is made based on the
performance of an underlying index, rather than based on a set principal
amount for a typical note. Another derivative investment the Fund may invest
in is a currency-indexed security. These are typically short-term or
intermediate-term debt securities. Their value at maturity or the interest
rates at which they pay income are determined by the change in value of the
U.S. dollar against one or more foreign currencies or an index. In some
cases, these securities may pay an amount at maturity based on a multiple of
the amount of the relative currency movements. This variety of index
security offers the potential for greater income but at a greater risk of
loss.
Other derivative investments the Fund may invest in include "debt
exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, such debt security is exchanged for
common stock of the issuer or is payable in an amount based on the price of
the issuer's common stock at the time of maturity. In either case there is a
risk that the amount payable at maturity will be less than the principal
amount of the debt (because the price of the issuer's common stock is not as
high as was expected).
WARRANTS -- Each Stock Fund and the Strategic Income Fund may invest up to
5% of its total assets in warrants, other than those that have been acquired
in units or attached to other securities. Each Stock Fund may invest up to
2% of its assets in warrants that are not listed on the New York or American
Stock Exchanges. Warrants are options to purchase equity securities at
specific prices valid for a specific period of time. Those prices do not
necessarily move in a manner parallel to the prices of the underlying
securities. The price paid for a warrant will be foregone unless the warrant
is exercised prior to its expiration. Warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
SMALL, UNSEASONED COMPANIES -- Each Stock Fund may invest in securities of
small, unseasoned companies as well as those of large, well-known companies.
In view of the limited liquidity and price volatility of the former, each
Stock Fund will not invest more than 5% of its assets at the time of
purchase in securities of companies, including predecessors that have
operated less than three years. The securities of small, unseasoned
companies may have a limited trading market, which might adversely affect a
Fund's ability to dispose of such securities and can result in lower prices
for such securities than might otherwise be the case. If other investors
holding the same securities as a Fund sell them when the Fund attempts to
dispose of its holdings, the Fund might receive lower prices than might
otherwise be obtained, because of the thinner market for such securities.
SPECIAL SITUATIONS -- Each Stock Fund may invest in securities of companies
that are in "special situations" that the Subadviser believes may present
opportunities for capital growth. A "special situation" may be an event such
as a proposed merger, reorganization, or other unusual development that is
expected to occur and which may result in an increase in the value of a
company's securities, regardless of general business conditions or the
movement of prices in the securities market as a whole. There is a risk that
the price of the security may decline if the anticipated development fails
to occur.
BORROWING -- From time to time, the Atlas Strategic Growth, Strategic
Income, and Global Growth Funds may increase each of their ownership of
securities by borrowing from banks on an unsecured basis and investing the
borrowed funds (on which the Fund will pay interest), subject to the
requirement of the
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Investment Company Act of 1940 (the "1940 Act") that borrowings not exceed
50% of a Fund's net assets. Purchasing securities with borrowed funds is a
speculative investment method known as leverage. There are risks associated
with leveraging purchases of portfolio securities by borrowing, including
possible reduction of income and increased fluctuation of net asset value
per share. A Fund may be subject to relatively greater risks and costs than
a fund that does not use leverage. For further discussion of risks and other
details, see "Borrowing" in "Description of Certain Securities Investment
Policies" in the SAI.
SHORT SALES AGAINST-THE-BOX -- The Atlas Money Market and Bond Funds may not
sell securities short. The Atlas Stock Funds may each enter into
transactions referred to as "short sales-against-the-box." No more than 15%
of a Fund's net assets will be held as collateral for such short sales at
any one time. See "Short Sales Against-the-Box" in "Investment Objective and
Policies" in the SAI for further details.
The Stock Funds and the Atlas Strategic Income Fund will not, as a matter of
operating policy, which may be changed without the approval of a majority of
the outstanding shares, invest in an issuer engaged in the manufacture of
tobacco products.
REVERSE REPURCHASE AND DOLLAR REVERSE REPURCHASE AGREEMENTS -- may be
entered into by the Bond and Stock Funds. A reverse repurchase agreement is
the sale of a security by a Fund and its agreement to repurchase the
security at a specified time and price. In addition, the Government Funds
may enter into similar transactions, known as dollar reverse repurchase
agreements, with respect to mortgage-backed securities. Dollar reverse
repurchase agreements differ from reverse repurchase agreements only with
respect to the securities repurchased by a Fund, which are substantially
similar but not identical to the securities the Fund sold. Each Bond or
Stock Fund will maintain in a segregated account with the Custodian cash,
U.S. Government securities or other appropriate liquid, high grade debt
obligations in an amount sufficient to cover its obligations under these
agreements with broker-dealers (but no collateral is required on such
agreements with banks). Under the 1940 Act, these agreements are considered
borrowings by a Fund. Accordingly, each Bond or Stock Fund will limit its
investments in such agreements, together with any bank borrowings, to no
more than one-third of each Bond or Stock Fund's total assets. Reverse
repurchase and dollar reverse repurchase agreements create leverage, which
is speculative, and increase a Fund's investment risk. If the income and
gains on securities purchased with the proceeds of these agreements exceed
the costs of the agreements, a Bond or Stock Fund's earnings or net asset
value will increase faster than otherwise would be the case; conversely if
the income and gains fail to exceed the costs, earnings or net asset value
would decline faster than otherwise would be the case. The Adviser, or
Subadviser if applicable, will monitor the creditworthiness of firms with
which they engage in
these transactions.
OPTIONS AND FUTURES STRATEGIES -- the Bond and Stock Funds may engage in
options on securities, options on futures and futures contract strategies to
hedge their investments against changes in value, to manage cash flow, to
attempt to enhance income, or as a temporary substitute for purchases or
sales of actual securities. They will not engage in such transactions for
speculation. Their ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations, and there can be no
assurance that any of these strategies will succeed.
These strategies involve risks and transaction costs to which the Bond and
Stock Funds would otherwise not be subject. If the Adviser's or a
Subadviser's prediction of the direction of market movements in the
underlying instruments or indices is inaccurate, the Fund
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involved may be left in a worse position than if such strategies were not
used. Inherent risks include (1) dependence upon the Adviser's or
Subadviser's knowledge and ability to correctly predict the direction of the
market and/or rates; (2) imperfect correlation between the price of the
futures contract or option and the price of the securities or indices being
hedged; (3) the fact that the skills needed to use these strategies are
different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any
time; and (5) the possible need to defer closing out certain hedged
positions to avoid adverse
tax consequences.
A more thorough description of these investment practices and their
associated risks is contained below and in the current SAI. The Bond and
Stock Funds will not use leverage in futures, options on futures and options
on securities transactions, and are not commodity pools. When required by
SEC guidelines, each Fund will maintain a segregated account with the
Custodian with sufficient cash, U.S. Government securities or other highly
liquid, high grade debt securities to cover its potential futures and
options obligations.
OPTIONS ON SECURITIES, INDICES AND CURRENCIES -- the Bond and Stock Funds
may purchase and sell covered exchange listed put and call options on
securities, indices and currencies. These options may be on debt securities,
financial indices and foreign currencies (Bond Funds) and on stocks, stock
and financial indices, foreign government securities or foreign currencies
(Stock Funds). The Bond and Stock Funds may also buy and sell covered over-
the-counter puts and calls on securities that they may invest in directly
consistent with their respective investment policies. Under applicable
regulatory guidelines over-the-counter options may be treated in whole or in
part as
illiquid investments.
A Fund will only sell covered options. An option is covered if the seller
owns an offsetting position in the security or maintains cash, securities of
the U.S. Government its agencies or instrumentalities or other liquid high
grade debt obligations with a value sufficient at all times to meet its
obligations. There is no limit on the amount of covered call options a Bond
and Stock Fund may sell, but it may sell covered put options only to the
extent that the cover does not exceed 25% of a Fund's net assets.
A Fund may sell covered put and call options for additional premium income,
buy put options in an effort to protect the value of a security in its
portfolio against decline in value and buy call options in an effort to
protect against a price increase of securities or currencies it intends to
purchase. The Bond and Stock Funds may also make offsetting transactions to
close open positions.
For a premium paid, a call option buyer obtains the right to purchase
securities for a specified time at a specified price. For a premium
received, a call option seller is obliged, when a buyer exercises the
option, to deliver securities upon receipt of the specified price. While the
option is open, a call seller gives up potential gain on the securities in
excess of the
exercise price.
For a premium paid, a put option buyer obtains the right for a specified
time to sell the securities to the put option seller at the specified price.
For a premium received, a put option seller is obliged, when the buyer
exercises the option, to pay the specified price for the securities. While
the option is open, the put option seller may have to pay more than the
current market price for the securities.
Put and call options on financial indices and foreign currencies are similar
to options on securities, except that settlement is in cash in an amount
equal to the difference between the closing price of the index or currency
and the exercise price of the option.
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FUTURES CONTRACTS AND RELATED OPTIONS -- the Bond and Stock Funds may
purchase and sell financial futures contracts and options on futures which
are traded on a commodities exchange or board of trade for hedging, return
enhancement and risk management purposes in accordance with regulations of
the Commodity Futures Trading Commission. These futures contracts and
related options may be on debt securities, debt financial indices, and U.S.
Government securities (Bond Funds) and stock and financial indices, foreign
securities and foreign currencies (Stock Funds and the Strategic Income
Fund). A financial futures contract is an agreement to purchase or sell an
agreed amount of securities or currencies at a set price for delivery in the
future, or in the case of currency and index contracts, to take or make
delivery of an amount of cash equal to the difference between the closing
price of the index or currency and the contract price. A Fund may not enter
into a futures contract or option on a futures contract if immediately
thereafter the aggregate initial margin deposits related to such positions,
plus premiums paid by a Fund for open options on futures positions, less the
amount by which such options are "in-the-money", would exceed 5% of the
market value of a Fund's total assets. In addition, the value of all futures
contracts sold by a Fund will not exceed 25% (50% in the case of the
Strategic Income Fund) of its net
asset value.
A Bond or Stock Fund's successful use of futures contracts and related
options depends upon the Adviser's or Subadviser's ability to predict the
direction of the market, and is subject to various additional risks. Most
futures exchanges or boards of trade have established daily limits on the
amount that the price of a futures contract or related options may vary,
either up or down, from the previous day's settlement price. These daily
limits may restrict a Fund's ability to buy or sell futures contracts or
related options on any particular day.
INTEREST RATE SWAPS -- For hedging purposes, the Bond Funds may enter into
interest rate swap transactions and purchase or sell interest rate caps and
floors. An interest rate swap involves an agreement between the Fund and
another party to exchange payments calculated as if they were interest on a
fictitious ("notional") principal amount (e.g., an exchange of floating rate
payments by one party for fixed rate payments by the other). An interest
rate cap or floor entitles the purchaser, in exchange for a premium, to
receive payments of interest on a notional principal amount from the seller
of the cap or floor, to the extent that a specified reference rate exceeds
or falls below a predetermined level.
A Fund will usually enter into such transactions on a "net" basis, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payment streams. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each swap will be accrued
on a daily basis, and an amount of cash or high-quality liquid securities
having an aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's Custodian. If a
Fund enters into a swap on other than a net basis, or sells caps or floors,
the Fund will maintain a segregated account in the full amount, accrued on a
daily basis, of the Fund's obligations with respect to the transaction. Such
segregated accounts will be maintained in accordance with applicable
regulations of the Securities and Exchange Commission.
A Fund will not enter into any swap, cap or floor transaction unless the
unsecured senior debt or the claims paying ability of the other party to the
transaction is consistent with its credit quality standards for debt
obligations set forth above. The swap market has grown substantially in
recent years, with a large number of banks and investment banking firms
acting both as principals and agents utilizing standard swap documentation,
and the Adviser and the Subadvisers have determined that the swap market has
become relatively liquid. Swap transactions do not involve the delivery of
securities or other
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underlying assets or principal, and the risk of loss with respect to such
transactions is limited to the net amount of payments that a Fund is
contractually obligated to make or receive. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed
and, accordingly, they are less liquid than swaps. A Fund will not enter
into an interest rate swap transaction at any time that the aggregate amount
of its obligations under such transactions (based on notional amounts)
exceeds 10% of its total assets. The aggregate purchase price of caps and
floors held by a Fund may not exceed 5% of its total assets at the time of
purchase, and they will be considered by the Fund to be illiquid assets. A
Fund may sell caps and floors without limitation other than the segregated
account requirement described above.
The use of swaps, caps and floors is a highly specialized activity which
involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. If the Adviser's or a
Subadviser's forecast of market values, interest rates, and other factors is
incorrect, a Fund's investment performance will diminish compared with the
performance that could have been achieved if these investment techniques
were not used. Moreover, even if the forecasts are correct, a Fund's swap
position may correlate imperfectly with the asset or liability being hedged.
In addition, in the event of a default by the other party to the
transaction, a Fund might incur
a loss.
FORWARD CURRENCY EXCHANGE CONTRACTS -- the Stock Funds and the Strategic
Income Fund may enter into foreign currency exchange contracts to hedge
specific transactions or portfolio positions and to protect the value of the
portfolio against future changes in currency exchange rates. A forward
contract is an obligation to purchase or sell a specific currency at an
agreed upon future date at a price set on the date of the contract.
Transaction hedging is the purchase or sale of a forward contract with
respect to specific receivables or payables for the purchase or sale of
portfolio securities. A position hedge is the sale of a foreign currency
with respect to portfolio security positions denominated or quoted in that
currency. A Fund may not position hedge with respect to a particular
currency for an amount greater than the aggregate market value at the time
of any sale of forward currency of its portfolio securities denominated or
quoted in such currency. Forward currency exchange contracts are subject to
the same types of risks and transaction costs as options and futures
transactions.
- ----------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
COMPANY'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE
COMPANY'S SHARES AND, IF GIVEN, OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
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ATLAS ASSETS, INC., 1901 Harrison Street, Oakland, CA 94612
- --------------------------------------------------------------------------------
PAYABLE ON DEATH ACCOUNT BENEFICIARY DESIGNATION FORM
<TABLE>
<C> <S> <C> <C> <C>
Owner's Name
Joint Owner's Name
Street Address City State Zip
Telephone Number -
Telephone Number - Residence Business
Atlas Fund Account
Taxpayer ID Number Number
</TABLE>
PAYABLE ON DEATH PAYEES
<TABLE>
<C> <S> <C> <C> <C>
1.
Name (please print) Taxpayer ID Number
Street Address City State Zip
2.
Name (please print) Taxpayer ID Number
Street Address City State Zip
</TABLE>
I/We understand that, as authorized by statute of
the state in which I/we reside, funds in this
account are payable upon request only to me/us as
Original Payee(s) during my/our lifetime(s) and,
upon my death/the death of the last of us to die,
to the Payable On Death Payee(s) named above who
survive(s) me/us. I/We understand that upon
presentation to you of proof of my death/the death
of the last of us to die, funds remaining in the
account will be payable only to the Payable On
Death Payee(s) who survive(s) me/us, in equal
shares if more than one survives me/us. (Payable
on Death accounts are not authorized under the
laws of the states of Arizona, Florida, Kansas,
New Jersey and Texas).
<TABLE>
<C> <S> <C> <C> <C>
[ARTWORK TO COME]
Original Payee Signature Date
Original Payee Signature Date
</TABLE>
<PAGE>
ATLAS ASSETS, INC., 1901 Harrison Street, Oakland, CA 94612
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS FORM
FOR TRUSTS, CORPORATIONS, PARTNERSHIPS AND OTHER ENTITIES
Corporations, please complete sections 1 through 3.
Trusts, partnerships and other entities, complete sections 1 and 3.
If any information on this Form changes, you will need to file an amended
Form with the Atlas Funds' Shareholder Services Agent ("Agent"). Please call
1-800-933-ATLAS (1-800-933-2852) for additional Forms.
1. ACCOUNT REGISTRATION
____________________________________________________________________________
Name of Trust, Corporation, Partnership or Other Entity
___________________________________________________________________________
Atlas Funds Account Number (If this is an existing account)
THE REGISTERED OWNER IS A:
/ / Trust / / Partnership / / Corporation/Incorporated / / Other (please
specify):
Association
<TABLE>
<S> <C> <C>
Date of Previous Securities Transactions Form,
Today's Date if this Form is an amendment
</TABLE>
2. CORPORATIONS AND INCORPORATED ASSOCIATIONS ONLY
CORPORATE SECRETARY, PLEASE COMPLETE THIS SECTION, SIGN IT, AND AFFIX YOUR
CORPORATE SEAL. BY SIGNING THIS FORM I CERTIFY THAT:
<TABLE>
<C> <S>
/ / On ------------------------ , 19 --------- , a quorum of the Board of Directors of the
Registered Owner named above empowered the person(s) named in section 3 to carry out
securities transactions on the Registered Owner's behalf.
/ / I am authorized to certify as needed the names and titles of officers of the Registered Owner
and notify the Agent of any changes.
/ / A resolution authorizing all of these powers has been duly adopted by the Registered Owner's
Board of Directors, is in full force and effect in accordance with the Registered Owner's
charter and by-laws, and will remain in effect until the Atlas Funds' Agent receives a duly
executed amended Securities Transactions Form.
Affix Corporate
Seal Here
Secretary's name (please print) Date
X
Signature
</TABLE>
<PAGE>
3. AUTHORIZED PERSONS
The persons named in this section are currently
authorized under the applicable governing document
to purchase, redeem, withdraw, exchange,
[ARTWORK
TO COME]
or assign shares of Atlas Funds ("securities
transactions") for the Registered Owner named in
section 1, and to execute and deliver any
instruments necessary to complete these
transactions. The Agent may act only upon the
instructions of person(s) authorized in the most
recent Securities Transactions Form received by the
Agent. The Atlas Funds and its Agent will not be
liable for any loss or expense resulting from acting
on instructions they believe to be genuine. This
Securities Transactions Form will remain in effect
until the Agent receives an amended Form.
PLEASE SIGN THIS SECTION.
By signing this Form, I agree to all the terms and
conditions outlined above. I have full authority to
sign on behalf of the Registered Owner.
<TABLE>
<S> <C>
Name (please print)
X
Signature
Name (please print)
X
Signature
Name (please print)
X
Signature
Name (please print)
X
Signature
<CAPTION>
<S> <C>
Date
Title
Date
Title
Date
Title
Date
</TABLE>
HOW MANY SIGNATURES ARE REQUIRED
FOR ATLAS FUNDS TRANSACTIONS: / / 1 / / 2 / / 3 / / All
<PAGE>
ATLAS ASSETS, INC., 1901 Harrison Street, Oakland, CA 94612
- --------------------------------------------------------------------------------
WORLDLINK FORM
If your Atlas Fund Class A share purchase is made with a check or bank wire
from a financial institution other than World Savings, you can combine the
balances of your World Savings account(s) and the current value of your
Atlas Fund account(s) to qualify for a breakpoint sales charge reduction. To
qualify for the reduced sales charge, today's Atlas Fund purchase plus your
World Savings and Atlas Fund Class A and Class B account balances must total
$25,000 or more (See "What is the Class A sales charge option?" in the
Prospectus).
TO QUALIFY FOR WORLDLINK, COMPLETE THESE STEPS:
<TABLE>
<C> <S>
1. Make an investment in Atlas with a check or bank wire from a financial institution OTHER THAN
World Savings, and meet the minimum WorldLink account balance total of $25,000.
2. Complete this form.
3. Drop off your check, the Worldlink Form and New Account Form (for initial investments only),
at your World Savings Branch to be forwarded to World Savings Headquarters for verification
of account balance(s). BECAUSE BALANCES MUST BE VERIFIED AT WORLD SAVINGS' HEADQUARTERS,
PURCHASES SENT DIRECTLY TO THE AGENT WILL NOT QUALIFY FOR THE SALES CHARGE REDUCTION.
</TABLE>
[ARTWORK
TO COME]
FOR WORLD SAVINGS TO PROVIDE ATLAS WITH YOUR
ACCOUNT BALANCE(S), THE FOLLOWING MUST BE PROVIDED:
<TABLE>
<C> <S> <C>
/ / All Social Security number(s) ("SSN") or Taxpayer Identification
number(s) ("TIN") that are assigned to your World account(s).
/ / Signature(s) for each SSN provided or the authorized signature(s)
for the TIN.
I (we) authorize World Savings to verify the balances in the
accounts assigned to the following SSN(s) and/or TIN(s), and to
provide this information to Atlas. Please note there must be a
signature for each
SSN and/or TIN provided.
</TABLE>
<TABLE>
<S> <C> <C>
SSN/TIN Print Name
SSN/TIN Print Name
SSN/TIN Print Name
SSN/TIN Print Name
<CAPTION>
X
<S> <C>
X
Signature
X
Signature
X
Signature
Date
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
- ---------------------------------------------------------------
NOTES
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
THE ATLAS FUNDS
U.S. Treasury Money Fund
National Municipal Money Fund
California Municipal Money Fund
U.S. Government Intermediate Fund
(formerly U.S. Treasury Intermediate Fund)
National Insured Intermediate
Municipal Fund
California Insured Intermediate
Municipal Fund
National Municipal Bond Fund
California Municipal Bond Fund
U.S. Government and
Mortgage Securities Fund
Strategic Income Fund
Balanced Fund
Growth and Income Fund
Strategic Growth Fund
Global Growth Fund
DISTRIBUTOR
Atlas Securities, Inc.
1901 Harrison Street
Oakland, CA 94612
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, MA 02205-1537
ADVISER
Atlas Advisers, Inc.
1901 Harrison Street
Oakland, CA 94612
SHAREHOLDER SERVICES AGENT
National Financial Data Services
P.O. Box 419056
Kansas City, MO 64141
AUDITOR
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105
<PAGE>
PROSPECTUS
, 1996
<PAGE>
PART B
ATLAS FUNDS
______________________________________________
STATEMENT OF ADDITIONAL INFORMATION
______________________________________________
<PAGE>
ATLAS ASSETS, INC.
1901 Harrison Street
Oakland, California 94612
1-800-933-ATLAS (1-800-933-2852)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("Statement"), which may be
amended from time to time, concerning Atlas Assets, Inc. (the "Company") is not
a Prospectus for the Company. This Statement supplements the Prospectus dated
__________, 1996 and investors should read it in conjunction with that
Prospectus. A copy of the Prospectus, which may be amended from time to time,
is available without charge by writing or calling the Company at the address or
telephone number printed above.
The date of this Statement of Additional Information is _____________,
1996.
<PAGE>
TABLE OF CONTENTS
Page
----
Description of Certain Securities and
Investment Policies.................................................. B-2
Fundamental Investment Restrictions .................................... B-37
Portfolio Turnover ..................................................... B-41
Management of the Company .............................................. B-42
Investment Advisory and Other Services ................................. B-45
Execution of Portfolio Transactions .................................... B-49
How to Invest .......................................................... B-50
Other Investment and Redemption Services ............................... B-55
Taxes .................................................................. B-57
Additional Information ................................................. B-65
Investment Results ..................................................... B-65
Financial Statements ................................................... B-80
Appendix I -- Description of Ratings ................................... B-81
Appendix II -- Industry Classifications ................................ B-85
<PAGE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT POLICIES
The investment objectives and policies of each of the Funds are described
in the Prospectus. Supplemental information about those policies is set forth
below. Certain capitalized terms used in this Statement are defined in the
Prospectus.
INVESTMENT RISKS.
With the exception of U.S. Government Securities, the debt securities the
Strategic Income Fund invests in will have one or more types of investment risk:
credit risk, interest rate risk or foreign exchange risk. Credit risk relates
to the ability of the issuer to meet interest or principal payments or both as
they become due. Generally, higher yielding bonds are subject to credit risk to
a greater extent than higher quality bonds. Interest rate risk refers to the
fluctuations in value of debt securities resulting solely from the inverse
relationship between price and yield of outstanding debt securities. An
increase in prevailing interest rates will generally reduce the market value of
debt securities, and a decline in interest rates will tend to increase their
value. In addition, debt securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation than obligations with shorter maturities. Fluctuations in the
market value of debt securities subsequent to their acquisition will not affect
the interest payable on those securities, and thus the cash income from such
securities, but will be reflected in the valuations of these securities used to
compute the Fund's net asset values. Foreign exchange rate risk refers to the
change in value of the currency in which a foreign security the Fund holds is
denominated against the U.S. dollar.
SPECIAL RISKS - HIGH YIELD SECURITIES.
As stated in the Prospectus, the corporate debt securities, in which the
Strategic Income Fund will principally invest may be in the lower rating
categories. The Fund may invest in securities rated as low as "C" by Moody's or
"D" by Standard & Poor's. The Fund's Subadviser will not rely solely on the
ratings assigned by rating services and may invest, without limitation in
unrated securities which offer, in the opinion of the Subadviser, comparable
yields and risks as those rated securities in which the Fund may invest.
Risks of high yield securities may include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting
from changes in prevailing interest rates, (iii) subordination to the prior
claims of banks and other
B-2
<PAGE>
senior lenders, (iv) the operation of mandatory sinking fund or call/redemption
provisions during periods of declining interest rates that could cause the Fund
to be able to reinvest premature redemption proceeds only in lower yielding
portfolio securities, (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising interest
rates and economic downturn. As a result of the limited liquidity of high yield
securities, their prices have at times experienced significant and rapid decline
when a substantial number of holders decided to sell. A decline is also likely
in the high yield bond market during an economic downturn. An economic downturn
or an increase in interest rates could severely disrupt the market for high
yield bonds and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest.
REPURCHASE AGREEMENTS.
Each Atlas Fund, except the U.S. Treasury Money Fund, may engage in
repurchase agreement transactions on portfolio securities with member banks of
the Federal Reserve System or with certain dealers listed on the Federal Reserve
Bank of New York's list of reporting dealers. Under the terms of a typical
repurchase agreement, a Fund would acquire an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the obligation
at an agreed upon price and time, thereby determining the yield during the
Funds' holding period. This arrangement results in a fixed rate of return that
is not subject to market fluctuations during the Fund's holding period. The
value of the underlying securities will be monitored by the Adviser or by a
Fund's Subadviser to ensure that it at least equals at all times the total
amount of the repurchase obligation, including interest.
A Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert these rights. The
Adviser, or the Subadviser if applicable, acting under the supervision of the
Board of Directors, reviews, on an ongoing basis, the creditworthiness and the
values of the collateral of those banks and dealers with which a Fund enters
into repurchase agreements to evaluate potential risks.
A repurchase agreement is considered to be a loan collateralized by the
underlying securities under the 1940 Act. Investments by the Municipal Funds in
repurchase agreements, if
B-3
<PAGE>
any, are limited by the restrictions on those Funds' investment in taxable
instruments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.
In order to secure yields or prices deemed advantageous at the time, all
Funds may purchase or sell securities on a "when-issued" or "delayed delivery"
basis. The Funds will not enter into such a transaction for the purpose of
leverage. In such transactions delivery of the securities occurs beyond the
normal settlement periods (generally within two months but not more than 120
days), but no payment or delivery is made by, and no interest accrues to, the
Fund prior to the actual delivery or payment by the other party to the
transaction. To the extent that assets of a Fund are not invested prior to the
settlement of a purchase of securities, the Fund will earn no income; however,
it is intended that each Fund will be fully invested to the extent practicable.
While when-issued or delayed delivery securities may be sold prior to the
settlement date, a Fund will purchase such securities for the purpose of
actually acquiring them unless a sale appears desirable for investment reasons.
At the time a Fund makes the commitment to purchase a security on a when-
issued or delayed delivery basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The Funds do not
believe that the net asset value or income of their portfolios will be adversely
affected by their purchase of securities on a when-issued or delayed delivery
basis.
Due to fluctuations in the value of securities purchased on a when-issued
or delayed delivery basis, the yields obtained on such securities may be higher
or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers. Similarly, the sale of
securities on a firm commitment basis can involve the risk that the prices
available in the market when delivery is made may actually be higher than those
obtained in the transaction itself.
When the Fund engages in when-issued or delayed transactions, it relies on
the buyer or seller, as the case may be, to consummate the transaction. Failure
of the buyer or seller to do so may result in the Fund losing the opportunity to
obtain a price and yield considered to be advantageous. A Fund will establish a
segregated account consisting of cash, U.S. Government Securities or other high-
grade debt obligations in an amount equal to the amount of its when-issued or
firm commitment obligation. Such segregated securities either will mature or,
if necessary, be sold on or before the settlement date.
B-4
<PAGE>
When-issued transactions and forward commitments allow a Fund a technique
to use against anticipated changes in interest rates and prices. For instance,
in periods of rising interest rates and falling prices, a Fund might sell
securities in its portfolio on a forward commitment basis to attempt to limit
its exposure to anticipated falling prices. In periods of falling interest
rates and rising prices, a Fund might sell portfolio securities and purchase the
same or similar securities on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields.
DOLLAR REVERSE REPURCHASE AND REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS.
The Government Funds and the Strategic Income Fund may engage in dollar
reverse repurchase and reverse dollar reverse repurchase agreements with respect
to mortgage-backed securities. These agreements involve the purchase or sale by
the Fund of securities that are substantially similar to those sold or purchased
by the Fund upon the initiation of the transaction, as the case may be. For
this purpose, "substantially similar" means that the securities are issued by
the same U.S. Government agency or instrumentality, have the same original term
to maturity, and have the same original rate of interest, but may be backed by
different pools of mortgage obligations. Dollar reverse repurchase agreements
are subject to the same risks and restrictions as described in the Prospectus
with respect to reverse repurchase agreements. Reverse dollar reverse
repurchase agreements are subject to the same risks and restrictions as
described in "Repurchase Agreements" above with respect to repurchase
agreements.
OPTIONS ON SECURITIES, INDICES AND CURRENCIES (ALL BOND AND STOCK FUNDS ARE
ELIGIBLE TO USE THE FOLLOWING OPTIONS).
1. Purchasing Put and Call Options on Securities.
By purchasing a put option, a Fund obtains the right (but not the
obligation) to sell the option's underlying security to the writer of the option
at a fixed strike price. The option may give the Fund the right to sell only on
the option's expiration date, or may be exercisable at any time up to and
including that date. In return for this right, the Fund pays the writer the
current market price for the option (known as an option premium).
A Fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Fund exercises
the option, it completes the sale of the underlying security at the strike
price. The
B-5
<PAGE>
Fund may also terminate a put option position by effecting a "closing
transaction" (i.e. selling an option of the same series as the option previously
purchased) in the secondary market at its current price, if a liquid secondary
market exists.
Put options may be used by a Fund to hedge against losses on sales of
securities. If securities prices fall, the value of the put option would be
expected to rise and offset all or a portion of the Fund's resulting losses in
its securities holdings. However, option premiums tend to decrease over time as
the expiration date nears. Therefore, because of the cost of the option premium
and transaction costs, the Fund would expect to suffer a loss in the put option
if prices do not decline sufficiently to offset the deterioration in the value
of the option premium. At the same time, because the maximum the Fund has at
risk is option premium, purchasing put options offers potential profit from an
increase in the value of the securities hedged.
A Fund may also purchase options whether or not it holds such securities in
its portfolio. Buying a put option on an investment it does not own permits a
Fund either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event of a decline
in the securities market, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio securities.
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying security at the option's strike
price. By purchasing a call option, a Fund would attempt to participate in
potential price increases of the underlying security, but with risk limited to
the cost of the option if securities prices fell. At the same time, the Fund
can expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option. The value of debt securities underlying calls
purchased by the Strategic Income Fund will not exceed the value of the portion
of the Fund's portfolio invested in cash or cash equivalents (i.e., securities
with maturities of less than one year).
2. Writing Put and Call Options on Securities.
When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Fund assumes the obligation to pay
B-6
<PAGE>
the strike price for the option's underlying security if the other party to the
option chooses to exercise it. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of the
underlying security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. Prior to exercise, the Fund may seek
to terminate its position in a put option by effecting a closing purchase
transaction with respect to the option in the secondary market (i.e. buying an
option of the same series as the option previously written) at its current
price. If the secondary market is not liquid for an option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes, and must continue
to set aside assets to cover its obligation.
A Fund may write a put option as an alternative to purchasing a security.
If the security's price rises, the Fund would expect the put to lapse
unexercised and to profit from a written put option, although its gain would be
limited to the amount of the premium it received. If the security's price
remains the same over time, it is likely that the Fund will also profit, because
it should be able to close out the option at a lower price. If the security's
price falls, the Fund would expect to suffer a loss. If the put is exercised,
the Fund must fulfill its obligation to purchase the underlying investment at
the exercise price, which will usually exceed the market value of the investment
at that time. This loss should be less than the loss the Fund would have
experienced from purchasing the underlying security directly (assuming the
secondary market for the put option and the underlying security are equally
liquid) because the premium received for writing the option should mitigate the
effect of the price decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing covered call options generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, the Fund would seek to mitigate the effects of a price decline.
At the same time, the Fund would give up some ability to participate in security
price increases when writing call options.
B-7
<PAGE>
3. Securities Index Option Transactions.
A Fund may buy or sell a securities index option at a fixed price. No
securities actually change hands in these transactions. Instead, changes in the
underlying index's value are settled in cash. The cash settlement amounts are
based on the difference between the index's current value and the value
contemplated by the contract. Most securities index options are based on
broad-based indices reflecting the prices of a broad variety of securities, such
as the Standard & Poor's 500 Composite Stock Price Index. Some index options
are based on narrower industry averages or market segments.
The Company expects that a Fund's options transactions will normally
involve broad-based indices, though it is not limited to these indices. Since
the value of index options depends primarily on the value of their underlying
indexes, the performance of broad-based indices will generally reflect broad
changes in securities prices. A Fund, however, can invest in many different
types of securities, including securities that are not included in the
underlying indices of the options available to the Fund. In addition, a Fund's
investments may be more or less heavily weighted in securities of particular
types of issuers, or securities of issuers in particular industries, than the
indexes underlying its index options positions. Therefore, while a Fund's index
options should provide exposure to changes in value of its portfolio securities
(or protection against declines in their value in the case of hedging
transactions), it is likely that the price changes of the Fund's index options
positions will not match the price changes of the Fund's other investments.
4. Combined Option Positions.
A Fund may purchase and write options in combination to adjust the risk and
return characteristics of the overall position. For example, a Fund may
purchase a put option and write a call option on the same underlying security,
in order to construct a combined position with risk and return characteristics
similar to those of selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and buying a
call option at a lower price, in order to reduce the risk of the written call
option in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close than single options transactions.
Combined option positions will be subject to the same overall percentage
limitation as other option strategies.
B-8
<PAGE>
5. Risks of Transactions in Options.
An option position may be closed out only on an exchange or market which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market will exist at any particular time for
options purchased or written by a Fund. For some options no secondary market on
an exchange may exist at all. In such event, it might not be possible to effect
closing transactions in particular options, with the result that a Fund would
have to exercise its options in order to realize any profit and would incur
brokerage commissions upon the exercise of call options and upon the subsequent
disposition of underlying securities acquired through the exercise of call
options or upon the purchase of underlying securities for the exercise of put
options. If a Fund as a covered call option writer is unable to effect a
closing purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or the Fund delivered the
underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volumes; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no
assurance that higher than anticipated trading activity or other unforeseen
events might not, at times, render certain of the facilities of any of the
clearing corporations inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.
In addition, options on indices are subject to certain risks that are not
present with other options. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
instrument, whether a Fund will realize a gain or loss on the purchase or sale
of an option on an index depends upon movements in the level of prices in the
market generally or in an industry or market segment rather than
B-9
<PAGE>
movements in the price of a particular instrument. In addition, index prices
may be distorted or interrupted if trading of certain instruments included in
the index is interrupted. If this occurred, a Fund would not be able to close
out options which had been purchased or written by it and, if restrictions on
exercise were imposed, may be unable to exercise an option being held, which
could result in substantial losses to a Fund. However, it is the Funds' policy
to purchase or write options only on indices which include a sufficient number
of securities so that the likelihood of a trading halt in the index is
minimized.
The eligible Funds may buy and sell over-the-counter puts and calls on
securities and as well as listed options. Unlike listed option positions,
positions in over-the-counter options may be closed out only with the other
party to the options transaction. Such options transactions are subject to the
additional risks that a Fund may be unable to close out a transaction with the
other party when it wishes to do so, and that the other party to the transaction
may default without the protection against default afforded by exchange clearing
corporations with respect to listed options. The eligible Funds will enter into
unlisted option transactions only with securities dealers which the Adviser or a
Subadviser believes to be of high credit standing and to maintain a liquid
market for such options. Under certain conditions, the premiums a Fund pays for
unlisted options and the value of securities used to cover such options written
by the Fund are considered to be invested in illiquid assets for purposes of the
investment restriction applicable to illiquid investments.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
1. Interest Rate Futures Transactions (all Bond and Stock Funds are eligible
to use these transactions).
The Bond and Stock Funds may purchase or sell interest rate futures
contracts in hedging transactions. When a Fund purchases a futures contract, it
agrees to purchase the underlying instrument at a specified future date and
price. When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date and price.
No consideration is paid or received by a Fund upon the purchase or sale of
a futures contract. Initially, a Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 5% of the
contract amount (this amount is subject to change by the board of trade on which
the contract is traded and members of such board of trade may charge a higher
amount). This amount is known as "initial
B-10
<PAGE>
margin" and is returned to a Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied by the Fund.
Subsequent payments, known as "variation margin," to and from the Fund or
the broker, as the case may be, must be made daily as the price of securities
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable. These daily payments to account
for valuation changes are a process known as "marking-to-market." If a Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. The party that
has a gain may be entitled to receive all or a part of this amount. At any time
prior to the expiration of a futures contract, a Fund may elect to close the
position by taking an opposite position, which will operate to terminate the
Fund's existing position in the contract.
Initial and variation margin payments are similar to good faith deposits or
performance bonds, unlike margin extended by a securities broker, and do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitation. In the event of the bankruptcy of a futures commission merchant
("FCM") that holds margin on behalf of the Fund, the Fund may be entitled to
return of margin owed to it only in proportion to the amount received by the
FCM's other customers. The Adviser, or Subadviser if applicable, will attempt
to minimize this risk by careful monitoring of the creditworthiness of the FCMs
with which the Fund does business.
The purpose of the acquisition or sale of a futures contract by an eligible
Bond Fund is to protect that Fund from fluctuations in rates on securities
without actually buying or selling the securities. The value of portfolio
securities will exceed the value of the futures contracts sold by the Fund, and
an increase in the value of the futures contracts could only mitigate -- but not
totally offset -- the decline in the value of the portfolio. Interest rate
futures contracts are currently traded on the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange (CME) and the
New York Futures Exchange. Among the securities on which interest rate futures
contracts are currently based are long-term U.S. Treasury bonds, U.S. Treasury
notes, GNMA pass-through securities, three-month U.S. Treasury bills, municipal
bond futures and ninety-day commercial paper.
2. Securities Index Futures Contracts (all Bond and Stock Funds are eligible
to participate in these contracts).
When a Fund purchases a securities index futures contract, it agrees to
purchase the underlying index at a specified future
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date and price. When a Fund sells a securities index futures contract, it
agrees to sell the underlying index at a specified future date and price.
The majority of index futures are closed out by entering into an offsetting
purchase or sale transaction in the same contract on the exchange where they are
traded, rather than being held for the life of the contract. Futures contracts
are closed out at their current prices, which may result in a gain or loss. If
a Fund holds an index futures contract until the delivery date, it will pay or
receive a cash settlement amount based on the difference between the index's
closing price and the settlement price agreed upon when the contract was
initiated.
A Fund may purchase securities index futures contracts in an attempt to
remain fully invested in the securities market. For example, if a Fund had cash
and short-term securities on hand that it wished to invest in common stocks, but
at the same time it wished to maintain a highly liquid position in order to be
prepared to meet redemption requests or other obligations, it could purchase a
stock index futures contract in order to participate in changes in stock prices.
A Fund may also purchase futures contracts as an alternative to purchasing
actual securities. For example, if a Fund intended to purchase stocks but had
not yet done so, it could purchase a stock index futures contract in order to
lock in current stock prices while deciding on particular investments. This
strategy is sometimes known as an anticipatory hedge. In these strategies the
Fund would use futures contracts to attempt to achieve an overall return similar
to the return from the stocks included in the underlying index, while taking
advantage of potentially greater liquidity that futures contracts may offer.
Although the Fund would hold cash and liquid debt securities in a segregated
account with a value sufficient to cover its open futures obligations, the
segregated assets would be available to the Fund immediately upon closing out
the futures position, while settlement of securities transactions can take
several days.
When a Fund wishes to sell securities, it may sell securities index futures
contracts to hedge against securities market declines until the sale can be
completed. For example, if a Fund anticipated a decline in common stock prices
at a time when it anticipated selling common stocks, it could sell a futures
index contract in order to lock in current market prices. If stock prices
subsequently fell, the futures contract's value would be expected to rise and
offset all or a portion of the anticipated loss in the common stocks the Fund
had hedged in anticipation of selling them. The success of this type of
strategy depends to a great extent on the degree of correlation between the
index futures contract and the securities hedged. Of
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course, if prices subsequently rose, the futures contract's value could be
expected to fall and offset all or a portion of the benefit to the Fund.
3. Options on Futures Contracts (all Bond and Stock Funds are eligible to
participate in these contracts).
An option on a futures contract is an agreement to buy or sell the futures
contract. Exercise of the option results in ownership of a position in the
futures contract. Options on futures contracts may be purchased and sold by a
Fund in the same manner as options on securities. Options on futures contracts
may also be written by a Fund in the same manner as securities options, except
that the writer must make margin payments to a futures commission merchant
("FCM") as described above with respect to futures contracts. The holder or
writer of an option may terminate his position by selling or purchasing an
option of the same series. There is no guarantee that such closing transactions
can be effected.
4. Risks of Transactions in Futures Contracts and Options on Futures.
There are risks in connection with the use of futures contracts as a
hedging device. Successful use of futures contracts by a Fund is subject to the
ability of the Adviser, or Subadviser if applicable, to forecast movements in
the direction of interest rates. These forecasts may involve skills and
techniques that may be different from those involved in the management of the
Funds. In addition, even a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected trends in interest rates.
As noted above, price changes of the Fund's futures and options on futures
positions may not be well correlated with price changes of its other investments
because of differences between the underlying indices and the types of
securities the Fund invests in. For example, if the Fund sold a broad-based
index futures contract to hedge against a stock market decline while the Fund
completed a sale of specific securities in its portfolio, it is possible that
the price of the securities could move differently from the broad market average
represented by the index futures contract, resulting in an imperfect hedge and
potentially in losses to the Fund.
Index futures prices can also diverge from the prices of their underlying
indexes, even if the underlying instruments match the Fund's investments well.
Futures prices are affected by such factors as current and anticipated short-
term interest rates, changes in volatility of the underlying index, and the time
remaining until expiration of the contract, which may not affect security prices
the same way. Imperfect correlation
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between the Fund's investments and its futures positions may also result from
differing levels of demand in the futures markets and the securities markets,
from structural differences in how futures and securities are traded, or from
imposition of daily price fluctuation limits for futures contracts. The Fund
may purchase or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in historical volatility between the futures contract
and the securities, although this may not be successful in all cases. If price
changes in the Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce anticipated gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of up to seven days for
some types of securities, the futures markets can provide liquidity superior to
that of the securities markets in many cases. Nevertheless, there is no
assurance a liquid secondary market will exist for any particular futures
contract at any particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day.
On volatile trading days when the price fluctuation limit is reached, it may be
impossible for the Fund to enter into new positions or close out existing
positions. Trading in index futures can also be halted if trading in the
underlying index stocks is halted. If the secondary market for a futures
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable futures positions, and
potentially could require the Fund to continue to hold a futures position until
the delivery date, regardless of potential losses. If the Fund must continue to
hold a futures position, its access to other assets held to cover the position
could also be impaired.
Options on futures are subject to risks similar to those described above
with respect to futures contracts, including the risk of imperfect correlation
between the option and a Fund's other investments and the risk that there might
not be a liquid secondary market for the option. In the case of options on
futures contracts, there is also a risk of imperfect correlation between the
option and the underlying futures contract. Options on futures are also subject
to the risks of an illiquid secondary market, particularly in strategies
involving writing options which the Fund cannot terminate by exercise. In
general, options with strike prices close to their underlying securities'
current value will have the highest trading volume, while options with
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strike prices further away may be less liquid. The liquidity of options on
futures may also be affected if exchanges impose trading halts, particularly
when markets are volatile.
5. Limitations on Transactions in Futures and Options on Futures.
The Company has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission ("CFTC"), which regulates trading in the futures markets, on
behalf of each Fund that may engage in any purchases or sales of futures
contracts or options on futures contracts. Pursuant to Section 4.5 of the
regulations under the Commodity Exchange Act, the eligible Funds are subject to
the following limitations:
(a) The Company will use futures contracts and related options solely for
bona fide hedging purposes within the meaning of CFTC regulations; provided that
a Fund may hold long positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions in an amount
not in excess of the limitation in paragraph (b); and
(b) The Company will not enter into any futures contract or option on a
futures contract if, as a result, the sum of initial margin deposits on futures
contracts and related options and premiums paid for options on futures contracts
a portfolio has purchased, after taking into account unrealized profits and
losses on such contracts, would exceed 5% of the portfolio's total assets.
In addition, the Company does not intend to enter into futures contracts or
options on a futures contract that are not traded on exchanges or boards of
trade.
These limitations on the Company's investments in futures contracts and
options, and the Company's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as permitted by the appropriate
regulatory agencies. The Company will not modify the above limitations to
increase its permissible futures and options activities without supplying
additional information in a current Prospectus or Statement of Additional
Information that has been distributed or made available to the Company's
shareholders.
Various exchanges and regulatory authorities have undertaken reviews of
options and futures trading in light of market volatility. Among the possible
actions that have been presented are proposals to adopt new or more stringent
daily price fluctuation limits for futures or options transactions, and
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proposals to increase the margin requirements for various types of strategies.
It is impossible to predict what actions, if any, will result from these reviews
at this time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS.
A Fund eligible to participate in futures and options will not use leverage
in its options and futures strategies. In the case of strategies entered into
as a hedge, the Fund will hold securities or other options or futures positions
whose values are expected to offset its obligations under the hedge strategies.
A Fund will not enter into an option or futures position that exposes the Fund
to an obligation to another party unless it owns either (i) an offsetting
position in securities or other options or futures contracts or (ii) cash,
receivables and short-term debt securities with a value sufficient to cover its
potential obligations.
A Fund will comply with guidelines established by the Securities and
Exchange Commission with respect to coverage of options and futures strategies
by mutual funds and, if the guidelines so require, will set aside cash and high
grade liquid debt securities in a segregated account with its custodian bank in
the amount prescribed. Securities held in a segregated account cannot be sold
while the futures or option strategy is open, unless they are replaced with
similar securities. As a result, there is a possibility that segregation of a
large percentage of the Fund's assets could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations.
INTEREST RATE SWAPS.
Each Bond Fund may engage in interest rate swaps. As indicated in the
Prospectus, an interest rate swap is a contract between two entities
("counterparties") to exchange interest payments (of the same currency) between
the parties. In the most common interest rate swap structure, one counterparty
agrees to make floating rate payments to the other counterparty, which in turn
makes fixed rate payments to the first counterparty. Interest payments are
determined by applying the respective interest rates to an agreed upon amount,
referred to as the "notional principal amount." In many such transactions, the
floating rate payments are tied to the London Interbank Offered Rate ("LIBOR"),
which is the offered rate for short-term eurodollar deposits between major
international banks. As there is no exchange of principal amounts, an interest
rate swap is not an investment or a borrowing.
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SWAP OPTIONS.
Each Bond Fund may invest in swap options. A swap option is a contract
that gives a counterparty the right (but not the obligation) to enter into a new
swap agreement or to shorten, extend, cancel or otherwise change an existing
swap agreement, at some designated future time on specified terms. It is
different from a forward swap, which is a commitment to enter into a swap that
starts at some future date with specified rates. A swap option may be
structured European-style (exercisable on the prespecified date) or American-
style (exercisable during a designated period). The buyer of the right to pay
fixed rate payments pursuant to a swap option is said to own a put. The buyer
of the right to receive fixed rate payments pursuant to a swap option is said to
own a call.
CAPS AND FLOORS.
Each Bond Fund may also purchase or sell interest rate caps and floors. An
interest rate cap is a right to receive periodic cash payments over the life of
the cap equal to the difference between any higher actual level of interest
rates in the future and a specified strike (or "cap") level. The cap buyer
purchases protection for a floating rate move above the strike. An interest
rate floor is the right to receive periodic cash payments over the life of the
floor equal to the difference between any lower actual level of interest rates
in the future and a specified strike (or "floor") level. The floor buyer
purchases protection for a floating rate move below the strike. The strikes are
typically based on the three-month LIBOR (although other indices are available)
and are measured quarterly.
RISKS ASSOCIATED WITH SWAPS.
The risks associated with interest rate swaps and interest rate caps and
floors are similar to those described previously with respect to over-the-
counter options. In connection with such transactions, the Fund involved relies
on the other party to the transaction to perform its obligations pursuant to the
underlying agreement. If there were a default by the other party to the
transaction, the Fund would have contractual remedies pursuant to the agreement,
but could incur delays in obtaining the expected benefit of the transaction or
loss of such benefit. In the event of insolvency of the other party, the Fund
might be unable to obtain its expected benefit. In addition, while a Fund will
seek to enter into such transactions only with parties which are capable of
entering into closing transactions with the Fund, there can be no assurance that
a Fund will be able to close out such a transaction with the other party, or
obtain an offsetting
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position with any other party, at any time prior to the end of the term of the
underlying agreement. This may impair a Fund's ability to enter into other
transactions at a time when doing so might be advantageous.
FOREIGN SECURITIES.
Each Stock Fund and the Atlas Strategic Income Fund may invest in foreign
securities which offer potential benefits not available from investing solely in
securities of domestic issuers, such as the opportunity to invest in the
securities of foreign issuers that appear to offer growth potential, or to
invest in foreign countries with economic policies or business cycles different
from those of the U.S., or to reduce fluctuations in portfolio value by
investing in securities in foreign stock markets that do not move in a manner
parallel to U.S. markets. In buying foreign securities, each Fund may convert
U.S. dollars into foreign currency, but only in connection with currency futures
and forward contracts and to effect securities transactions on foreign
securities exchanges and not to hold such currency as an investment.
Because a Fund may purchase securities denominated in foreign currencies, a
change in the value of any such currency against the U.S. dollar will result in
a change in the U.S. dollar value of the Fund's assets and its income available
for distribution. In addition, although a portion of a Fund's investment income
may be received or realized in foreign currencies, the Fund will be required to
compute and distribute its income in U.S. dollars, and absorb the cost of
currency fluctuations. Subsequent foreign currency losses may result in a Fund
having previously distributed more income in a particular period than was
available from investment income, which could result in a return of capital to
shareholders. A Fund's portfolio of foreign securities may include those of a
number of foreign countries or, depending upon market conditions, those of a
single country.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in domestic securities of
issuers traded in the U.S.: reduction of income by foreign taxes; fluctuation in
value of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for currency
exchange; lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to U.S. issuers; less volume on foreign exchanges than on U.S.
exchanges; greater volatility and less liquidity on foreign markets than in the
U.S.; less regulation of foreign issuers, stock exchange and brokers than in the
U.S.; greater difficulties
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in commencing lawsuits against foreign issuers; higher brokerage commission
rates and custodial costs than in the U.S.; increased risks of delays in
settlement of portfolio transactions or loss of certificates of portfolio
securities; possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social instability or
adverse diplomatic developments; and differences between the U.S. economy and
foreign economies. In the past, U.S. Government policies have discouraged
certain investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions may be re-imposed.
The Funds may invest in foreign securities that impose restrictions on
transfer within the United States or to United States persons. Although
securities subject to such transfer restrictions may be marketable abroad, they
may be less liquid than foreign securities of the same class that are not
subject to such restrictions. Each Fund accordingly treats these foreign
securities as subject to the 10% overall limitation on investment in illiquid
securities.
DEBT SECURITIES OF FOREIGN GOVERNMENTS AND COMPANIES.
As stated in the Prospectus, the Strategic Income Fund may invest in debt
obligations and other securities (which may be denominated in U.S. dollars or
non-U.S. currencies) issued or guaranteed by foreign corporations, certain
"supranational entities" (described below) and foreign governments or their
agencies or instrumentalities, and in debt obligations and other securities
issued by U.S. corporations denominated in non-U.S. currencies. The types of
foreign debt obligations and other securities in which the Fund may invest are
the same types of debt obligations identified under "Debt Securities of U.S.
Companies," below.
The percentage of the Strategic Income Fund's assets that will be allocated
to foreign securities will vary depending on the relative yields of foreign and
U.S. securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries and
the relationship of such countries' currency to the U.S. dollar. These factors
are judged on the basis of fundamental economic criteria (e.g., relative
inflation levels and trends, growth rate forecasts, balance of payments status,
and economic policies) as well as technical and political data.
The Strategic Income Fund may invest in U.S. dollar-denominated foreign
securities referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount bonds and
are generally collateralized in full as to principal due at maturity by U.S.
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Treasury zero coupon obligations that have the same maturity as the Brady Bonds.
However, the Fund may also invest in uncollateralized Brady Bonds. Brady Bonds
are generally viewed as having three or four valuation components: (i) any
collateralized repayment of principal at final maturity; (ii) the collateralized
interest payments; (iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute what is referred to as the "residual risk" of such bonds).
In the event of a default with respect to collateralized Brady Bonds as a result
of which the payment obligations of the issuer are accelerated, the zero coupon
U.S. Treasury securities held as collateral for the payment of principal will
not be distributed to investors, nor will such obligations be sold and the
proceeds distributed. The collateral will be held by the collateral agent to
the scheduled maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal the
principal payments which would have then been due on the Brady Bonds in the
normal course. In addition, in light of the residual risk of Brady Bonds and,
among other factors, the history of defaults with respect to commercial bank
loans by public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government. Obligations of
"supranational entities" include those of international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and of international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the "World Bank"), the European Coal and Steel Community, the Asian
Development Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional capital
contributions if the supranational entity is unable to repay its borrowings.
Each supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at the
entity's call), reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS.
Since investments in companies whose principal business activities are
located outside of the United States will frequently involve currencies of
foreign countries, and since assets of each Stock Fund and the Strategic Income
Fund may
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temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of a Fund as measured in U.S.
dollars may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations. Although each Fund values its
assets daily in terms of U.S. dollars, it does not intend to convert its
holdings of foreign currencies into U.S. dollars on a daily basis. A Fund may
conduct its foreign currency exchange transactions on a spot (i.e. cash) basis
at the spot rate prevailing in the foreign currency exchange market or through
entering into contracts to purchase or sell foreign currencies at a future date
(i.e., a "forward foreign currency" contract or "forward" contract). It will
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to a Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer. The Funds do not intend to
speculate in foreign currency exchange rates or forward contracts.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders, usually large commercial banks, and their customers.
A forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of foreign currency
involved in the underlying security transaction, the Fund will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
When the Adviser, or a Fund's Subadviser, believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of foreign currency approximating the value of some or all
of a Fund's securities denominated in such foreign currency. The
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precise matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term hedging
strategy is highly uncertain. A Fund will not enter into such forward contracts
or maintain a net exposure to such contracts where the consummation of the
contracts would obligate such Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets denominated in that
currency. Under normal circumstances, consideration of the prospect for
currency parities will be incorporated in the longer term investment decisions
made with regard to overall diversification strategies. However, the Company
believes that it is important to have the flexibility to enter into such forward
contracts when it determines that the best interests of a Fund will be served.
A Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount of
the foreign currency.
If a Fund retains the security and engages in an offsetting transaction,
the Fund will incur a gain or loss to the extent that there has been movement in
forward contract prices. If a Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between a Fund entering into a
forward contract for the sale of the foreign currency and the date it enters
into an offsetting contract for the purchase of the foreign currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent that the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
It is impossible to forecast with precision the market value of securities
at the expiration of the contract. Accordingly, it may be necessary for a Fund
to purchase additional foreign currency on the spot market (and bear the expense
of such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency. Conversely, it may
be necessary to sell on
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the spot market some of the foreign currency received upon the sale of the
security if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver.
Each Fund may also enter into a forward contract to sell a foreign currency
denominated in a currency other than that in which the underlying security is
denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the forward contract and the foreign
currency of the underlying investment than between the U.S. dollar and the
foreign currency of the underlying investment. This technique is referred to as
"cross hedging." The success of cross hedging is dependent on many factors,
including the ability of the Subadviser to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the extent that
the correlation is not identical, the Fund may experience losses or gains on
both the underlying security and the cross currency hedge.
Each Fund's dealings in forward foreign currency contracts will be limited
to the transactions described herein. Of course, a Fund is not required to
enter into such transactions with regard to its foreign currency denominated
securities and will not do so unless deemed appropriate by the Adviser or
Subadviser. It also should be realized that this method of protecting the value
of the Fund's securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which one can achieve at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, they tend to limit any
potential gain which might result should the value of such currency increase.
The cost to a Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. Because
such contracts are not traded on an exchange, the Fund must evaluate the credit
and performance risk of each particular counterparty under a forward contract.
LOANS OF PORTFOLIO SECURITIES.
Each Fund may lend its portfolio securities, subject to the restrictions
stated in the Prospectus, to attempt to increase a Fund's income to distribute
to shareholders or for liquidity purposes. Under applicable regulatory
requirements (which are subject to change), the loan collateral must, on each
business day, at least equal the market value of the loaned securities and
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must consist of cash, bank letters of credit or U.S. Government securities. To
be acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Fund if the demand meets the terms of the letter. The
Fund receives an amount equal to the dividends or interest on loaned securities
and also receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral or (c) interest on short-term debt securities
purchased with such loan collateral; either type of interest may be shared with
the borrower. The Fund may also pay reasonable finder's, custodian and
administrative fees and will not lend its portfolio securities to any officer,
director, employee or affiliate of the Company, the Adviser or the Stock Funds'
Subadviser. The terms of each Fund's loans must meet applicable tests under the
Internal Revenue Code and permit the Fund to reacquire loaned securities on five
business days' notice or in time to vote on any important matter.
BORROWING.
From time to time, the Atlas Global Growth Fund, Atlas Strategic Income
Fund and the Atlas Strategic Growth Fund may each increase its ownership of
securities by borrowing from banks on an unsecured basis and investing the
borrowed funds, subject to the restrictions stated in the Prospectus. Any such
borrowing will be made only from banks, and pursuant to the requirements of the
1940 Act, will be made only to the extent that the value of the Fund's assets,
less its liabilities other than borrowings, is equal to at least 300% of all
borrowings including the proposed borrowing. If the value of the Fund's assets
so computed should fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent necessary to
meet such requirements and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such sale. Interest
on money borrowed is an expense the Fund would not otherwise incur, so that it
may have little or no net investment income during periods of substantial
borrowings. Borrowing for investment increases both investment opportunity and
risk. Since substantially all of a Fund's assets fluctuate in value whereas
borrowing obligations are fixed, when the Fund has outstanding borrowings, its
net asset value per share will tend to increase and decrease more when its
portfolio assets fluctuate in value than would otherwise be the case.
ILLIQUID AND RESTRICTED SECURITIES.
The expenses of registration of restricted securities that are illiquid
(excluding securities that may be resold by a Fund pursuant to Rule 144A as
explained in the Prospectus) may be negotiated by a Fund at the time such
securities are purchased by
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the Fund. When such registration is required before such securities may be
sold, a considerable period may elapse between a decision to sell the securities
and the time when the Fund would be permitted to sell them. Thus, the Fund
would bear the risks of any downward price fluctuation during that period. A
Stock Fund also may acquire securities through private placements. Such
securities may have contractual restrictions on their resale, which might
prevent their resale by the Fund at a time when such sale would be desirable and
might lower the amount realizable upon the sale of such securities.
ZERO COUPON SECURITIES.
The Atlas Bond and Stock Funds may invest in zero coupon securities issued
by the U.S. Treasury or by corporations. The Municipal Bond Funds may invest in
zero coupon securities issued by municipalities. Zero coupon Treasury
securities are: (i) U.S. Treasury notes and bonds which have been stripped of
their unmatured interest coupons and receipts; or (ii) certificates representing
interests in such stripped debt obligations or coupons. Corporate and municipal
zero coupon securities are: (i) notes or debentures that do not pay current
interest and are issued at substantial discounts from par value, or (ii) notes
or debenture that pay no current interest until a stated date one or more years
in the future, after which the issuer is obligated to pay interest until
maturity, usually at a higher rate than if interest were payable from the date
of issuance. Such zero coupon securities, in addition to being subject to the
risks identified below are subject to the risk of the issuer's failure to pay
interest and repay principal in accordance with the terms of the obligation.
Because a zero coupon security pays no interest to its holder during its
life or for a substantial period of time, it usually trades at a deep discount
from its face or par value and will be subject to a greater fluctuations in
market value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. Because a
Fund accrues taxable income from these securities without receiving cash, such
Fund may be required to sell portfolio securities in order to pay a dividend
depending upon the proportion of shareholders who elect to receive dividends in
cash rather than reinvesting dividends in additional shares of the Fund. A Fund
might also sell portfolio securities to maintain portfolio liquidity. In either
case, cash distributed or held by a Fund and not reinvested in Fund shares will
hinder the Fund in seeking current income.
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DEBT SECURITIES OF U.S. COMPANIES.
The Strategic Income Fund's investments in fixed-income securities issued
by domestic companies and other issuers may include debt obligations (bonds,
debentures, notes, mortgage-backed and asset-backed securities and CMOs)
together with preferred stocks.
The risks attendant to investing in high-yielding, lower-rated bonds are
described above. If a sinking fund or callable bond held by the Fund is selling
at a premium (or discount) and the issuer exercises the call or makes a
mandatory sinking fund payment, the Fund would realize a loss (or gain) in
market value; the income from the reinvestment of the proceeds would be
determined by current market conditions, and investment of that income may occur
at times when rates are generally lower than those on the called bond.
PREFERRED STOCKS.
Preferred stock, unlike common stock, offers a stated dividend rate payable
from the corporation's earnings. Such preferred stock dividends may be
cumulative or non-cumulative, participating, or auction rate. If interest rates
rise, the fixed dividend on preferred stocks may be less attractive, causing the
price of preferred stocks to decline. Preferred stock may have mandatory
sinking fund provisions, as well as call/redemption provisions prior to
maturity, a negative feature when interest rates decline. Dividends on some
preferred stock may be "cumulative," requiring all or a portion of prior unpaid
dividends to be paid. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases.
The rights of preferred stocks on distribution of a corporation's assets in the
event of a liquidation are generally subordinate to the rights associated with a
corporation's debt securities.
PARTICIPATION INTERESTS.
The Strategic Income Fund may invest in participation interests, subject to
the limitation, described in "Illiquid and Restricted Securities" in the
Prospectus, on investments by the Fund in illiquid investments. Participation
interests represent an undivided interest in or assignment of a loan made by the
issuing financial institution. No more than 5% of the Fund's net assets can be
invested in participation interests of the same issuing bank. Participation
interests are primarily dependent
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upon the financial strength of the borrowing corporation, which is obligated to
make payments of principal and interest on the loan, and there is a risk that
such borrowers may have difficulty making payments. Such borrowers may have
senior securities as low as "C" by Moody's or "D" by Standard & Poor's. In the
event the borrower fails to pay scheduled interest or principal payments, the
Fund could experience a reduction in its income and might experience a decline
in the net asset value of its shares. In the event of a failure by the
financial institution to perform its obligation in connection with the
participation agreement, the Fund might incur certain costs and delays in
realizing payment or may suffer a loss of principal and/or interest. The Fund's
Subadviser has set certain creditworthiness standards for issuers of loan
participation and monitors their creditworthiness. These same standards apply
to participation interests in loans to foreign companies.
ASSET-BACKED SECURITIES.
These securities, issued by trusts and special purpose corporations, are
backed by pools of assets, primarily automobile and credit-card receivables and
home equity loans, which pass through the payments on the underlying obligations
to the security holders (less servicing fees paid to the originator or fees for
any credit enhancement). The value of an asset-backed security is affected by
changes in the market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing any credit enhancement, and is
also affected if any credit enhancement has been exhausted. Payments of
principal and interest passed through to holders of asset-backed securities are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other securities. The degree of credit enhancement
varies, and generally applies to only a fraction of the asset-backed security's
par value until exhausted. If the credit enhancement of an asset-backed
security held by the Fund has been exhausted, and if any required payments of
principal and interest are not made with respect to the underlying loans, the
Fund may experience losses or delays in receiving payment. The risks of
investing in asset-backed securities are ultimately dependent upon payment of
consumer loans by the individual borrowers. As a purchaser of an asset-backed
security, the Fund would generally have no recourse to the entity that
originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner as
described above for prepayments of a pool of mortgage loans and underlying
mortgage-backed securities. However, asset-backed securities do not have the
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benefit of the same security interest in the underlying collateral as do
mortgage-backed securities.
SHORT SALES AGAINST-THE-BOX.
In such short sales, while the short position is open, the Atlas Stock
Funds must own an equal amount of such securities, or by virtue of ownership of
securities have the right, without payment of further consideration, to obtain
an equal amount of the securities sold short. Short sales against-the-box may
be made to defer, for Federal income tax purposes, recognition of gain or loss
on the sale of securities "in the box" until the short position is closed out.
MUNICIPAL OBLIGATIONS.
Municipal securities will be purchased by the Municipal Funds. Such
obligations are issued by or on behalf of states, territories, and possessions
of the United States and the District of Columbia and by their political
subdivisions, agencies, and instrumentalities. The interest on these
obligations is generally not includable in gross income of most investors for
federal income tax purposes. Issuers of municipal obligations do not usually
seek assurances from governmental taxing authorities with respect to the tax-
free nature of the interest payable on such obligations. Rather, issuers seek
opinions of bond counsel as to such tax status. See "Taxes" below.
Municipal issuers of securities are not usually subject to the securities
registration and public reporting requirements of the Securities and Exchange
Commission and state securities regulators. As a result, the amount of
information available about the financial condition of an issuer of municipal
obligations may not be as extensive as that which is made available by
corporations whose securities are publicly traded.
The two principal classifications of municipal obligations are general
obligation and limited obligation (or revenue) bonds. There are, in addition, a
variety of hybrid and special types of municipal obligations as well as numerous
differences in the financial backing for the payment of municipal obligations,
both within and between the two principal classifications.
Payments due on general obligation bonds are secured by the issuer's pledge
of its full faith and credit including, if available, its taxing power. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or
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special districts. The proceeds of these obligations are used to fund a wide
range of public facilities such as the construction or improvement of schools,
roads and sewer systems.
The principal source of payment for a limited obligation bond or revenue
bond is generally the net revenue derived from particular facilities financed
with such bonds. In some cases, the proceeds of a special tax or other revenue
source may be committed by law for use to repay particular revenue bonds. For
example, revenue bonds have been issued to lend the proceeds to a private entity
for the acquisition or construction of facilities with a public purpose such as
hospitals and housing. The loan payments by the private entity provide the
special revenue source from which the obligations are to be repaid.
MUNICIPAL NOTES.
Municipal notes generally are used to provide short-term capital funding
for municipal issuers and generally have maturities of one year or less. The
portfolios of the Atlas National Municipal Money Fund and the Atlas California
Municipal Money Fund will consist primarily of these short-term obligations.
Municipal notes of municipal issuers include:
TAX ANTICIPATION NOTES are issued to raise working capital on a short-term
basis. Generally, these notes are issued in anticipation of various seasonal
tax revenues being paid to the issuer, such as income, sales, use and business
taxes, and are payable from these specific future taxes.
REVENUE ANTICIPATION NOTES are issued in anticipation of the receipt of
non-tax revenue, such as federal revenues or grants.
BOND ANTICIPATION NOTES are issued to provide interim financing until long-
term financing can be arranged. In most cases, long-term bonds are issued to
provide the money for the repayment of these notes.
MUNICIPAL COMMERCIAL PAPER.
Issues of municipal commercial paper typically represent short-term,
unsecured, negotiable promissory notes. Agencies of state and local governments
issue these obligations in addition to or in lieu of Municipal notes to finance
seasonal working capital needs or to provide interim construction financing and
are paid from general revenues of the issuer or are refinanced with long-term
debt. In most cases, municipal commercial paper is backed by letters of credit,
lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions.
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FLOATING RATE AND VARIABLE RATE OBLIGATIONS AND PARTICIPATION INTERESTS.
The Funds may purchase floating rate and variable rate obligations,
including participation interests therein. Floating rate or variable rate
obligations provide that the rate of interest is set as a specific percentage of
a designated base rate (such as the prime rate at a major commercial bank) or is
reset on a regular basis by a bank or investment banking firm to a market rate.
At specified times, the owner can demand payment of the obligation at par plus
accrued interest. Variable rate obligations provide for a specified periodic
adjustment in the interest rate, while floating rate obligations have an
interest rate which changes whenever there is a change in the external interest
rate.
Frequently banks provide letters of credit or other credit support or
liquidity arrangements to secure these obligations. The quality of the
underlying creditor or of the bank, as the case may be, must, as determined by
the Investment Adviser, be equivalent to the quality standard prescribed for the
Funds. The maturity of floating and variable rate obligations is equal to the
period during which a particular rate is in effect, or, if longer, the period
required to demand payment of the obligation.
The Funds may invest in participation interests purchased from banks in
floating rate or variable rate obligations owned by banks. A participation
interest gives the purchaser an undivided interest in the obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the obligation, and provides a demand repayment feature. Each
participation is backed by an irrevocable letter of credit or guarantee of a
bank (which may be the bank issuing the participation interest or another bank).
A Fund holding a participation interest has the right to sell the instrument
back to the issuing bank or draw on the letter of credit on demand for all or
any part of the Fund's participation interest in the underlying obligation, plus
accrued interest.
INSURANCE.
The Insured Funds will invest primarily, and the other Municipal Funds will
invest in varying amounts, in municipal securities covered by insurance
guaranteeing the scheduled payment of principal and interest thereon. A Fund
will receive payments of insurance for any installment of interest and principal
due for payment but which is unpaid by reason of nonpayment by the issuer. The
insurance feature insures the
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scheduled payment of interest and principal but does not guarantee the market
value of the insured municipal securities nor the value of the shares of the
Insured Funds.
As discussed in the Prospectus, the municipal securities in the portfolios
of the Insured Funds will generally be insured by new-issue, secondary market,
or mutual fund insurance. The new-issue insurance policies, if any, will have
been obtained by the respective issuers of the municipal securities (or, in some
cases, a dealer) and, as is the case with secondary market insurance obtained
other than by an Insured Fund, all premiums respecting such securities will have
been paid in advance. Such policies are non-cancelable and will continue in
force so long as the municipal securities are outstanding and the respective
insurers remain in business. Since new-issue insurance remains in effect as
long as the securities insured thereby are outstanding, the insurance may have
an effect on the resale value of securities in the Insured Funds' portfolios.
This generally will be true of secondary market insurance as well. New-issue
insurance and secondary market insurance which is non-cancelable while the
insured securities are outstanding may be considered to represent an element of
market value in regard to the municipal securities thus insured, but the exact
effect, if any, of this insurance on such market value cannot be determined.
An Insured Fund may at any time purchase a secondary market insurance
policy on any municipal security purchased by such Fund. Such policy would
likely be purchased if, in the opinion of the Investment Adviser or Subadviser,
the market value or net proceeds of a sale by an Insured Fund would exceed the
current value of the security (without insurance) plus the cost of the policy.
Any difference between the excess of a security's market value as a "AAA" rated
security over its market value without such rating, including the single premium
cost thereof, would inure to the Insured Fund in determining the net capital
gain or loss realized by such Fund upon the sale of the portfolio security. An
Insured Fund may purchase insurance under a secondary market policy in lieu of a
mutual fund insurance policy at any time regardless of the effect of market
value on the underlying municipal security, if the Investment Adviser or
Subadviser believes such insurance would best serve the Fund's interests in
meeting its objectives and policies. Similarly, where a Fund purchases a
security already subject to secondary market insurance, it may be expected that
the price paid by the Fund would exceed the cost of the security without such
insurance. To the extent such secondary market insurance exists throughout the
period in which the security is outstanding, it is to be expected that upon the
sale of such a security the price obtained by the Fund would also exceed the
price of the security without the insurance.
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Coverage under a mutual fund insurance policy terminates upon sale of a
security from an Insured Fund's portfolio. Accordingly, such insurance does not
have an effect on the resale value of the securities. Therefore the Insured
Funds would be likely to retain any municipal securities insured under a mutual
fund insurance policy which are in default or in significant risk of default,
and to place a value on the insurance which will be equal to the difference
between the market value of the defaulted security and the market value of
similar securities which are not in default. Under these circumstances the
Investment Adviser or Subadviser may be restricted in making changes to an
Insured Fund's portfolio to the extent that it holds defaulted securities, which
may limit its ability in certain circumstances to purchase other municipal
securities. While a defaulted municipal security is held in an Insured Fund's
portfolio, the Fund continues to pay the insurance premium thereon but also
collects interest payments from the insurer and retains the right to collect the
full amount of principal from the insurer when the security comes due. Of
course, an Insured Fund may elect to purchase a secondary market policy
discussed above in lieu of a mutual fund insurance policy, in order to be able
to sell such security.
Each of the municipal security insurance companies has established reserves
to cover estimated losses. Both the method of establishing these reserves and
the amount of the reserves may vary from company to company. Municipal security
insurance companies are obligated to pay a security's interest and principal
when due if the issuing entity defaults on the insured security. Although
defaults on insured municipal securities have been low to date, there is no
assurance this low rate will continue in the future. A higher than expected
default rate could deplete loss reserves and adversely affect the ability of a
municipal security insurer to pay claims to holders of insured securities, such
as an Insured Fund. The Insured Funds' policy of investing in municipal
securities insured by insurers whose claims-paying ability is rated "AAA"
applies at the time of the purchase of a security, and a Fund will not be
required to dispose of securities in the event of a downgrading of the claims-
paying ability of a particular insurance company.
PARTICULAR RISK FACTORS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS.
The following describes certain risks with respect to municipal obligations
of California issuers in which the Municipal Funds may, and the California Funds
predominately will, invest. This summarized information is based on information
drawn from official statements and prospectuses relating to securities offerings
of the State of California and various local agencies in California, available
as of the date of this
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Statement of Additional Information. While the Investment Adviser has not
independently verified such information, it has no reason to believe that such
information is not correct in all material respects.
California is the most populous state in the nation with a total population
at the 1990 Census of 29,976,000. Growth has been incessant since World War II,
with population gains in each decade since 1950 of between 18% and 49%. During
the last decade, population rose 20%. The State now comprises 12.3% of the
nation's population and 12.9% of its total personal income. Its economy is
broad and diversified with major concentrations in high technology research and
manufacturing, aerospace and defense-related manufacturing, trade, real estate,
and financial services. After experiencing strong growth throughout much of the
1980's, the State was adversely affected by both the national recession and the
cutbacks in aerospace and defense spending which have had a severe impact on the
economy in Southern California. Although the national economic recovery is
continuing at a strong pace, California is still experiencing the effects of a
recession. Unemployment has remained above the national average since 1990.
Substantial contraction in California's defense related industries, overbuilding
in commercial real estate and consolidation and decline in the State's financial
services industry will likely produce slower overall growth for several years.
Economists predict that the State's economy will experience modest growth in
1995 and 1996.
These economic difficulties have exacerbated the structural budget
imbalance which has been evident since fiscal year 1985-86. Since that time,
budget shortfalls have become increasingly more difficult to solve and the State
has recorded General Fund operating deficits in six of the past seven fiscal
years. Many of these problems have been attributable to the fact that the great
population influx has produced increased demand for education and social
services at a far greater pace than the growth in the State's tax revenues.
Despite substantial tax increases, expenditure reductions and the shift of some
expenditure responsibilities to local government, the budget condition has
remained problematic in recent years. In addition, the accumulated budget
deficits over the past several years had exhausted the State's available cash
reserves and resources. In July and August, 1994, the State was required to
issue a total of $7 billion of short-term revenue anticipation warrants to fund,
in part, the State's cash flow management needs for the 1994-95 fiscal year.
On July 8, 1994, the Governor signed into law a $57.5 billion budget which,
among other things, relies on the State's ability to obtain $2.8 billion in new
reimbursement from the federal government for the State's cost of serving
illegal immigrants. Although the State legislature has passed a standby
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measure which could trigger automatic budget reductions if the State's fiscal
condition worsens over the next two years, the stability of the budget would be
jeopardized if the State is unable to obtain the hoped-for federal funds.
The current budget includes General Fund spending of $40.9 billion, up 4.2%
from the level of spending during the 1993-94 fiscal year. The budget also
envisions General Fund spending climbing another 8.4% in the 1995-96 fiscal
year. The budget forecasts revenues and expenditures which will result in
operating surpluses in both 1994-95 and 1995-96, leading to the elimination of
an estimated $2.0 billion accumulated budget deficit by June 30, 1996.
Because of the State of California's continuing budget problems, the rating
on the State's general obligation bonds was downgraded in July 1994 from Aa to
A1 by Moody's Investors Service, Inc., from A+ to A by Standard & Poor's
Corporation and from AA to A by Fitch Investors Service, Inc. All three rating
agencies expressed uncertainty about the State's ability to balance the budget
by 1996.
On December 6, 1994, Orange County became the largest municipality in the
United States to file for protection under the Federal bankruptcy laws. The
filing stemmed from approximately $1.7 billion in losses suffered by the
County's investment pool due to investments in high risk "derivative"
securities. Over 185 public agencies had funds invested in the pool, and these
funds may be accessed only with permission of the bankruptcy court. It is
unclear whether the State will lend financial or other assistance to Orange
County to prevent the County from defaulting on its other obligations.
In addition to this current information, future California political and
economic developments, constitutional amendments, legislative measures,
executive orders, administrative regulations, litigation and voter initiatives
could have an adverse effect on the debt obligations of California issuers.
Certain debt obligations held by the California Funds may be obligations of
issuers which rely in whole or in substantial part on California state revenues
for the continuance of their operations and the payment of their obligations.
Whether and to what extent the California Legislature will continue to
appropriate a portion of the state's general fund to counties, cities and their
various entities, is not entirely certain. To the extent local entities do not
receive money from the state to pay for their operations and services, their
ability to pay debt service on obligations held by the Funds may be impaired.
In addition, the California Constitution limits the taxing and spending
powers of the State of California and its public
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agencies and, therefore, the ability of California issuers to raise revenues
through taxation to repay outstanding debt, and to spend such revenues over a
predetermined limit.
Certain debt obligations held by the California Funds may be obligations of
issuers who rely in whole or in part on ad valorem real property taxes as a
source of revenue. The California Constitution limits ad valorem real property
taxes, and imposes super-majority approval requirements for additional real
property taxes, and the ability of California issuers to raise revenues through
such taxes to repay outstanding debt is limited.
Certain debt obligations in which the California Funds invest may be
payable solely from the revenues of specific institutions, or may be secured by
specific properties, which are subject to provisions of California law that
could adversely affect the holders of such obligations. The following
paragraphs describe a number of such provisions, but do not purport to be a
complete description of all of them.
Certain debt obligations held by the Funds may be obligations payable
solely from lease payments on real property or personal property leased to the
state, cities, counties or their various public entities. California law
requires that the lessee is not required to make lease payments during any
period that it is denied use and occupancy of the property lease in proportion
to such loss. Moreover, the lessee only agrees to include lease payments in its
annual budget for each fiscal year. In case of a default under the lease, the
only remedy available against the lessee is that of reletting the property; no
acceleration of lease payments is permitted. Each of these factors presents a
risk that the lease financing obligations held by the Funds would not be paid in
a timely manner.
Certain debt obligations held by the California Funds may be obligations
which are payable solely from the revenues of health care institutions. The
method of reimbursement for indigent care, California's selective contracting
with health care providers for such care and selective contracting by health
insurers for care of its beneficiaries now in effect under California and
federal law may adversely affect these revenues and, consequently, payment on
those debt obligations.
Debt obligations payable solely from revenues of health care institutions
may also be insured by the state. However, no guarantee exists that adequate
reserve funds will be appropriated for such insurance.
Certain debt obligations held by the California Funds may be obligations
which are secured in whole or in part by a mortgage or deed of trust on real
property. California has five principal statutory provisions which limit the
remedies of a creditor
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secured by a mortgage or deed of trust. Two limit the creditor's right to
obtain a deficiency judgment, one limitation being based on the method of
foreclosure and the other on the type of debt secured. Under the former, a
deficiency judgment is barred when the foreclosure is accomplished by means of
nonjudicial trustee's sale. Under the latter, a deficiency judgment is barred
when the foreclosed mortgage or deed of trust secures certain purchase money
obligations.
Another California statute, commonly known as the "one form of action"
rule, requires creditors secured by real property to exhaust their real property
security by foreclosure before bringing a personal action against the debtor.
The fourth statutory provision limits any deficiency judgment obtained by a
creditor secured by real property following a judicial sale of such property to
the excess of the outstanding debt over the fair value of the property at the
time of the sale, thus preventing the creditor from obtaining a large deficiency
judgment against the debtor as a result of low bids at a judicial sale. The
fifth statutory provision gives the debtor the right to redeem the real property
from any judicial foreclosure sale as to which a deficiency judgment may be
ordered against the debtor.
Upon the default of a mortgage or deed of trust with respect to California
real property, the creditor's nonjudicial foreclosure rights under the power of
sale contained in the mortgage or deed of trust are subject to the constraints
imposed by California law upon transfers of title to real property by private
power of sale. During the period beginning with the recordation of a formal
notice of default and ending five business days prior to the date of sale, the
debtor is entitled to reinstate the mortgage by making any overdue payments.
Under standard loan servicing procedures, the filing of the formal notice
of default does not occur unless at least three full monthly payments have
become due and remain unpaid. The power of sale is exercised by posting a
notice of sale for at least 20 days after expiration of the three-month period
following the recordation of the formal notice of default and by publishing a
copy once a week during that period. Therefore, the effective minimum period of
foreclosing on a mortgage could be in excess of seven months after the initial
default. Such time delays in collections could disrupt the flow of revenues
available to an issuer for the payment of debt service on the outstanding
obligations if such defaults occur with respect to a substantial number of
mortgages or deeds of trust securing an issuer's obligations.
In addition, a court could find that there is sufficient involvement of the
issuer in the nonjudicial sale of securing a mortgage for such private sale to
constitute "state action," and could hold that the private right-of-sale
proceedings violate the
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due process requirements of the federal or state constitutions, consequently
preventing an issuer from using the nonjudicial foreclosure remedy described
above.
Certain debt obligations held by the California Funds may be obligations
which finance the acquisition of single-family home mortgages for low and
moderate income mortgagors. These obligations may be payable solely from
revenues derived from the home mortgages, and are subject to California's
statutory limitations described above applicable to obligations secured by real
property. Under California anti-deficiency legislation, there is no personal
recourse against a mortgagor of a single family residence purchased with the
loan secured by the mortgage, regardless of whether the creditor chooses
judicial or nonjudicial foreclosure.
Under California law, mortgage loans secured by single-family owner-
occupied dwellings may be prepaid at any time. Prepayment charges on such
mortgage loans may be imposed only with respect to voluntary prepayments made
during the first five years during the term of the mortgage loan, and cannot in
any event exceed six months' advance interest on the amount prepaid in excess of
20% of the original principal amount of the mortgage loan. This limitation
could affect the flow of revenues available to an issuer for debt service on the
outstanding debt obligations which finance such home mortgages.
FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment policies and
investment restrictions in addition to the policies and restrictions discussed
in the Prospectus. With respect to each Fund, the policies and restrictions
listed below cannot be changed without approval by the holders of a "majority of
the outstanding voting securities" of that Fund (which is defined in the
Investment Company Act of 1940 ["1940 Act"]) to mean the lesser of (i) 67% or
more of the outstanding voting securities of a Fund present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
These restrictions provide that no Fund may:
(1) Purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if with
respect to 75% of the Fund's assets, as a result, more than 5% of the value of
such assets of the Fund would be invested in the securities of any one issuer or
such Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. These restrictions shall not apply to the California
Municipal Funds.
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<PAGE>
(2) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of any Fund's investments in that industry would exceed 25%
of the current value of such Fund's total assets, provided that there is no
limitation with respect to investments in (i) municipal obligations (with
respect to the Municipal Funds); (ii) obligations of the United States
Government, its agencies or instrumentalities; and (iii) the obligations of
domestic banks (with respect to the Money Funds). For purposes of this policy,
the Funds have adopted the industry classification set forth in Appendix II to
this Statement of Additional Information which may be amended from time to time
without shareholder approval.
(3) Purchase securities subject to legal or contractual restrictions
preventing their ready disposition; or enter into repurchase agreements or
purchase time deposits maturing in more than seven days or acquire other
illiquid assets if, immediately after and as a result, the value of illiquid
assets held by a Fund would exceed, in the aggregate, 10% of the value of the
Fund's net assets (except that the Atlas Balanced Fund, the Atlas Strategic
Growth Fund, the Atlas Global Growth Fund and the Atlas Strategic Income Fund
have each adopted this restriction as a non-fundamental operating policy which
may be changed without shareholder approval).
(4) Invest in securities of a company which, together with any
predecessor, has been in operation for less than three years if more than 5% of
the Fund's total assets would then be invested in such securities; provided that
in the case of industrial revenue bonds purchased for the Municipal Funds, this
restriction shall apply to the entity supplying the revenues from which the
issue is to be paid. The Atlas Global Growth Fund has adopted this restriction
as a non-fundamental operating policy which may be changed without shareholder
approval.
(5) Invest in companies for the purpose of exercising control or
management.
(6) Purchase or sell real estate or real estate limited partnership
interests; provided that a Fund may invest in readily marketable securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein.
(7) Purchase or sell commodities or commodities contracts or interests in
oil, gas or other mineral exploration or development programs, provided,
however, that the Bond and Stock Funds may purchase and sell interest rate
futures contracts and
B-38
<PAGE>
related options, and the Stock Funds and the Strategic Income Fund may purchase
and sell stock index futures contracts and related options and purchase or sell
forward foreign currency contracts.
(8) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets; provided that this restriction shall not apply
to the transfer of securities in connection with a permissible borrowing. For
purposes of this restriction, (a) the deposit of assets in escrow or a
segregated account in connection with the writing of covered put or call
options, the purchase of securities on a when-issued or delayed-delivery basis,
or the undertaking of another investment technique utilizing a cover or
segregated account arrangement, and (b) collateral arrangements with respect to
(i) the purchase and sale of options on securities and options on indexes and
(ii) initial or variation margin for futures contracts will not be deemed to be
pledges of a Fund's assets.
(9) Purchase securities on margin or effect short sales, except that a
Fund may obtain such short-term credits as may be necessary for the clearance of
purchases or sales of securities, and may make margin payments in connection
with futures contracts and related options and the Atlas Stock Funds may effect
short sales against-the-box.
(10) Engage in the business of underwriting securities issued by others,
except to the extent that the purchase of municipal obligations or other
permitted investments directly from the issuer thereof or from an underwriter
for an issuer and the later disposition of such securities in accordance with
any Fund's investment program may be deemed to be an underwriting.
(11) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
Investment Adviser or a Subadviser to save brokerage costs or average prices
among them is not deemed to result in a securities trading account.)
(12) Make loans to any person or firm; provided, however, that the
acquisition for investment of a portion of an issue of publicly distributed
bonds, debentures, notes or other evidences of indebtedness of any corporation
or government shall not be construed to be the making of a loan; and provided
further that a Fund may enter into repurchase agreements and may make loans of
portfolio securities.
(13) Purchase from or sell portfolio securities to its officers, directors
or other "interested persons" (as defined in the 1940 Act) (other than otherwise
unaffiliated brokers) of the Fund or of the Company.
B-39
<PAGE>
(14) Purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the directors or officers of the Company or the
Investment Adviser individually own beneficially more than 1/2 of 1% of the
securities of such issuer and together own beneficially more than 5% of such
securities.
(15) Borrow money, except from banks for temporary or emergency purposes
not in excess of 33-1/3% of the value of a Fund's total assets. A Fund will not
purchase securities if such borrowings are outstanding in excess of 5% of the
value of a Fund's total assets. This restriction shall not apply to the Atlas
Strategic Growth Fund, the Atlas Global Growth Fund and the Atlas Strategic
Income Fund and shall not prevent a Bond Fund from entering into reverse
repurchase agreements or "roll" transactions, provided that these transactions
and any other transactions constituting borrowing by a Fund may not exceed one-
third of the Fund's total assets. In the event that the asset coverage for a
Fund's borrowings falls below 300%, a Fund will reduce, within three days
(excluding Sundays and holidays), the amount of its borrowings in order to
provide for 300% asset coverage.
(16) Knowingly purchase securities of other registered management
investment companies, except that a Fund may acquire such securities: (i) if not
more than 10% of the Fund's assets shall be invested in such securities; or
(ii) in connection with a merger, acquisition or consolidation with such a
company.
A Fund may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Fund's investment policies and restrictions.
A Fund will include the original cost of the securities so acquired in any
subsequent determination of a Fund's compliance with the investment percentage
limitations referred to above and in the Prospectus. A Fund will not knowingly
exercise rights or otherwise acquire securities when to do so would jeopardize
the Fund's status under the 1940 Act as a "diversified" investment company. If
a percentage restriction on investment or utilization of assets in a fundamental
policy or restriction is adhered to at the time an investment is made, a later
change in percentage ownership of a security or kind of securities resulting
from changing market values will not be considered a violation of a Fund's
investment policies or restrictions.
The Company may make commitments more restrictive than the restrictions
listed above with respect to a Fund so as to permit the sale of shares of the
Fund in certain states.
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<PAGE>
The Company has given an undertaking to the States of California and
Missouri that the Company will not acquire the shares of other open-end
investment companies except in connection with a merger, acquisition or
consolidation. This is not a fundamental investment policy of any of the Funds.
The Company has given an undertaking to the State of Texas that the Company
will restrict its investment in warrants to 5% of the value of a Fund's net
assets and further limit its investment in warrants not listed on the New York
or American Stock Exchange to 2% of a Fund's net assets. This is not a
fundamental investment policy of any of the Funds.
PORTFOLIO TURNOVER
For reporting purposes, a Fund calculates its portfolio turnover rate by
dividing the lesser of purchases or sales of portfolio securities for the fiscal
year by the monthly average of the value of the portfolio securities owned by
the Fund during the fiscal year. In determining portfolio turnover, a Fund
excludes all securities whose maturities at the time of acquisition were one
year or less. A 100% portfolio turnover rate would occur, for example, if all of
the securities in the Fund's portfolio (other than short-term money market
securities) were replaced once during the fiscal year. Based on this
definition, the policy of each Money Fund in investing in securities with
remaining maturities of less than one year is expected to result in a portfolio
turnover rate of 0%.
Increased portfolio turnover will likely result in correspondingly greater
brokerage commissions and dealer markups which must be paid by the Funds. To
the extent that portfolio trading results in realization of net short-term
capital gains, shareholders will be taxed on such gains at ordinary income tax
rates (except shareholders who invest through IRAs and other tax-deferred
retirement plans which are not taxed currently on accumulations in their
accounts). To the extent that increased portfolio turnover results in sales of
securities held less than three months, a Fund's ability to qualify as a
"regulated investment company" under the Internal Revenue Code may be affected
(see "Taxes," below).
B-41
<PAGE>
MANAGEMENT OF THE COMPANY
Directors and Officers
The Directors and officers of Atlas Assets, Inc. (the "Company"), their
business addresses and principal occupations during the past five years are:
Positions Principal Occupations
Name and Address Held and Business Experience
- ------------------------- ------------------- --------------------------------
Marion O. Sandler (1),(4) Director, Presi- Chairman of the Board and
1901 Harrison Street dent and Chief Chief Executive Officer of
Oakland, CA 94612 Executive Officer World Savings and Loan
Association ("World
Savings"), and Golden West
Financial Corporation
("GWFC"). President and
Chief Executive Officer of
Atlas Advisers, Inc.
("Adviser") and Atlas
Securities, Inc.
("Distributor")
Barbara A. Bond (2),(3),(4) Director Certified Public
Hood and Strong Accountant/ Tax Partner of
101 California Street Hood andStrong
San Francisco, CA 94111
Russell W. Kettell (1),(4) Director President of GWFC and
1901 Harrison Street Senior Executive Vice
Oakland, CA 94612 President of World Savings
Daniel L. Rubinfeld (2),(3),(4)Director Professor of Law and
School of Law, Boalt Hall Economics at the University
University of California of California, Berkeley
Berkeley, CA 94720
David J. Teece (2), (3), (4) Director Professor of Business
University of California Administration at the
IMIO #1930 University of California
Haas School of Business S-402 Berkeley
Berkeley, CA 94720
B-42
<PAGE>
Positions Principal Occupations
Name and Address Held and Business Experience
- ------------------------- ------------------- --------------------------------
Julius Louis Helvey (1) Group Senior Vice Group Senior Vice President
1901 Harrison Street President and Of World Savings, GWFC,
Oakland, CA 94612 Chief Financial Adviser and Distributor
Officer
Larry E. LaCasse (1) Group Senior Vice 1992 to present - Group
1901 Harrison Street President and Senior Vice President of
Oakland, CA 94612 Chief Operating the Adviser and the Distri-
Officer butor; 1988 to Present -
Chief Operating Officer of
the Adviser and the Distri-
butor; 1988 - 1991 Senior
Vice President of the
Adviser and the Distributor;
1988 - Vice President of
American Capital Services, Inc.;
1986 to 1988 - Vice President
of American Capital Marketing,
Inc.; 1984 to 1986 - Vice
President of Corporate
Development at Financial
Network Investments Corp.
Edward L. Bisgaard (1) Vice President, 1989 to present - Vice
1901 Harrison Street Chief Accounting President, Chief Accounting
Oakland, CA 94612 Officer and Officer and Treasurer of
Treasurer Adviser and Distributor; 1988 to
1989 - Chief Financial Officer
of Dunham & Greer Investment
Counsel; 1986 to 1988 - General
Partner of R&R Tire and Auto
Service Center;
1979 to 1986 - Vice President
and Manager of Fund Operations
at Capital Research & Management
Company
Steven J. Gray (1) Vice President, 1992 to present - Vice
1901 Harrison Street Chief Legal President, Chief Legal Counsel
Oakland, CA 94612 Counsel, and and Secretary of Adviser and
Secretary Distributor; 1989 to 1992 -
Associate Attorney, Investment
Management Group at the law
firms of Gaston & Snow (1989-
1990), Thelen, Marrin, Johnson &
Bridges (1990-1992), and
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<PAGE>
Positions Principal Occupations
Name and Address Held and Business Experience
- ------------------------- ------------------- --------------------------------
Heller, Ehrman, White &
McAuliffe (1992); 1986 to 1989
- Attorney for Federal Home Loan
Bank Board; 1985 to 1986;
Senior Attorney and Vice
President C.R.I., Inc.; 1982 to
1985 - Attorney, United States
Securities and Exchange
Commission
- -------------------------------------
(1) Director or officer who is an "interested person" of the Company due
to his affiliation with the Company's investment manager.
(2) Member of the Contracts Committee.
(3) Member of the Audit Committee.
(4) Member of the Executive Committee.
As of December 31, 1995, Golden West Financial Corporation, 1901 Harrison
Street, Oakland, CA 94612, a Delaware corporation and sole shareholder of the
Adviser and Distributor, owned beneficially and of record an aggregate of
13.16%, 12.77%, 16.99%, 16.67% and 20.87% respectively, of the Class A shares
outstanding of the Atlas U.S. Government Intermediate Fund (formerly the Atlas
U.S. Treasury Intermediate Fund), the Atlas California Insured Intermediate
Municipal Fund, the Atlas National Insured Intermediate Municipal Fund, the
Atlas Balanced Fund and the Atlas Strategic Growth Fund, and 12.51%, 12.54%,
16.69%, 14.87, and 17.53%, respectively, of the total shares of those Funds. In
addition, as of such date, Golden West owned beneficial and of record an
aggregate of 2.21% of the Class B shares outstanding of the Atlas U.S. Treasury
Money Fund, and the Distributor owned beneficially and of record an aggregate of
1.71% of the Atlas U.S. Treasury Money Fund Class A shares outstanding. Because
of these combined holdings, Golden West Financial Corporation may be deemed to
"control" those Funds under the 1940 Act.
As of December 31, 1995, officers and directors as a group owned
approximately 4.50% of the shares of the Atlas Treasury Money Fund, 2.08% of the
shares of the Atlas California Municipal Money Fund, and 1.08% of the Atlas
Strategic Growth Fund, but owned less than 1% of each class of the shares of
each
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<PAGE>
of the other Funds. The officers and directors as a group owned 2.04% of the
Company's shares in total.
The following table sets forth the aggregate compensation paid by the
Company for the fiscal year ended December 31, 1995 to the Directors who are not
affiliated with the Investment Adviser and the aggregate compensation paid to
such Directors for service on the Company's Board and that of all other funds in
the "Company complex", (of which there currently are none, as defined in
Schedule 14A under the Securities Exchange Act of 1934):
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement from
Benefits Estimated Company and
Accrued as Annual Company
Aggregate Part of Benefits Complex
Compensation Company Upon Paid to
Name from Company Expenses Retirement Directors
- ------------------ ------------ -------- ---------- ----------
<S> <C> <C> <C> <C>
Barbara A. Bond $14,000 None N/A $14,000 (14)*
Daniel L. Rubinfeld 13,700 None N/A 13,700 (14)*
David J. Teece 10,600 None N/A 10,600 (14)*
Marion O. Sandler None None N/A None
Russell W. Kettell None None N/A None
* Indicates total number of funds in Company complex.
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
Atlas Advisers, Inc. ("Investment Adviser"), serves as the investment
adviser to the Company pursuant to an Investment Advisory Agreement dated
January 12, 1990 (the "Advisory Agreement"), which was last approved by the
Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Company, at a meeting
held on November 20, 1995.
The Advisory Agreement with respect to each Fund is for an initial term of
two years and may be renewed from year to year afterwards, provided that any
such renewal has been specifically approved at least annually by (i) the
majority (as defined in the 1940 Act) of the outstanding voting securities of
the Fund, or (ii) the vote of a majority of directors who are not parties to the
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party, cast in person, at a meeting called
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<PAGE>
for the purpose of voting on such approval. The Advisory Agreement also
provides that either party thereto has the right with respect to any Fund to
terminate it without penalty, upon 60 days written notice to the other party,
and that the Advisory Agreement automatically terminates in the event of its
assignment (as defined in the 1940 Act).
The directors and officers of the Investment Adviser are: Marion O.
Sandler (Director, President and Chief Executive Officer), James T. Judd
(Director), Dirk S. Adams (Director), Julius Louis Helvey (Group Senior Vice
President and Chief Financial Officer), Larry E. LaCasse (Group Senior Vice
President and Chief Operating Officer), Edward L. Bisgaard (Vice President,
Chief Accounting Officer and Treasurer), Steven J. Gray (Vice President, Chief
Legal Counsel and Secretary).
Under the Advisory Agreement, the Investment Adviser has agreed to reduce
its fees to a Fund if the Fund's annual ordinary operating expenses exceed the
most stringent limits prescribed by any state in which the Fund's shares are
offered for sale. The Investment Adviser calculates and administers this
expense limitation separately with respect to each Fund. Expenses which are not
subject to this limitation are interest, taxes, 12b-1 fees and extraordinary
expenses. Expenditures, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, including
costs incurred in connection with the purchase or sale of portfolio securities,
are accounted for as capital items and not as expenses. Reimbursement, if any,
will be on a monthly basis, subject to year-end adjustment. With the exceptions
of the Government and Mortgage Securities, Growth and Income and Strategic
Growth Funds, the Investment Adviser voluntarily waived all or a portion of each
Fund's management fees and, with the exceptions of the California and National
Money Funds, absorbed a portion of each Fund's ordinary operating expenses
during the fiscal year or period ended December 31, 1995.
SUBADVISERS.
Boston Safe Advisors, Inc. ("Boston Advisors") serves as Subadviser to the
Company with respect to the Municipal Funds pursuant to a Subadvisory Agreement
dated May 21, 1993, which was approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company, at a meeting held on November 20, 1995, and by
shareholders of the Municipal Funds at a meeting held on March 17, 1993.
Boston Advisor's parent company, The Boston Company, Inc., is a wholly
owned subsidiary of Mellon Bank Corporation, a publicly owned multibank holding
company.
B-46
<PAGE>
Oppenheimer Management Corporation ("Oppenheimer") serves as Subadviser to
the Company with respect to the Stock Funds and the Strategic Income Fund
pursuant to a Subadvisory Agreement dated October 1, 1993 (the "Oppenheimer
Subadvisory Agreement"), which was last approved by the Board of Directors,
including a majority of the directors who are not "interested persons" (as
defined in the 1940 Act) of the Company at a meeting held on November 20, 1995
with respect to each of the Stock Funds. The shareholders of the Atlas Growth
and Income Fund approved the Oppenheimer Subadvisory Agreement at a meeting on
September 29, 1993.
Each Subadvisory Agreement is for an initial term of two years and may be
renewed from year to year afterwards, provided that any such renewal has been
specifically approved at least annually by (i) the majority (as defined in the
1940 Act) of the outstanding voting securities of the appropriate Fund, or
(ii) the vote of a majority of directors who are not parties to the Subadvisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person, at a meeting called for the purpose of voting on such
approval. Each Subadvisory Agreement also provides that the Company or Atlas
Advisers, Inc. has the right with respect to any Fund to terminate it without
penalty, upon 60 days written notice to the other parties, that the Subadviser
has the right with respect to any Fund to terminate without penalty upon 120
days written notice, and that the Subadvisory Agreement automatically terminates
in the event of its assignment (as defined in the 1940 Act).
PRINCIPAL UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS.
As described in the Prospectus, the Company has adopted a Principal
Underwriting Agreement with Atlas Securities, Inc. (the "Distributor"), which
serves as the sole underwriter and distributor of each Fund's shares. Pursuant
to the Principal Underwriting Agreement, a commission is paid to the Distributor
at the time of the sale of Class A shares of the Bond and Stock Funds and on a
contingent deferred basis on the sale of Class B shares of the Bond and Stock
Funds. During the fiscal year ended December 31, 1993, the Distributor received
and retained sales commissions from the Company for the sale of shares in the
amount of $5,469,286. During the fiscal years ended December 31, 1994 and 1995,
the Distributor received and retained sales commissions from the Company for the
sale of Class A and Class B shares in the amounts of $2,256,098 and $4,508, and
$475,239 and $11,527, respectively.
As also described in the Prospectus, the Company has adopted separate
Distribution Plans for Class A and Class B shares (the "Distribution Plans")
under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule").
Under the Distribution Plan for Class A shares, each Fund is authorized to spend
up to 0.25%
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<PAGE>
of its average daily net assets on activities primarily intended to
result in the sale of its Class A shares, which activities are summarized in the
Prospectus. The Class A shares Distribution Plan also provides that the
Investment Adviser may pay Service Agents for servicing and distribution
services out of its management fee income from the Company, its past profits or
any other source available to it. During the fiscal year ended December 31,
1995, the Distributor received reimbursements for distribution expenses for
Class A shares in the amount $1,207,542.
Payment under the Class A shares Distribution Plan in any year will be
applied to distribution expenses incurred in that year and will not be used to
pay for distribution expenses incurred, but unreimbursed, from previous years.
Under the Distribution Plan for Class B shares, each Fund that has issued
Class B Shares is authorized to spend up to 0.75% of its average daily net
assets to compensate the Distributor for expenses incurred, and services and
facilities provided, in distributing Class B Shares , including, but not limited
to, payment of trail commissions and other payments to brokers, dealers,
financial institutions or others who sell shares and/or service shareholder
accounts; compensation to and expenses, including overhead and telephone
expenses of the Distributor; the printing of prospectuses, statements of
additional information, and reports for other than existing shareholders; and
the preparation, printing and distribution of sales literature and advertising
materials.
The distribution fees payable to the Distributor under the Class B Plan are
designed to compensate the Distributor for the expenses it incurs and the
services it renders in distributing Class B shares of the Funds. However,
because the Plan for Class B shares is a compensation plan, the distribution
fees are payable even if the amount paid exceeds the Distributor's actual
expenses, in which case the Distributor would make a profit. If in any year the
Distributor's expenses incurred in connection with the distribution of Class B
Shares of a Fund exceed the distribution fees paid by the Fund, the Distributor
will recover such excess only if the Plan with respect to the Fund continues to
be in effect in some later year when the distribution fees exceed the
Distributor's expenses. There is no limit on the periods during which
unreimbursed expenses may be carried forward, although the Company is not
obligated to repay any unreimbursed expenses for a Fund that may exist at such
time, if any, as the Class B shares Plan terminates or is not continued with
respect to the Fund. No interest, carrying or finance charge will be imposed on
any amounts carried forward. During the fiscal year ended December 31, 1995,
the Distributor received distribution fees for Class B shares in the amount of
$74,356.
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<PAGE>
The Distribution Plans are subject to annual renewal by the Directors,
including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Company and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to such Distribution Plan (the "Qualified Directors"). In approving the
Distribution Plans, the Directors determined that the Distribution Plans were in
the best interests of the shareholders of the respective class of shares of each
Fund adopting one or both of the Distribution Plans. Agreements related to the
Distribution Plans must also be approved by such vote of the Directors and the
Qualified Directors as described above.
The Distribution Plans require that, at least quarterly, the Directors must
review a written report prepared by the Chief Financial Officer of the Company
enumerating the amounts expended and purposes therefor under each Distribution
Plan. The Distribution Plans also require that, so long as they are in effect,
the Qualified Directors shall have the authority to select and nominate other
Qualified Directors on behalf of the full Board of Directors.
EXECUTION OF PORTFOLIO TRANSACTIONS
When circumstances relating to a proposed transaction indicate that a
particular broker-dealer is in a position to obtain the best price and
execution, the order is placed with that broker-dealer. This may or may not be
a broker-dealer who has provided research, statistical, or other related
services to the Investment Adviser or has sold shares of the Funds. Subject to
the requirement of seeking the best available prices and execution, the
Investment Adviser may, in circumstances in which two or more broker-dealers are
in a position to offer comparable prices and execution, give preference to
broker-dealers who have provided research, statistical, and other related
services to the Investment Adviser for the benefit of the Company. The
Investment Adviser is of the opinion that while such research and related
services are useful in varying degrees, they are of indeterminable value and do
not reduce the expenses of the Investment Adviser. Total brokerage commissions
paid by the Atlas Growth and Income Fund during the fiscal years ended December
31, 1993, 1994 and 1995 were $222,614, $220,872, and $214,402, respectively.
Total brokerage commissions for the Atlas Balanced Fund and the Atlas Strategic
Growth Fund for the period October 1, 1993 (inception of operations) to December
31, 1993 were $3,197 and $5,722, respectively, and for the fiscal years ended
December 31, 1994 and 1995 were $3,005, $10,517, and $4,945 and $15,948
respectively. Substantially and broker-dealers used by the Stock Funds'
Subadviser to execute portfolio transactions for the Funds provide research
services to the
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<PAGE>
Subadviser. Transactions in the other Funds were on a principal basis.
The Bond Funds will effect transactions in financial and interest rate
futures contracts on the Chicago Mercantile Exchange and other boards of trade
through futures commissions merchants and at negotiated commissions. The Stock
Fund will effect transactions in stock index futures on boards of trade through
futures commissions merchants and at negotiated commissions and transactions in
forward foreign currency contracts on exchanges or in the spot market.
There are occasions on which the Investment Adviser or a Subadviser, on
behalf of the Company may execute portfolio transactions concurrently with
portfolio transactions in the same securities by other clients of the Investment
Adviser or a Subadviser, or for trusts or other accounts served by affiliated
companies of the Investment Adviser or a Subadviser. Although such concurrent
trading potentially could be either advantageous or disadvantageous to the
Company, they will be effected only when the Investment Adviser or a Subadviser
believes that to do so is in the best interests of the Company. When such
concurrent trading occurs, the Investment Adviser or a Subadviser will seek to
average prices or otherwise allocate the executions in an equitable manner among
the Company and the other parties involved.
HOW TO INVEST
PRICES OF SHARES.
The price to be paid by an investor for shares of a Fund (the "public
offering price") is based on the net asset value per share of Class A and Class
B shares which the Company calculates once daily as of the close of regular
trading (normally 4:00 p.m., New York time) each business day the New York Stock
Exchange ("NYSE") is open for unrestricted trading. The NYSE is currently
scheduled to be closed on New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day, and on the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday.
BOND FUNDS:
1. The Company values portfolio securities including U.S. Treasury
obligations, and other obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, certificates of deposit issued by banks or
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<PAGE>
savings and loan associations, commercial paper, corporate short-term notes and
other short term investments with original or remaining maturities in excess of
60 days at the mean of representative quoted bid and asked prices for such
securities or, if such prices are not available, for securities of comparable
maturity, quality and type. In circumstances where the Investment Adviser deems
it appropriate to do so, prices obtained for the day of valuation from a bond
pricing service will be used. The Company amortizes to maturity all securities
with 60 days or less to maturity based on their cost to a Fund if acquired
within 60 days of maturity or, if already held by a Fund on the 60th day, based
on the value determined on the 61st day.
2. The Company values long-term fixed-income obligations at the mean of
representative quoted bid or asked prices for such securities or, if such prices
are not available, at prices for securities of comparable maturity, quality and
type. In circumstances where the Investment Adviser deems it appropriate to do
so, prices obtained for the day of valuation from a bond pricing service will be
used.
3. The Company deems the maturities of variable or floating rate
instruments, or instruments which a Fund has the right to sell at par to the
issuer or dealer, to be the time remaining until the next interest rate
adjustment date or until they can be resold or redeemed at par.
4. Where market quotations are not readily available, the Company values
securities (including restricted securities which are subject to limitations as
to their sale) at fair value pursuant to methods approved by the Board of
Directors.
5. The fair value of any other assets is added to the value of securities,
as described above to arrive at total assets.
6. Each Fund's liabilities, including proper accruals of taxes and other
expense items, are deducted from total assets and a net asset figure is
obtained.
7. The net asset figure obtained as described above is then divided by the
total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
MONEY MARKET FUNDS:
It is the Company's policy to use its best efforts to maintain a constant
per share price for the Money Funds equal to $1.00.
The portfolio instruments of the Money Funds are valued on
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<PAGE>
the basis of amortized cost. This involves valuing an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price a Fund would receive if it
sold the instrument.
The valuation of each Fund's portfolio instruments based upon their
amortized cost and simultaneous maintenance of each Fund's per share net asset
value at $1.00 are permitted by Rule 2a-7 under the 1940 Act.
Under this rule, each Money Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of one year or less, and invest only in securities
determined by the Board of Directors, and as required by the rule, to be of high
quality with minimal credit risks. High quality is defined as the top two
quality rating grades as rated by any two national statistical rating
organizations ("NRSRO"), or by one NRSRO if rated by only one, or if not rated
by an NRSRO, of comparable quality as determined by the Subadviser. The U.S.
Treasury Money Fund invests only in securities guaranteed by the full faith and
credit of the U.S. Government, that is, of the highest quality. In accordance
with the rule the Board of Directors has established procedures designed to
stabilize, to the extent reasonably practicable, each Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of each Fund's portfolio holdings by the Board of Directors, at
such intervals as they may deem appropriate, to determine whether the net asset
value of a Fund calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. The rule
also provides that the extent of any deviation between a Fund's net asset value
based upon available market quotations or market equivalents and $1.00 per share
net asset value based on amortized cost must be examined by the Directors. In
the event the Board of Directors determines that a deviation exists which may
result in material dilution or is otherwise unfair to investors or existing
shareholders, they must cause a Fund to take such corrective action as they
regard as necessary and appropriate, including: selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or paying distributions from capital
or capital gains; redeeming shares in kind; or establishing a net asset value
per share by using available market quotations.
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THE STOCK FUNDS:
The Company values portfolio securities of the Stock Funds listed or traded
on an exchange, at their last sales price on the exchange where the security is
principally traded. Lacking any sales on a particular day, the security is
valued at the mean between the closing bid and asked prices on that day. Each
security traded in the over-the-counter market (but not including securities
reported on the NASDAQ National Market System) is valued at the mean between the
last bid and asked prices, based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. These procedures need not
be used to determine the value of debt securities owned by the Fund if, in the
opinion of the Board of Directors some other method (e.g. the mean between
closing over-the-counter bid and asked prices in the case of debt instruments
traded on an exchange) would more accurately reflect their fair value. A
security which is listed or traded on more than one exchange is valued at the
quotation of the exchange determined by the Board of Directors to be the primary
market for such security. Short-term obligations are valued at amortized cost,
which constitutes fair value as determined by the Board. All other securities
and other assets of the Fund are appraised at their fair value as determined in
good faith under consistently applied procedures established by and under the
general supervision of the Board.
For purposes of determining the net asset value per share of each Stock
Fund, all assets and liabilities initially expressed in foreign currencies are
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars last quoted by any major bank and any changes in
the value of forward contracts are included in the determination of net asset
value.
DUAL CLASS METHODOLOGY.
The methodology for calculating the net asset value, dividends and distributions
of Funds' Class A and Class B shares recognizes two types of expenses. General
expenses that do not pertain specifically to either class are allocated pro rata
to the shares of each class, based on the ratio of the net assets of such class
to the Fund's total net assets, and then equally to each outstanding share
within a given class. Such general expenses include (i) management fees, (ii)
legal, bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Additional Statements and other materials for
current shareholders, (iv) fees to unaffiliated Directors, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up costs,
(viii) interest, taxes and brokerage commissions, and (ix) nonrecurring
expenses, such as litigation costs. Other expenses that are directly
attributable
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to a class are allocated equally to each outstanding share within that
class. Such expenses include (a) Distribution Plan fees, (b) incremental
transfer and shareholder servicing agent fees and expenses, (c) registration
fees and (d) shareholder meeting expenses, to the extent that such expenses
pertain to a specific class rather than to the Fund as a whole.
PAYMENT AND TERMS OF OFFERING.
Payment of shares purchased must accompany the purchase order either by
check or by wire made payable to the Fund or to Atlas Assets, Inc. and sent to
the Shareholder Services Agent as described in the Prospectus under "How Can I
Invest?" As a condition of this offering, if the Company cancels an order to
purchase shares due to nonpayment (for example, on account of a check returned
for "not sufficient funds"), the person who made the order will be responsible
for any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Company shall have the authority as agent of the
shareholder to redeem shares in his account for their then-current net asset
value per share to reimburse the Company for the loss incurred. The Company may
prohibit future orders from investors whose purchase orders have been cancelled
due to nonpayment. The Distributor or the Investment Adviser will reimburse the
Fund for any such losses not recovered from the shareholder.
The Company reserves the right to change the generally applicable minimum
initial or subsequent investment amounts at any time upon disclosure of such
change in the prospectus or a supplement. The Company may waive or reduce the
minimum initial or subsequent investment amount without prior prospectus
disclosure for types of accounts involving scheduled continuous investments such
as automatic purchase plans and employee benefit plan investment programs. An
order to purchase shares is not binding on the Company until the Shareholder
Services Agent confirms it in writing (or by other arrangements made with the
Company, in the case of orders utilizing wire transfer of funds) and the Company
receives payment. Any purchase order or exchange may be rejected by the Company
or the Distributor prior to confirmation, and the Company reserves the right,
upon prior written notice to a shareholder, to refuse to accept any additional
purchase or exchange requests from the shareholder. With respect to purchase
orders or exchanges for shareholders with Atlas Funds account(s) balances as of
and since March 31, 1993 of $1 million or more and shareholders with an
outstanding letter of intent to purchase $1 million or more in shares of one or
more Atlas Funds as of that date, the Company reserves the right to impose the
lower sales charge in effect prior to March 31, 1993 applicable to sales of $1
million or more.
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THE SHAREHOLDER ACCOUNT.
When an investor makes an initial investment in a Fund, a shareholder
account is opened in accordance with the investor's instructions on the account
application. A shareholder will receive from the Shareholder Services Agent
("Agent") a confirmation statement showing the current transaction and a summary
of the status of the account as of the transaction date after each investment,
redemption (except for a redemption by Checkwriting), exchange of Atlas Fund
shares or any payment or reinvestment of dividends or distributions. The
minimum redemption amounts and minimum account balances described in the
Prospectus do not apply to mandatory periodic payments under an IRA or SEP Plan
or other qualified benefit plan.
OTHER INVESTMENT AND REDEMPTION SERVICES
PURCHASES UNDER A LETTER OF INTENT.
The reduced sales charges and public offering prices for Class A shares set
forth in the Prospectus are available on purchases of $100,000 or more made
within a 13-month period pursuant to the terms of a "Letter of Intent" elected
and agreed to by the shareholder on the New Account Form on the terms described
in the Prospectus and herein. The Letter of Intent is a non-binding statement
of an investor's intention to purchase a stated aggregate dollar amount of
shares of the Company. The investor may pay the sales charge applicable to the
amount of the intended aggregate purchase.
After 13 months, if you purchased less than the amount intended, the Agent
will request you to remit the difference between the lower sales charge you paid
(based on your higher intended LOI amount) and the sales charge applicable to
the purchases actually made under the LOI. If the Agent doesn't receive your
remittance within 20 days of the request, it will redeem sufficient escrowed
shares from your account to equal the sales charge difference. Your escrowed
shares earn dividends, which will continue to be credited to your account during
the LOI period.
REINSTATEMENT.
When a shareholder has redeemed shares in a Bond or Stock Fund, the
shareholder may, by returning the redemption check, or another check in an
amount no greater than the redemption payment, to the Shareholder Services
Agent, have that check applied to the purchase of shares of any Bond or Stock
Fund at the net asset value (without sales charge) next determined after
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receipt by the Shareholder Services Agent. The reinstatement will be subject to
the applicable minimum investment requirements. In the case of a reinstatement
of Class B shares, the Distributor will refund the CDSC imposed at the time of
redemption by crediting the shareholder's account with additional shares in an
amount equal to the CDSC. A shareholder may exercise this privilege only once
for each Bond or Stock Fund. The Shareholder Services Agent must receive such
checks no later than the close of business on the 30th calendar day following
the redemption payment date.
TELEPHONE REDEMPTIONS.
When utilizing the telephone redemption service, the shareholder must give
the full registration name, address, number of shares to be redeemed, account
number and name of the Fund in order for the redemption request to be processed.
A corporation, partnership or other entity wishing to utilize the telephone
redemption services must have on file with the Company a Securities Transaction
Form indicating the names, titles and the required number of signatures
authorized to act on its behalf. For a corporation, the authorization form must
be signed by a duly authorized officer(s) and the signature guaranteed or the
corporate seal affixed.
Any changes or exceptions (made more than 30 days from the election of the
feature) to the original instructions of a shareholder with respect to telephone
redemption must be made in writing, with signature(s) guaranteed, and will be
effective upon receipt by the Shareholder Services Agent. The Shareholder
Services Agent and the Company reserve the right to refuse any telephone
instructions and may discontinue the aforementioned redemption option upon
30 days' written notice.
REDEMPTIONS IN KIND.
It is possible that unusual conditions may arise in the future which would,
in the opinion of the Board of Directors of the Company, make it undesirable for
a Fund to pay for all redemptions in cash. In such cases, the Board may
authorize payment to be made in portfolio securities or other property of a
Fund. The Company would value securities delivered in payment of redemptions at
the same value assigned to such securities in computing the net asset value per
share. Shareholders receiving such securities would incur brokerage costs when
they sell these securities. If the Company so elects, however, it must pay in
cash all redemptions with respect to any shareholder during any 90-day period in
an amount equal to the lesser of (i) $250,000 or (ii) 1% of the net asset value
of a Fund at the beginning of such period.
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TAXES
Each Fund intends to continue to meet all the requirements and to elect the
tax status of a "regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986 (the "Code"). If a Fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To so qualify under Subchapter M, a Fund must derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock or securities or
foreign currencies, or other income derived with respect to its business of
investing in stock, securities or currencies. To qualify, a Fund must also (a)
derive less than 30% of its gross income (irrespective of losses) from the sale
or other disposition of stock or securities held less than three months, and (b)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the Fund's assets is represented by cash, cash items,
U.S. Government securities, securities of other regulated investment companies,
and other securities, limited, in respect of any one issuer, to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies) or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses or related trades or businesses. The requirements
for qualification may cause a Fund to restrict the extent of its short-term
trading or its transactions in options or futures contracts.
Even though a Fund qualifies as a "regulated investment company," it may be
subject to certain federal excise taxes unless the Fund meets certain additional
distribution requirements. Under the Code, a nondeductible excise tax of 4% is
imposed on the excess of a regulated investment company's "required
distribution" for the calendar year ending within the regulated investment
company's taxable year over the "distributed amount" for such calendar year.
The term "required distribution" means the sum of (i) 98% of ordinary income
(generally net investment income) for the calendar year, (ii) 98% of capital
gain net income (both long-term and short-term) for the one-year period ending
on October 31 (as though the one-year period ending on October 31 were the
regulated investment company's taxable year), and (iii) the sum of any untaxed,
undistributed taxable net investment income and net capital gains of the
regulated investment company for prior periods. The term "distributed
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amount" generally means the sum of (i) ordinary income and capital gain net
income actually distributed by a Fund in the current year and (ii) any amount on
which a Fund pays income tax for the year. Each Fund intends to continue to
meet these distribution requirements to avoid the excise tax liability.
To the extent that dividends received by a Fund would qualify for the 70%
dividends received deduction available to corporations, a Fund must designate in
a written notice to shareholders, mailed not later than 60 days after the close
of its taxable year, the amount of the Fund's dividends that would be eligible
for this treatment.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the Fund pays the dividend during
January of the following year.
If a shareholder exchanges or otherwise disposes of Class A shares of a
Fund within 90 days of having acquired such shares, and if as a result of having
acquired those shares the shareholder subsequently pays a reduced sales charge
for shares of the same or a different Fund, then the sales charges previously
incurred in acquiring the Fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales charges)
for purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other Fund shares.
LONG-TERM CAPITAL GAINS.
Each Fund also intends to distribute to shareholders all of the excess of
net long-term capital gain over net short-term capital loss realized on sales of
portfolio securities. Any dividend or capital gain distribution paid by a Fund
has the effect of reducing the net asset value per share on the record date by
the amount of the distribution. Therefore, such a distribution paid shortly
after a purchase of shares would represent, in substance, a return of capital to
the shareholder, to the extent that it is paid on the shares so purchased, even
though subject to income taxes. A sale of shares by a shareholder at net asset
value at that time would establish a capital loss for federal tax purposes.
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CLASS B AUTOMATIC CONVERSION FEATURE
The conversion of Class B shares to Class A shares is based on the
continuing availability of a private letter ruling from the Internal Revenue
Service, or an opinion of counsel to the effect that the conversion of Class B
shares does not constitute a taxable event for the holder under federal income
tax law. In the unlikely event that such a private letter ruling or opinion is
no longer available, the automatic conversion feature may have to be suspended.
In that case, Class B shares could then be exchanged for Class A shares on the
basis of the relative net asset values of the two classes, without the
imposition of a sales charge or fee. However, such exchange would constitute a
taxable event.
FOREIGN SHAREHOLDERS.
Under the Code, distributions of net investment income by a Fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by a Fund to a foreign shareholder is "effectively connected" with
a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
Distributions of net long-term capital gains are not subject to tax withholding,
but in the case of a foreign shareholder who is a nonresident alien individual,
such distributions ordinarily will be subject to U.S. income tax at a rate of
30% if the individual is physically present in the U.S. for more than 182 days
during the taxable year. Each Fund may be required to pay withholding and other
taxes imposed by foreign countries which would reduce a Fund's investment
income, generally at rates from 10% to 40%. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. To the
extent a Fund does pay foreign withholding or other foreign taxes on certain of
its investments, investors will not be able to deduct their pro rata shares of
the such taxes in computing their taxable income and will not be able to take
their share of such taxes as a credit against their United States income taxes.
OTHER MATTERS.
Investors should be aware that the investments to be made by the Bond Funds
may involve sophisticated tax rules such as the original issue discount and mark
to market rules that would result in income or gain recognition without
corresponding current cash receipts. Although these Funds will seek to avoid
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significant noncash income, such noncash income could occur. Investors should
be aware that the Stock Funds and the Strategic Income Fund may invest in
securities issued by foreign companies or governments and traded in foreign
markets.
TAX ASPECTS OF COVERED CALLS AND HEDGING TRANSACTIONS.
As noted above, each Fund intends to qualify as a "regulated investment
company" under the Code. One of the tests for such qualification is that less
than 30% of its gross income (irrespective of losses) must be derived from gains
realized on the sale of securities held for less than three months. Due to this
limitation, a Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including futures contracts, held for less than three months, whether or not
they were purchased on the exercise of a call held by the Fund; (ii) purchasing
calls or puts which expire in less than three months; (iii) effecting closing
transactions with respect to calls or puts purchased less than three months
previously; (iv) exercising puts or calls held by the Fund for less than three
months; and (v) writing calls on investments held for less than three months.
Certain foreign corrency exchange contracts in which a Fund may invest are
treated as "section 1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts generally are treated as ordinary
income or loss. In addition, section 1256 contracts held by a Fund at the end
of each taxable year are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized. These contracts also
may be marked-to-market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed pursuant to
the Code. An election can be made by a Fund to exempt these transactions from
this mark-to-market treatment.
Certain forward contracts entered into by a Fund may result in "straddles"
for federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund on straddle positions. Generally, a loss
sustained on the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the offsetting
positions making up the straddle. Disallowed loss is generally allowed at the
point where there is no unrecognized gain in the offsetting positions making up
the straddle, or the offsetting position is disposed of.
Under the Code, gains or losses attributable to fluctuations
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in exchange rates that occur between the time a Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of foreign currency forward contracts, gains or losses
attributable to fluctuations in the value of a foreign currency between the date
of acquisition of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. Currency gains and
losses are offset against market gains and losses before determining a net
"Section 988" gain or loss under the Code, which may increase or decrease the
amount of a Fund's investment company income available for distribution to its
shareholders.
SPECIAL TAX CONSIDERATIONS FOR THE MUNICIPAL FUNDS.
GENERAL.
The percentage of total dividends paid by the Municipal Funds with respect
to any taxable year and qualified for exclusion from gross income ("exempt-
interest dividends") will be the same for all shareholders receiving dividends
during such year. In order for the Municipal Funds to pay exempt-interest
dividends during any taxable year, at the close of each fiscal quarter at least
50% of the aggregate value of the Municipal Funds' assets must consist of tax-
exempt securities. In addition, each of the Municipal Funds must distribute 90%
of the aggregate interest excludable from gross income and 90% of the investment
company taxable income earned by the Municipal Fund during the taxable year.
Not later than 60 days after the close of its taxable year, each Municipal Fund
will notify each shareholder of the portion of the dividends paid by the
Municipal Fund to the shareholder with respect to such taxable year which
constitutes exempt-interest dividends. The aggregate amount of dividends so
designated cannot, however, exceed the excess of the amount of interest
excludable from gross income from tax under Section 103 of the Code received by
the Municipal Fund during the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code.
The Code treats interest on private activity bonds, as defined therein, as
an item of tax preference subject to an alternative minimum tax on individuals
at a rate of up to 28% and on corporations at a rate of 20%. The Municipal
Funds are not restricted in the percentage of securities subject to the
alternative minimum tax they may hold or the amount of income subject to the
alternative minimum tax they may distribute. Further, under the Code corporate
shareholders must include
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federal exempt-interest dividends in their adjusted current earnings for
calculation of corporate alternative minimum taxable income.
Substantially all "investment company taxable income" earned by the
Municipal Funds will be distributed to shareholders. In general, a Municipal
Fund's investment company taxable income will be its taxable income (for
example, its short-term capital gains) subject to certain adjustments and
excluding the excess of any net long-term capital gain for the taxable year over
the net short-term capital loss, if any, for such year. The Municipal Funds
would be taxed on any undistributed investment company taxable income. Since it
is intended that any such taxable income will be distributed, it will be taxable
to shareholders as ordinary income. Similarly, distributions of capital gains,
if any, will be taxable to shareholders. Market discount earned on tax-exempt
obligations will not qualify as tax-exempt income.
CALIFORNIA.
Like the Municipal Funds, the California Funds are subject to federal tax
under Subchapter M of the Code (as described above). With respect to taxation
by California, in general, California has adopted federal law with respect to
the taxation of regulated investment companies and their shareholders. In any
year in which a California Fund qualifies as a regulated investment company
under the Internal Revenue Code and is exempt from federal income tax, if, at
the close of each quarter of its taxable year, at least 50% of the value of the
total assets of that California Fund consists of bonds the interest on which
(when held by an individual) is exempt from personal income taxation under
California law ("California Exempt Securities"), then that California Fund will
be qualified to pay dividends exempt from California personal income tax
(hereinafter referred to as "California exempt-interest dividends"). The
California Funds intend to qualify under the above requirement so that they may
pay California exempt-interest dividends. If a California Fund fails to so
qualify, no part of that California Fund's dividends will be exempt from
California personal income tax. Even if a California Fund qualifies under the
above requirement, any dividends paid to corporate shareholders subject to the
California franchise tax will be taxed as ordinary dividends to such
shareholders.
Not later than 60 days after the close of its taxable year, each California
Fund will notify each of its shareholders of the portion of the dividends exempt
from California personal income tax paid by such fund to the shareholder with
respect to such taxable year. The total amount of California exempt-interest
dividends paid by a California Fund to all of its shareholders with respect to
any taxable year cannot exceed the amount of
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interest received by the California Fund during such year on California-Exempt
Securities less any expenses or expenditures (including any expenditures
attributable to the acquisition of securities of another California tax-exempt
fund and dividends paid to the California Fund's corporate shareholders) that
are deemed to have been paid from such interest. Dividends paid by the
California Fund in excess of this limitation will be treated as ordinary
dividends subject to California personal income tax at ordinary rates. For
purposes of the limitation, expenses or other expenditures paid during any year
generally will be deemed to have been paid with funds attributable to interest
received by the California Fund from California-Exempt Securities for such year
in the same ratio as such interest from California-Exempt Securities bears to
the total gross income earned by the Fund for the year. The effect of this
accounting convention is that amounts of interest from California-Exempt
Securities received by the California Fund that would otherwise be available for
distribution as California exempt-interest dividends will be reduced by the
expenses and expenditures deemed to have been paid from such amounts.
In cases where shareholders are "substantial users" or "related persons"
with respect to California-Exempt Securities held by a California Fund, such
shareholders should consult their tax advisers to determine whether California
exempt-interest dividends paid by the California Fund with respect to such
obligations retain their California corporate or personal income tax exclusion.
In this connection, rules similar to those regarding the possible unavailability
of federal exempt-interest dividend treatment to "substantial users" are
applicable for California state tax purposes.
Long-term and/or short-term capital gain distributions will not constitute
California exempt-interest dividends and will be subject to California tax.
Moreover, interest on indebtedness incurred by a shareholder to purchase or
carry California Funds shares is not deductible for California corporate or
personal income tax purposes if the California Fund distributes California
exempt-interest dividends during the shareholder's taxable year.
OTHER MATTERS.
Shares of the Municipal Funds would not be suitable for tax-exempt
institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and individual retirement accounts since
such plans and accounts are generally tax-exempt and, therefore, would not gain
any additional benefit from the tax-exempt nature of Municipal Funds' dividends,
and such dividends would be ultimately taxable to the beneficiaries when
distributed to them. In addition, the Municipal Funds may not be an appropriate
investment for entities
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which are "substantial users" of facilities financed by industrial development
bonds or "related persons" thereof. "Substantial user" is defined under U.S.
Treasury Regulations to include a non-exempt person who regularly uses a part of
such facilities in his trade or business and whose gross revenues derived with
respect to the facilities financed by the issuance of bonds are more than 5% of
the total revenues derived by all users of such facilities, or who occupies more
than 5% of the usable area of such facilities or for whom such facilities or a
part thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S Corporation and its shareholders.
Interest on indebtedness incurred by a shareholder to purchase or carry
Municipal Fund shares is not deductible for federal income tax purposes if the
Municipal Fund distributes exempt-interest dividends during the shareholder's
taxable year. If a shareholder receives an exempt-interest dividend with
respect to any share and such share is held for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend.
SPECIAL TAX CONSIDERATIONS FOR THE TREASURY MONEY FUND.
Income dividends on shares of the U.S. Treasury Money Fund are subject to
federal income tax, but in most states are exempt from state personal income
tax. This is the case in each state in which shares of the Funds are currently
sold.
* * *
The foregoing is a general abbreviated summary of present United States
federal income taxes; as to the Treasury Money Fund, of Arizona, California,
Colorado, Kansas, Missouri and New Jersey income taxes; and, as to the
California Funds, of California franchise and income taxes on dividends and
distributions by each Fund. Investors are urged to consult their own tax
advisers for more detailed information and for information regarding any
foreign, state and local taxes applicable to dividends and distributions
received.
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ADDITIONAL INFORMATION
TRANSFER AGENT AND CUSTODIAN.
State Street Bank and Trust Company acts as Transfer Agent for the
Company's shares. Investors Bank & Trust Company acts as Custodian for
securities and other assets of the Company.
INDEPENDENT AUDITORS.
The Company's Board of Directors has appointed Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31, 1996.
Deloitte & Touche LLP will conduct the annual audit of the Company, and will
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company as to matters of accounting and federal and state
income taxation.
LEGAL OPINIONS.
The validity of the shares offered by the Prospectus has been passed upon
by Paul, Hastings, Janofsky & Walker located at 555 South Flower Street, Los
Angeles, California 90071. Paul, Hastings, Janofsky & Walker also acts as legal
counsel for the Company's Adviser and Distributor.
INVESTMENT RESULTS
The Company may from time to time include information on the investment
results (current yield, effective yield, tax-equivalent yield, tax-equivalent
effective yield, distribution rate, tax-equivalent distribution rate and total
return) of a Fund in advertisements or in reports furnished to current or
prospective shareholders.
TOTAL RETURN.
The average annual compound rate of return ("T") of each class is computed
by using the value at the end of the period ("EV") of a hypothetical initial
investment of $1,000 ("P") over a period of years ("n") according to the
following formula as required by the Securities and Exchange Commission:
P(1+T)(n) = EV
B-65
<PAGE>
The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) for Class A shares, deduction of
the maximum applicable sales charge from the $1,000 initial investment, and (2)
for Class B shares, the payment of the contingent deferred sales charge of 3.0%
for the first and second years, 2.0% for the third and fourth years, 1.0% in the
fifth year and none thereafter, applied as described in the Prospectus. The
formula also assumes reinvestment of all dividends and distributions at net
asset value on the reinvestment date determined by the Board and a complete
redemption at the end of any period illustrated. Each Fund will calculate total
return for one, five and ten-year periods for each class of shares after such a
period has elapsed. In addition, a Fund may provide lifetime average total
return figures for each class of shares.
In addition to average annual returns, a Fund may quote unaveraged or
cumulative total returns for each class reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, and/or a series of redemptions, over
any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted for each class with or without taking a
Fund's sales charge into account. Excluding the Fund's sales charge from a
total return calculation produces a higher total return figure. Total returns,
yields, and other performance information for Class A or Class B shares of a
Fund may be quoted numerically or in a table, graph, or similar illustration.
Performance information may be compared to the record of the Standard & Poor's
Daily Stock Price Index of 500 Common Stocks (S&P 500), the Dow Jones Industrial
Average (DJIA), the cost of living (measured by the Consumer Price Index, or
CPI), and other widely recognized benchmark indicators over the same period.
Tabular comparisons, hypothetical examples and explanatory illustrations may be
used from recognized sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds
and Inflation", which instead of comparing actual Fund performance, demonstrate
performance of stocks, bonds, indices, averages, government or other securities,
and other recognized benchmark economic and market indicators such as the rate
of inflation. A Fund may have the ability to invest in securities not included
in the S&P, DJIA or other indices and its investment portfolio may or may not be
similar in composition to the indices. These indices and averages are based on
the prices of unmanaged groups of stocks, and, unlike fund total returns, their
returns do not include the effect of paying brokerage commissions and other
costs of investing.
B-66
<PAGE>
YIELDS.
Current yield ("YIELD") is computed by dividing the difference between
dividends and interest earned during a one-month period ("a") and expenses
accrued for the period (net of reimbursements) ("b") by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends ("c") and the maximum offering price per share on the last
day of the period ("d") according to the following formula as required by the
Securities and Exchange Commission:
a-b 6
YIELD = 2[(----- + 1) - 1]
cd
Current yield may also be calculated on the basis of the net asset value per
share rather than the public offering price.
Income from "roll" transactions (the sale of mortgage backed or other
securities together with an agreement, for which a Fund receives a fee, to
purchase similar securities at a future date) is recorded for accounting
purposes as interest income ratably over the term of each roll transaction and
is included in net investment income for purposes of determining a Fund's yield.
MONEY FUNDS YIELDS.
Current yield for the Money Funds will be calculated based on the net
change, exclusive of capital charges, over a seven-day period, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent.
TAX-EQUIVALENT YIELDS.
Tax-Equivalent yield for the Municipal Funds and the Treasury Money Fund
will be computed by dividing that portion of the yield of the class of shares of
the Fund which is tax-exempt by one minus a stated income tax rate and adding
the product to that portion, if any, of the yield of such class of shares of the
Fund that is not tax-exempt.
B-67
<PAGE>
TAX-EQUIVALENT EFFECTIVE YIELD.
Tax-equivalent effective yield for the Municipal Funds and the Treasury
Money Fund is calculated in the same way as tax equivalent yield, with the
additional assumption that dividends and distributions are reinvested.
EFFECTIVE YIELDS.
Effective yield and tax-equivalent effective yield will be calculated by
determining the net change, or tax-equivalent assumed net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding one, raising the sum to a power equal to 365 divided by seven, and
subtracting one from the result.
DISTRIBUTION RATES.
Distribution rates for the Bond and Stock Funds will be calculated by
annualizing the aggregate per share dollar amount of actual distributions made
over a 30 day period divided by the net asset value per share at the end of the
period.
TAX-EQUIVALENT DISTRIBUTION RATES.
Tax-equivalent distribution rates for the Municipal Bond Funds will be
computed by dividing that portion of the distribution rate of the class of
shares of the Fund which is tax-exempt by one minus a stated income tax rate and
adding the product to that portion, if any, of the distribution rate of such
class of shares of the Fund that is not tax-exempt.
COMPARISONS.
The Company may, from time to time, compare specific features of the Funds
and/or each class of shares and their portfolios, including credit quality and
maturity, to those available from comparable mutual funds. Advertisements or
sales literature of the Company may refer to the Atlas California Insured
Intermediate Municipal Fund as the first California municipal bond fund that
seeks the credit safety of insurance plus the high income potential of
intermediate-term securities. Advertisements or sales literature may refer to
the Class B
B-68
<PAGE>
contingent deferred sales charge alternative as the "Atlas Alternative", and may
refer to Class B shares as "Atlas Alternative Shares." The Company also may,
from time to time, compare the results of an investment in Class A or Class B
shares of one or more of the Funds with averages, rankings and indices,
including, but not limited to the following:
(1) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury (excluding
flower bonds and foreign targeted issues), all publicly issued debt of agencies
of the U.S. Government (excluding mortgage backed securities), and all public,
fixed rate, non-convertible investment grade domestic corporate debt rated at
least Baa by Moody's Investors Service or BBB by Standard and Poor's
Corporation, or, in the case of nonrated bonds, BBB by Fitch Investors Service
(excluding collateralized mortgage obligations).
(2) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures supplied
by the U.S. League of Savings Institutions). Savings accounts offer a
guaranteed rate of return on principal, but no opportunity for capital growth.
During a portion of the averaging period, the maximum rates paid on some savings
deposits were fixed by law.
(3) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g., food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
(4) Lipper Analytical Services, Inc., which ranks mutual funds by overall
performance, investment objectives and assets, and publishes averages on broad
based categories of mutual funds and indexes of cumulative total returns for
various periods.
(5) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back fixed
income securities.
The yields of the Money Funds may also be compared to the Donoghue's Money
Fund Averages, which are averages compiled by IBC/Donoghue's Organization, Inc.,
a widely recognized independent monitor of the performance of money market
mutual funds, to other Donoghue's rankings, to the average yield reported by the
Bank Rate Monitor for money market deposit accounts and certificates of deposit
offered by leading banks and thrift institutions in top standard metropolitan
statistical areas, or to other widely recognized independent monitoring and
ranking services and publications.
B-69
<PAGE>
The performance of a Fund's Class A or Class B shares may be compared to
those of other mutual funds having similar objectives, expressed as an average
or as a rating or ranking prepared by IBC/Donoghue Organization, Wiesenberger
Investment Company Service, Lipper Analytical Services, Inc., CDA Investment
Technologies, other recognized independent services which monitor the
performance of mutual funds or other economic or market indicators from
published sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds, Bills and
Inflation". Similar comparisons may be made with respect to various benchmark
securities, indices and averages which illustrate general market or economic
performance. These comparisons may be illustrated by means of tables or of bar,
pie, or mountain charts or other type of graphic illustration, numerically, or
by means of hypothetical examples and illustrations from recognized sources.
Performance will be calculated for each class of shares of a Fund by relating
net asset value per share at the beginning of a period, assuming reinvestment of
all gains, distributions and dividends paid during the period, to the net asset
value at the end of the period.
Indices, averages and rankings prepared by the research departments of such
financial organizations as Salomon Brothers, Inc., Merrill Lynch, Pierce,
Fenner & Smith, Inc., Bear Stearns & Co., Inc., Ibbotson Associates and other
similar providers of financial research data, may be used, as well as
information provided by the Board of Governors of the Federal Reserve System.
Performance rankings, ratings, averages, indices and excerpts of comments,
descriptions and other references or reviews of the Funds, their investment
managers, policies, strategies, rankings, or other comparisons appearing in
magazines, newspapers, investment newsletters, and other periodicals, including
MONEY MAGAZINE, FORBES, FORTUNE, BUSINESS WEEK, WALL STREET JOURNAL, NEW YORK
TIMES, LOS ANGELES TIMES, DALLAS MORNING NEWS, BARRONS, INVESTORS DAILY, MUTUAL
FUND VALUES, FACTS, CHANGING TIMES, IBBOTSON ASSOCIATES, AND OTHERS may also be
used.
B-70
<PAGE>
The performance of the Municipal Funds may also be compared to the
following charts illustrating tax free and tax equivalent investment yields,
which may be updated each year to reflect that year's current brackets and
rates:
<TABLE>
<CAPTION>
1996 Federal Tax Brackets*
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
Single Return Up to $24,000 24,001-58,150 58,151-121,300 121,301-263,750 Over 263,750
Joint Return Up to $40,100 40,101-96,900 96,901-147,700 147,701-263,750 Over 263,750
To Match a Tax
Free Yield of ** A taxable investment would have to pay:
2.0% 2.35% 2.78% 2.90% 3.13% 3.31%
3.0% 3.53% 4.17% 4.35% 4.69% 4.97%
4.0% 4.71% 5.56% 5.80% 6.25% 6.62%
5.0% 5.88% 6.94% 7.25% 7.81% 8.28%
6.0% 7.06% 8.33% 8.70% 9.38% 9.93%
7.0% 8.24% 9.72% 10.14% 10.94% 11.59%
8.0% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
B-71
<PAGE>
1996 Federal and California Combined Tax Brackets*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Federal Rate 15.00% 15.00% 15.00% 15.00% 28.00% 28.00% 28.00%
California Rate 1.00% 2.00% 4.00% 6.00% 6.00% 8.00% 9.30%
15.85% 16.70% 18.40% 20.10% 32.32% 33.76% 34.70%
Single Return 0-4,831 4,832-11,449 11,450-18,068 18,069-24,000 24,001-25,083 25,084-31,700 31,701-58,150
Joint Return 0-9,662 9,663-22,898 22,899-36,136 36,137-40,100 40,101-50,166 50,167-63,400 63,401-96,900
To Match a Tax
Free Yield of** A taxable investment would have to pay:
2.0% 2.38% 2.40% 2.45% 2.50% 2.96% 3.02% 3.06%
3.0% 3.57% 3.60% 3.68% 3.75% 4.43% 4.53% 4.59%
4.0% 4.75% 4.80% 4.90% 5.01% 5.91% 6.04% 6.13%
5.0% 5.94% 6.00% 6.13% 6.26% 7.39% 7.55% 7.66%
6.0% 7.13% 7.20% 7.35% 7.51% 8.87% 9.06% 9.19%
7.0% 8.32% 8.40% 8.58% 8.76% 10.34% 10.57% 10.72%
8.0% 9.51% 9.60% 9.80% 10.01% 11.82% 12.08% 12.25%
</TABLE>
*Net amount subject to income tax after deductions and exemptions.
**Tax Free yields and their taxable equivalents are shown as illustrations only.
Actual yield will vary with market conditions. Some income may be subject to
federal alternative minimum tax.
***Adjustments resulting from the personal exemption phaseout and reduction of
itemized deductions for high income individuals, described on the following
page, may result in an effective top combined marginal rate greater than 46.24%.
B-72
<PAGE>
<TABLE>
<CAPTION>
1996 Federal and California Combined Tax Brackets* (Continued)
<S> <C> <C> <C>
Federal Rate 31.00% 36.00% 39.60%
California Rate 9.30% 9.30% 9.30%
37.42% 41.95% 45.22%***
Single Return 58,551-121,300 121,301-263,750 Over
263,750
Joint Return 96,901-147,700 147,701-263,750 Over
263,750
To Match a Tax
Free Yield of** A taxable investment would have to pay:
2.0% 3.20% 3.45% 3.65%
3.0% 4.79% 5.17% 5.48%
4.0% 6.39% 6.89% 7.30%
5.0% 7.99% 8.61% 9.13%
6.0% 9.59% 10.34% 10.95%
7.0% 11.19% 12.06% 12.78%
8.0% 12.78% 13.78% 14.60%
</TABLE>
*Net amount subject to income tax after deductions and exemptions.
**Tax Free yields and their taxable equivalents are shown as illustrations only.
Actual yield will vary with market conditions. Some income may be subject to
federal alternative minimum tax.
***Adjustments resulting from the personal exemption phaseout and reduction of
itemized deductions for high income individuals, described on the following
page, may result in an effective top combined marginal rate greater than 46.24%.
B-73
<PAGE>
- --------------------------------------------------------------------------------
INCREASE IN MARGINAL TAX RATE
Based on adjusted gross income.
Reduction in Itemized Deductions: (See note 1 below.)
<TABLE>
<CAPTION>
AGI AGI
$117,950 Above
and below $117,950
--------- --------------------------------
Rate Bracket 31.0% 36.0% 39.6%
----- ----- -----
<S> <C> <C> <C> <C>
Joint Return 0% .93% 1.08% 1.19%
Single Return 0% .93% 1.08% 1.19%
</TABLE>
Personal Exemption Phaseout: (See note 2 below.)
<TABLE>
<CAPTION>
Adjusted Gross
Income Rate Bracket
---------------- -------------------------------
31.00% 36.00% 39.6%
<S> <C> <C> <C> <C>
Joint Return $176,950-299,450 N/A 1.44% 0***
Single Return $117,950-240,450 0.62% 0.72% 0**
</TABLE>
NOTE 1: ITEMIZED DEDUCTIONS REDUCED
For 1996, a taxpayer (single or married filing jointly) whose AGI exceeds
$117,950 must reduce his itemized deductions by 3% of this excess adjusted gross
income (AGI-$117,950). This reduction is limited to 80% of his itemized
deductions. Medical expenses, investment interest, casualty losses, and
wagering losses to the extent of wagering gains are exempted from the 3%
reduction. This reduction in the deductibility of itemized deductions causes a
taxpayer's marginal tax rate to increase as shown above.
NOTE 2: PERSONAL EXEMPTION PHASEOUT
For 1996, the deduction for personal exemptions is reduced for high-income
taxpayers. This reduction affects taxpayers whose adjusted gross income (AGI)
exceeds $176,950 for those who file joint returns and $117,950 for single
taxpayers. This phaseout increases the marginal tax rate as shown above.
** Single taxpayers with taxable incomes of more than $263,750, who are
therefore in the 39.6% bracket, will have AGIs above the $240,450 level at
which personal exemptions are fully phased out.
*** Married taxpayers with taxable incomes of more than $263,750, who are
therefore in the 39.6% bracket, will typically have AGIs above the $299,450
level at which personal exemptions are fully phased out.
B-74
<PAGE>
The performance of the Treasury Money Fund may be compared to the following Tax
Equivalent Performance Chart for State and Local Tax-Exempt Investments.
<TABLE>
<CAPTION>
TO MATCH
A STATE
AND LOCAL
TAX-FREE AN INVESTMENT, TAXABLE AT THE MAXIMUM TAX RATE
YIELD OF: FOR EACH STATE, WOULD HAVE TO PAY:
AZ CA CO FL KS MO NJ TX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.12% 2.25% 2.11% 2.00% 2.17% 2.13% 2.14% 2.00%
3.00% 3.18% 3.37% 3.16% 3.00% 3.25% 3.19% 3.21% 3.00%
4.00% 4.24% 4.49% 4.21% 4.00% 4.34% 4.26% 4.28% 4.00%
5.00% 5.30% 5.62% 5.26% 5.00% 5.42% 5.32% 5.35% 5.00%
6.00% 6.36% 6.74% 6.32% 6.00% 6.50% 6.38% 6.42% 6.00%
7.00% 7.42% 7.87% 7.37% 7.00% 7.59% 7.45% 7.49% 7.00%
8.00% 8.47% 8.99% 8.42% 8.00% 8.67% 8.51% 8.56% 8.00%
</TABLE>
B-75
<PAGE>
1995 STATE TAX BRACKETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ARIZONA RATE 3.00% 3.50% 4.20% 5.20% 5.60%
Single Return 0-10,000 10,001-25,000 25,001-50,000 50,001-150,000 Over 150,000
Joint Return 0-20,000 20,001-50,000 50,001-100,000 100,001-300,000 Over 300,000
CALIFORNIA RATE 1.000% 2.000% 4.000% 6.000%
Single Return 0-4,831 4,832-11,449 11,450-18,068 18,069-25,083
Joint Return 0-9,662 9,663-22,898 22,899-36,136 36,137-50,166
8.000% 9.300% 10.000% 11.000%
Single Return 25,084-31,700 31,701-109,936 109,937-219,872 Over 219,873
Joint Return 50,167-63,400 63,401-219,872 219,873-439,744 Over 439,744
Colorado Rate 5.000%
Florida Rate 0.000%
KANSAS RATE 3.500% 4.400% 6.250% 6.450% 7.500% 7.750%
Single Return N/A 0-20,000 N/A N/A 20,001-30,000 Over 30,000
Joint Return 0-30,000 N/A 30,001-60,000 Over 60,000 N/A N/A
MISSOURI RATE 1.500% 2.000% 2.500% 3.000% 3.500%
For Each Person 0-1,000 1,001-2,000 2,001-3,000 3,001-4,000 4,001-5,000
4.000% 4.500% 5.000% 5.500% 6.000%
For Each Person 5,001-6,000 6,001-7,000 7,001-8,000 8,001-9,000 Over 9,000
NEW JERSEY RATE 1.700% 2.125% 2.975% 4.250% 6.013% 6.580%
Single Return 0-20,000 20,001-35,000 N/A 35,001-40,000 40,001-75,000 Over 75,000
Joint Return 0-20,000 20,001-50,000 50,001-70,000 70,001-80,000 80,001-150,000 Over 150,000
TEXAS RATE 0.000%
</TABLE>
B-76
<PAGE>
INVESTMENT RESULTS
The Investment results for each class of shares of a Fund will vary from time to
time depending upon market conditions, the composition of a Fund's portfolio and
operating expenses of the class or the Fund, so that any total return figure
should not be considered representative of what an investment in a class of
shares of a Fund may earn in any future period. An investor should consider
these factors and possible differences in calculation methods when comparing a
class of shares of the Fund's investment results with those published for other
investment companies, other investment vehicles and unmanaged indices. An
investor should also consider a Fund's results relative to the risks associated
with a Fund's investment objective and policies.
YIELDS (7 DAYS ENDING DECEMBER 31, 1995)
<TABLE>
<CAPTION>
Atlas Atlas
Atlas Atlas U.S. U.S.
California National Treasury Treasury
Municipal Municipal Money Fund Money Fund
Money Fund Money Fund Class A Class B
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
7-day Yield 3.68% 3.47% 4.98% 4.36%
7-day Effective 3.75% 3.53% 5.10 4.46%
7-day Tax Equivalent 6.97% 5.84% * **
</TABLE>
*AZ = 5.40%; CA = 5.73%; CO = 5.37%; KS = 5.53%; MO = 5.43%; NJ = 5.46%
**AZ = 4.72%; CA = 5.01%; CO = 4.69%; KS = 4.83%; MO = 4.74%; NJ = 4.77%
B-77
<PAGE>
INVESTMENT RESULTS (CONTINUED)
YIELDS (30 DAYS ENDING DECEMBER 31, 1995)
<TABLE>
<CAPTION>
Atlas
U.S. Gov.
Intermediate
Fund
Atlas Atlas (formerly
Atlas California Atlas National Atlas Atlas Atlas
California Insured National Insured U.S. Gov. & U.S. Treas. Atlas Growth &
Municipal Intermediate Municipal Intermediate Mortgage Intermediate Balanced Income
Class A Bond Fund Municipal Bond Fund Municipal Securities Fund) Fund Funds
------- --------- ------------ --------- ------------ ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-day Yield 4.03% 3.45% 3.94% 3.59% 6.45% 5.33% 3.32% 1.80%
30-day Tax Equivalent 7.36% 6.30% 6.52% 5.94% N/A * N/A N/A
</TABLE>
*AZ = 5.25%; CA = 5.57%; CO = 5.22%; KS = 5.38%; MO = 5.28%; NJ = 5.31%
YIELDS (30 DAYS ENDING DECEMBER 31, 1995)
<TABLE>
<CAPTION>
Atlas
U.S. Gov.
Intermediate
Fund
Atlas Atlas (formerly
Atlas California Atlas National Atlas Atlas Atlas
California Insured National Insured U.S. Gov. & U.S. Treas. Atlas Growth &
Municipal Intermediate Municipal Intermediate Mortgage Intermediate Balanced Income
Class B Bond Fund Municipal Bond Fund Municipal Securities Fund) Fund Funds
------- --------- ------------ --------- ------------ ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-day Yield 3.63% 3.05% 3.54% 3.19% 6.16% 4.96% 2.85% 1.30%
30-day Tax Equivalent 6.63% 5.57% 5.86% 5.28% N/A ** N/A
</TABLE>
**AZ = 4.85%; CA = 5.15%; CO = 4.82%; KS = 4.96%; MO = 4.89%; NJ = 4.90%
B-78
<PAGE>
INVESTMENT RESULTS (CONTINUED)
TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1995)
<TABLE>
<CAPTION>
Atlas
U.S. Gov.
Intermediate
Fund
Atlas Atlas (formerly
Atlas California Atlas National Atlas Atlas Atlas Atlas
California Insured National Insured U.S. Gov. & U.S. Treas. Growth & Atlas Strategic
Municipal Intermediate Municipal Intermediate Mortgage Intermediate Income Balanced Growth
Class A Bond Fund Municipal Bond Fund Municipal Securities Fund) Fund Fund Fund
------- --------- ------------ --------- ----------- ---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
One Year 11.32% 8.48% 11.32% 8.65% 12.04% 6.82% 29.06% 22.96% 25.27%
Five Years 8.00% N/A 8.23% N/A 8.25% N/A N/A N/A N/A
Since Inception 7.63% 4.35% 8.05% 4.41% 7.72% 3.58% 14.53% 8.40% 11.33%
</TABLE>
TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1995)
<TABLE>
<CAPTION>
Atlas
U.S. Gov.
Intermediate
Fund
Atlas Atlas (formerly
Atlas California Atlas National Atlas Atlas Atlas Atlas
California Insured National Insured U.S. Gov. & U.S. Treas. Growth & Atlas Strategic
Municipal Intermediate Municipal Intermediate Mortgage Intermediate Income Balanced Growth
Class B Bond Fund Municipal Bond Fund Municipal Securities Fund) Fund Fund Fund
------- --------- --------- --------- --------- ---------- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
One Year 11.05% 8.26% 11.16% 8.43% 11.93% 6.54% 29.32% 23.08% 25.58%
Since Inception # 6.05% 4.69% 6.56% 4.90% 8.29% 4.59% 22.90% 15.00% 17.59%
</TABLE>
# Aggregate return for July 1, 1994 through June 30, 1995.
B-79
<PAGE>
FINANCIAL STATEMENTS
The Company's audited financial statements for its fiscal year ended
December 31, 1995, as contained in the Annual Report to Shareholders for the
fiscal year ended December 31, 1995 (the "Annual Report"), are incorporated
herein by reference to the Annual Report which has been filed with the
Securities and Exchange Commission. Any person not receiving the Annual Report
previously or with this Statement should call or write the Company to obtain a
free copy.
B-80
<PAGE>
APPENDIX I
DESCRIPTION OF RATINGS
In general, the ratings of Moody's Investors Services, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"), and the other nationally recognized
statistical rating organizations, represent the opinions of these agencies as to
the quality of securities which they rate. It should be emphasized, however,
that such ratings are relative and subjective and are not absolute standards of
quality. Consequently, debt securities with the same maturity, coupon and rating
may have different yields, while debt securities of the same maturity and coupon
with different ratings may have the same yield. These ratings will be used by
the Funds as initial criteria for the selection of portfolio securities, but the
Funds will also rely upon the independent advice of the Adviser and their
respective Subadvisers (if any) to evaluate potential investments. The Appendix
to this Statement of Additional Information contains further information
concerning the ratings of Moody's and S&P and their significance. Subsequent to
its purchase by a Fund, an issue of securities may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require sale of such securities by the Fund, but the Adviser
will consider such event in its determination of whether the Fund should
continue to hold the securities. To the extent that the rating given by Moody's
or S&P for securities may change as a result of changes in such organizations or
their rating systems, the Funds will attempt to use comparable ratings as
standards for its investments in accordance with the investment policies
contained in the Prospectus and in this Statement of Additional Information.
MOODY'S INVESTORS SERVICE, INC. describes its ratings for debt securities
as follows:
BONDS --
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
not likely 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
B-81
<PAGE>
elements may be of greater magnitude or there may be other elements present
which make the long-term risks appear somewhat larger than the 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 some time 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 overly moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B. "Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa. "Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca. "Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C. "Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing."
NOTES AND VARIABLE RATE OBLIGATIONS --
MIG 1/VMIG 1. "The MIG 1 (or VMIG 1 for an issue with a variable rate
demand feature) designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancings.
B-82
<PAGE>
MIG 2/VMIG 2. "The MIG 2 (or VMIG 1 for an issue with a variable rate
demand feature) designation denotes high quality. Margins of protection are
ample although not as large as in the preceding group."
COMMERCIAL PAPER --
PRIME-1. "Issuers rated Prime-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2. "Issuers rated Prime-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained."
STANDARD & POOR'S CORPORATION describes its ratings for debt securities as
follows:
BONDS --
AAA. "Bonds which are rated AAA have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA. "Bonds which are rated AA have a very strong capacity to pay interest
and repay principal and differ from the higher rated issues only in small
degree.
A. "Bonds which are 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.
B-83
<PAGE>
BBB. "Bonds which are rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
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 debt in this category than in higher rated categories.
BB, B, CCC and CC. "Bonds which are 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 obligations.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C. The rating C is reserved for income bonds on which no interest is being
paid."
NOTES --
SP-1. "The SP-1 rating denotes a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation."
SP-2. "The SP-2 rating denotes a satisfactory capacity to pay principal
and interest."
COMMERCIAL PAPER --
A-1. "The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics are denoted with a plus (+)
designation."
A-2. "The A-2 designation indicates a capacity for timely payment on
issues so designated is strong; however, the relative degree of safety is not as
high as for issues designated A-1."
B-84
<PAGE>
APPENDIX II
INDUSTRY CLASSIFICATIONS
Aerospace/Defense Food
Air Transportation Gas Utilities*
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Insurance
Building Materials Leasing & Factoring
Cable Television Leisure
Chemicals Manufacturing
Commercial Finance Metals/Mining
Computer Hardware Nondurable Household Goods
Computer Software Oil - Integrated
Conglomerates Paper
Consumer Finance Publishing/Printing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Stores Specialty Retailing
Drug Wholesalers Steel
Durable Household Goods Supermarkets
Education Telecommunications - Technology
Electric Utilities Telephone - Utility
Electrical Equipment Textile/Apparel
Electronics Tobacco
Energy Services & Producers Toys
Entertainment/Film Trucking
Environmental
- ------------------------------
*For purposes of the Fund's investment policy not to concentrate in securities
of issuers in the same industry, gas utilities and gas transmission utilities
each will be considered a separate industry.
B-85
<PAGE>
PART C
ATLAS FUNDS
________________________
OTHER INFORMATION
________________________
<PAGE>
ATLAS ASSETS, INC.
PART C: OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Incorporated by reference to the Annual Report to
Shareholders of Atlas Assets, Inc. for the year ended December 31,
1995:
Statements of Investments in Securities and Net Assets at
December 31, 1995 for: (i) the Atlas U.S. Treasury Money
Fund ("Treasury Money Fund"), the Atlas California Municipal
Money Fund, and the Atlas National Municipal Money Fund
(collectively the "Money Funds"); (ii) the Atlas U.S.
Government Intermediate Fund, formerly the Atlas U.S.
Treasury Intermediate Fund ("Government Intermediate Fund"),
the Atlas California Insured Intermediate Municipal Fund and
the Atlas National Insured Intermediate Municipal Fund (the
"Insured Funds"), the Atlas California Municipal Bond Fund,
the Atlas National Municipal Bond Fund, and the Atlas U.S.
Government and Mortgage Securities Fund (collectively the
"Bond Funds"); and (iii) the Atlas Balanced Fund ("Balanced
Fund"), the Atlas Strategic Growth Fund ("Growth Fund"), the
Atlas Growth and Income Fund ("Growth and Income Fund")
(collectively the "Stock Funds").
Statements of Assets and Liabilities at December 31,
1995 for the Money, Bond and Stock Funds.
Statements of Operations for the fiscal year ended December
31, 1995 for the Money, Bond and Stock Funds.
Statements of Changes in Net Assets for the fiscal years
January 1, 1994 to December 31, 1994, and January 1, 1995
to December 31, 1995 for the Money, Bond and Stock Funds.
Financial Highlights, selected data for a share outstanding
throughout the periods January 10, 1990 (effective date of
registration) to December 31, 1990, January 1, 1991 to
December 31, 1991, January 1, 1992 to December 31, 1992,
January 1, 1993 to December 31, 1993, January 1, 1994 to
December 31, 1994, and January 1, 1995 to December 31, 1995
for the Money and Bond Funds Class A shares (other than the
Treasury Money, Government Intermediate and Insured Funds);
for the periods May 1, 1992 (inception of operations) to
December 31, 1992, January 1, 1993 to December 31, 1993,
January 1, 1994 to December 31, 1994, and January 1, 1995
C-1
<PAGE>
to December 31, 1995 for the Treasury Money Fund Class A
shares; for the period October 5, 1992 (inception of
operations) to December 31, 1992, January 1, 1993 to
December 31, 1993, January 1, 1994 to December 31, 1994,
and January 1, 1995 to December 31, 1995 for the Government
Intermediate Fund Class A shares; for the period June 1,
1993 (effective date of registration) to December 31, 1993,
January 1, 1994 to December 31, 1994, and January 1, 1995
to December 31, 1995 for the Insured Funds Class A shares;
for the periods December 5, 1990 (inception of operations)
to December 31, 1990, January 1 to December 31, 1991, 1992,
1993, 1994 and 1995 for the Growth and Income Fund Class A
shares; for the periods October 1, 1993 (inception of
operations) to December 31, 1993, January 1, 1994 to
December 31, 1994, and January 1, 1995 to December 31, 1995
for the Balanced and Growth Funds Class A shares; and for
the period July 1, 1994 (inception of operations) to
December 31, 1994 and January 1, 1995 to December 31, 1995
for all Class B shares.
Notes to Financial Statements at December 31, 1995 for
Atlas Assets, Inc.
Independent Auditors' Report, dated February 2, 1996 for
Atlas Assets, Inc.
(b) Exhibits - as required by Part C:
1. (a) Articles of Incorporation for the Registrant.
(b) Articles of Amendment for the Registrant.
(c) Articles Supplementary for the Atlas California
Double Tax Free Money Fund, the Atlas Tax Free Money
Fund, the Atlas California Double Tax Free Income Fund,
the Atlas Tax Free Income Fund and the Atlas U.S.
Government and Mortgage Securities Fund.
(d) Articles Supplementary for the Atlas Growth and
Income Fund.
(e) Amended Articles Supplementary changing the names
of certain Atlas Funds as follows: Atlas California
Municipal Money Fund, Atlas National Municipal Money
Fund, Atlas California Municipal Bond Fund, and Atlas
National Municipal Bond Fund. (7)
(f) Articles Supplementary for the Atlas U.S. Treasury
Money Fund. (7)
C-2
<PAGE>
(g) Articles Supplementary for the Atlas U.S.
Government Intermediate Fund (formerly the Atlas U.S.
Treasury Intermediate Fund).
(h) Articles Supplementary for the Atlas California
Insured Intermediate Municipal Fund.
(i) Articles Supplementary for the Atlas National
Insured Intermediate Municipal Fund.
(j) Articles Supplementary for the Atlas Balanced
Fund. (10)
(k) Articles Supplementary for the Atlas Strategic
Growth Fund. (10)
(l) Articles Supplementary for classification of
shares. (11)
(m) Articles Supplementary for the Atlas Global Growth
Fund.
(n) Articles Supplementary for the Atlas Strategic
Income Fund.
2. Bylaws for the Registrant. (2)
3. None.
4. Specimen stock certificate for the Registrant. (3)
5. (a) Investment Advisory Agreement dated January 12,
1990 between Atlas Advisers, Inc. and Registrant.
(b) Amendment to Investment Advisory Agreement dated
November 1, 1991 between Atlas Advisers, Inc. and
Registrant. (6)
(c) Form of Subadvisory Agreement between The Boston
Company Advisors, Inc. and Registrant. (6)
(d) Form of Subadvisory Agreement between
OppenheimerFunds, Inc. (formerly Oppenheimer Management
Corporation) and Registrant.
6. Principal Underwriting Agreement dated January 12,
1990 between Atlas Securities, Inc. and Registrant. (3)
7. None.
C-3
<PAGE>
8. (a) Custodian Contract dated November 1, 1995 between
Investors Bank and Trust Company and Registrant.
9. (a) Transfer Agency and Service Agreement dated
January 12, 1990 between State Street Bank and Trust
Company and Registrant. (3)
(b) Form of Indemnification Agreement. (2)
(c) Form of License Agreement. (2)
(d) Notice of Eligibility Pursuant to Commodity
Futures Trading Commission dated December 19, 1989. (3)
10. Opinion and Consent of Counsel. (9)
11. Consent of Independent Auditors.
12. None.
13. Investment Representations of Purchaser dated
December 12, 1989 from Golden West Financial
Corporation relating to initial shares. (3)
14. Prototype of Registrant's Individual Retirement
Custodian Account. (3)
15. (a) Distribution Plan dated January 12, 1990 between
Atlas Securities, Inc. and the Registrant.
(b) Distribution Plan dated February 18, 1994 for
Class B Shares of the Registrant.
C-4
<PAGE>
(c) Atlas Funds Multiple Class Plan adopted on
August 11, 1995 pursuant to Rule 18f-3.
16. Schedule for Computation of Performance Data. (8)
25. Power of Attorney. (3)
____________________
(1) Incorporated by reference to Registration Statement as filed
on February 25, 1988.
(2) Incorporated by reference to Pre-Effective Amendment No. 3
as filed on December 29, 1989.
(3) Incorporated by reference to Post-Effective Amendment No. 1
as filed on July 10, 1990.
(4) Incorporated by reference to Post-Effective Amendment No. 4
as filed on November 13, 1990.
(5) Incorporated by reference to Post-Effective Amendment No. 6
as filed on April 12, 1991.
(6) Incorporated by reference to Post-Effective Amendment No. 7
as filed on April 21, 1992.
(7) Incorporated by reference to Post-Effective Amendment No. 8
as filed on April 21, 1992.
(8) Incorporated by reference to Post-Effective Amendment No. 10
as filed on October 5, 1992.
(9) Incorporated by reference to the Registrant's Rule 24-f-2
Notice as filed on or about February 27, 1996.
(10) Incorporated by reference to Post-Effective Amendment No. 13
as filed on August 2, 1993.
(11) Incorporated by reference to Post-Effective Amendment No. 16
as filed on April 18, 1994.
C-5
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Listed below are the direct or indirect wholly-owned
subsidiaries of Golden West Financial Corporation.
STATE OF
NAME INCORPORATION
- ---------------------------------- -------------
World Savings and Loan Association *
World Savings Bank, FSB **
World Savings Bank, SSB Texas
Atlas Securities, Inc. California
Atlas Advisers, Inc. California
1901 Corporation California
Commerce Invest Company of Shawnee, Inc. Kansas
World Mortgage Company Colorado
Golden West Savings Association Service, Co. California
First S&L Shares, Inc. Colorado
* Federally chartered savings and loan association.
** Federally chartered savings bank.
Item 26. NUMBER OF HOLDERS OF SECURITIES
At December 31, 1995 Registrant had the following number of
record holders:
<TABLE>
<CAPTION>
Fund Name Class A Class B Total
--------- ------- ------- -----
<S> <C> <C> <C>
Atlas U.S. Treasury Money Fund 2,311 18 2,329
Atlas National Municipal Money Fund 394 0 394
Atlas California Municipal Money Fund 1,391 0 1,391
Atlas U.S. Government Intermediate Fund
(formerly Atlas U.S. Treasury
Intermediate Fund) 412 45 455
Atlas National Municipal Bond Fund 1,731 64 1,795
Atlas California Municipal Bond Fund 4,609 181 4,790
Atlas U.S. Government and Mortgage
Securities Fund 10,449 260 10,709
Atlas Growth and Income Fund 5,457 481 5,938
Atlas California Insured Intermediate
Municipal Fund 677 31 708
Atlas National Insured Intermediate
Municipal Fund 523 26 549
Atlas Balanced Fund 884 184 1,068
Atlas Strategic Growth Fund 885 259 1,144
------ ----- ------
TOTALS 29,724 1,548 31,272
</TABLE>
C-6
<PAGE>
Item 27. INDEMNIFICATION
Subsection (B) of Section 2-418 of the General Corporation Law of
Maryland empowers a Maryland corporation such as Registrant to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director, officer, employee or agent of that corporation or a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding unless he acted in bad faith, or with active and
deliberate dishonesty or otherwise as provided in such statute.
The Maryland Code provisions also include, inter alia, authority to
make advances of expenses pending resolution of the matter, to purchase
insurance to cover the corporation and its agents, and a requirement to
report instances of indemnification to the corporation's stockholders. In
addition, directors and officers may in most cases be protected from the
assessment of personal monetary liability in certain legal actions
notwithstanding the availability or not of indemnification.
Article VII(g) of the Articles of Incorporation of Registrant, as
amended, contains indemnification and limitation provisions meant to conform
to the above statute and to the provisions of Section 17 of the Investment
Company Act of 1940, as amended ("1940 Act") and to 1940 Act Release No.
11330 (September 4, 1980). These provisions will implement "reasonable and
fair means" to determine whether indemnification shall be made which
include: (1) reference to a final decision on the merits by a court or other
body that liability did not occur by reason of disabling conduct, or (2) in
the absence of such a decision, a reasonable, factually based decision to the
same effect by (a) a vote of a majority of a quorum of directors who are
neither "interested persons" of the Registrant (as defined in Section
2(a)(19) of the 1940 Act) nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Directors, officers and
controlling persons by the Registrant's charter and bylaws, 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 said Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Series of expenses incurred or paid by a Director, officer or controlling
C-7
<PAGE>
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, 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 issues.
Effective January 1990, Registrant and the interested Directors and
officers of the Registrant obtained coverage under a Professional Indemnity
insurance policy. The terms and conditions of policy coverage conform
generally to the standard coverage available to the investment company
industry. The coverage was renewed effective March 1995. Similar coverage
is afforded the investment adviser and the principal underwriter and their
Directors, officers and employees.
To the extent permitted by the 1940 Act, the non-interested
Directors may be indemnified by the Company with respect to errors and
omissions. To the extent not so permitted, Golden West Financial Corporation
may so indemnify the non-interested Directors to the extent permitted by
Delaware law.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
A. INVESTMENT ADVISER--Atlas Advisers, Inc.
See the material following the captions "What Companies are
affiliated with the Funds?" appearing as a portion of Part A hereof, and
"Management of the Company" and "Investment Advisory and Other Services"
appearing as a portion of Part B hereof.
B. SUB-ADVISER--Boston Safe Advisors, Inc.
The list required by this Item 28 of officers and directors of The Boston
Company Advisors, Inc. ("Boston Advisors"), together with all other
information required by this Item 28 including, but not limited to, any other
business, profession, vocation or employment of a substantial nature engaged
in by Boston Advisors and its officers and directors during the past two
years, is incorporated by reference to the Form ADV filed by Boston Advisors
(SEC File No. 801-14158).
C. SUB-ADVISER--OppenheimerFunds, Inc.
The list required by this Item 28 of officers and directors of
OppenheimerFunds, Inc. (formerly Oppenheimer Management Corporation)
("Oppenheimer"), together with all other information required by this Item 28
including, but not limited to, any other
C-8
<PAGE>
business, profession, vocation or employment of a substantial nature engaged
in by Oppenheimer and its officers and directors during the past two years,
is incorporated by reference to the Form ADV, as amended, filed by
Oppenheimer (SEC File No.801-8253).
C-9
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS
(a) None.
(b) Directors and officers of Atlas Securities, Inc.,
principal underwriter of the Registrant:
Positions and Positions and
Name and Principal Offices with Offices with
Place of Business Underwriter Registrant
- -------------------- ----------------- ------------------
Marion O. Sandler Chairman, Presi- Chairman, Presi-
1901 Harrison Street dent and Chief dent and Chief
Oakland, CA 94612 Executive Officer Executive Officer
James T. Judd Director N/A
1901 Harrison Street
Oakland, CA 94612
Dirk S. Adams Director N/A
1901 Harrison Street
Oakland, CA 94612
Julius Louis Helvey Group Senior Vice Group Senior Vice
1901 Harrison Street President and Chief President and Chief
Oakland, CA 94612 Financial Officer Financial Officer
Larry E. LaCasse Group Senior Vice Group Senior Vice
1901 Harrison Street President and Chief President and Chief
Oakland, CA 94612 Operating Officer Operating Officer
Edward L. Bisgaard Vice President, Vice President,
1901 Harrison Street Chief Accounting Chief Accounting
Oakland, CA 94612 Officer and Officer and
Treasurer Treasurer
W. Lawrence Key Senior Vice N/A
1901 Harrison Street President-
Oakland, CA 94612 National Sales
Manager
Steven J. Gray Vice President, Vice President,
1901 Harrison Street Chief Legal Counsel Chief Legal Counsel
Oakland, CA 94612 and Secretary and Secretary
(c) None.
C-10
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held
in the offices of the Fund Custodian, Investors Bank and Trust Company, 89
South Street, Boston, MA 02111.
Item 31. MANAGEMENT SERVICES
None.
Item 32. UNDERTAKINGS
(a) All previously furnished required undertakings have
been satisfied.
(b) Registrant hereby undertakes to file a post-effective
amendment including financial statements of each of the Atlas Global Growth
Fund and the Atlas Strategic Income Fund which need not be certified, within
four to six months from the effective date of Registrant's Post-Effective
Amendment to its 1933 Act Registration Statement with respect to shares of
each of those series.
(c) The Registrant undertakes to furnish copies of its latest
annual report and semi-annual report, upon request and without charge, to
every person to whom a prospectus is delivered.
C-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly
caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Oakland,
and the State of California, on the 21st day of February, 1996.
ATLAS ASSETS, INC.
(Registrant)
By: Marion O. Sandler *
---------------------------
Marion O. Sandler
Chairman, Chief Executive
Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Marion O. Sandler * Chief Executive February 21, 1996
- ---------------------- Officer, President, -------------------
Marion O. Sandler and Chairman Date
Julius Louis Helvey * Chief Financial February 21, 1996
- ---------------------- Officer and Group -------------------
Julius Louis Helvey Senior Vice President Date
/s/ Edward L. Bisgaard Chief Accounting February 21, 1996
- ---------------------- Officer, Treasurer -------------------
Edward L. Bisgaard and Vice President Date
Russell W. Kettell * Director February 21, 1996
- ---------------------- -------------------
Russell W. Kettell Date
C-12
<PAGE>
SIGNATURES CONTINUED
Barbara A. Bond * Director February 21, 1996
- ---------------------- -------------------
Barbara A. Bond Date
Daniel L. Rubinfeld * Director February 21, 1996
- ---------------------- -------------------
Daniel L. Rubinfeld Date
David J. Teece * Director February 21, 1996
- --------------------- -------------------
David J. Teece Date
*By /s/Larry E. LaCasse
- ----------------------------
Larry E. LaCasse,
Attorney-in-Fact
Pursuant to Power of Attorney
previously filed.
C-13
<PAGE>
EXHIBIT INDEX
Exhibit
Number Item
- ------- ---------------------------------------------------
1(a) Articles of Incorporation
1(b) Articles of Amendment
1(c) Articles Supplementary for Atlas California Double
Tax Free Money Fund
1(c) Articles Supplementary for Atlas Tax Free Money
Fund
1(c) Articles Supplementary for Atlas California Double
Tax Free Income Fund
1(c) Articles Supplementary for Atlas Tax Free Income
Fund
1(c) Articles Supplementary for Atlas U.S. Government
and Mortgage Securities Fund
1(d) Articles Supplementary for Atlas Growth and Income
Fund
1(g) Articles Supplementary for Atlas U.S. Treasury
Intermediate Fund
Articles Supplementary changing name of Atlas U.S.
Treasury Intermediate Fund to Atlas U.S.
Government Intermediate Fund
1(h) Articles Supplementary for Atlas California
Insured Intermediate Municipal Fund
1(i) Articles Supplementary for Atlas National Insured
Intermediate Municipal Fund
1(m) Articles Supplemntary for Atlas Global Growth Fund
1(n) Articles Supplementary for Atlas Strategic Income
Fund
5(a) Investment Advisory Agreement dated 1/12/90
between Atlas Advisors, Inc. and Registrant
5(d) Form of Subadvisory Agreement between
OppenheimerFunds, Inc. and Registrant
8(a) Custodian Contract dated 11/1/95 between Investors
Bank and Trust Company and Registrant
11 Consent of Indpendent Auditors
15(a) Distribution Plan dated 1/12/90 between Atlas
Securities, Inc. and Registrant
15(b) Class B Distribution Plan dated 2/18/94
15(c) Atlas Funds Multiple Class Plan dated 8/11/95 and
pursuant to Rule 18f-3
<PAGE>
GOLDEN WEST INVESTMENT COMPANY, INC.
ARTICLES OF INCORPORATION
I.
INCORPORATOR
The undersigned, Hilary E. O'Brien, whose mailing address is 345
California Street, San Francisco, California 94104, being at least 18 years
of age, does hereby form a corporation under and by virtue of the General
Laws of the State of Maryland.
II.
NAME
The name of the corporation (hereinafter called the
"Corporation") is:
Golden West Investment Company, Inc.
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are:
(a) To conduct and carry on the business of an open-end investment
company under the Investment Company Act of 1940 (the "1940 Act").
(b) To hold, invest and reinvest its assets in securities and
other investments including holding part or all of its assets in cash,
including foreign currencies.
(c) To issue and sell shares of its capital stock in such amounts
and on such terms and conditions and for such purposes and for such amount or
kind of consideration (including, without limitation, securities) now or
hereafter permitted by law.
(d) To redeem, purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
shareholders of the Corporation) shares of its capital stock, in any manner
and to the extent now or
<PAGE>
hereafter permitted by law and by these Articles of Incorporation.
(e) To do any and all such acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of the purposes stated in this Article.
The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any
other clause of this or any other Article of these Articles of Incorporation,
and shall each be regarded as independent; and they are intended to be and
shall be construed as powers as well as purposes and objects of the
Corporation and shall be in addition to and not in limitation of the general
powers of corporations under the laws of the State of Maryland.
IV.
PRINCIPAL OFFICE AND RESIDENT AGENT
The principal address of the Corporation in the State of Maryland
is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The name and address of the Corporation's resident agent is
The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202.
V.
CAPITAL STOCK
(a) The total number of shares of capital stock which the
Corporation shall have the authority to issue is One Billion (1,000,000,000)
shares of the par value of $.0001 per share and of the aggregate par value of
One Hundred Thousand Dollars ($100,000). The Board of Directors of the
Corporation is hereby empowered to increase or decrease, from time to time,
the total number of shares of capital stock that the Corporation shall have
authority to issue without any action by the shareholders.
(b) Any fractional share shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate
evidencing such fractional share, but including the right to vote and the
right to receive dividends.
(c) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation
and the By-Laws of the Corporation.
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(d) As used in these Articles of Incorporation, a "series" of
shares represent interests in the same assets, liabilities, income, earnings
and profits of the Corporation; each "class" of shares of a series represents
interests in the same underlying assets, liabilities, income, earnings and
profits, but may differ from other classes of such series with respect to
fees, expenses, other liabilities, dividends, distributions, liquidation
preferences, voting rights, redemption rights, or such other matters as shall
be established by the Board of Directors. Initially, the shares of capital
stock of the Corporation shall be all of one class and series. The Board of
Directors shall have authority to classify and reclassify any authorized but
unissued shares of capital stock from time to time by setting or changing in
any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of the capital stock. Subject to the provisions of
Section (e) of this Article V and applicable law, the power of the Board of
Directors to classify or reclassify any of the shares of capital stock shall
include, without limitation, authority to classify or reclassify any such
stock into one or more series of capital stock and to divide and classify
shares of any series into one or more classes of such series, by determining,
fixing or altering one or more of the following:
1. The distinctive designation of such class or
series and the number of shares to constitute such
class or series; provided that, unless otherwise
prohibited by the terms of such class or series, the
number of shares of any class or series may be
decreased by the Board of Directors in connection with
any classification or reclassification of unissued
shares and the number of shares of such class or series
may be increased by the Board of Directors in
connection with any such classification or
reclassification, and any shares of any class or series
which have been redeemed, purchased or otherwise
acquired by the Corporation shall remain part of the
authorized capital stock and be subject to
classification and reclassification as provided herein;
2. Whether and, if so, the rates, amounts and
times at which, and the condition under which,
dividends shall be payable on shares of such class or
series;
3. Whether shares of such class or series shall
have voting rights in addition to any general voting
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rights provided by law and the charter of the
Corporation and, if so, the terms of such additional
voting rights;
4. The rights of the holders of shares of such
class or series upon the liquidation, dissolution or
winding up of the affairs of, or upon any distribution
of the assets of, the Corporation.
(e) Shares of capital stock of the Corporation shall have the
following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
1. ASSETS BELONGING TO A CLASS OR SERIES. All
consideration received by the Corporation for the issue
or sale of stock of any class or series of capital
stock, together with all assets in which such
consideration is invested and reinvested, income,
earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to the class or series
of shares of capital stock with respect to which such
assets, payments or funds were received by the
Corporation for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such
consideration, assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any
assets derived from any reinvestment of such proceeds
in whatever form, are herein referred to as "assets
belonging to" such class or series. Any assets,
income, earnings, profits, and proceeds thereof, funds
or payment which are not readily attributable to any
particular class or series shall be allocable among any
one or more of the classes or series in such manner and
on such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable; and each
such allocation by the Board of Directors shall be
conclusive and binding upon the shareholders of all
classes and series for all purposes.
2. LIABILITIES BELONGING TO A CLASS OR SERIES.
The assets belonging to each particular class or series
shall be charged with the liabilities of the
Corporation in respect of that class or series and with
all expenses, costs, charges, and reserves attributable
to that class or series, and shall be so recorded upon
the books of account of the Corporation. Such
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liabilities, expenses, costs, charges and reserves,
whether with any items allocated to that class or
series as provided in the following sentence, so
charged to that class or series are herein referred to
as "liabilities belonging to" that class or series.
The Board of Directors shall allocate and charge any
general liabilities, expenses, costs, charges or
reserves of the Corporation that are not readily
identifiable as belonging to any particular class or
series to and among any one or more of the classes or
series created from time to time in such manner and on
such basis as the Board of Directors in its sole
discretion deems fair and equitable; and each such
allocation by the Board of Directors shall be
conclusive and binding upon the shareholders of all
classes and series for all purposes.
3. DIVIDENDS AND DISTRIBUTIONS. Shares of each
class or series of capital stock shall be entitled to
such dividends and distributions, in stock or in cash
or both, as may be declared from time to time by the
Board of Directors, acting in its sole discretion, with
respect to such class or series, provided, however,
that dividends and distributions on shares of a class
or series of capital stock shall be paid only out of
the lawfully available assets belonging to such class
or series after providing for liabilities belonging to
such class or series.
All dividends and distributions on shares of a
particular class or series shall be distributed pro
rata to the holders of that class or series in
proportion to the number of shares of that class or
series held by such holders at the date and time of
record established for the payment of such dividends or
distributions, except that in connection with any
dividend or distribution program or procedure, the
Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the
shareholder's purchase order and/or payment have
not been received by the time or times established by
the Board of Directors.
The Corporation intends to qualify as a "regulated
investment company" under the Internal Revenue Code of
1986, or any successor or comparable statue thereto,
and regulations promulgated thereunder. Inasmuch as
the computation of net income and gains for Federal
income tax purposes may vary from the computation
thereof on the books of the Corporation, the Board of
Directors shall have the power, in its sole discretion,
to distribute in any fiscal year as dividends,
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including dividends designated in whole or in part as
capital gains distributions, amounts sufficient, in the
opinion of the Board of Directors, to enable the
Corporation to qualify as a regulated investment
company and to avoid liability of the Corporation for
Federal income tax in respect of that year. However,
nothing in the foregoing shall limit the authority of
the Board of Directors to make distributions greater
than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of
the Corporation for such tax.
4. LIQUIDATION. In the event of the liquidation
or dissolution of the Corporation, or of a particular
class or series shareholders of each class or series of
capital stock shall be entitled to receive, as a
series, out of the assets of the Corporation available
for distribution to shareholders, but other than
general assets not belonging to any particular class or
series of capital stock, the assets belonging to such
class or series. The assets so distributable to the
shareholders of any class or series of capital stock
shall be distributed among such shareholders in
proportion to the number of shares of such class or
series held by them and recorded on the books of the
Corporation. In the event that there are any general
assets not belonging to any particular class or series
of capital stock and available for distribution, such
distribution shall be made to the holders of capital
stock of all classes or series of capital stock in
proportion to the asset value of the respective class
or series of capital stock determined as hereinafter
provided.
The liquidation of any particular class or series
in which there are shares then outstanding may be
authorized by vote of a majority of the Board of
Directors then in office, subject to the approval of a
majority of the outstanding securities of that class or
series, as defined in the 1940 Act, and without the
vote of any other class or series. The liquidation or
dissolution of a particular class or series may be
accomplished, in whole or in part, by the transfer of
assets of such class or series to another class or
series or by the exchange of shares of such class or
series for the shares of another class or series.
5. VOTING. Each shareholder of each class or
series of capital stock shall be entitled to one vote
for each share of capital stock, irrespective of the
class or series, then standing in his name on the books
of the Corporation, and on any matter submitted to a
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vote of shareholders, all shares of capital stock then
issued and outstanding and entitled to vote shall be
voted in the aggregate and not by series except: (i)
when expressly required by the 1940 Act or the laws of
the State of Maryland, shares of capital stock shall be
voted by individual class or series and (ii) when only
shares of capital stock of a particular class or series
are affected by a matter only such shares so affected
shall be entitled to vote on such matter.
6. REDEMPTION. To the extent the Corporation
has funds or other property legally available therefor,
each holder of shares of capital stock of the
Corporation shall be entitled to require the
Corporation to redeem all or any part of the shares
standing in the name of such holder on the books of the
Corporation, at the redemption price of such shares as
in effect from time to time as may be determined by the
Board of Directors of the Corporation in accordance
with provisions of applicable law. Without limiting
the generality of the foregoing, the Corporation shall,
to the extent permitted by applicable law, have the
right at any time to redeem the shares owned by any
holder of capital stock of the Corporation if the value
of such shares in the account of such holder is less
than the minimum initial investment amount applicable
to that account as set forth in the Corporation's
current registration statement under the 1940 Act, and
subject to such further terms and conditions as the
Board of Directors of the Corporation may from time to
time adopt. The redemption price of shares of capital
stock of the Corporation shall, except as otherwise
provided in this Section (e)(6), be the net asset value
thereof as determined by, or pursuant to methods
approved by, the Board of Directors of the Corporation
from time to time in accordance with the provisions of
applicable law, less such redemption fee or other
charge, if any, as may be specified in the
Corporation's current registration statement under the
1940 Act. Payment of the redemption price shall be
made in cash by the Corporation at such time and in
such manner as may be determined from time to time by
the Board of Directors of the Corporation unless, in
the opinion of the Board of Directors, which shall be
conclusive, conditions exist which may payment wholly
in cash unwise or undesirable. In such event the
Corporation may make payment wholly or partly by
securities or other property included in the assets
belonging or allocable to the class or series of the
shares redemption of which is being sought, the value
of which shall be determined as provided herein.
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7. STOCK CERTIFICATES. The Corporation shall
not be obligated to issue certificates representing
shares of any class or series unless it shall receive a
written request therefor from the record holder thereof
in accordance with procedures established in the By-
laws or by the Board of Directors.
VI. DIRECTORS
The number of directors of the Corporation shall be three (3),
which number may be, from time to time, increased or decreased pursuant to
the By-Laws of the Corporation, but shall never be less than the minimum
number permitted by the General Laws of the State of Maryland now or
hereafter in force. The names of the directors who shall serve until the
first annual shareholders meeting or until their successors are elected and
qualify are as follows:
Herbert M. Sandler
Marion O. Sandler
Richard A. Crane
VII.
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN
POWERS OF THE CORPORATION AND OF THE DIRECTORS
AND SHAREHOLDERS
The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and shareholders:
(a) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and upon such other
terms as the Board of Directors, in its sole discretion, may fix. Any stock
or other securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion shall
determine, be offered to the holders of any class, series or type of stock or
other securities at the time outstanding to the exclusion of the holders of
any or all other classes, series or types of stock or other securities at the
time outstanding.
(b) The Board of Directors of the Corporation shall have power
from time to time and in its sole discretion to determine, in accordance with
sound accounting practice, what
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constitutes annual or other net income, profits, earnings, surplus, or net
assets; to fix and vary from time to time the amount to be reserved as
working capital, or determine that retained earnings or surplus shall remain
in the hands of the Corporation; to set apart out of any funds of the
Corporation such reserve or reserves in such amount or amounts and for such
proper purpose or purposes as it shall determine and to abolish any such
reserve or any part thereof; to distribute and pay distributions or dividends
in stock, cash or other securities or property, out of surplus or any other
funds or amounts legally available therefor, at such times and to the
shareholders of record on such dates as it may from time to time determine;
and to determine whether and to what extent and at what times and places and
under what conditions and regulations the books, accounts and documents of
the Corporation, or any of them, shall be open to the inspection of
shareholders, except as otherwise provided by statute or by the By-Laws, and,
except as so provided, no shareholder shall have any right to inspect any
book, account or document of the Corporation unless authorized so to do by
resolution of the Board of Directors.
(c) The Board of Directors of the Corporation may establish in its
absolute discretion the basis or method for determining the value of the
assets belonging to any class or series, and the net asset value of each
share of capital stock of each series and class for purposes of sales,
redemptions, repurchases of shares or otherwise.
The Board of Directors may determine to maintain the net asset
value per share of any class or series at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the
1940 Act for the continuing declarations of income attributable to that class
or series as dividends payable in additional shares of that class or series
at the designated constant dollar amount and for the handling of any losses
attributable to that class or series. Such procedures may provide that in
the event of any loss, each shareholder shall be deemed to have contributed
to the capital of the Corporation attributable to that class or series his
pro rata portion of the total number of shares required to be cancelled in
order to permit the net asset value per share of that class or series to be
maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Corporation shall be deemed to have agreed,
by his investment in any class or series with respect to which the Board of
Directors shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(d) Any contract, transaction, or act of the Corporation or of the
Board of Directors which shall be ratified by a majority of a quorum of the
shareholders having voting powers at any annual meeting, or at any special
meeting called
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for such purpose, shall so far as permitted by law be as valid and as binding
as though ratified by every shareholder of the Corporation.
(e) Unless the By-Laws otherwise provide, any officer or employee
of the Corporation (other than a director) may be removed at any time with or
without cause by the Board of Directors or by any committee or superior
officer upon whom such power of removal may be conferred by the By-Laws or by
authority of the Board of Directors.
(f) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority of the
total number of shares of any series or class, or of all classes or series of
capital stock, or by the total number of such shares, such action shall be
valid and effective if authorized by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote
thereon.
(g) The Corporation shall indemnify (1) its directors to the full
extent provided by the general laws of the State of Maryland and the 1940 Act
now or hereafter in force, including the advance of expenses under the
procedures provided by such laws; (2) its officers to the same extent it
shall indemnify its directors; and (3) its officers who are not directors to
such further extent as shall be authorized by the Board of Directors and be
consistent with law. The foregoing shall not limit the authority of the
Corporation to indemnify other employees and agents consistent with law. Any
indemnification by the Corporation shall be consistent with the requirements
of law, including the 1940 Act. The foregoing shall not be exclusive of any
other rights to which a person seeking indemnification may be entitled under
any insurance policy, agreement or otherwise and shall inure to the benefit
of the heirs, executors and personal representatives of such person.
(h) In addition to the powers and authority hereinbefore,
hereinafter or by statute expressly conferred upon them, the Board of
Directors may exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation, subject, nevertheless, to the
express provisions of the laws of Maryland, of these Articles of
Incorporation and of the By-Laws of the Corporation.
(i) The Corporation reserves the right from time to time to make
any amendments of its Articles of Incorporation which may now or hereafter be
authorized by law, including any amendments changing the terms or
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contract rights, as expressly set forth in its Articles of Incorporation, of
any of its outstanding stock by classification, reclassification or otherwise
but no such amendment which changes such terms or contract rights of any of
its outstanding stock shall be valid unless such amendment shall have been
authorized by not less than a majority of the aggregate number of the votes
entitled to be cast thereon, by a vote at a meeting or in writing with or
without a meeting.
(j) The Corporation shall not be required to hold an annual
meeting of shareholders in any year in which the laws of Maryland do not
require that such a meeting be held.
The enumeration and definition of particular powers of the Board of
Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or
any other Article of the Articles of Incorporation of the Corporation, or
construed as or deemed by inference or otherwise in any manner to exclude or
limit any powers conferred upon the Board of Directors under the General Laws
of the State of Maryland now or hereafter in force.
VIII.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on November 13, 1987.
/s/ Hilary E. O'Brien
---------------------------
Hilary E. O'Brien
WITNESS:
/s/ Don Mark
- ----------------------------
Don Mark
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GOLDEN WEST INVESTMENT COMPANY, INC.
ARTICLES OF AMENDMENT
GOLDEN WEST INVESTMENT COMPANY, INC., a Maryland corporation, having
its principal office in Baltimore, Maryland (hereafter referred to as the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department") that:
FIRST: The below amendment to the Charter of the Corporation was
advised by the Board of Directors in accord with the Maryland General
Corporation Law, and there is no stock entitled to vote on the matter
either outstanding or subscribed for at the time of approval.
SECOND: The Charter of the Corporation is hereby amended (a) by
striking in its entirety Article I, and by substituting in lieu the
following:
I.
The name of the Corporation is ATLAS ASSETS, INC.
and (b) by the addition of the following Article VIII thereto:
VIII.
Subject to the provisions of the 1940 Act, to the
fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no
director or officer of this Corporation shall be
personally liable to the Corporation or its
stockholders for money damages. No amendment of
the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the
benefits provided to directors and officers under
this provision with respect to any act or omission
which occurred prior to such amendment or repeal.
<PAGE>
IN WITNESS WHEREOF, GOLDEN WEST INVESTMENT COMPANY, INC. has caused
these presents to be signed in the name and in its behalf by its President and
attested by its Secretary on this _____ day of _____________, 1988, and its
President acknowledges that these Articles of Amendment are the act and deed of
GOLDEN WEST INVESTMENT COMPANY, INC. and, under the penalties of perjury, that
the matters and facts set forth herein with respect to authorization and
approval are true in all material respects to the best of his knowledge,
information and belief.
By
----------------------------
President
ATTEST:
- -------------------------
Secretary
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly classified 350,000,000 shares of
the unissued shares of capital stock of the Corporation into a series
designated the ATLAS CALIFORNIA DOUBLE TAX FREE MONEY FUND (the "Atlas Fund")
and has provided for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Atlas Fund is as
follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the Atlas Fund for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to Atlas Fund as provided in
the following sentence, are herein referred to as "assets belonging to" the
Atlas Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular class or series (collectively
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to the Atlas Fund shall belong
to that series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
2. LIABILITIES BELONGING TO ATLAS FUND. The assets
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belonging to the Atlas Fund shall be charged with the liabilities of the
Corporation in respect of that series and all expenses, costs, charges and
reserves attributable to that series, and any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular class or series shall be
allocated and charged by or under the supervision of the Board of Directors
to the Atlas Fund in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to the Atlas Fund are
herein referred to as "liabilities belonging to" that series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board
of Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors
shall have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act of 1940 (the "1940
Act"), to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time
period, all determined in accordance with generally accepted accounting
principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily
or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares
of that series shall be paid only out of the capital gains belonging to the
Atlas Fund. All dividends and distributions on shares of the Atlas Fund
shall be distributed pro rata to the holders of that series in proportion to
the number of shares of that series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Board of Directors under such program or procedure.
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The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or
any successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a
combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time for
the election by each shareholder of the mode of the making of such dividend
or distribution to that shareholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in
subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as
declared by the Board of Directors, the excess of the assets belonging to the
Atlas Fund over the liabilities belonging to that series and such
shareholders shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so distributable to the
shareholders of the Atlas Fund shall be distributed among such shareholders
in proportion to the number of shares of that series held by them and
recorded on the books of the Corporation. The liquidation of the Atlas Fund
may be authorized by vote of a majority of the Board of Directors then in
office, subject to the approval of a majority of the outstanding securities
of that series, as defined in the 1940 Act, and without the vote of the
holders of any other class or series. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of
assets of such series to another class or series or by the exchange of shares
of such series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the
shareholders of the Corporation, each holder of a share of the
Atlas Fund shall be entitled to one vote for each share of the
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Atlas Fund outstanding in the holder's name on the books of the Corporation,
and all shares of all classes or series shall vote as a single class or
series ("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of the Atlas Fund is required by the
1940 Act or by the Maryland General Corporation Law, such requirement as to a
separate vote by that series shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes of series,
then, subject to (c) below, the shares of all other classes or series shall
vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to
be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his
shares of the Atlas Fund at a redemption price per share equal to the net
asset value per share of the Atlas Fund next determined (in accordance with
subsection (9)) after the Shares are properly tendered for redemption, less
such redemption charge as is determined by the Board of Directors. Payment of
the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the Atlas Fund at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment
of the redemption price and may suspend the right of the holders of shares of
the Atlas Fund to require the Corporation to redeem shares of that series
during any period or at any time when and to the extent permissible under the
1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause
the Corporation to redeem at net asset value the shares of the Atlas Fund
from a holder who has, for a period of more than six months, had shares of
that series having an aggregate net asset value (determined in accordance
with subsection (9))
4
<PAGE>
equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of
the full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of
the Atlas Fund shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities belonging to that series) by the total number of
shares of the Atlas Fund outstanding, all determined by the Board of
Directors in accordance with generally accepted accounting principles and not
inconsistent with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act
for the continuing declarations of income attributable to that series as
dividends payable in additional shares of the Atlas Fund at the designated
constant dollar amount and for the handling of any losses attributable to
that series. Such procedures may provide that in the event of any loss, each
shareholder shall be deemed to have contributed to the capital of the
Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset
value per share of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the
Atlas Fund shall be deemed to have agreed, by his investment in such series,
to make the contribution referred to in the preceding sentence in the event
of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an
equal proportionate interest in the assets belonging to the Atlas Fund
(subject to the liabilities belonging to that series), and each share of the
Atlas Fund shall be equal to each other share of that series. The Board of
Directors may from time to time divide or combine the shares of the Atlas
Fund into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interest in the assets belonging to the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority
to provide that holders of shares of the Atlas Fund shall have the right to
convert or exchange said shares into shares of one or more other classes or
5
<PAGE>
series of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell
fractions of shares of the Atlas Fund having pro rata all the rights of full
shares of the Atlas Fund, including, without limitation, the right to vote
and to receive dividends, and wherever the words "share" or "shares" are used
in the Charter or in the By-Laws, they shall be deemed to include fractions
of shares of the Atlas Fund, where the context does not clearly indicate that
only full shares are intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall
receive a written request therefor from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary on December 20, 1989.
WITNESS: ATLAS ASSETS, INC.
/s/ Louise Longley /s/ Marion O. Sandler *
- ---------------------- -------------------------
Louise Longley Marion O. Sandler
Secretary President
THE UNDERSIGNED, Vice President of Atlas Assets, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Marion O. Sandler *
-------------------------
Marion O. Sandler
President
/s/ Larry E. Lacasse
- ------------------------
Larry E. LaCasse
Attorney-in-fact
6
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry E. LaCasse as true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all actions and written consents of the Board of
Directors of Golden West Investment Company, Inc.; Articles of Amendment for
Golden West Investment Company, Inc., Articles Supplementary for Atlas
Assets, Inc. for each of the following funds: Atlas Tax Free Money Fund,
Atlas California Double Tax Free Money Fund, Atlas Tax Free Income Fund,
Atlas Double Tax Free Income Fund, and Atlas U.S. Government and Mortgage
Securities Fund; and written consents of the Board of Directors of Atlas
Assets, Inc.; and to certify and file the same, with all exhibits thereto,
and other documents in connection therewith, with the Department of
Corporations of California; the State Department of Assessments and Taxation
of Maryland; and with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
/s/ Marion O. Sandler President, Chief 12/20/89
- -------------------------- Executive Officer ----------
Marion O. Sandler and Director
/s/ Herbert M. Sandler Director 12/20/89
- -------------------------- ----------
Herbert M. Sandler
7
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly classified 130,000,000 shares of
the unissued shares of capital stock of the Corporation into a series
designated the ATLAS TAX FREE MONEY FUND (the "Atlas Fund") and has provided
for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Atlas Fund is as
follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the Atlas Fund for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to Atlas Fund as provided in
the following sentence, are herein referred to as "assets belonging to" the
Atlas Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular class or series (collectively
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to the Atlas Fund shall belong
to that series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to
the Atlas Fund shall be charged with the liabilities
1
<PAGE>
of the Corporation in respect of that series and all expenses, costs, charges
and reserves attributable to that series, and any general liabilities,
expenses, costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular class or series shall be
allocated and charged by or under the supervision of the Board of Directors
to the Atlas Fund in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to the Atlas Fund are
herein referred to as "liabilities belonging to" that series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board
of Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors
shall have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act of 1940 (the "1940
Act"), to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time
period, all determined in accordance with generally accepted accounting
principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily
or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares
of that series shall be paid only out of the capital gains belonging to the
Atlas Fund. All dividends and distributions on shares of the Atlas Fund
shall be distributed pro rata to the holders of that series in proportion to
the number of shares of that series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Board of Directors under such program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or
any successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a
combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time for
the election by each shareholder of the mode of the making of such dividend
or distribution to that shareholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in
subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as
declared by the Board of Directors, the excess of the assets belonging to the
Atlas Fund over the liabilities belonging to that series and such
shareholders shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so distributable to the
shareholders of the Atlas Fund shall be distributed among such shareholders
in proportion to the number of shares of that series held by them and
recorded on the books of the Corporation. The liquidation of the Atlas Fund
may be authorized by vote of a majority of the Board of Directors then in
office, subject to the approval of a majority of the outstanding securities
of that series, as defined in the 1940 Act, and without the vote of the
holders of any other class or series. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of
assets of such series to another class or series or by the exchange of shares
of such series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be
entitled to one vote for each share of the
3
<PAGE>
Atlas Fund outstanding in the holder's name on the books of the Corporation,
and all shares of all classes or series shall vote as a single class or
series ("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of the Atlas Fund is required by the
1940 Act or by the Maryland General Corporation Law, such requirement as to a
separate vote by that series shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes of series,
then, subject to (c) below, the shares of all other classes or series shall
vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to
be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his
shares of the Atlas Fund at a redemption price per share equal to the net
asset value per share of the Atlas Fund next determined (in accordance with
subsection (9)) after the Shares are properly tendered for redemption, less
such redemption charge as is determined by the Board of Directors. Payment of
the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the Atlas Fund at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment
of the redemption price and may suspend the right of the holders of shares of
the Atlas Fund to require the Corporation to redeem shares of that series
during any period or at any time when and to the extent permissible under the
1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause
the Corporation to redeem at net asset value the shares of the Atlas Fund
from a holder who has, for a period of more than six months, had shares of
that series having an aggregate net asset value (determined in accordance
with subsection (9))
4
<PAGE>
equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of
the full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of
the Atlas Fund shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities belonging to that series) by the total number of
shares of the Atlas Fund outstanding, all determined by the Board of
Directors in accordance with generally accepted accounting principles and not
inconsistent with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act
for the continuing declarations of income attributable to that series as
dividends payable in additional shares of the Atlas Fund at the designated
constant dollar amount and for the handling of any losses attributable to
that series. Such procedures may provide that in the event of any loss, each
shareholder shall be deemed to have contributed to the capital of the
Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset
value per share of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the
Atlas Fund shall be deemed to have agreed, by his investment in such series,
to make the contribution referred to in the preceding sentence in the event
of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an
equal proportionate interest in the assets belonging to the Atlas Fund
(subject to the liabilities belonging to that series), and each share of the
Atlas Fund shall be equal to each other share of that series. The Board of
Directors may from time to time divide or combine the shares of the Atlas
Fund into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interest in the assets belonging to the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority
to provide that holders of shares of the Atlas Fund shall have the right to
convert or exchange said shares into shares of one or more other classes or
5
<PAGE>
series of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell
fractions of shares of the Atlas Fund having pro rata all the rights of full
shares of the Atlas Fund, including, without limitation, the right to vote
and to receive dividends, and wherever the words "share" or "shares" are used
in the Charter or in the By-Laws, they shall be deemed to include fractions
of shares of the Atlas Fund, where the context does not clearly indicate that
only full shares are intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall
receive a written request therefor from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary on December 20, 1989.
WITNESS: ATLAS ASSETS, INC.
/s/ Louise Longley /s/ Marion O. Sandler *
- ------------------------ ------------------------
Louise Longley Marion O. Sandler
Secretary President
THE UNDERSIGNED, Vice President of Atlas Assets, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Marion O. Sandler *
------------------------
Marion O. Sandler
President
/s/ Larry E. Lacasse
- -----------------------
Larry E. LaCasse
Attorney-in-fact
6
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry E. LaCasse as true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all actions and written consents of the Board of
Directors of Golden West Investment Company, Inc.; Articles of Amendment for
Golden West Investment Company, Inc., Articles Supplementary for Atlas
Assets, Inc. for each of the following funds: Atlas Tax Free Money Fund,
Atlas California Double Tax Free Money Fund, Atlas Tax Free Income Fund,
Atlas Double Tax Free Income Fund, and Atlas U.S. Government and Mortgage
Securities Fund; and written consents of the Board of Directors of Atlas
Assets, Inc.; and to certify and file the same, with all exhibits thereto,
and other documents in connection therewith, with the Department of
Corporations of California; the State Department of Assessments and Taxation
of Maryland; and with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
/s/ Marion O. Sandler President, Chief 12/20/89
- ------------------------ Executive Officer ----------
Marion O. Sandler and Director
/s/ Herbert M. Sandler Director 12/20/89
- ------------------------ ----------
Herbert M. Sandler
7
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its
principal office in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly classified 50,000,000 shares of
the unissued shares of capital stock of the Corporation into a series
designated the ATLAS CALIFORNIA DOUBLE TAX FREE INCOME FUND (the "Atlas
Fund") and has provided for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Atlas Fund is as
follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the Atlas Fund for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to Atlas Fund as provided in
the following sentence, are herein referred to as "assets belonging to" the
Atlas Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular class or series (collectively
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to the Atlas Fund shall belong
to that series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
2. LIABILITIES BELONGING TO ATLAS FUND. The assets
1
<PAGE>
belonging to the Atlas Fund shall be charged with the liabilities of the
Corporation in respect of that series and all expenses, costs, charges and
reserves attributable to that series, and any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular class or series shall be
allocated and charged by or under the supervision of the Board of Directors
to the Atlas Fund in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to the Atlas Fund are
herein referred to as "liabilities belonging to" that series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board
of Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors
shall have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act of 1940 (the "1940
Act"), to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time
period, all determined in accordance with generally accepted accounting
principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily
or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares
of that series shall be paid only out of the capital gains belonging to the
Atlas Fund. All dividends and distributions on shares of the Atlas Fund
shall be distributed pro rata to the holders of that series in proportion to
the number of shares of that series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Board of Directors under such program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or
any successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a
combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time for
the election by each shareholder of the mode of the making of such dividend
or distribution to that shareholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in
subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as
declared by the Board of Directors, the excess of the assets belonging to the
Atlas Fund over the liabilities belonging to that series and such
shareholders shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so distributable to the
shareholders of the Atlas Fund shall be distributed among such shareholders
in proportion to the number of shares of that series held by them and
recorded on the books of the Corporation. The liquidation of the Atlas Fund
may be authorized by vote of a majority of the Board of Directors then in
office, subject to the approval of a majority of the outstanding securities
of that series, as defined in the 1940 Act, and without the vote of the
holders of any other class or series. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of
assets of such series to another class or series or by the exchange of shares
of such series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be
entitled to one vote for each share of the
3
<PAGE>
Atlas Fund outstanding in the holder's name on the books of the Corporation,
and all shares of all classes or series shall vote as a single class or
series ("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of the Atlas Fund is required by the
1940 Act or by the Maryland General Corporation Law, such requirement as to a
separate vote by that series shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes of series,
then, subject to (c) below, the shares of all other classes or series shall
vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to
be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his
shares of the Atlas Fund at a redemption price per share equal to the net
asset value per share of the Atlas Fund next determined (in accordance with
subsection (9)) after the Shares are properly tendered for redemption, less
such redemption charge as is determined by the Board of Directors. Payment of
the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the Atlas Fund at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment
of the redemption price and may suspend the right of the holders of shares of
the Atlas Fund to require the Corporation to redeem shares of that series
during any period or at any time when and to the extent permissible under the
1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause
the Corporation to redeem at net asset value the shares of the Atlas Fund
from a holder who has, for a period of more than six months, had shares of
that series having an aggregate net asset value (determined in accordance
with subsection (9))
4
<PAGE>
equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of
the full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of
the Atlas Fund shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities belonging to that series) by the total number of
shares of the Atlas Fund outstanding, all determined by the Board of
Directors in accordance with generally accepted accounting principles and not
inconsistent with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act
for the continuing declarations of income attributable to that series as
dividends payable in additional shares of the Atlas Fund at the designated
constant dollar amount and for the handling of any losses attributable to
that series. Such procedures may provide that in the event of any loss, each
shareholder shall be deemed to have contributed to the capital of the
Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset
value per share of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the
Atlas Fund shall be deemed to have agreed, by his investment in such series,
to make the contribution referred to in the preceding sentence in the event
of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an
equal proportionate interest in the assets belonging to the Atlas Fund
(subject to the liabilities belonging to that series), and each share of the
Atlas Fund shall be equal to each other share of that series. The Board of
Directors may from time to time divide or combine the shares of the Atlas
Fund into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interest in the assets belonging to the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority
to provide that holders of shares of the Atlas Fund shall have the right to
convert or exchange said shares into shares of one or more other classes or
5
<PAGE>
series of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell
fractions of shares of the Atlas Fund having pro rata all the rights of full
shares of the Atlas Fund, including, without limitation, the right to vote
and to receive dividends, and wherever the words "share" or "shares" are used
in the Charter or in the By-Laws, they shall be deemed to include fractions
of shares of the Atlas Fund, where the context does not clearly indicate that
only full shares are intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall
receive a written request therefor from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary on December 20, 1989.
WITNESS: ATLAS ASSETS, INC.
/s/ Louise Longley /s/ Marion O. Sandler *
- ---------------------- ------------------------
Louise Longley Marion O. Sandler
Secretary President
THE UNDERSIGNED, Vice President of Atlas Assets, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Marion O. Sandler *
------------------------
Marion O. Sandler
President
/s/ Larry E. Lacasse
- ------------------------
Larry E. LaCasse
Attorney-in-fact
6
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry E. LaCasse as true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all actions and written consents of the Board of
Directors of Golden West Investment Company, Inc.; Articles of Amendment for
Golden West Investment Company, Inc., Articles Supplementary for Atlas
Assets, Inc. for each of the following funds: Atlas Tax Free Money Fund,
Atlas California Double Tax Free Money Fund, Atlas Tax Free Income Fund,
Atlas Double Tax Free Income Fund, and Atlas U.S. Government and Mortgage
Securities Fund; and written consents of the Board of Directors of Atlas
Assets, Inc.; and to certify and file the same, with all exhibits thereto,
and other documents in connection therewith, with the Department of
Corporations of California; the State Department of Assessments and Taxation
of Maryland; and with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
/s/ Marion O. Sandler President, Chief 12/20/89
- ----------------------- Executive Officer ----------
Marion O. Sandler and Director
/s/ Herbert M. Sandler Director 12/20/89
- ----------------------- ----------
Herbert M. Sandler
7
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly classified 20,000,000 shares of
the unissued shares of capital stock of the Corporation into a series
designated the ATLAS TAX FREE INCOME FUND (the "Atlas Fund") and has provided
for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Atlas Fund is as
follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the Atlas Fund for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to Atlas Fund as provided in
the following sentence, are herein referred to as "assets belonging to" the
Atlas Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular class or series (collectively
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to the Atlas Fund shall belong
to that series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
2. LIABILITIES BELONGING TO ATLAS FUND. The assets
1
<PAGE>
belonging to the Atlas Fund shall be charged with the liabilities of the
Corporation in respect of that series and all expenses, costs, charges and
reserves attributable to that series, and any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular class or series shall be
allocated and charged by or under the supervision of the Board of Directors
to the Atlas Fund in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to the Atlas Fund are
herein referred to as "liabilities belonging to" that series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board
of Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors
shall have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act of 1940 (the "1940
Act"), to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time
period, all determined in accordance with generally accepted accounting
principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily
or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares
of that series shall be paid only out of the capital gains belonging to the
Atlas Fund. All dividends and distributions on shares of the Atlas Fund
shall be distributed pro rata to the holders of that series in proportion to
the number of shares of that series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Board of Directors under such program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or
any successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a
combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time for
the election by each shareholder of the mode of the making of such dividend
or distribution to that shareholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in
subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as
declared by the Board of Directors, the excess of the assets belonging to the
Atlas Fund over the liabilities belonging to that series and such
shareholders shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so distributable to the
shareholders of the Atlas Fund shall be distributed among such shareholders
in proportion to the number of shares of that series held by them and
recorded on the books of the Corporation. The liquidation of the Atlas Fund
may be authorized by vote of a majority of the Board of Directors then in
office, subject to the approval of a majority of the outstanding securities
of that series, as defined in the 1940 Act, and without the vote of the
holders of any other class or series. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of
assets of such series to another class or series or by the exchange of shares
of such series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be
entitled to one vote for each share of the
3
<PAGE>
Atlas Fund outstanding in the holder's name on the books of the Corporation,
and all shares of all classes or series shall vote as a single class or
series ("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of the Atlas Fund is required by the
1940 Act or by the Maryland General Corporation Law, such requirement as to a
separate vote by that series shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes of series,
then, subject to (c) below, the shares of all other classes or series shall
vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to
be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his
shares of the Atlas Fund at a redemption price per share equal to the net
asset value per share of the Atlas Fund next determined (in accordance with
subsection (9)) after the Shares are properly tendered for redemption, less
such redemption charge as is determined by the Board of Directors. Payment of
the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the Atlas Fund at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment
of the redemption price and may suspend the right of the holders of shares of
the Atlas Fund to require the Corporation to redeem shares of that series
during any period or at any time when and to the extent permissible under the
1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause
the Corporation to redeem at net asset value the shares of the Atlas Fund
from a holder who has, for a period of more than six months, had shares of
that series having an aggregate net asset value (determined in accordance
with subsection (9))
4
<PAGE>
equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of
the full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of
the Atlas Fund shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities belonging to that series) by the total number of
shares of the Atlas Fund outstanding, all determined by the Board of
Directors in accordance with generally accepted accounting principles and not
inconsistent with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act
for the continuing declarations of income attributable to that series as
dividends payable in additional shares of the Atlas Fund at the designated
constant dollar amount and for the handling of any losses attributable to
that series. Such procedures may provide that in the event of any loss, each
shareholder shall be deemed to have contributed to the capital of the
Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset
value per share of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the
Atlas Fund shall be deemed to have agreed, by his investment in such series,
to make the contribution referred to in the preceding sentence in the event
of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an
equal proportionate interest in the assets belonging to the Atlas Fund
(subject to the liabilities belonging to that series), and each share of the
Atlas Fund shall be equal to each other share of that series. The Board of
Directors may from time to time divide or combine the shares of the Atlas
Fund into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interest in the assets belonging to the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority
to provide that holders of shares of the Atlas Fund shall have the right to
convert or exchange said shares into shares of one or more other classes or
5
<PAGE>
series of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell
fractions of shares of the Atlas Fund having pro rata all the rights of full
shares of the Atlas Fund, including, without limitation, the right to vote
and to receive dividends, and wherever the words "share" or "shares" are used
in the Charter or in the By-Laws, they shall be deemed to include fractions
of shares of the Atlas Fund, where the context does not clearly indicate that
only full shares are intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall
receive a written request therefor from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary on December 20, 1989.
WITNESS: ATLAS ASSETS, INC.
/s/ Louise Longley /s/ Marion O. Sandler *
- ----------------------- ------------------------
Louise Longley Marion O. Sandler
Secretary President
THE UNDERSIGNED, Vice President of Atlas Assets, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Marion O. Sandler *
------------------------
Marion O. Sandler
President
/s/ Larry E. Lacasse
- -----------------------
Larry E. LaCasse
Attorney-in-fact
6
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry E. LaCasse as true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all actions and written consents of the Board of
Directors of Golden West Investment Company, Inc.; Articles of Amendment for
Golden West Investment Company, Inc., Articles Supplementary for Atlas
Assets, Inc. for each of the following funds: Atlas Tax Free Money Fund,
Atlas California Double Tax Free Money Fund, Atlas Tax Free Income Fund,
Atlas Double Tax Free Income Fund, and Atlas U.S. Government and Mortgage
Securities Fund; and written consents of the Board of Directors of Atlas
Assets, Inc.; and to certify and file the same, with all exhibits thereto,
and other documents in connection therewith, with the Department of
Corporations of California; the State Department of Assessments and Taxation
of Maryland; and with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
/s/ Marion O. Sandler President, Chief 12/20/89
- ----------------------- Executive Officer ----------
Marion O. Sandler and Director
/s/ Herbert M. Sandler Director 12/20/89
- ----------------------- ----------
Herbert M. Sandler
7
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly classified 50,000,000 shares of
the unissued shares of capital stock of the Corporation into a series
designated the ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND (the "Atlas
Fund") and has provided for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Atlas Fund is as
follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the Atlas Fund for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to Atlas Fund as provided in
the following sentence, are herein referred to as "assets belonging to" the
Atlas Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular class or series (collectively
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to the Atlas Fund shall belong
to that series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to
the Atlas Fund shall be charged with the liabilities of the Corporation in
respect of that series and all expenses, costs, charges and reserves
attributable to that series, and any general liabilities, expenses, costs,
charges or reserves of the Corporation which are not readily identifiable as
belonging to any particular class or series shall be allocated and charged by
or under the supervision of the Board of Directors to the Atlas Fund in such
manner and on such basis as the Board of Directors, in its sole discretion,
deems fair and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to the Atlas Fund are herein referred to as
"liabilities belonging to" that series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Board of Directors shall be
conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors
shall have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act of 1940 (the "1940
Act"), to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time
period, all determined in accordance with generally accepted accounting
principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily
or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares
of that series shall be paid only out of the capital gains belonging to the
Atlas Fund. All dividends and distributions on shares of the Atlas Fund
shall be distributed pro rata to the holders of that series in proportion to
the number of shares of that series held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on
2
<PAGE>
shares as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Board of Directors
under such program or procedure.
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or
any successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a
combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time for
the election by each shareholder of the mode of the making of such dividend
or distribution to that shareholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in
subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as
declared by the Board of Directors, the excess of the assets belonging to the
Atlas Fund over the liabilities belonging to that series and such
shareholders shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so distributable to the
shareholders of the Atlas Fund shall be distributed among such shareholders
in proportion to the number of shares of that series held by them and
recorded on the books of the Corporation. The liquidation of the Atlas Fund
may be authorized by vote of a majority of the Board of Directors then in
office, subject to the approval of a majority of the outstanding securities
of that series, as defined in the 1940 Act, and without the vote of the
holders of any other class or series. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of
assets of such series to another class or series or by the exchange of shares
of such series for the shares of another class or series.
3
<PAGE>
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be
entitled to one vote for each share of the Atlas Fund outstanding in the
holder's name on the books of the Corporation, and all shares of all classes
or series shall vote as a single class or series ("Single Class Voting");
provided, however, that (a) as to any matter with respect to which a separate
vote of the Atlas Fund is required by the 1940 Act or by the Maryland General
Corporation Law, such requirement as to a separate vote by that series shall
apply in lieu of Single Class Voting as described above; (b) in the event
that the separate vote requirements referred to in (a) above apply with
respect to one or more classes of series, then, subject to (c) below, the
shares of all other classes or series shall vote as a single class or series;
and (c) as to any matter which does not affect the interest of the Atlas Fund
the holders of shares of the Atlas Fund shall not be entitled to vote. As to
any matter with respect to which a separate vote of the Atlas Fund is
required pursuant to proviso (a) above, notwithstanding any provision of law
requiring any action on that matter to be taken or authorized by the holders
of a greater proportion than a majority of the Atlas Fund entitled to vote
thereon, such action shall be valid and effective if taken or authorized by
the affirmative vote of the holders of a majority of shares of the Atlas Fund
outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his
shares of the Atlas Fund at a redemption price per share equal to the net
asset value per share of the Atlas Fund next determined (in accordance with
subsection (9)) after the Shares are properly tendered for redemption, less
such redemption charge as is determined by the Board of Directors. Payment of
the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the Atlas Fund at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment
of the redemption price and may suspend the right of the holders of shares of
the Atlas Fund to require the Corporation to redeem shares of that series
during any period or at any time when and to the extent permissible under the
1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause
the Corporation to redeem at net asset value the shares
4
<PAGE>
of the Atlas Fund from a holder who has, for a period of more than six
months, had shares of that series having an aggregate net asset value
(determined in accordance with subsection (9)) equal to 50% less than the
then current minimum initial investment in the series or less in his account,
provided that at least sixty (60) days' prior written notice of the proposed
redemption has been given to such holder by postage paid mail to his last
known address. Upon redemption of such shares pursuant to this subsection,
the Corporation shall promptly cause payment of the full redemption price to
be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of
the Atlas Fund shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities belonging to that series) by the total number of
shares of the Atlas Fund outstanding, all determined by the Board of
Directors in accordance with generally accepted accounting principles and not
inconsistent with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act
for the continuing declarations of income attributable to that series as
dividends payable in additional shares of the Atlas Fund at the designated
constant dollar amount and for the handling of any losses attributable to
that series. Such procedures may provide that in the event of any loss, each
shareholder shall be deemed to have contributed to the capital of the
Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset
value per share of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the
Atlas Fund shall be deemed to have agreed, by his investment in such series,
to make the contribution referred to in the preceding sentence in the event
of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an
equal proportionate interest in the assets belonging to the Atlas Fund
(subject to the liabilities belonging to that series), and each share of the
Atlas Fund shall be equal to each other share of that series. The Board of
Directors may from time to time divide or combine the shares of the Atlas
Fund into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interest in the assets belonging to the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with
the requirements of the 1940 Act, the Board of
5
<PAGE>
Directors shall have the authority to provide that holders of shares of the
Atlas Fund shall have the right to convert or exchange said shares into
shares of one or more other classes or series of shares in accordance with
such requirements and procedures as may be established by the Board of
Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell
fractions of shares of the Atlas Fund having pro rata all the rights of full
shares of the Atlas Fund, including, without limitation, the right to vote
and to receive dividends, and wherever the words "share" or "shares" are used
in the Charter or in the By-Laws, they shall be deemed to include fractions
of shares of the Atlas Fund, where the context does not clearly indicate that
only full shares are intended.
13. STOCK CERTIFICATES. The Corporation shall not be
obligated to issue certificates representing shares of the Atlas Fund unless
it shall receive a written request therefor from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary on December 20, 1989.
WITNESS: ATLAS ASSETS, INC.
/s/ Louise Longley /s/ Marion O. Sandler *
- ---------------------- ------------------------
Louise Longley Marion O. Sandler
Secretary President
THE UNDERSIGNED, Vice President of Atlas Assets, Inc., who executed
on behalf of the Corporation Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Marion O. Sandler *
------------------------
Marion O. Sandler
President
/s/ Larry E. Lacasse
- ----------------------
Larry E. LaCasse
Attorney-in-fact
6
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry E. LaCasse as true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any or all actions and written consents of the Board of
Directors of Golden West Investment Company, Inc.; Articles of Amendment for
Golden West Investment Company, Inc., Articles Supplementary for Atlas
Assets, Inc. for each of the following funds: Atlas Tax Free Money Fund,
Atlas California Double Tax Free Money Fund, Atlas Tax Free Income Fund,
Atlas Double Tax Free Income Fund, and Atlas U.S. Government and Mortgage
Securities Fund; and written consents of the Board of Directors of Atlas
Assets, Inc.; and to certify and file the same, with all exhibits thereto,
and other documents in connection therewith, with the Department of
Corporations of California; the State Department of Assessments and Taxation
of Maryland; and with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
/s/ Marion O. Sandler President, Chief 12/20/89
- ----------------------- Executive Officer ----------
Marion O. Sandler and Director
/s/ Herbert M. Sandler Director 12/20/89
- ----------------------- ----------
Herbert M. Sandler
7
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 20,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
GROWTH AND INCOME FUND (the "Atlas Fund") and has provided for the issuance of
such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the Atlas Fund is as follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to Atlas Fund as provided in the following sentence,
are herein referred to as "assets belonging to" the Atlas Fund. In the event
that there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular class or series (collectively "General Items"), such General Items
shall be allocated by or under the supervision of the Board of Directors to the
Atlas Fund in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable; and any General Items so allocated to
the Atlas Fund shall belong to that series. Each such allocation by the Board
of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to the
Atlas Fund shall be charged with the liabilities of the Corporation in respect
of that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to the Atlas Fund are herein referred to as "liabilities belonging
to" that series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and binding for all
purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares of
that series shall be paid only out of the capital gains belonging to the Atlas
Fund. All dividends and distributions on shares of the Atlas Fund shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable on
shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under such
program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of the Corporation,
the Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends designated in
whole or part as capital gains distributions, amounts sufficient, in the opinion
of the Board of Directors, to enable the Atlas Fund to qualify as a regulated
investment company and to avoid liability of the Atlas Fund for federal income
tax in respect of that year. However, nothing in the foregoing shall limit the
authority of the Board of Directors to make distributions greater than or less
than the amount necessary to qualify as a regulated investment company and to
avoid liability of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may be authorized by vote of a majority of the
Board of Directors then in office, subject to the approval of a majority of the
outstanding securities of that series, as defined in the 1940 Act, and without
the vote of the holders of any other class or series. The liquidation or
dissolution of the Atlas Fund may be accomplished, in whole or in part, by the
transfer of assets of such series to another class or series or by the exchange
of shares of such series for the shares of another class or series.
3
<PAGE>
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be entitled
to one vote for each share of the Atlas Fund outstanding in the holder's name on
the books of the Corporation, and all shares of all classes or series shall vote
as a single class or series ("Single Class Voting"); provided, however, that (a)
as to any matter with respect to which a separate vote of the Atlas Fund is
required by the 1940 Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that series shall apply in lieu of Single
Class Voting as described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to one or more classes
or series, then, subject to (c) below, the shares of all other classes or series
shall vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to be
taken or authorized by the holders of a greater proportion than a majority of
the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund at a redemption price per share equal to the net asset value per share of
the Atlas Fund next determined (in accordance with subsection (9)) after the
Shares are properly tendered for redemption, less such redemption charge as is
determined by the Board of Directors. Payment of the redemption price shall be
in cash; provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may make payment wholly or
partly in securities or other assets belonging to the Atlas Fund at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
4
<PAGE>
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last know address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of the
Atlas Fund shall be the quotient obtained by dividing the value of the net
assets of that series (being the value of the assets belonging to that series
less the liabilities belonging to that series) by the total number of shares of
the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declarations of income attributable to that series as dividends
payable in additional shares of the Atlas Fund at the designated constant dollar
amount and for the handling of any losses attributable to that series. Such
procedures may provide that in the event of any loss, each shareholder shall be
deemed to have contributed to the capital of the Corporation attributable to the
Atlas Fund his pro rata portion of the total number of shares required to be
cancelled in order to permit the net asset value per share of the Atlas Fund to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Atlas Fund shall be deemed to have agreed, by
his investment in such series, to make the contribution referred to in the
preceding sentence in the event of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of the Atlas Fund shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of the Atlas Fund into a greater or lesser
number of shares of that series without thereby changing the proportionate
beneficial interest in the assets belonging to the Atlas Fund or in any way
affecting the rights of shares of the Atlas Fund.
5
<PAGE>
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of the Atlas Fund shall have the right to convert
or exchange said shares into shares of one or more other classes or series of
shares in accordance with such requirements and procedures as may be established
by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall receive
a written request therefore from the record holder thereof in accordance with
procedures established in the By-Laws or by the Board of Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Chief Operating Officer on November 13, 1990.
WITNESS: ATLAS ASSETS, INC.
- ----------------------------------- ---------------------------------------
Larry E. LaCasse Marion O. Sandler
Chief Operating Officer President
THE UNDERSIGNED, President of Atlas Assets, Inc., who executed on
behalf of the Corporation's Articles Supplementary of which this Certificate is
made a part, hereby acknowledges in the name and on behalf of said Corporation
the foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
----------------------------------------
Marion O. Sandler
President
6
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 25,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
U.S. TREASURY INTERMEDIATE FUND (the "Atlas Fund") and has provided for the
issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the Atlas Fund is as follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to Atlas Fund as provided in the following sentence,
are herein referred to as "assets belonging to" the Atlas Fund. In the event
that there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular class or series (collectively "General Items"), such General Items
shall be allocated by or under the supervision of the Board of Directors to the
Atlas Fund in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable; and any General Items so allocated to
the Atlas Fund shall belong to that series. Each such allocation by the Board
of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to the
Atlas Fund shall be charged with the liabilities of the Corporation in respect
of that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to the Atlas Fund are herein referred to as "liabilities belonging
to" that series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and binding for all
purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares of
that series shall be paid only out of the capital gains belonging to the Atlas
Fund. All dividends and distributions on shares of the Atlas Fund shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable on
shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under such
program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of the Corporation,
the Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends designated in
whole or part as capital gains distributions, amounts sufficient, in the opinion
of the Board of Directors, to enable the Atlas Fund to qualify as a regulated
investment company and to avoid liability of the Atlas Fund for federal income
tax in respect of that year. However, nothing in the foregoing shall limit the
authority of the Board of Directors to make distributions greater than or less
than the amount necessary to qualify as a regulated investment company and to
avoid liability of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may be authorized by vote of a majority of the
Board of Directors then in office, subject to the approval of a majority of the
outstanding securities of that series, as defined in the 1940 Act, and without
the vote of the holders of any other class or series. The liquidation or
dissolution of the Atlas Fund may be accomplished, in whole or in part, by the
transfer of assets of such series to another class or series or by the exchange
of shares of such series for the shares of another class or series.
3
<PAGE>
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be entitled
to one vote for each share of the Atlas Fund outstanding in the holder's name on
the books of the Corporation, and all shares of all classes or series shall vote
as a single class or series ("Single Class Voting"); provided, however, that (a)
as to any matter with respect to which a separate vote of the Atlas Fund is
required by the 1940 Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that series shall apply in lieu of Single
Class Voting as described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to one or more classes
or series, then, subject to (c) below, the shares of all other classes or series
shall vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to be
taken or authorized by the holders of a greater proportion than a majority of
the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund at a redemption price per share equal to the net asset value per share of
the Atlas Fund next determined (in accordance with subsection (9)) after the
Shares are properly tendered for redemption, less such redemption charge as is
determined by the Board of Directors. Payment of the redemption price shall be
in cash; provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may make payment wholly or
partly in securities or other assets belonging to the Atlas Fund at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
4
<PAGE>
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last know address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of the
Atlas Fund shall be the quotient obtained by dividing the value of the net
assets of that series (being the value of the assets belonging to that series
less the liabilities belonging to that series) by the total number of shares of
the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declarations of income attributable to that series as dividends
payable in additional shares of the Atlas Fund at the designated constant dollar
amount and for the handling of any losses attributable to that series. Such
procedures may provide that in the event of any loss, each shareholder shall be
deemed to have contributed to the capital of the Corporation attributable to the
Atlas Fund his pro rata portion of the total number of shares required to be
cancelled in order to permit the net asset value per share of the Atlas Fund to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Atlas Fund shall be deemed to have agreed, by
his investment in such series, to make the contribution referred to in the
preceding sentence in the event of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of the Atlas Fund shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of the Atlas Fund into a greater or lesser
number of shares of that series without thereby changing the proportionate
beneficial interest in the assets belonging to the Atlas Fund or in any way
affecting the rights of shares of the Atlas Fund.
5
<PAGE>
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of the Atlas Fund shall have the right to convert
or exchange said shares into shares of one or more other classes or series of
shares in accordance with such requirements and procedures as may be established
by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall receive
a written request therefore from the record holder thereof in accordance with
procedures established in the By-Laws or by the Board of Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Assistant Secretary on August _____, 1992.
WITNESS: ATLAS ASSETS, INC.
- -------------------------- ---------------------------
Stephanie Kalk Larry E. LaCasse
Assistant Secretary Group Senior Vice President
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation's Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
---------------------------------------
Larry E. LaCasse
Group Senior Vice President
6
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation having its principal office
in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland, that:
Pursuant to authority contained in the charter of the Corporation, the
Board of Directors adopted a resolution changing the name of the series
designated the ATLAS U.S. TREASURY INTERMEDIATE FUND to the ATLAS U.S.
GOVERNMENT INTERMEDIATE FUND.
IN WITNESS WHEREOF, Atlas Assets, Inc. has caused these presents to be
signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Secretary on October 19, 1995.
ATLAS ASSETS, INC.
----------------------------------------
Larry E. LaCasse
Group Senior Vice President
Witness:
- -----------------------------------
Steven J. Gray
Secretary
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
---------------------------------------
Larry E. LaCasse
Group Senior Vice President
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 25,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND (the "Atlas Fund") and has
provided for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the Atlas Fund is as follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to Atlas Fund as provided in the following sentence,
are herein referred to as "assets belonging to" the Atlas Fund. In the event
that there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular class or series (collectively "General Items"), such General Items
shall be allocated by or under the supervision of the Board of Directors to the
Atlas Fund in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable; and any General Items so allocated to
the Atlas Fund shall belong to that series. Each such allocation by the Board
of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to the
Atlas Fund shall be charged with the liabilities of the Corporation in respect
of that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to the Atlas Fund are herein referred to as "liabilities belonging
to" that series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and binding for all
purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares of
that series shall be paid only out of the capital gains belonging to the Atlas
Fund. All dividends and distributions on shares of the Atlas Fund shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable on
shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under such
program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of the Corporation,
the Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends designated in
whole or part as capital gains distributions, amounts sufficient, in the opinion
of the Board of Directors, to enable the Atlas Fund to qualify as a regulated
investment company and to avoid liability of the Atlas Fund for federal income
tax in respect of that year. However, nothing in the foregoing shall limit the
authority of the Board of Directors to make distributions greater than or less
than the amount necessary to qualify as a regulated investment company and to
avoid liability of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may be authorized by vote of a majority of the
Board of Directors then in office, subject to the approval of a majority of the
outstanding securities of that series, as defined in the 1940 Act, and without
the vote of the holders of any other class or series. The liquidation or
dissolution of the Atlas Fund may be accomplished, in whole or in part, by the
transfer of assets of such series to another class or series or by the exchange
of shares of such series for the shares of another class or series.
3
<PAGE>
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be entitled
to one vote for each share of the Atlas Fund outstanding in the holder's name on
the books of the Corporation, and all shares of all classes or series shall vote
as a single class or series ("Single Class Voting"); provided, however, that (a)
as to any matter with respect to which a separate vote of the Atlas Fund is
required by the 1940 Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that series shall apply in lieu of Single
Class Voting as described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to one or more classes
or series, then, subject to (c) below, the shares of all other classes or series
shall vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to be
taken or authorized by the holders of a greater proportion than a majority of
the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund at a redemption price per share equal to the net asset value per share of
the Atlas Fund next determined (in accordance with subsection (9)) after the
Shares are properly tendered for redemption, less such redemption charge as is
determined by the Board of Directors. Payment of the redemption price shall be
in cash; provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may make payment wholly or
partly in securities or other assets belonging to the Atlas Fund at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
4
<PAGE>
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last know address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of the
Atlas Fund shall be the quotient obtained by dividing the value of the net
assets of that series (being the value of the assets belonging to that series
less the liabilities belonging to that series) by the total number of shares of
the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declarations of income attributable to that series as dividends
payable in additional shares of the Atlas Fund at the designated constant dollar
amount and for the handling of any losses attributable to that series. Such
procedures may provide that in the event of any loss, each shareholder shall be
deemed to have contributed to the capital of the Corporation attributable to the
Atlas Fund his pro rata portion of the total number of shares required to be
cancelled in order to permit the net asset value per share of the Atlas Fund to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Atlas Fund shall be deemed to have agreed, by
his investment in such series, to make the contribution referred to in the
preceding sentence in the event of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of the Atlas Fund shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of the Atlas Fund into a greater or lesser
number of shares of that series without thereby changing the proportionate
beneficial interest in the assets belonging to the Atlas Fund or in any way
affecting the rights of shares of the Atlas Fund.
5
<PAGE>
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of the Atlas Fund shall have the right to convert
or exchange said shares into shares of one or more other classes or series of
shares in accordance with such requirements and procedures as may be established
by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall receive
a written request therefore from the record holder thereof in accordance with
procedures established in the By-Laws or by the Board of Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Secretary on March _____, 1993.
WITNESS: ATLAS ASSETS, INC.
- ------------------------- -----------------------------
Steven J. Gray Larry E. LaCasse
Secretary Group Senior Vice President
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation's Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
----------------------------------------
Larry E. LaCasse
Group Senior Vice President
6
<PAGE>
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 25,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND (the "Atlas Fund") and has provided
for the issuance of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the Atlas Fund is as follows:
1. ASSETS BELONGING TO ATLAS FUND. All consideration received by
the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to Atlas Fund as provided in the following sentence,
are herein referred to as "assets belonging to" the Atlas Fund. In the event
that there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular class or series (collectively "General Items"), such General Items
shall be allocated by or under the supervision of the Board of Directors to the
Atlas Fund in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable; and any General Items so allocated to
the Atlas Fund shall belong to that series. Each such allocation by the Board
of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO ATLAS FUND. The assets belonging to the
Atlas Fund shall be charged with the liabilities of the Corporation in respect
of that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of the Atlas Fund in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to the Atlas Fund are herein referred to as "liabilities belonging
to" that series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and binding for all
purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of the Atlas
Fund may be paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine. Dividends may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities belonging to the Atlas Fund.
All dividends on shares of the Atlas Fund shall be paid only out of
the income belonging to that series and capital gains distributions on shares of
that series shall be paid only out of the capital gains belonging to the Atlas
Fund. All dividends and distributions on shares of the Atlas Fund shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable on
shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under such
program or procedure.
2
<PAGE>
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of the Corporation,
the Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends designated in
whole or part as capital gains distributions, amounts sufficient, in the opinion
of the Board of Directors, to enable the Atlas Fund to qualify as a regulated
investment company and to avoid liability of the Atlas Fund for federal income
tax in respect of that year. However, nothing in the foregoing shall limit the
authority of the Board of Directors to make distributions greater than or less
than the amount necessary to qualify as a regulated investment company and to
avoid liability of the Atlas Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may be authorized by vote of a majority of the
Board of Directors then in office, subject to the approval of a majority of the
outstanding securities of that series, as defined in the 1940 Act, and without
the vote of the holders of any other class or series. The liquidation or
dissolution of the Atlas Fund may be accomplished, in whole or in part, by the
transfer of assets of such series to another class or series or by the exchange
of shares of such series for the shares of another class or series.
3
<PAGE>
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of the Atlas Fund shall be entitled
to one vote for each share of the Atlas Fund outstanding in the holder's name on
the books of the Corporation, and all shares of all classes or series shall vote
as a single class or series ("Single Class Voting"); provided, however, that (a)
as to any matter with respect to which a separate vote of the Atlas Fund is
required by the 1940 Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that series shall apply in lieu of Single
Class Voting as described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to one or more classes
or series, then, subject to (c) below, the shares of all other classes or series
shall vote as a single class or series; and (c) as to any matter which does not
affect the interest of the Atlas Fund the holders of shares of the Atlas Fund
shall not be entitled to vote. As to any matter with respect to which a
separate vote of the Atlas Fund is required pursuant to proviso (a) above,
notwithstanding any provision of law requiring any action on that matter to be
taken or authorized by the holders of a greater proportion than a majority of
the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund at a redemption price per share equal to the net asset value per share of
the Atlas Fund next determined (in accordance with subsection (9)) after the
Shares are properly tendered for redemption, less such redemption charge as is
determined by the Board of Directors. Payment of the redemption price shall be
in cash; provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may make payment wholly or
partly in securities or other assets belonging to the Atlas Fund at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
4
<PAGE>
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last know address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of the
Atlas Fund shall be the quotient obtained by dividing the value of the net
assets of that series (being the value of the assets belonging to that series
less the liabilities belonging to that series) by the total number of shares of
the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The Board of Directors may determine to maintain the net asset value
per share of the Atlas Fund at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declarations of income attributable to that series as dividends
payable in additional shares of the Atlas Fund at the designated constant dollar
amount and for the handling of any losses attributable to that series. Such
procedures may provide that in the event of any loss, each shareholder shall be
deemed to have contributed to the capital of the Corporation attributable to the
Atlas Fund his pro rata portion of the total number of shares required to be
cancelled in order to permit the net asset value per share of the Atlas Fund to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Atlas Fund shall be deemed to have agreed, by
his investment in such series, to make the contribution referred to in the
preceding sentence in the event of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of the Atlas Fund shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of the Atlas Fund into a greater or lesser
number of shares of that series without thereby changing the proportionate
beneficial interest in the assets belonging to the Atlas Fund or in any way
affecting the rights of shares of the Atlas Fund.
5
<PAGE>
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of the Atlas Fund shall have the right to convert
or exchange said shares into shares of one or more other classes or series of
shares in accordance with such requirements and procedures as may be established
by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of the Atlas Fund unless it shall receive
a written request therefore from the record holder thereof in accordance with
procedures established in the By-Laws or by the Board of Directors.
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Secretary on March _____, 1993.
WITNESS: ATLAS ASSETS, INC.
- ------------------------- ---------------------------
Steven J. Gray Larry E. LaCasse
Secretary Group Senior Vice President
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation's Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
-------------------------------
Larry E. LaCasse
Group Senior Vice President
6
<PAGE>
DRAFT
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 20,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
GLOBAL GROWTH FUND (the "Atlas Fund"), has subdivided the common stock of the
series into two classes, referred to "Class A Common Stock" and "Class B Common
Stock", and has provided for the issuance of the common stock of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the common stock of the Atlas Fund is
as follows:
1. ASSETS BELONGING TO THE ATLAS FUND. All consideration received
by the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to the Atlas Fund as provided in the following
sentence, are herein referred to as "assets belonging to" the Atlas Fund. In
the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular class or series (collectively "General Items"), such General
Items shall be allocated by or under the supervision of the Board of Directors
to the Atlas Fund or a class of the Atlas Fund in such manner and on such basis
as the Board of Directors, in its sole discretion, deems fair and equitable; and
any General Items so allocated to the Atlas Fund or a class of the Atlas Fund
shall be deemed to belong to the Atlas Fund or that class. Each such allocation
by the Board of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO THE ATLAS FUND. The assets belonging to
the Atlas Fund shall be charged with the liabilities of the Corporation in
respect of each class and all expenses, costs, charges and reserves attributable
to that class, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of any particular class of the Atlas Fund
in such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to any particular class of the Atlas Fund
are herein referred to as "liabilities belonging to" that class. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board of
Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of each class
the Atlas Fund may be paid with such frequency, in such form and in such amount
as the Board of Directors may from time to time determine. Dividends may be
paid daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to each class of the
Atlas Fund.
All dividends on shares of a class of the Atlas Fund shall be paid
only out of the income allocable to that class and capital gains distributions
on shares of that class shall be paid only out of the capital gains allocable
to a class of the Atlas Fund. All dividends and distributions on shares of a
class of the Atlas Fund shall be distributed pro rata to the holders of that
class in proportion to the number of shares of that class held by such holders
at the date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the
2
<PAGE>
computation thereof on the books of the Corporation, the Board of Directors
shall have the power, in its sole discretion, to distribute in any fiscal year
as dividends, including dividends designated in whole or part as capital gains
distributions, amounts sufficient, in the opinion of the Board of Directors, to
enable the Atlas Fund to qualify as a regulated investment company and to avoid
liability of the Atlas Fund for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount necessary
to qualify as a regulated investment company and to avoid liability of the Atlas
Fund for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may, to the extent permitted by applicable law, be
approved by vote of a majority of the Board of Directors then in office without
the need of any shareholder approval. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of assets
of such series to another class or series or by the exchange of shares of such
series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of each class of the Atlas Fund shall
be entitled to one vote for each share of the Atlas Fund outstanding in the
holder's name on the books of the Corporation, and all shares of all classes or
series shall vote as a single class or series ("Single Class Voting"); provided,
however, that (a) as to any matter with respect to which a separate vote of the
Atlas Fund is required by the 1940 Act or by the Maryland General Corporation
Law, such requirement as to a separate vote by that series shall apply in lieu
of Single Class Voting as described above; (b) in the event that the separate
vote requirements referred to in (a) above apply with respect to one or more
classes or series, then, subject to (c) below, the shares of all other classes
or series shall vote as a single class or series; and (c) as to any matter which
does not affect the interest of the Atlas Fund the holders of shares of the
Atlas Fund shall not be entitled to vote. As to any matter with respect to
which a separate vote of the Atlas Fund is required pursuant to proviso (a)
above, notwithstanding any provision of law requiring any action on that matter
to be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas
3
<PAGE>
Fund outstanding and entitled to vote thereon.
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund, and all shares of the Atlas Fund shall be subject to redemption by the
Corporation, at a redemption price per share equal to the net asset value per
share of the Atlas Fund next determined (in accordance with subsection (9))
after the Shares are properly tendered for redemption, less such redemption
charge as is determined by the Board of Directors. Payment of the redemption
price shall be in cash; provided, however, that if the Board of Directors
determines, which determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Corporation may make
payment wholly or partly in securities or other assets belonging to the Atlas
Fund at the value of such securities or assets used in such determination of net
asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of each
class of the Atlas Fund shall be the quotient obtained by dividing the value of
the net assets of the Atlas Fund allocable to that class (being the allocable
portion of the value of the assets belonging to the Atlas Fund less the
liabilities belonging to the Atlas Fund) by the total number of shares of the
class of the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The methodology for calculating the net asset value, dividends and
distributions of the Atlas Fund Class A and Class B shares recognizes two types
of expenses. General expenses that do not pertain specifically to either class
are allocated pro rata to the shares of each class, based on the ratio of the
net assets of such class to the Atlas Fund's total net assets, and then equally
to each outstanding share within a given class. Other expenses that are
directly attributable to a class are allocated equally to each outstanding share
within that class.
The Board of Directors may determine to maintain the net asset value
per share of a class of the Atlas Fund at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the 1940
Act for the continuing declarations of
4
<PAGE>
income attributable to that class as dividends payable in additional shares of a
particular class of the Atlas Fund at the designated constant dollar amount and
for the handling of any losses attributable to that class. Such procedures may
provide that in the event of any loss, each shareholder shall be deemed to have
contributed to the capital of the Corporation attributable to the Atlas Fund his
pro rata portion of the total number of shares required to be cancelled in order
to permit the net asset value per share of the class of the Atlas Fund to be
maintained, after reflecting such loss, at the designated constant dollar
amount. Each shareholder of the Atlas Fund shall be deemed to have agreed, by
his investment in such class, to make the contribution referred to in the
preceding sentence in the event of any such loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of a class of the Atlas
Fund shall be equal to each other share of that class. The Board of Directors
may from time to time divide or combine the shares of a class of the Atlas Fund
into a greater or lesser number of shares of that class without thereby changing
the proportionate beneficial interest in the assets belonging to a class of the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of a class of the Atlas Fund shall have the right
to convert or exchange said shares into shares of one or more other classes or
series of shares in accordance with such requirements and procedures as may be
established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of a class of the Atlas Fund unless it
shall receive a written request therefore from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
5
<PAGE>
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Vice President and Chief Legal Counsel on _________________,
1996.
WITNESS: ATLAS ASSETS, INC.
- -------------------------- --------------------------------------------
Steven J. Gray Larry E. LaCasse
Vice President and Group Senior Vice President
Chief Legal Counsel and Chief Operating Officer
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation's Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
--------------------------------------------
Larry E. LaCasse
Group Senior Vice President
and Chief Operating Officer
6
<PAGE>
DRAFT
ATLAS ASSETS, INC.
ARTICLES SUPPLEMENTARY
Atlas Assets, Inc., a Maryland corporation, having its principal
office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified 20,000,000 shares of the unissued
shares of capital stock of the Corporation into a series designated the ATLAS
STRATEGIC INCOME FUND (the "Atlas Fund"), has subdivided the common stock of the
series into two classes, referred to "Class A Common Stock" and "Class B Common
Stock", and has provided for the issuance of the common stock of such series.
SECOND: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the common stock of the Atlas Fund is
as follows:
1. ASSETS BELONGING TO THE ATLAS FUND. All consideration received
by the Corporation from the issue or sale of shares of the Atlas Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the Atlas Fund for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to the Atlas Fund as provided in the following
sentence, are herein referred to as "assets belonging to" the Atlas Fund. In
the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular class or series (collectively "General Items"), such General
Items shall be allocated by or under the supervision of the Board of Directors
to the Atlas Fund or a class of the Atlas Fund in such manner and on such basis
as the Board of Directors, in its sole discretion, deems fair and equitable; and
any General Items so allocated to the Atlas Fund or a class of the Atlas Fund
shall be deemed to belong to the Atlas Fund or that class. Each such allocation
by the Board of Directors shall be conclusive and binding for all purposes.
1
<PAGE>
2. LIABILITIES BELONGING TO THE ATLAS FUND. The assets belonging to
the Atlas Fund shall be charged with the liabilities of the Corporation in
respect of each class and all expenses, costs, charges and reserves attributable
to that class, and any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charged by or under the
supervision of the Board of Directors of any particular class of the Atlas Fund
in such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to any particular class of the Atlas Fund
are herein referred to as "liabilities belonging to" that class. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board of
Directors shall be conclusive and binding for all purposes.
3. INCOME BELONGING TO THE ATLAS FUND. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act of 1940 (the "1940 Act"), to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding.
Income belonging to the Atlas Fund includes all income, earnings and
profits derived from assets belonging to the Atlas Fund less any expenses,
costs, charges or reserves belonging to Atlas Fund for the relevant time period,
all determined in accordance with generally accepted accounting principles.
4. DIVIDENDS. Dividends and distributions on shares of each class
the Atlas Fund may be paid with such frequency, in such form and in such amount
as the Board of Directors may from time to time determine. Dividends may be
paid daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to each class of the
Atlas Fund.
All dividends on shares of a class of the Atlas Fund shall be paid
only out of the income allocable to that class and capital gains distributions
on shares of that class shall be paid only out of the capital gains allocable
to a class of the Atlas Fund. All dividends and distributions on shares of a
class of the Atlas Fund shall be distributed pro rata to the holders of that
class in proportion to the number of shares of that class held by such holders
at the date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.
The Corporation intends to qualify the Atlas Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of the Corporation,
the Board of Directors shall have the
2
<PAGE>
power, in its sole discretion, to distribute in any fiscal year as dividends,
including dividends designated in whole or part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Directors, to enable the
Atlas Fund to qualify as a regulated investment company and to avoid liability
of the Atlas Fund for federal income tax in respect of that year. However,
nothing in the foregoing shall limit the authority of the Board of Directors to
make distributions greater than or less than the amount necessary to qualify as
a regulated investment company and to avoid liability of the Atlas Fund for such
tax.
Dividends and distributions may be made in cash, property or
additional shares of the Atlas Fund or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by each
shareholder of the mode of the making of such dividend or distribution to that
shareholder. Any such dividend or distribution paid in shares will be paid at
the net asset value thereof as defined in subsection (9) below.
5. LIQUIDATION. In the event of the liquidation or dissolution of
the Corporation, the shareholders of the Atlas Fund shall be entitled to
receive, as a series and in preference to any other series, when and as declared
by the Board of Directors, the excess of the assets belonging to the Atlas Fund
over the liabilities belonging to that series and such shareholders shall not be
entitled thereby to any distribution upon liquidation of any other class or
series. The assets so distributable to the shareholders of the Atlas Fund shall
be distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Corporation. The
liquidation of the Atlas Fund may, to the extent permitted by applicable law, be
approved by vote of a majority of the Board of Directors then in office without
the need of any shareholder approval. The liquidation or dissolution of the
Atlas Fund may be accomplished, in whole or in part, by the transfer of assets
of such series to another class or series or by the exchange of shares of such
series for the shares of another class or series.
6. VOTING. On each matter submitted to a vote of the shareholders
of the Corporation, each holder of a share of each class of the Atlas Fund shall
be entitled to one vote for each share of the Atlas Fund outstanding in the
holder's name on the books of the Corporation, and all shares of all classes or
series shall vote as a single class or series ("Single Class Voting"); provided,
however, that (a) as to any matter with respect to which a separate vote of the
Atlas Fund is required by the 1940 Act or by the Maryland General Corporation
Law, such requirement as to a separate vote by that series shall apply in lieu
of Single Class Voting as described above; (b) in the event that the separate
vote requirements referred to in (a) above apply with respect to one or more
classes or series, then, subject to (c) below, the shares of all other classes
or series shall vote as a single class or series; and (c) as to any matter which
does not affect the interest of the Atlas Fund the holders of shares of the
Atlas Fund shall not be entitled to vote. As to any matter with respect to
which a separate vote of the Atlas Fund is required pursuant to proviso (a)
above, notwithstanding any provision of law requiring any action on that matter
to be taken or authorized by the holders of a greater proportion than a majority
of the Atlas Fund entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of shares of the Atlas Fund outstanding and entitled to vote thereon.
3
<PAGE>
7. REDEMPTION BY SHAREHOLDER. Each holder of shares of the Atlas
Fund shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of the Atlas
Fund, and all shares of the Atlas Fund shall be subject to redemption by the
Corporation, at a redemption price per share equal to the net asset value per
share of the Atlas Fund next determined (in accordance with subsection (9))
after the Shares are properly tendered for redemption, less such redemption
charge as is determined by the Board of Directors. Payment of the redemption
price shall be in cash; provided, however, that if the Board of Directors
determines, which determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Corporation may make
payment wholly or partly in securities or other assets belonging to the Atlas
Fund at the value of such securities or assets used in such determination of net
asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of the
Atlas Fund to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the 1940 Act.
8. REDEMPTION BY CORPORATION. The Board of Directors may cause the
Corporation to redeem at net asset value the shares of the Atlas Fund from a
holder who has, for a period of more than six months, had shares of that series
having an aggregate net asset value (determined in accordance with subsection
(9)) equal to 50% less than the then current minimum initial investment in the
series or less in his account, provided that at least sixty (60) days' prior
written notice of the proposed redemption has been given to such holder by
postage paid mail to his last known address. Upon redemption of such shares
pursuant to this subsection, the Corporation shall promptly cause payment of the
full redemption price to be made to the holder of such shares so redeemed.
9. NET ASSET VALUE PER SHARE. The net asset value per share of each
class of the Atlas Fund shall be the quotient obtained by dividing the value of
the net assets of the Atlas Fund allocable to that class (being the allocable
portion of the value of the assets belonging to the Atlas Fund less the
liabilities belonging to the Atlas Fund) by the total number of shares of the
class of the Atlas Fund outstanding, all determined by the Board of Directors in
accordance with generally accepted accounting principles and not inconsistent
with the 1940 Act.
The methodology for calculating the net asset value, dividends and
distributions of the Atlas Fund Class A and Class B shares recognizes two types
of expenses. General expenses that do not pertain specifically to either class
are allocated pro rata to the shares of each class, based on the ratio of the
net assets of such class to the Atlas Fund's total net assets, and then equally
to each outstanding share within a given class. Other expenses that are
directly attributable to a class are allocated equally to each outstanding share
within that class.
The Board of Directors may determine to maintain the net asset value
per share of a class of the Atlas Fund at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the 1940
Act for the continuing declarations of income attributable to that class as
dividends payable in additional shares of a particular class of the Atlas Fund
at the designated constant dollar amount and for the handling of any losses
4
<PAGE>
attributable to that class. Such procedures may provide that in the event of
any loss, each shareholder shall be deemed to have contributed to the capital of
the Corporation attributable to the Atlas Fund his pro rata portion of the total
number of shares required to be cancelled in order to permit the net asset value
per share of the class of the Atlas Fund to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each shareholder of the Atlas
Fund shall be deemed to have agreed, by his investment in such class, to make
the contribution referred to in the preceding sentence in the event of any such
loss.
10. EQUALITY. All shares of the Atlas Fund shall represent an equal
proportionate interest in the assets belonging to the Atlas Fund (subject to the
liabilities belonging to that series), and each share of a class of the Atlas
Fund shall be equal to each other share of that class. The Board of Directors
may from time to time divide or combine the shares of a class of the Atlas Fund
into a greater or lesser number of shares of that class without thereby changing
the proportionate beneficial interest in the assets belonging to a class of the
Atlas Fund or in any way affecting the rights of shares of the Atlas Fund.
11. CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that holders of shares of a class of the Atlas Fund shall have the right
to convert or exchange said shares into shares of one or more other classes or
series of shares in accordance with such requirements and procedures as may be
established by the Board of Directors.
12. FRACTIONAL SHARES. The Corporation may issue and sell fractions
of shares of the Atlas Fund having pro rata all the rights of full shares of the
Atlas Fund, including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in the Charter or
in the By-Laws, they shall be deemed to include fractions of shares of the Atlas
Fund, where the context does not clearly indicate that only full shares are
intended.
13. STOCK CERTIFICATES. The Corporation shall not be obligated to
issue certificates representing shares of a class of the Atlas Fund unless it
shall receive a written request therefore from the record holder thereof in
accordance with procedures established in the By-Laws or by the Board of
Directors.
5
<PAGE>
IN WITNESS WHEREOF, Atlas Assets, Inc., has caused these presents to
be signed in its name and on its behalf by its Group Senior Vice President and
witnessed by its Vice President and Chief Legal Counsel on _________________,
1996.
WITNESS: ATLAS ASSETS, INC.
- ----------------------------- ---------------------------------------------
Steven J. Gray Larry E. LaCasse
Vice President and Group Senior Vice President
Chief Legal Counsel and Chief Operating Officer
THE UNDERSIGNED, Group Senior Vice President of Atlas Assets, Inc.,
who executed on behalf of the Corporation's Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
---------------------------------------------
Larry E. LaCasse
Group Senior Vice President
and Chief Operating Officer
6
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated and effective as of the 12th day of January,
1990, is made and entered into by and between ATLAS ASSETS, INC., a Maryland
corporation (hereinafter called the "Company"), and ATLAS ADVISERS, INC., a
California corporation (hereinafter called the "Adviser").
WHEREAS, the Company is engaged in business as an open-end
management investment company and is so registered under the Investment
Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is so registered under the
Investment Advisers Act of 1940; and
WHEREAS, the Company is authorized to issue shares of capital stock
in separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Company intends to initially offer shares in five
series (the "Initial Series"):
Atlas Tax Free Money Fund
Atlas California Double Tax Free Money Fund
Atlas Tax Free Income Fund
Atlas California Double Tax Free Income Fund
Atlas U.S. Government and Mortgage Securities Fund.
The Company desires to retain the Adviser to render investment advisory
services as described hereunder with respect to the Initial Series being
herein collectively referred to as a "Series" and the Adviser is willing so
to do.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. (a) Initial Series. The Company hereby appoints
the Adviser to act as adviser and investment manager to
the Initial Series for the period and on the terms
herein set forth. The Adviser accepts such appointment
and agrees to render the services herein set forth, for
the compensation herein provided.
1
<PAGE>
(b) Additional Series. In the event that the
Company establishes one or more series of shares other
than the Initial Series with respect to which it
desires to retain the Adviser to render management and
investment advisory services hereunder, it shall so
notify the Adviser in writing, indicating the advisory
fee which will be payable with respect to the
additional series of shares. If the Adviser is willing
to render such services, it shall so notify the Company
in writing, whereupon such series of shares shall
become a Series hereunder.
The Adviser shall, for all purposes herein, be deemed an independent
contractor and not an agent of the Company.
2. (a) Subject to the supervision of the Company's
Board of Directors ("Board"), the Adviser agrees to
provide supervision of the portfolio of each Series and
to determine what securities or other property shall be
purchased or sold by each Series, giving due
consideration to the policies of each Series as
expressed in the Company's Articles of Incorporation,
By-laws, Form N-1A Registration Statement
("Registration Statement") under the 1940 Act and under
the Securities Act of 1933, as amended (the "1933
Act"), and prospectus as in use from time to time, as
well as to the factors affecting the status of each
Series as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended. In its
duties hereunder, the Adviser shall further be bound by
any and all determinations by the Board relating to
investment policy, which determinations shall in
writing be communicated to the Adviser.
(b) (i) The Adviser shall provide adequate
facilities and qualified personnel for the
placement of, and shall place orders for the
purchase, or other acquisition, and sale, or
other disposition, of portfolio securities
for each Series. With respect to such
transactions, the Adviser, subject to such
direction as may be furnished from time to
time by the Board of Directors of the
Company, shall endeavor as the primary
objective to obtain the most favorable prices
an executions of orders. Subject to such
primary objective, the Adviser may place
orders with brokerage firms which have sold
shares of any Series or which furnish
statistical and other information to the
Adviser, taking into account the value and
quality of the brokerage services of such
brokerage firms, including the availability
and quality of such statistical and other
information. Receipt by
2
<PAGE>
the Adviser of any such statistical and other
information and services shall not be deemed
to give rise to any requirement for abatement
of the advisory fee payable to the Adviser
pursuant to Section 4 hereof.
(ii) On occasions when the Adviser deems
the purchase or sale of a security to be in
the best interests of a Series as well as
other clients of the Adviser, the Adviser, to
the extent permitted by applicable laws and
regulations, may aggregate the securities to
be so sold or purchased when the Adviser
believes that to do so will be in the best
interests of the Series. In such event,
allocation of the securities so purchased or
sold, as well as the expenses incurred in the
transaction, will be made by the Adviser in
the manner the Adviser considers to be the
most equitable and consistent with its
fiduciary obligations to the Series and to
such other clients.
(c) The Adviser will oversee the maintenance of all
books and records with respect to the securities
transactions of the Series, and will furnish the Board with
such periodic and special reports as the Board reasonably
may request. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Adviser hereby agrees that all
records which it maintains for the Company are the property
of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records
which it maintains for the Company and which are required to
be maintained by Rule 31a-1 under the 1940 Act, and further
agrees to surrender promptly to the Company any records
which it maintains for the Company upon request by the
Company.
(d) The Adviser will oversee the computation of the
net asset value and the net income of each Fund as described
in the currently effective Registration Statement or as more
frequently requested by the Board.
3. ADMINISTRATIVE DUTIES OF THE ADVISER. The Adviser will administer
the affairs of each Fund subject to the supervision of the Board and the
following understandings:
(a) The Adviser will supervise all aspects of the
operations of each Fund, including the oversight of transfer
agency, custodial, pricing and accounting services, except
as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the
Board of its responsibility for control of the conduct of
the affairs of the Funds.
(b) The Adviser will provide the Company and the Funds
3
<PAGE>
with such corporate, administrative and clerical personnel
(including offices of the Company) and services as are
reasonably deemed necessary or advisable by the Board.
(c) The Adviser will arrange, but not pay, for the
periodic preparation, updating, filing and dissemination (as
applicable) of each Fund's prospectus, statement of
additional information, proxy material, tax returns and
required reports with or to the Fund's shareholders, the
Securities and Exchange Commission and other appropriate
federal or state regulatory authorities.
(d) The Adviser will provide the Company and the Funds
with, or obtain for them, adequate office space and all
necessary office equipment and services, including telephone
service, heat, utilities, stationery supplies and similar
items.
The Company will reimburse the Adviser for the expenses it incurs
in providing the administrative services provided by the Adviser at the end
of each calendar quarter upon presentation to the Company of an itemized
schedule of such expenses.
4. FURTHER DUTIES. In all matters relating to the performance of
this Contract, the Adviser will act in conformity with the Articles of
Incorporation, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the
requirements of the 1940 Act, and rules thereunder, and all other applicable
federal and state laws and regulations.
5. DELEGATION OF THE ADVISER'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to one or more of the Funds, the Adviser may
enter into on or more agreements ("Sub-Advisory or Sub-Administration
Contract") with a sub-adviser or sub-administrator in which the Adviser
delegates to such sub-adviser or sub-administrator the performance of any or
all of the services specified in Section 2 and 3 of this Agreement, provided
that; (i) each Sub-Advisory and Sub-Administration Contract imposes on the
sub-adviser or sub-administrator bound thereby all the duties and conditions
to which the Adviser is subject with respect to the delegated services under
Sections 2, 3 and 4 of this Agreement; (ii) each Sub-Advisory or
Sub-Administration Contract meets all requirements of the 1940 Act and rules
thereunder; and (iii) the Adviser shall not enter into a Sub-Advisory or
Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. (a) Each Series shall pay to the Adviser on or before
the tenth (10th) day of each month, as compensation for the
services rendered by the Adviser during the preceding month,
an amount to be computed by applying to the total net asset
value of such Series the applicable annual rates set forth
on Appendix A hereto:
4
<PAGE>
(b) The fees on Appendix A shall be computed and
accrued daily at one three-hundred-sixty-fifth (1/365th) of
the applicable rates set forth therein. The net asset value
of each Series shall be determined in the manner set forth
in the Articles of Incorporation, Prospectus and Statement
of Additional Information of the Company after the close of
the New York Stock Exchange on each day on which said
Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said exchange shall not be open, in the
manner further set forth in said Articles of Incorporation,
Prospectus and Statement of Additional Information. In the
event of termination other than at the end of a calendar
month, the monthly fee shall be prorated for the portion of
the month prior to termination and paid on or before the
tenth (10th) day subsequent to termination.
7. (a) The Adviser agrees to reduce the fee payable to it
under this Agreement by the amount which the ordinary
operating expenses of the Company for any fiscal year of the
Company, excluding interest, taxes and extraordinary
expenses, shall exceed the most stringent limits prescribed
by any state in which the Company shares are offered for
sale; provided that, within such limits, the Adviser shall
be entitled to recover any such excess fees over any twelve-
month period. Costs incurred in connection with the
purchase or sale of portfolio securities, including
brokerage fees and commissions, which are capitalized in
accordance with generally accepted accounting principles
applicable to investment companies, shall be accounted for
as capital items and not as expenses. Proper accruals shall
be made by the Company for any projected reduction hereunder
and corresponding amounts shall be withheld from the fees
paid by the Company to the Adviser. Any additional
reduction computed at the end of the fiscal year shall be
deducted from the fee for the last month of such fiscal
year.
(b) The above provision in subsection (a) with respect
to expense limitation shall be calculated and administered
separately with respect to each Series, as opposed to the
Company in the aggregate, if and to the extent so required
by state securities authorities.
(c) The payment or assumption by the Adviser of any
expense of the Company or any Series that the Adviser is not
required by this Agreement to pay or assume shall not
obligate the Adviser to pay or assume the same or any
similar expense of the Company or any Series on any
subsequent occasion.
8. Nothing contained in this Agreement shall be construed to prohibit
the Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, or to
prohibit affiliates of the Adviser from engaging in such businesses or in
other related or unrelated businesses.
5
<PAGE>
9. The Company agrees (i) not to hold the Adviser or any of its
officers or employees liable for, and (ii) to indemnify or insure the Adviser
and its officers and employees ("Indemnified Parties") against, any costs and
liabilities the Indemnified Parties may incur as a result of any claim
against the Indemnified Parties in the good faith exercise of their powers
hereunder (excepting matters as to which the Indemnified Parties shall be
finally adjudged to have been guilty of willful misconduct or gross
negligence, or in violation of applicable law) or arising out of an act or
omission of the custodian, or of any broker or agent selected by the Adviser
in a commercially reasonable manner.
10. (a) This Agreement shall become effective with respect
to the Initial Series on the date hereof (the "Effective
Date") and, with respect to any additional Series, on the
date of receipt by the Company of notice from the Adviser in
accordance with Section 1(b) hereof that the Adviser is
willing to serve as Adviser with respect to such Series.
Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two (2) years from the
Effective Date with respect to the Initial Series and, with
respect to each additional Series, until the day and month
following the first anniversary of the date on which such
Series becomes a Series hereunder, and shall continue in
full force and effect for periods of one year thereafter
with respect to each Series so long as such continuance with
respect to any such Series is approved at least annually (i)
by either the Directors of the Company or by a vote of a
majority (as defined in the 1940 Act) of the outstanding
voting securities of such Series, and (ii) in either event
by the vote of a majority of the Directors of the Company
who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting
on such approval. However, the continuance of this
Agreement with respect to any Series is subject to the
approval of this Agreement by a majority (as defined in the
1940 Act) of the outstanding voting securities of such
Series on or before the next anniversary following the date
on which such Series becomes a Series hereunder.
Any approval of this Agreement by a majority (as
defined in the 1940 Act) of the outstanding voting
securities of any Series shall be effective to continue
this Agreement with respect to any such Series
notwithstanding (i) that this Agreement has not been
approved by the holders of a majority (as defined in
the 1940 Act) of the outstanding voting securities of
any other Series affected thereby, and (ii) that this
Agreement has not been approved by the vote of a
majority (as defined in the 1940 Act) of the
outstanding voting securities of the Company, unless
such approval shall be required by any applicable law
or otherwise.
(b) This Agreement may be terminated with respect to any
6
<PAGE>
Series at any time, without payment of any penalty, by
the Board of Directors of the Company or by the vote of a
majority (as defined in the 1940 Act) of the outstanding
voting securities of the Company, on sixty (60) days'
written notice to the Adviser, or by the Adviser on like
notice to the Company.
(c) This Agreement shall automatically and immediately
terminate in the event of its assignment.
11. (a) This Agreement supersedes any prior agreement
relating to the subject matter hereof between the parties.
(b) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be
affected thereby.
12. This Agreement shall be construed in accordance with
the laws of the State of California and the 1940 Act. To
the extent that the applicable laws of the State of
California conflict with the applicable provisions of the
1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate originals by their officers thereunto duly
authorized as of the date first above written.
ATLAS ASSETS, INC. ATLAS ADVISERS, INC.
By /s/ Larry E. LaCasse By /s/ Larry E. LaCasse
- --------------------------- ----------------------------
Larry E. LaCasse Larry E. LaCasse
Chief Operating Officer and Chief Operating Officer and
Senior Vice President Senior Vice President
ATTEST: ATTEST:
/s/ Louise Longley /s/ Louise Longley
- ---------------------------- --------------------------
Louise Longley Louise Longley
Secretary Secretary
7
<PAGE>
Atlas Assets, Inc.
1901 Harrison Street
Oakland, California 94612
Ladies and Gentlemen:
This will confirm our agreement to modify the language of Section 9 of the
Investment Advisory Agreement between us dated January 12, 1990 to read in
full as set forth below. This modification will add the underlined words and
delete the bracketed words indicated below, in order to reflect accurately in
the Agreement the limitations of the Investment Company Act of 1940 with
respect to indemnification (which limitations we acknowledge are applicable
whether or not specifically referred to in Section 9).
"Section 9. The Company agrees (i) not to hold the Adviser or any of
its officers or employees liable for, and (ii) to indemnify or insure the
Adviser and its officers and employees ("Indemnified Parties") against, any
costs and liabilities the Indemnified Parties may incur as a result of any
claim against the Indemnified Parties in the good faith exercise of their
powers hereunder (excepting matters as to which the Indemnified Parties
[shall be finally adjudged to] have been guilty of willful [misconduct]
misfeasance, BAD BAITH, or gross negligence IN THE PERFORMANCE OF THEIR
DUTIES, OR BY REASON OF THEIR RECKLESS DISREGARD OF THEIR OBLIGATIONS AND
DUTIES UNDER THIS AGREEMENT, or in violation of applicable law)
[or arising out of an act or omission of the custodian, or of any broker
or agent selected by the Adviser in a commercially reasonable manner]."
Very truly yours,
ATLAS ADVISERS, INC.
By: /s/ Larry E. LaCasse Date: 11/1/91
------------------------ --------------------
Title: Sr. Vice President
------------------------------
Agreed: ATLAS ASSETS, INC.
By: /s/ Larry E.LaCasse
---------------------------------
Title: Sr. Vice President
------------------------------
<PAGE>
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
AS AMENDED FEBRUARY 16, 1996
Atlas National Municipal Money Fund
(Formerly the Atlas Tax Free Money Fund);
Atlas California Municipal Money Fund
(Formerly the Atlas California Double Tax Free Money Fund);
Atlas U.S. Treasury Money Fund
-----------------------------------------------------------
On the Portion of
Daily Total Net Asset Value Annual Rate
- --------------------------- -----------
Assets up to $500 million .50%
Assets over $500 million .47 1/2%
Atlas National Municipal Bond Fund
(Formerly the Atlas Tax Free Income Fund);
Atlas California Municipal Bond Fund
(Formerly the Atlas California Double Tax Free Income Fund);
Atlas U.S. Government Intermediate Fund
(Formerly the Atlas U.S. Treasury Intermediate Fund);
Atlas U.S. Government and Mortgage Securities Fund;
Atlas National Insured Intermediate Municipal Fund;
Atlas California Insured Intermediate Municipal Fund;
-----------------------------------------------------------
On the Portion of
Daily Total Net Asset Value Annual Rate
- --------------------------- -----------
Assets up to $500 million .55%
Assets over $500 million .50%
Atlas Growth and Income Fund;
Atlas Balanced Fund;
Atlas Strategic Growth Fund;
----------------------------
On the Portion of
Daily Total Net Asset Value Annual Rate
- --------------------------- -----------
Assets up to $100 million .70%
Assets between $100 million
and $500 million .60%
Assets over $500 million .50%
A-1
<PAGE>
Atlas Global Growth Fund
------------------------
On the Portion of
Daily Total Net Asset Value Annual Rate
- --------------------------- -----------
Assets up to $100 million .80%
Assets between $100 million
and $500 million .75%
Assets over $500 million .70%
Atlas Strategic Income Fund
---------------------------
On the Portion of
Daily Total Net Asset Value Annual Rate
- --------------------------- -----------
Assets up to $100 million .75%
Assets between $100 million
and $500 million .70%
Assets over $500 million .65%
A-2
<PAGE>
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1993 among ATLAS ADVISERS,
INC., a California corporation (the "Adviser"), ATLAS ASSETS, INC., a Maryland
corporation (the "Company"), on behalf of each series of the Company listed in
Appendix A hereto, as amended from time to time (hereinafter referred to
individually as a "Fund" and collectively as the "Funds") and OPPENHEIMER
MANAGEMENT CORPORATION, a Colorado corporation (the "Subadviser").
WHEREAS, the Company is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company and is authorized to issue
separate series, each of which offers a separate class of shares of capital
stock and each of which has its own investment objectives, policies and
limitations;
WHEREAS, the Company has retained the Adviser to render investment
management and administrative services to the Funds;
WHEREAS, the Adviser and the Company desire to retain the Subadviser
to furnish portfolio management services to the Funds in connection with the
Adviser's investment management activities on behalf of the Funds, and the
Subadviser is willing to furnish such services to the Adviser and the Company;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser, the Subadviser and the
Company as follows:
1
<PAGE>
1. APPOINTMENT. The Adviser and the Company hereby appoint the
Subadviser to act as portfolio manager to each Fund listed in Appendix A
(collectively, the "Funds") on the terms set forth in this Agreement, as may be
amended in writing from time to time by the parties hereto. The Subadviser
accepts such appointment and agrees to furnish the services described herein,
for the compensation provided in the Fee Schedule attached hereto as Appendix B,
as may be amended in writing from time to time by the parties hereto.
2. REPRESENTATIONS OF THE COMPANY. The Company represents,
warrants, and agrees that:
A. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Maryland.
B. The Adviser and Subadviser have been duly appointed by the
Board of Directors of the Company.
C. The Company will deliver to the Subadviser a true and
complete copy of its Registration Statement filed with the SEC, as effective
from time to time, and such other documents or instruments governing the
investment objectives of the Funds and such other information as is necessary
for the Subadviser to carry out its obligations under this Agreement.
D. The Company is currently in compliance and shall at all
times use its best efforts to ensure continued compliance with the requirements
imposed upon the Company by the 1940 Act and applicable state laws.
2
<PAGE>
3. REPRESENTATIONS OF THE SUBADVISER. The Subadviser represents,
warrants, and agrees that:
A. The Subadviser is a corporation duly organized, validly
existing and in good standing under the laws of the state of Colorado.
B. The Subadviser is registered as an "Investment Adviser"
under the Investment Advisers Act of 1940 ("Advisers Act") and under applicable
state laws and is currently in compliance and shall at all times use its best
efforts to ensure compliance with the requirements imposed upon the Subadviser
by the Advisers Act and applicable state laws and has provided its current Form
ADV to the Adviser.
C. The Subadviser has adopted a written code of ethics
complying with the requirements of Rule 17j under the 1940 Act, will provide the
Company with a copy of the code of ethics and evidence of its adoption, and will
make such reports to the Company as are required by Rule 17j-1 under the 1940
Act.
4. REPRESENTATIONS OF THE ADVISER. The Adviser represents,
warrants, and agrees that:
A. The Adviser is a corporation duly organized, validly
existing and in good standing under the laws of the state of California.
B. The Adviser is registered as an "Investment Adviser" under
the Advisers Act and under applicable state laws and is currently in compliance
and shall at all times use its best
3
<PAGE>
efforts to ensure compliance with the requirements imposed upon the Adviser by
the Advisers Act and applicable state laws and has provided its current Form ADV
to the Subadviser.
C. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j under the 1940 Act, has provided the Company
with a copy of the code of ethics and evidence of its adoption, and will make
such reports to the Company as are required by Rule 17j-1 under the 1940 Act.
5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Company's
Board of Directors, the Subadviser will provide a continuous investment program
for the portfolio of each Fund listed in Appendix A, including investment
management, with respect to all investments, cash and cash equivalents in the
portfolio. The Subadviser will determine from time to time what securities and
other investments will be purchased, retained or sold by a Fund and will place
orders for execution of such portfolio transactions in accordance with paragraph
C below to effect the investment decisions made. The Subadviser will provide
the services identified in this Agreement in accordance with each respective
Fund's investment objectives, policies and restrictions as stated in the
Company's Registration Statement filed with the SEC, as effective from time to
time, and as interpreted by the Adviser and communicated to the Subadviser, on
behalf of the Company, from time to time. The Adviser will be responsible for
all other services to be provided to each Fund that is identified in Appendix A
hereto.
4
<PAGE>
B. Nothing in this Agreement shall in any way limit or restrict
the Subadviser or any of its directors, officers, stockholders or employees from
buying, selling or trading any securities for its or their own account or the
account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by the
Subadviser of its duties and obligations under this Agreement.
C. Subject to any applicable regulatory restriction or
prohibition, the Subadviser shall have authority and discretion to select
brokers and dealers (hereinafter "broker-dealers") to execute portfolio
transactions for the Funds and for the selection of the markets on or in which
the transactions will be executed. In placing orders, the Subadviser may place
portfolio transactions with brokers on a commission basis or with primary market
makers on a net basis. It is understood that transactions with market makers
reflect the spread between the bid and asked prices. The Subadviser may make
purchases of underwritten issues which include an underwriting fee paid to the
underwriter.
The primary objective of the Subadviser in placing orders for the
purchase and sale of securities for a Fund shall be to obtain the "best
execution" (prompt and reliable execution at the most favorable security price
obtainable) taking into account such factors as price, commission, if any, size
of order, difficulty of execution and skill required of the executing broker or
dealer. The Subadviser shall have discretion, in the interests of each Fund, to
allocate brokerage on each Fund's portfolio transactions to broker-dealers
qualified to obtain best execution
5
<PAGE>
of such transactions who provide brokerage and/or research services (as such
services are defined Section 28(e)(3) of the Securities Exchange Act of 1934)
for any of the Funds. The term "research" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or purchasers or sellers of securities; and
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
Subject to such policies as the Adviser and the Company's Board of Directors may
determine, the Subadviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused a Fund to pay a broker for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker-dealer, viewed in
terms of either that particular transaction or the Subadviser's overall
responsibilities with respect to the Fund. In reaching such determination, the
Subadviser will not be required to place or attempt to place a specific dollar
value on the brokerage and/or research services provided or being provided by
such broker/dealer. The Subadviser shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate applicable to
any particular portfolio transactions or to select any broker-dealer on the
basis of its purported or "posted"
6
<PAGE>
commission rate but will, to the best of its ability, endeavor to be aware of
the current level of the charges of eligible broker-dealers and to minimize the
expense incurred by the Funds for effecting their portfolio transactions.
D. All transactions will be consummated by payment to or
delivery by the Company's Custodian, or such depositories or agents as may be
designated by the Custodian, of all cash and/or securities due to or from a
Fund, and the Subadviser shall not have possession or custody thereof or any
responsibility or liability with respect thereto. The Subadviser shall advise
the Custodian and the Company daily of all investment orders placed by it with
broker-dealers pursuant to procedures agreed upon by the Subadviser and the
Company. The Subadviser shall not be responsible for obtaining prices for any
such investment order, but will use its best efforts to direct the Custodian to
pricing sources and assist the Custodian in obtaining dealer quotes if so
requested by the Custodian. The Company or its authorized agents, the Adviser
and Subadviser, shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Subadviser. The Company shall be responsible for all custodial arrangements
and the payment of all custodial charges and fees, and, upon transmitting to the
Custodian the investment orders placed by it with broker-dealers, the Subadviser
shall have no responsibility or liability with respect to custodial arrangements
or the acts, omissions or other conduct of the Custodian.
7
<PAGE>
E. The Custodian shall, on a daily basis pursuant to procedures
and in a format agreed upon by the Subadviser and the Company, provide portfolio
reports to the Subadviser that shall include a listing of all portfolio
investments of each Fund and its cash position.
6. EXPENSES. During the term of this Agreement, the Subadviser will
pay all expenses incurred by it or its staff in connection with rendering
portfolio management services under this Agreement. This does not include
expenses and costs of the Funds' operations payable by the Company or the
Adviser, including, but not limited to, those for: interest and taxes;
brokerage commissions; custody, transfer agency, dividend disbursement,
accounting, pricing, legal and auditing services; insurance premiums for
fidelity and other coverage required for their operations; filing and
registration of shares; shareholder reports; meetings of the Company's
shareholders or directors (except those called solely to accommodate the
Subadviser); printing and postage; office facilities, stationery and supplies;
the clerical, executive and administrative costs incurred by the Adviser in
overseeing or administering all of the above; other direct administrative and
service costs; and such extraordinary non-recurring expenses as may arise,
including litigation, affecting any of the Funds.
7. COMPENSATION. For the services provided, the Adviser will pay
the Subadviser a fee, payable monthly based on the aggregate daily net assets of
the Funds, as provided in the Fee Schedule attached to this Agreement as
Appendix B. The "aggregate daily net assets" is defined as the aggregate of the
values placed
8
<PAGE>
on the net assets of all Funds as of 4:00 p.m. (New York time), on each day on
which the net asset value of the Funds' portfolios is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Company lawfully
determines the net asset value of a Fund's portfolio as of some other time on
each business day, as of such time. The net asset value of each Fund's
portfolio shall be determined pursuant to the applicable provisions of the
Company's current Registration Statement and the 1940 Act. If the determination
of net asset value for a Fund is suspended in conformity with the 1940 Act for
any particular business day, then the value of the net assets of such Fund's
portfolio as last determined shall be deemed to be the value of the net assets
as of the close of the New York Stock Exchange, or such other time as the net
asset value of the portfolio may lawfully be determined, on that day. If the
Company has suspended the determination of the net asset value of a Fund's
portfolio pursuant to the Registration Statement and the 1940 Act for a period
including such month, the Subadviser's compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month). If the Company
determines the value of the net assets of a Fund's portfolio more than once on
any day, the last such determination on that day shall be deemed to be the sole
determination on that day for the purposes of this Section 7.
8. BOOKS AND RECORDS.
A. The Subadviser will make available to the Adviser and the
Company promptly upon request its records and
9
<PAGE>
ledgers with respect to and relating to each Fund's securities transactions to
assist the Adviser and the Company in compliance with the 1940 Act and the
Advisers Act, and other applicable laws. The Subadviser will furnish the
Company's Board of Directors such periodic and special reports on each Fund as
the Adviser and the Directors may reasonably request.
B. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Subadviser hereby agrees that all records which it maintains for
the Funds are the property of the Company and further agrees to surrender
promptly to the Company any of such records upon the Company's request. The
Subadviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act and to preserve the records required by Rule 204-2 under the Advisers
Act to the extent necessary or appropriate to comply with the period specified
in the Rule.
9. INDEMNIFICATION.
A. Absent the Adviser's or the Company's gross negligence,
willful misconduct or bad faith in the performance of its duties, or reckless
disregard of its obligations and duties under this Agreement, the Subadviser
agrees to indemnify and hold harmless the Adviser, the Company and their
officers and employees against any and all costs and liabilities (including
legal and other expenses) which the Adviser or the Company may incur, arising
out of the Subadviser's (a) gross negligence, willful misconduct or bad faith
in the performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, or
10
<PAGE>
(b) untrue statement or omission of a material fact required in the Registration
or Proxy Statements or other regulatory filing, if such statement or omission
was made in reliance upon information furnished in writing by the Subadviser for
inclusion in such regulatory filings.
B. Absent the Subadviser's gross negligence, willful misconduct
or bad faith in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, the Adviser and the Company agree
to indemnify and hold harmless the Subadviser and its officers and employees
against any and all costs and liabilities (including legal and other expenses)
which the Subadviser may incur, arising out of the Adviser's or the Company's
(a) gross negligence, willful misconduct or bad faith in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, or (b) untrue statement or omission of a material fact required in
the Registration or Proxy Statements or other regulatory filing, unless such
statement or omission was made in reliance upon information furnished in writing
by the Subadviser for inclusion in such regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of
the Subadviser are not exclusive, and nothing in this Agreement shall prevent
the Subadviser from providing similar services to other investment companies
(whether or not their investment objectives and policies are similar to those of
a Fund) or from engaging in other activities. When the Subadviser recommends
the purchase or sale of a security for other investment
11
<PAGE>
companies and other clients, and at the same time the Subadviser recommends the
purchase or sale of the same security for one or more Funds, it is understood
that such transactions will be executed on a basis that is fair and equitable to
each Fund.
11. DURATION. The term of this Agreement, with respect to each Fund,
shall begin on the date (which shall occur on or before December 31, 1993) the
SEC declares effective the Post-Effective Amendment to the Company's
Registration Statement that discloses the Subadviser as such for that Fund and
shall remain in effect until the first meeting of such Fund's shareholders held
thereafter (except that in the case of the Atlas Growth and Income Fund, such
shareholders meeting may be held prior to the date the SEC declares effective
the applicable Registration Statement), and, if approved at such meeting, shall
continue in effect for two years from the effective date of the Post-Effective
Amendment with respect to such Fund and continue on an annual basis thereafter
if approved for each Fund each year by (a) the vote of a majority of the entire
Board of Directors of the Company or by the vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), and by
(b) the vote of a majority of those Directors of the Company who are not parties
to this Agreement or interested persons (as such term is defined in the
1940 Act) of any such party, cast in person at a meeting called for the purpose
of voting on such approval.
12. TERMINATION. This Agreement may be terminated at any time
without payment of any penalty by (a) the Adviser, upon sixty (60) days' written
notice to the Subadviser and the Company
12
<PAGE>
(which notice may be waived by the Subadviser and the Company), (b) the Company,
on behalf of any one or more of the Funds, upon the vote of a majority of the
Company's Board of Directors or a majority of the outstanding voting securities
of such Fund, upon sixty (60) days' written notice to the Adviser and the
Subadviser, or (c) the Subadviser, upon one hundred twenty (120) days' written
notice to the Adviser and the Company (which notice may be waived by the Adviser
and the Company). Termination of this Agreement with respect to a Fund shall
not effect the continuing applicability of this Agreement with respect to other
Funds. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act). Termination of this
Agreement shall not affect the right of the Subadviser to receive payments of
any unpaid balance of the compensation described in Section 7 earned prior to
such termination.
13. AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought and no amendment of this Agreement shall be effective
with respect to a Fund until approved by a vote of a majority of the outstanding
voting securities of such Fund, if such approval is required by applicable law.
14. USE OF NAME. It is understood that the name
"Oppenheimer Management Corporation" or any derivative thereof or logo
associated with that name is the valuable property of the Subadviser and its
affiliates and that the Company and each Fund
13
<PAGE>
have the right to use such name (or derivative or logo) in offering and sales
materials so long as the Subadviser is portfolio manager to such Fund and
provided the Subadviser shall have reviewed and approved in writing such use,
which approval may not be unreasonably withheld. Upon termination of this
Agreement, the Company shall promptly cease to use such name.
15. MISCELLANEOUS.
A. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
B. The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
C. If any provision of this Agreement shall be held invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and the provisions of this Agreement shall be
deemed to be severable.
D. Any notice under this Agreement shall be in writing
addressed and delivered or mailed, postage prepaid, to the other party at the
address below or at such other address as such other party may designate
hereunder for the receipt of such notice:
If to the Adviser or the Company: Atlas Advisers, Inc.
1901 Harrison Street
Oakland, California 94612
Attn: Steven J. Gray,
Vice President
and Chief Legal Counsel
14
<PAGE>
If to the Subadviser: Oppenheimer Management Corporation
Two World Trade Center, 34th Floor
New York, New York 10048
Attention: Andrew J. Donohue,
Executive Vice President
and General Counsel
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATLAS ADVISERS, INC.
By:
-------------------------------------
Larry E. LaCasse
Its Group Senior Vice President and
Chief Operating Officer
ATLAS ASSETS, INC.
By:
-------------------------------------
Larry E. LaCasse
Its Group Senior Vice President and
Chief Operating Officer
OPPENHEIMER MANAGEMENT CORPORATION
By:
-------------------------------------
Andrew J. Donohue
Its Executive Vice President and
General Counsel
15
<PAGE>
APPENDIX A
SUBADVISORY AGREEMENT
OPPENHEIMER MANAGEMENT CORPORATION
DATED: OCTOBER 1, 1993
AS AMENDED , 1996
------------
The provisions of the Subadvisory Agreement among ATLAS ADVISERS,
INC., ATLAS ASSETS, INC. (the "Company") and OPPENHEIMERFUNDS, INC. (formerly
Oppenheimer Management Corporation) apply to the following series of the
Company:
1. Atlas Growth and Income Fund
2. Atlas Balanced Fund
3. Atlas Strategic Growth Fund
IN WITNESS WHEREOF, the parties hereto have caused this Appendix A to
the Subadvisory Agreement to be amended as of _________, 1996 to add the
following series of the Company:
4. Atlas Global Growth Fund
5. Atlas Strategic Income Fund
ATLAS ADVISERS, INC. OPPENHEIMERFUNDS, INC.
By: By:
--------------------------- --------------------------
Larry E. LaCasse Andrew J. Donohue
Its Group Senior Vice President Its Executive Vice President
and Chief Operating Officer and General Counsel
ATLAS ASSETS, INC.
By:
--------------------------
Larry E. LaCasse
Its Group Senior Vice President
and Chief Operating Officer
A-1
<PAGE>
APPENDIX B
SUBADVISORY AGREEMENT
OPPENHEIMER MANAGEMENT CORPORATION
FEE SCHEDULE
DATED: OCTOBER 1, 1993
AS AMENDED , 1996
------------
For all Funds identified in Appendix A
ANNUAL FEE - GROWTH AND INCOME,
BALANCED, AND STRATEGIC GROWTH FUNDS
The subadvisory fee payable monthly to OppenheimerFunds, Inc.
("Oppenheimer," formerly Oppenheimer Management Corporation) for services
rendered to the Atlas Growth and Income Fund, the Atlas Balanced Fund and the
Atlas Strategic Growth Fund is computed on the aggregate net assets of those
Funds, as of the close of business each day, at the annual rate of 0.30% of the
first $50 million of net assets and 0.25% of net assets in excess of $50
million.
If the average annual net assets of any of those three Funds is less
than $8,333,333 (as calculated in 12 month intervals), then an additional
subadvisory fee shall be paid equal to 0.30% multiplied by the amount by which
$8,333,333 exceeds the Fund's average annual net assets for such 12 month
period. However, no such additional subadvisory fee will be paid on assets of
the Atlas Growth and Income Fund, the Atlas Balanced Fund or the Atlas Strategic
Growth Fund through the end of 15 calendar months from its commencement of
operations.
ANNUAL FEE - GLOBAL GROWTH FUND
The subadvisory fee payable monthly to Oppenheimer for services
rendered to the Atlas [Global] Fund is computed on the net assets of the Fund as
of the close of business each day, at the annual rate of 0.35% of the first $50
million of net assets, 0.30% of net assets above $50 million up to $100 million
and 0.25% of net assets in excess of $100 million.
The subadvisory fee will be no less than $25,000 annually, commencing
with the twelve month billing period that begins on January 1, 1997. The
monthly billing amount will be calculated by applying the appropriate percentage
to the average daily net assets for the month, without regard to any minimum.
At the end of each twelve month billing period beginning with the period ending
December 31, 1997, and corresponding with the end of each calendar year
thereafter, if the prior twelve monthly payments do not equal or exceed $25,000,
Oppenheimer will be paid the amount necessary to satisfy the minimum annual fee.
B-1
<PAGE>
ANNUAL FEE - STRATEGIC INCOME FUND
The subadvisory fee payable to Oppenheimer Funds, Inc. for services
rendered to the Atlas [Strategic Income] Fund is computed on the net assets of
the Fund as of the close of business each day, at the annual rate of 0.30% of
the first $100 million of net assets and 0.25% of net assets in excess of $100
million.
The subadvisory fee will be no less than $25,000 annually. The
monthly billing amount will be calculated by applying the appropriate percentage
to the average daily net assets for the month, without regard to any minimum.
At the end of each twelve month billing period (commencing with the end of the
first full twelve month period following the commencement of operations of the
Fund, and annually thereafter), if the prior twelve monthly payments do not
equal or exceed $25,000, Oppenheimer will be paid the amount necessary to
satisfy the minimum annual fee.
IN WITNESS WHEREOF, the parties hereto have caused this Appendix B to
the Subadvisory Agreement to be amended as of , 1996.
---------------
ATLAS ADVISERS, INC. OPPENHEIMER MANAGEMENT CORPORATION
By: By:
--------------------------- --------------------------
Larry E. LaCasse Andrew J. Donohue
Its Group Senior Vice President Its Executive Vice President
and Chief Operating Officer and General Counsel
ATLAS ASSETS, INC.
By:
--------------------------
Larry E. LaCasse
Its Group Senior Vice President
and Chief Operating Officer
B-2
<PAGE>
(9/95)
Custody & Fund Accounting
CUSTODIAN AGREEMENT
BETWEEN
ATLAS FUNDS
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
-----
1. Bank Appointed Custodian............................ 1
2. Definitions......................................... 1
2.1 Authorized Person.............................. 1
2.2 Security....................................... 1
2.3 Portfolio Security............................. 2
2.4 Officers' Certificate.......................... 2
2.5 Book-Entry System.............................. 2
2.6 Depository..................................... 2
2.7 Proper Instructions............................ 2
3. Separate Accounts................................... 3
4. Certification as to Authorized Persons.............. 3
5. Custody of Cash..................................... 3
5.1 Purchase of Securities......................... 4
5.2 Redemptions.................................... 4
5.3 Distributions and Expenses of Fund............. 4
5.4 Payment in Respect of Securities............... 4
5.5 Repayment of Loans............................. 4
5.6 Repayment of Cash.............................. 4
5.7 Foreign Exchange Transactions.................. 4
5.8 Other Authorized Payments...................... 5
5.9 Termination.................................... 5
6. Securities.......................................... 5
6.1 Segregation and Registration................... 5
6.2 Voting and Proxies............................. 6
6.3 Book-Entry System.............................. 6
6.4 Use of a Depository............................ 7
6.5 Use of Book-Entry System for Commercial Paper.. 8
6.6 Use of Immobilization Programs................. 9
6.7 Eurodollar CDs................................. 9
6.8 Options and Futures Transactions............... 10
(a) Puts and Calls Traded on Securities
Exchanges, NASDAQ or Over-the-Counter..... 10
(b) Puts, Calls, and Futures Traded on
Commodities Exchanges..................... 10
<PAGE>
Page
-----
6.9 Segregated Account............................. 11
6.10 Interest Bearing Call or Time Deposits......... 12
6.11 Transfer of Securities......................... 13
7. Redemptions........................................ 14
8. Merger, Dissolution, etc. of Fund.................. 15
9. Actions of Bank Without Prior Authorization......... 15
10. Collections and Defaults............................ 16
11. Maintenance of Records and Accounting Services...... 16
12. Fund Evaluation..................................... 17
13. Concerning the Bank................................. 17
13.1 Performance of Duties and Standard of Care..... 17
13.2 Agents and Subcustodians with Respect to
Property of the Fund Held in the United States. 18
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States.............. 19
13.4 Insurance...................................... 23
13.5 Fees and Expenses of Bank..................... 23
13.6 Advances by Bank.............................. 23
14. Termination......................................... 23
15. Confidentiality..................................... 24
16. Notices.............................................. 25
17. Amendments.......................................... 25
18. Parties............................................. 25
19. Governing Law....................................... 25
20. Counterparts........................................ 25
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this ____ day of _________, 1995, between ATLAS
FUNDS, a Maryland corporation (the "Company") and INVESTORS BANK & TRUST
COMPANY (the "Bank").
The Company, an open-end management investment company, desires to place
and maintain all of the portfolio securities and cash of its separate series
(each series referred to herein as a "Fund" or collectively as the "Funds")
in the custody of the Bank. The Bank has at least the minimum qualifications
required by Section 17(f)(1) of the Investment Company Act of 1940 (the "1940
Act") to act as custodian of the portfolio securities and cash of the
Company, and has indicated its willingness to so act, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Company hereby appoints the Bank
as custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
2.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Company by appropriate resolution of its Board of Directors
("the Board"), and set forth in a certificate as required by Section 4 hereof.
2.2 SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit,
or group or index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to a foreign currency, or, in
general, any interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to, or
option contract to purchase or sell any of the foregoing, and futures,
forward contracts and options thereon.
1
<PAGE>
2.3 PORTFOLIO SECURITY. Portfolio Security will mean any Security
owned by a Fund of the Company.
2.4 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Company.
2.5 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank,
its successor or successors and its nominee or nominees.
2.6 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934
("Exchange Act"), its successor or successors and its nominee or nominees.
The term "Depository" shall further mean and include any other person
authorized to act as a depository under the 1940 Act, its successor or
successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Board.
2.7 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions (which may be continuing instructions) regarding the purchase or
sale of Portfolio Securities, and payments and deliveries in connection
therewith, given by an Authorized Person as shall have been designated in an
Officers' Certificate, such instructions to be given in such form and manner
as the Bank and the Company shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialed by such one or more persons from time to time designated
in an Officers' Certificate as having been authorized by the Board. Oral
instructions will be considered Proper Instructions if the Bank reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall
cause all oral instructions to be promptly confirmed in writing. The Bank
shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect
to any follow-up or confirmatory instruction shall be to make reasonable
efforts to detect any discrepancy between the original instruction and such
confirmation and to report such discrepancy to the Company. The Company shall
be responsible, at the Company's expense, for taking any action, including
any reprocessing, necessary to correct any such discrepancy or error, and to
the extent such action requires the Bank to act the Company shall give the
Bank specific Proper Instructions as to the action required. Upon receipt of
an Officers' Certificate as to the authorization by the Board accompanied by
a detailed description of procedures approved by the Company, Proper
Instructions may include communication effected
2
<PAGE>
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate
safeguards for the Company's assets.
3. SEPARATE ACCOUNTS. If the Company has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all
investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken by the Company shall
be deemed to refer to the Company acting on behalf of one or more of its
series, any reference in this Agreement to any assets of the Company,
including, without limitation, any Portfolio Securities and cash and earnings
thereon, shall be deemed to refer only to assets of the applicable series,
any duty or obligation of the Bank hereunder to the Company shall be deemed
to refer to duties and obligations with respect to the individual series, and
any obligation or liability of the Company hereunder shall be binding only
with respect to the individual series, and shall be discharged only out of
the assets of such series.
4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Bank his
or her certification to the Bank, in such form as may be acceptable to the
Bank, of (i) the names and signatures of the Authorized Persons and (ii) the
names of the members of the Board, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the
most recent certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Company, will sign a
new or amended certification setting forth the change and the new, additional
or omitted names or signatures. The Bank will be entitled to rely and act
upon any Officers' Certificate given to it by the Company which has been
signed by Authorized Persons named in the most recent certification.
5. CUSTODY OF CASH. As custodian for the Company, the Bank will open and
maintain a separate account or accounts in the name of the Company or in the
name of the Bank, as Custodian of the Company, and will deposit to the
account of the Company all of the cash of the Company, except for cash held
by a subcustodian appointed pursuant to Section 13.2 or Section 13.3 hereof,
including borrowed funds, delivered to the Bank, subject only to draft or
order by the Bank acting pursuant to the terms of this Agreement. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding shares of common stock of the Company, notification from the
Company's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will
release funds for deposit, and stating that it is for a purpose permitted
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under the terms of this Section 5, specifying the applicable subsection, the
Bank will make payments of cash held for the accounts of the Company, insofar
as funds are available for that purpose, only as permitted in subsections
5.1-5.9 below.
5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Company, against contemporaneous receipt of such securities by the Bank or,
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in
which the transaction occurs, registered in the name of the Company or in the
name of, or properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank pursuant to the
provisions of Section 6 below, each such payment to be made at the purchase
price shown on a broker's confirmation (or transaction report in the case of
Book Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made.
5.2 REDEMPTIONS. In such amount as may be necessary for the
repurchase or redemption of common shares of the Company offered for
repurchase or redemption in accordance with Section 7 of this Agreement.
5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the
account of the Company of dividends or other distributions to shareholders as
may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, distribution fees, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Company.
5.4 PAYMENT IN RESPECT OF SECURITIES. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or
securities subscribed to by the Company held by or to be delivered to the
Bank.
5.5 REPAYMENT OF LOANS. To repay loans of money made to the
Company, but, in the case of final payment, only upon redelivery to the Bank
of any Portfolio Securities pledged or hypothecated therefor and upon
surrender of documents evidencing the loan;
5.6 REPAYMENT OF CASH. To repay the cash delivered to the Company
for the purpose of collateralizing the obligation to return to the Company
certificates borrowed from the Company representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 FOREIGN EXCHANGE TRANSACTIONS. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may
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be entered into by the Bank on behalf of the Company upon the receipt of
Proper Instructions, such Proper Instructions to specify the currency broker
or banking institution (which may be the Bank, or any other subcustodian or
agent hereunder, acting as principal) with which the contract or option is
made, and the Bank shall have no duty with respect to the selection of such
currency brokers or banking institutions with which the Company deals or for
their failure to comply with the terms of any contract or option.
5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of
the Company, or other obligations of the Company incurred for proper Company
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by
its Secretary or Assistant Secretary, naming the person or persons to whom
such payment is to be made, and either describing the transaction for which
payment is to be made and declaring it to be an authorized transaction of the
Company, or specifying the amount of the obligation for which payment is to
be made, setting forth the purpose for which such obligation was incurred and
declaring such purpose to be a proper corporate purpose.
5.9 TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. SECURITIES.
6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian
appointed pursuant to Section 13.2 hereof, the Bank as custodian, will
receive and hold pursuant to the provisions hereof, in a separate account or
accounts and physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be delivered to
it by or for the account of the Company. All such Portfolio Securities will
be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Company pursuant to the terms of this Agreement. Subject
to the specific provisions herein relating to Portfolio Securities that are
not physically held by the Bank, the Bank will register all Portfolio
Securities (unless otherwise directed by Proper Instructions or an Officers'
Certificate), in the name of a registered nominee of the Bank as defined in
the Internal Revenue Code and any Regulations of the Treasury Department
issued thereunder, and will execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under
the laws of any state.
The Company will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or
to register in the name of its registered nominee, any Portfolio Securities
which may from time to time be registered in the name of the Company.
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6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an Officers' Certificate. The Bank
will execute and deliver, or cause to be executed and delivered, to the
Company all notices, proxies and proxy soliciting materials with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Company), but
without indicating the manner in which such proxies are to be voted.
6.3 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits
of Company assets in the Book-Entry System, and (ii) for any subsequent
changes to such arrangements following such approval, the Board has reviewed
and approved the arrangement and has not delivered an Officer's Certificate
to the Bank indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Company's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry Portfolio Securities which are
included with other securities deposited in the Account and shall at all
times during the regular business hours of the Bank (or such agent) be open
for inspection by duly authorized officers, employees or agents of the
Company. Where securities are transferred to the Company's account, the Bank
shall also, by book entry or otherwise, identify as belonging to the Company
a quantity of securities in fungible bulk of securities (i) registered in the
name of the Bank or its nominee, or (ii) shown on the Bank's account on the
books of the Federal Reserve Bank;
(c) The Bank (or its agent) shall pay for Portfolio Securities
purchased for the account of the Company or shall pay cash collateral against
the return of Portfolio Securities loaned by the Company upon (i) receipt of
advice from the Book-Entry System that such Portfolio Securities have been
transferred to the Account, and (ii) the making of an entry on the records of
the Bank (or its agent) to reflect such payment and transfer for the account
of the Company. The Bank (or its agent) shall transfer securities sold or
loaned for the account of the Company upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of Portfolio Securities loaned by
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the Company has been transferred to the Account; and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the
Company. Copies of all advices from the Book-Entry System of transfers of
Securities for the account of the Company shall identify the Company, be
maintained for the Company by the Bank and shall be provided to the Company
at its request. The Bank shall send the Company a confirmation, as defined by
Rule 17f-4 under the 1940 Act, of any transfers to or from the account of the
Company;
(d) The Bank will promptly provide the Company with any report
obtained by the Bank or its agent on the Book-Entry System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the Book-Entry System; and
(e) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of the Book-Entry System by reason
of any negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless disregard by
the Bank or any such agent of its duty to use its best efforts to enforce
such rights as it may have against the Book-Entry System; at the election of
the Company, it shall be entitled to be substituted for the Bank in any claim
against the Book-Entry System or any other person which the Bank or its agent
may have as a consequence of any such loss or damage if and to the extent
that the Company has not been made whole for any loss or damage;
6.4 USE OF A DEPOSITORY. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits
in DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and
remit to the Bank on behalf of the Company all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the
account of the Company and the Company
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shall pay cash collateral against the return of Portfolio Securities loaned
by the Company only upon delivery of the Portfolio Securities to or for the
account of the Company; and upon any sale of Portfolio Securities, delivery
of the securities will be made only against payment therefor or, in the event
Portfolio Securities are loaned, delivery of Portfolio Securities will be
made only against receipt of the initial cash collateral to or for the
account of the Company; and
(d) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of a Depository by reason of any
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts
to enforce such rights as it may have against a Depository. In this
connection, the Bank shall use its best efforts to ensure that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Company;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Company's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Company to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank and the Company all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Company may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.5 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each
year following such approval the Board has received and approved the
arrangements, upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Company has purchased
such Issuer's Book-entry Paper, the Bank shall issue and hold in book-entry
form, on behalf of the Company, commercial paper
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issued by issuers with whom the Bank has entered into a book-entry agreement
(the "Issuers"). In maintaining its Book-entry Paper System, the Bank agrees
that:
(a) the Bank will maintain all Book-Entry Paper held by the
Company in an account of the Bank that includes only assets held by it for
customers;
(b) the records of the Bank with respect to the Company's
purchase of Book-entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging to the Company which is included in the Book-entry
Paper System and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or agents
of the Company;
(c) the Bank shall pay for Book-Entry Paper purchased for the
account of the Company upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the
making of an entry on the records of the Bank to reflect such payment and
transfer for the account of the Company;
(d) the Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment
for such Book-Entry Paper has been transferred to the Company, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Company;
(e) the Bank shall transmit to the Company a transaction journal
confirming each transaction in Book-Entry Paper for the account of the
Company on the next business day following the transaction; and
(f) the Bank will send to the Company such reports on its system
of internal accounting control with respect to the Book-Entry Paper System as
the Company may reasonably request from time to time.
6.6 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated
by a bank which meets the requirements of Section 26(a)(1) of the 1940 Act,
and (ii) for each year following such approval the Board has reviewed and
approved the arrangement and has not delivered an Officer's Certificate to
the Bank indicating that the Board has withdrawn its approval, the Bank shall
enter into such immobilization program with such bank acting as a
subcustodian hereunder.
6.7 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD
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(a "European Branch"), provided that such Securities are identified on the
books of the Bank as belonging to the Company and that the books of the Bank
identify the European Branch holding such Securities. Notwithstanding any
other provision of this Agreement to the contrary, except as stated in the
first sentence of this subsection 6.7, the Bank shall be under no other duty
with respect to such Eurodollar CDs belonging to the Company, and shall have
no liability to the Company or its shareholders with respect to the actions,
inactions, whether negligent or otherwise of such European Branch in
connection with such Eurodollar CDs, except for any loss or damage to the
Company resulting from the Bank's own negligence, willful misfeasance or bad
faith in the performance of its duties hereunder.
6.8 OPTIONS AND FUTURES TRANSACTIONS.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Company regarding
escrow or other arrangements (i) in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank,
any broker-dealer registered under the Exchange Act and a member of the
National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Company relating to the compliance with the rules of the
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Company has deposited or is
maintaining adequate margin, if required, with any broker in connection with
any option, nor shall the Bank be under duty or obligation to present such
option to the broker for exercise unless it receives Proper Instructions from
the Company. The Bank shall have no responsibility for the legality of any
put or call purchased or sold on behalf of the Company, the propriety of any
such purchase or sale, or the adequacy of any collateral delivered to a
broker in connection with an option or deposited to or withdrawn from a
Segregated Account (as defined in subsection 6.9 below). The Bank
specifically, but not by way of limitation, shall not be under any duty or
obligation to: (i) periodically check or notify the Company that the amount
of such collateral held by a broker or held in a Segregated Account is
sufficient to protect such broker of the Company against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii) advise
the Company that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Company.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
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1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Company in accordance with the
provisions of any agreement among the Company, the Bank and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Company.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as
set forth in subparagraph (a)(2) of this Section 6.8 as if such subparagraph
referred to Futures Commission Merchants rather than brokers, and Futures and
puts and calls thereon instead of options.
6.9 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and
on behalf of the Company.
1. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be transferred into the Segregated Account or Accounts:
(a) in accordance with the provisions of any agreement among the
Company, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or
the Commodity Futures Trading Commission or any registered Contract Market,
or of any similar organizations regarding escrow or other arrangements in
connection with transactions by the Company;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Company or commodity
futures purchased or written by the Company;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less
than the aggregate purchase price due on the settlement dates of all the
Company's then outstanding forward commitment or "when-issued" agreements
relating to the purchase of Portfolio Securities and all the Company's then
outstanding commitments under reverse repurchase agreements entered into with
broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the Company
has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
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(e) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies; or
(f) for other proper corporate purposes, BUT ONLY, in the case of
this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
2. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be withdrawn from the Segregated Account or Accounts.
(a) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(b) for sale or delivery to meet the Company's obligations under
outstanding firm commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(c) for exchange for other liquid assets of equal or greater
value deposited in the Segregated Account;
(d) to the extent that the Company's outstanding forward
commitment or when-issued agreements for the purchase of portfolio securities
or reverse repurchase agreements are sold to other parties or the Company's
obligations thereunder are met from assets of the Company other than those in
the Segregated Account; or
(e) for delivery upon settlement of a forward commitment
agreement for the sale of Portfolio Securities.
6.10 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Company of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect
to the assets of the Company appropriate notation as to the amount of each
such deposit, the banking institution with which such deposit is made (the
"Deposit Bank"), and shall retain such forms of advice or receipt evidencing
the deposit, if any, as may be forwarded to the Bank by the Deposit Bank.
Such deposits shall be deemed Portfolio Securities of the Company and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the
Company.
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6.11 TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section
6.11, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the account of the
Company, against contemporaneous receipt by the Bank of payment therefor in
full, or, against payment to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale of the Portfolio Securities received
by the Bank before such transfer is made, as confirmed in the Proper
Instructions received by the Bank before such transfer is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for
failure to so tender in a timely manner unless such Proper Instructions are
received by the Bank at least two business days prior to the date required
for tender, and unless the Bank (or its agent or subcustodian hereunder) has
actual possession of such Security at least two business days prior to the
date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Company
upon authorization from the Company;
(e) in the case of option contracts owned by the Company, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the
Company by any bank, including the Bank;
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provided, however, that such Portfolio Securities will be released only upon
payment to the Bank for the account of the Company of the moneys borrowed,
except that in cases where additional collateral is required to secure a
borrowing already made, and such fact is made to appear in the Proper
Instructions, further Portfolio Securities may be released for that purpose
without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Company from the lender in accordance with
the normal procedures of the lender, that an event of deficiency or default
on the loan has occurred, the Bank may deliver such pledged Portfolio
Securities to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions
received by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Company
to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Company and the Bank, and
upon receipt of payment in connection with any repurchase agreement relating
to such securities entered into by the Company;
(j) for other authorized transactions of the Company or for other
proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed
by an authorized officer of the Company (other than the officer certifying
such resolution) and certified by its Secretary or Assistant Secretary,
specifying the Portfolio Securities to be delivered, setting forth the
transaction in or purpose for which such delivery is to be made, declaring
such transaction to be an authorized transaction of the Company or such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b), (c),
(e), (f), (g), (h) and (i) securities or cash receivable in exchange therefor
shall be delivered to the Bank.
7. REDEMPTIONS. In the case of payment of assets of the Company held by
the Bank in connection with redemptions and repurchases by the Company of
outstanding common shares, the Bank will rely on notification by the
Company's transfer agent of receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles and By-laws of the
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Company, from assets available for said purpose.
8. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of
the Company into or the consolidation of the Company with another investment
company where the Company is not the surviving entity, the sale by the
Company of all, or substantially all, of its assets to another investment
company, or the liquidation or dissolution of the Company and distribution of
its assets, the Bank will deliver the Portfolio Securities held by it under
this Agreement and disburse cash only upon the order of the Company set forth
in an Officers' Certificate, accompanied by a certified copy of a resolution
of the Board authorizing any of the foregoing transactions. Upon completion
of such delivery and disbursement and the payment of the fees, disbursements
and expenses of the Bank, this Agreement will terminate.
9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwith-standing
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Company or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name of
the Company all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Company and hold for the account of the Company all income,
dividends, interest and other payments or distribution of cash with respect
to the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by it
for the account of the Company which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Company;
9.3 Receive and hold for the account of the Company all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder;
9.4 Execute as agent on behalf of the Company all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code
or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Company's name
on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection with Portfolio Securities delivered to it or by it under this
Agreement as may be required under the provisions of the
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Internal Revenue Code and any Regulations of the Treasury Department issued
thereunder, or under the laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Company; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. COLLECTIONS AND DEFAULTS. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Company notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which
such income is payable are in default or payment is refused after due demand
or presentation, the Bank will notify the Company in writing of any default
or refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the
Company a written report once each month showing any income on any Portfolio
Security held by it which is more than ten days overdue on the date of such
report and which has not previously been reported.
11. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will
maintain records with respect to transactions for which the Bank is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the 1940 Act and will
furnish the Company daily with a statement of condition of the Company. The
Bank will furnish to the Company at the end of every month, and at the close
of each quarter of the Company's fiscal year, a list of the Portfolio
Securities and the aggregate amount of cash held by it for the Company. The
books and records of the Bank pertaining to its actions under this Agreement
and reports by the Bank or its independent accountants concerning its
accounting system, procedures for safeguarding securities and internal
accounting controls will be open to inspection and audit at reasonable times
by officers of or auditors employed by the Company and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Company.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
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The books and records maintained by the Bank on behalf of the Company are
the property of the Company and will be surrendered upon request in
accordance with Section 14.
12. FUND EVALUATION. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading
and as of such other hours, if any, as may be authorized by the Board the net
asset value and the public offering price of a share of capital stock of the
Company, such determination to be made in accordance with the provisions of
the Articles and By-laws of the Company and Prospectus and Statement of
Additional Information relating to the Company, as they may from time to time
be amended, and any applicable resolutions of the Board at the time in force
and applicable; and promptly to notify the Company, the proper exchange and
the NASD or such other persons as the Company may request of the results of
such computation and determination. In computing the net asset value
hereunder, the Bank may rely in good faith upon information furnished to it
by any Authorized Person in respect of (i) the manner of accrual of the
liabilities of the Company and in respect of liabilities of the Company not
appearing on its books of account kept by the Bank, (ii) reserves, if any,
authorized by the Board or that no such reserves have been authorized, (iii)
the source of the quotations to be used in computing the net asset value,
(iv) the value to be assigned to any security for which no price quotations
are available, and (v) the method of computation of the public offering price
on the basis of the net asset value of the shares, and the Bank shall not be
responsible for any loss occasioned by such reliance or for any good faith
reliance on any quotations received from a source pursuant to (iii) above.
13. CONCERNING THE BANK.
13.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any,
the Bank will be entitled to receive and act upon the advice of independent
counsel of its own selection, which may be counsel for the Company, and will
be without liability for any action taken or thing done or omitted to be done
in accordance with this Agreement in good faith in conformity with such
advice. In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for
any action taken or omitted to be taken by it in good faith reliance upon the
terms of this Agreement, any Officers' Certificate, Proper Instructions,
resolution of the Board, telegram, notice, request, certificate or other
instrument reasonably believed by the Bank to be genuine and for any other
loss to the Company except in the case of its negligence, willful misfeasance
or bad faith in the performance of its duties or reckless disregard of its
obligations and duties hereunder.
17
<PAGE>
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities purchased by
or for the Company, the legality of the purchases thereof or the propriety of
the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for the
Company or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Company or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the Company
or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Company or
the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; and
(f) any property or moneys of the Company unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to
the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for
the account of the Company are such as may properly be held by the Company
under the provisions of its Articles, By-laws, any federal or state statutes
or any rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of God,
earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or malfunction of
utilities, transportation, or computers (hardware or software) and computer
facilities, the unavailability of energy sources and other similar happenings
or events except as results from the Bank's own negligence; or
(b) for special, punitive or consequential damages arising from the
provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF
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THE FUND HELD IN THE UNITED STATES. The Bank may employ agents in the
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Company's assets with respect to property of the Company
held in the United States. The Bank shall have no liability to the Company or
any other person by reason of any act or omission of such subcustodian and
the Company shall indemnify the Bank and hold it harmless from and against
any and all actions, suits and claims, arising directly or indirectly out of
the performance of such subcustodian. Upon request of the Bank, the Company
shall assume the entire defense of any action, suit, or claim subject to the
foregoing indemnity. The Company shall pay all fees and expenses of such
subcustodian.
13.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES.
(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Company hereby
authorizes and instructs the Bank to employ as sub-custodians for the
Company's Portfolio Securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities depositories
designated on the Schedule attached hereto (each, a "Selected Foreign
Sub-Custodian"). Upon receipt of Proper Instructions, together with a
certified resolution of the Company's Board of Directors, the Bank and the
Company may agree to designate additional foreign banking institutions and
foreign securities depositories to act as Selected Foreign Sub-Custodians
hereunder. Upon receipt of Proper Instructions, the Company may instruct the
Bank to cease the employment of any one or more such Selected Foreign
Sub-Custodians for maintaining custody of the Company's assets, and the Bank
shall so cease to employ such sub-custodian as soon as alternate custodial
arrangements have been implemented.
(b) FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise
be agreed upon in writing by the Bank and the Company, assets of the Company
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
Selected Foreign Sub-Custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing
the provisions set forth in subparagraph (d) hereof. Notwithstanding the
foregoing, except as may otherwise be agreed upon in writing by the Bank and
the Company, the Company authorizes the deposit in Euro-clear, the securities
clearance and depository facilities operated by Morgan Guaranty Trust Company
of New York in Brussels, Belgium, of Foreign Portfolio Securities eligible
for deposit therein and to utilize such securities depository in connection
with settlements of purchases and sales of securities and deliveries and
returns of
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<PAGE>
securities, until notified to the contrary pursuant to subparagraph (a)
hereunder.
(c) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Company the Foreign Portfolio Securities held by
each Selected Foreign Sub-Custodian. Each agreement pursuant to which the
Bank employs a foreign banking institution shall require that such
institution establish a custody account for the Bank and hold in that
account, Foreign Portfolio Securities and other assets of the Company, and,
in the event that such institution deposits Foreign Portfolio Securities in a
foreign securities depository, that it shall identify on its books as
belonging to the Bank the securities so deposited.
(d) AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each of the
agreements pursuant to which a foreign banking institution holds assets of
the Company (each, a "Foreign Sub-Custodian Agreement") shall be
substantially in the form previously made available to the Company and shall
provide that: (a) the Company's assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the foreign
banking institution or its creditors or agent, except a claim of payment for
their safe custody or administration (including, without limitation, any fees
or taxes payable upon transfers or reregistration of securities); (b)
beneficial ownership of the Company's assets will be freely transferable
without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Company, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Company held by the Selected Foreign
Sub-Custodian will be subject only to the instructions of the Bank or its
agents.
(e) ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of
the Company, the Bank will use its best efforts to arrange for the
independent accountants of the Company to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.
(f) REPORTS BY BANK. The Bank will supply to the Company from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Company held by Selected Foreign Sub-Custodians,
including but not limited to an identification of entities having possession
of the Foreign Portfolio Securities and other assets of the Company.
20
<PAGE>
(g) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Trans-actions with
respect to the assets of the Company held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Company to the
Bank and shall be effected in accordance with the applicable Foreign
Sub-Custodian Agreement. If at any time any Foreign Portfolio Securities
shall be registered in the name of the nominee of the Selected Foreign
Sub-Custodian, the Company agrees to hold any such nominee harmless from any
liability by reason of the registration of such securities in the name of
such nominee.
Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Portfolio Securities received
for the account of the Company and delivery of Foreign Portfolio Securities
maintained for the account of the Company may be effected in accordance with
the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities to
the purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later payment
for such securities from such purchaser or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation,
the exercise of any voting rights, subscription rights, redemption rights,
exchange rights, conversion rights or tender rights, or any other action in
connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to
the Company such information in connection therewith as is made available to
the Bank by the Foreign Sub-Custodian, and shall promptly forward to the
applicable Foreign Sub-Custodian any instructions, forms or certifications
with respect to such Rights, and any instructions relating to the actions to
be taken in connection therewith, as the Bank shall receive from the Company
pursuant to Proper Instructions. Notwithstanding the foregoing, the Bank
shall have no further duty or obligation with respect to such Rights,
including, without limitation, the determination of whether the Company is
entitled to participate in such Rights under applicable U.S. and foreign
laws, or the determination of whether any action proposed to be taken with
respect to such Rights by the Company or by the applicable Foreign
Sub-Custodian will comply with all applicable terms and conditions of any
such Rights or any applicable laws or regulations, or market practices within
the market in which such action is to be taken or omitted.
(h) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Bank and each Company from and against
certain losses, damages, costs, expenses, liabilities or claims arising out
of or in
21
<PAGE>
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject to the
Terms and Conditions Governing the Euro-Clear System, a copy of which has
been made available to the Fund. The Fund acknowledges that pursuant to such
Terms and Conditions, Morgan Guaranty Brussels shall have the sole right to
exercise or assert any and all rights or claims in respect of actions or
omissions of, or the bankruptcy or insolvency of, any other depository,
clearance system or custodian utilized by Euro-clear in connection with the
Fund's securities and other assets.
(i) LIABILITY OF BANK. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any
Selected Foreign Sub-Custodian employed hereunder than any such Selected
Foreign Sub-Custodian has to the Bank and, without limiting the foregoing,
the Bank shall not be liable for any loss, damage, cost, expense, liability
or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism, political risk (including, but not
limited to, exchange control restrictions, confiscation, insurrection, civil
strife or armed hostilities) other losses due to Acts of God, nuclear
incident or any loss where the Selected Foreign Sub-Custodian has otherwise
exercised reasonable care.
(j) MONITORING RESPONSIBILITIES. The Bank shall furnish annually
to the Company, information concerning the Selected Foreign Sub-Custodians
employed hereunder for use by the Fund in evaluating such Selected Foreign
Sub-Custodians to ensure compliance with the requirements of Rule 17f-5 of
the Act. In addition, the Bank will promptly inform the Fund in the event
that the Bank is notified by a Selected Foreign Sub-Custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles) or
any other capital adequacy test applicable to it by exemptive order, or if
the Bank has actual knowledge of any material loss of the assets of the Fund
held by a Foreign Sub-Custodian.
(k) TAX LAW. The Bank shall have no responsibility or liability for
any obligations now or hereafter imposed on the Company or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed
on the Fund or the Bank as the custodian of the Fund by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with regard
to such tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
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<PAGE>
13.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Company held by it as it
uses in respect of its own similar property but it need not maintain any
special insurance for the benefit of the Company.
13.5 FEES AND EXPENSES OF BANK. The Company will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on Schedule A)
including any indemnities for any loss, liabilities or expense to the Bank as
provided above. For the services rendered by the Bank hereunder, the Company
will pay to the Bank such compensation or fees at such rate and at such times
as shall be agreed upon in writing by the parties from time to time. The Bank
will also be entitled to reimbursement by the Company for all reasonable
expenses incurred in conjunction with termination of this Agreement by the
Company.
13.6 ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Company to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Company. Should such a payment or payments, with
advanced funds, result in an overdraft (due to insufficiencies of the
Company's account with the Bank, or for any other reason) this Agreement
deems any such overdraft or related indebtedness, a loan made by the Bank to
the Company payable on demand and bearing interest at the current rate
charged by the Bank for such loans unless the Company shall provide the Bank
with agreed upon compensating balances. The Company agrees that the Bank
shall have a continuing lien and security interest to the extent of any
overdraft or indebtedness, in and to any property at any time held by it for
the Company's benefit or in which the Company has an interest and which is
then in the Bank's possession or control (or in the possession or control of
any third party acting on the Bank's behalf). The Company authorizes the
Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon against any balance of
account standing to the credit of the Company on the Bank's books.
14. TERMINATION.
14.1 This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such sixty days this Agreement
will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the
date of delivery of such notice (i) by the Bank in order to prepare for the
transfer by the Bank of all of the assets of the Company held hereunder, and
(ii) by the Company in order to give the Company an opportunity to make
23
<PAGE>
suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Company will, at its request, have access
to the records of the Bank relating to the performance of its duties as
custodian. Notwithstanding the foregoing, this Agreement may not be
terminated prior to November 1, 1998 except for cause after written notice
and a reasonable opportunity to cure.
14.2 In the event of the termination of this Agreement, the
Bank will immediately upon receipt or transmittal, as the case may be,
of notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly
endorsed and all records maintained under Section 11 to the successor
custodian when appointed by the Company. The obligation of the Bank
to deliver and transfer over the assets of the Company held by it
directly to such successor custodian will commence as soon as such successor
is appointed and will continue until completed as aforesaid. If the Company
does not select a successor custodian within ninety (90) days from the date
of delivery of notice of termination the Bank may, subject to the provisions
of subsection (14.3), deliver the Portfolio Securities and cash of the
Company held by the Bank to a bank or trust company of its own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Company under terms similar to
those on which they were held by the Bank, whereupon such bank or trust
company so selected by the Bank will become the successor custodian of such
assets of the Company with the same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Company may furnish the Bank with an order of
the Company advising that a successor custodian cannot be found willing and
able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Company the question of whether the
Company will be liquidated or will function without a custodian for the
assets of the Company held by the Bank. In that event the Bank will deliver
the Portfolio Securities and cash of the Company held by it, subject as
aforesaid, in accordance with one of such alternatives which may be approved
by the requisite vote of shareholders, upon receipt by the Bank of a copy of
the minutes of the meeting of shareholders at which action was taken,
certified by the Company's Secretary and an opinion of counsel to the Company
in form and content satisfactory to the Bank.
15. CONFIDENTIALITY. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other
party, except as may be required by applicable law or at the request of a
governmental agency. The parties further agree that a breach of this
provision would
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<PAGE>
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it
at its office at the address set forth below; namely:
(a) In the case of notices sent to the Company to:
Atlas Assets, Inc.
1901 Harrison Street
Oakland, CA 94612
Attention: Steven J. Gray
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Counsel
or at such other place as such party may from time
to time designate in writing.
17. AMENDMENTS. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the
Company, such alteration or amendment will be authorized and approved by its
Board.
18. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Company
without the written consent of the Bank or by the Bank without the written
consent of the Company, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 14 hereof will not
be deemed to be an assignment within the meaning of this provision.
19. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
Atlas Funds
By:
------------------------------
Larry E. LaCasse
Group Senior Vice President
ATTEST:
- -------------------------------
Investors Bank & Trust Company
By:
----------------------------
Henry Joyce
Director, Client Management
:
ATTEST:
- -----------------------------
DATE:
- -----------------------------
26
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
Atlas Assets, Inc.:
We consent to (a) the incorporation by reference in this Post-Effective
Amendment No. 19 to Registration Statement No. 33-20318 on Form N-1A of our
report dated February 2, 1996 incorporated by reference in the Statement of
Additional Information, which is a part of such Registration Statement, (b)
the reference to us under the heading "Additional Information - Independent
Auditors" in such Statement of Additional Information, and (c) the reference
to us under the heading "Financial Highlights" in the Prospectus, which is a
part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
February 22, 1996
<PAGE>
DISTRIBUTION PLAN
OF
ATLAS ASSETS, INC
WHEREAS, Atlas Assets, Inc. (the "Company") is a Maryland corporation
which offers shares of common stock in various series ("Series");
WHEREAS, Atlas Securities, Inc. ("Distributor") will serve as
distributor of the shares of common stock of the Company, and the Company and
the Distributor are parties to a principal underwriting agreement (the
"Agreement");
WHEREAS, the purpose of this Distribution Plan (the "Plan") is to
authorize the Company to bear expenses of distribution of its shares, including
reimbursement to the Distributor for its expenses in the promotion of the sale
of shares of the Company, pursuant to the Agreement;
WHEREAS, the Board of Directors of the Company has determined that
there is a reasonable likelihood that this Plan will benefit the Company and its
shareholders:
NOW, THEREFORE, the Company adopts this Plan as follows:
1. The Company may expend pursuant to this Plan amounts not to
exceed .25 of 1% of the average daily net assets of each Series per annum,
reimbursable on a quarterly basis for actual costs expended on behalf of that
Series in that year. Reimbursements from one Series may not be expended for
expenses of another Series. The Distributor may make payments not to exceed
.25% to securities dealers.
2. As Distributor of the shares of the Company, it may spend such
amounts as it deems appropriate on any activities or expenses primarily intended
to result in the sale of the Company's shares, including, but not limited to,
payment of trail commissions and other payments to brokers, dealers, financial
institutions or others who sell shares and/or service shareholder accounts;
compensation to and expenses, including overhead and telephone expenses, of the
Distributor; the printing of prospectuses, statements of additional information,
and reports for other than existing shareholders; and the preparation, printing
and distribution of sales literature and advertising materials.
<PAGE>
3. Subject to the limit in paragraph 1, the Company shall reimburse
the Distributor for amounts to finance selling or servicing of shares of the
Company including, but not limited to, commissions or other payments to dealers
and salaries and other expenses of Distributor relating to selling or servicing
efforts; PROVIDED, (i) that the Board of Directors of the Company shall have
approved categories of expenses for which payment or reimbursement shall be made
pursuant to this paragraph 2, and (ii) that reimbursement shall be made in
accordance with the terms of the Agreement.
4. This Plan shall not take effect until it has been approved by
vote of a majority of the outstanding voting securities of the Company (as
defined in the Investment Company Act of 1940 [the "1940 Act]) and by the Board
of Directors as provided in paragraph 5.
5. This Plan shall not take effect until it has been approved,
together with any related agreement, by votes of the majority of both (i) the
Board of Directors of the Company and (ii) those Directors of the Company who
are not "interested persons" of the Company (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of this Plan or
any agreement related to it (the "Independent Directors"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
6. The President or any Vice President of the Distributor shall
provide the Board of Directors, and the Board shall review, a written report of
the amounts expended pursuant to the Plan and the purposes for which such
expenditures were made.
7. This Plan may be terminated as to the Company at any time by vote
of a majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act of the Company.
Unless sooner terminated in accordance with this provision, this Plan shall
continue in effect until January 12, 1991. It may thereafter be renewed from
year to year in the manner provided for in paragraph 4 hereof.
8. Any agreement related to this Plan shall be in writing, and shall
provide:
(a) that such agreement may be terminated as to the
Company at any time, without payment of any penalty, by vote
of a majority of the Independent Directors or by a vote of a
majority of the outstanding voting securities (as defined in
the 1940 Act) of the Company, on not more than sixty (60)
days' written notice to any other party to the agreement;
and
2
<PAGE>
(b) that such agreement shall terminate automatically
in the event of its assignment.
9. This Plan may not be amended to increase materially the maximum
amount of fee or other distribution expenses provided for in paragraph 1 hereof
with respect to the Company unless such amendment is approved by the voting
securities of the Company in the manner provided in paragraph 5 hereof, and no
material amendment to this Plan shall be made unless approved in the manner
provided for in paragraph 5 hereof.
10. If and to the extent that any of the expenses of the Company
listed below in this paragraph are considered to be "primarily intended to
result in the sale of shares" issued by the Company within the meaning of Rule
12b-1 under the 1940 Act, the Company's payment of expenses is authorized
without limit under this Plan, without regard to reimbursements made by the
Company pursuant to paragraph 2 of this Plan or the requirements for approval of
any increase in such fees under paragraph 9 of this Plan. These expenses
include: (i) the costs of preparing, printing and mailing all required reports
and notices to shareholders, irrespective of whether such reports or notices
contain or are accompanied by material intended to result in the sale of shares
of the Company or other funds or other investments; (ii) the costs of preparing,
printing and mailing of all prospectuses; (iii) the costs of preparing, printing
and mailing of any proxy statements and proxies, irrespective of whether any
such proxy statement include any item relating to, or directed toward, the sale
of the Company's shares; (iv) all legal and accounting fees relating to the
preparation of any such reports, prospectuses, proxies and proxy statements; (v)
all fees and expenses relating to the qualification of the Company and/or its
shares under the securities or "Blue Sky" law of any jurisdiction; (vi) all fees
under the Act and the Securities Act of 1933, including fees in connection with
any application for exemption relating to or directed toward the sale of
Company's shares; (vii) all fees and assessments of the Investment Company
Institute or any successor organization, irrespective of whether some of its
activities are designed to provide sales assistance; (viii) all costs of
processing share transactions, preparing and mailing confirmations of shares
sold or redeemed or share certificates, and reports of share balances; and (ix)
all costs of responding to telephone or mail inquiries of investors or
prospective investors.
11. It is recognized that the costs of distributing the Company's
shares may exceed the sum of the sales charges collected on sales of shares and
reimbursements made by the Company pursuant to paragraph 1 of this Plan. In
view of this, if and to the extent that any investment advisory fees paid by the
Company might be considered as indirectly financing any activity which is
primarily intended to result in the sale of Company shares, the payment by the
Company of such fees hereby is authorized under this Plan.
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12. While this Plan is in effect, the selection and nomination of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) shall be committed to the discretion of the Directors
who are not interested persons.
13. The Company shall preserve copies of this Plan and any related
agreement and all reports made pursuant to paragraph 6 hereof for a period of
not less than six (6) years from the date of this Plan, or such agreement or
reports, as the case may be, the first two (2) years of which such reports shall
be stored in an easily accessible place.
14. NO ADMISSION OF AUTHORITY. The adoption of this Plan does not
constitute any admission that the adoption of the Rule or any particular
provisions thereof represented an authorized exercise of authority by the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by
its officers thereunto duly authorized, as of January 12, 1990.
ATLAS ASSETS, INC.
By /s/ Larry E. LaCasse
---------------------------------
Larry E. LaCasse
Chief Operating Officer and
Senior Vice President
By /s/ Louise Longley
---------------------------------
Louise Longley
Secretary
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DISTRIBUTION PLAN FOR CLASS B SHARES
OF
ATLAS ASSETS, INC
WHEREAS, Atlas Assets, Inc. (the "Company") is a Maryland corporation
which offers shares of common stock in various series ("Funds");
WHEREAS, Atlas Securities, Inc. (the "Distributor") will serve as
distributor of the shares of common stock of the Company, and the Company and
the Distributor are parties to a principal underwriting agreement (the
"Agreement");
WHEREAS, certain Funds of the Company offer multiple classes of shares
including shares subject to a front-end sales charge ("Class A Shares") and
shares subject to an asset based sales charge and a declining contingent
deferred sales charge ("Class B Shares");
WHEREAS, Class A shares are subject to a separate Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the purpose of this Distribution Plan (the "Plan") is to
authorize the Company to bear expenses of distribution of its Class B Shares,
including compensation to the Distributor for expenses incurred, and services
and facilities provided, in distributing Class B Shares of each of the Funds set
forth in Exhibit A hereto as may be amended from time to time, in accordance
with the requirements of Rule 12b-1;
WHEREAS, the Board of Directors of the Company has determined that
there is a reasonable likelihood that this Plan will benefit the Company and its
Class B shareholders:
NOW, THEREFORE, the Company adopts this Plan as follows:
1. As Distributor of the shares of the Company, it may spend such
amounts as it deems appropriate on any activities or expenses primarily intended
to result in the sale of the Company's shares, including, but not limited to,
payment of trail commissions and other payments to brokers, dealers, financial
institutions or others who sell shares and/or service shareholder accounts;
compensation to and expenses, including overhead and telephone expenses, of the
Distributor; the printing of prospectuses, statements of additional information,
and reports for other than existing shareholders; and the preparation, printing
and distribution of sales literature and advertising materials.
2. Each Fund with Class B Shares will pay the Distributor for: (a)
expenses incurred in connection with
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advertising and marketing shares of the Class B Shares including but not limited
to any advertising or marketing via radio, television, newspapers, magazines,
telemarketing or direct mail solicitations; (b) periodic payments of fees for
distribution assistance made to one or more securities dealers, or other
industry professionals, such as investment advisers, accountants, estate
planning firms and the Distributor itself (collectively "Service Organizations")
in respect of the average daily value of the Funds' Class B Shares beneficially
owned by persons ("Clients") for whom the Service Organization is the dealer of
record or holder of record or with whom the Service Organization has a servicing
relationship, and (c) expenses incurred in preparing, printing and distributing
the Funds' prospectuses and statements of additional information with respect to
Class B Shares (except those used for regulatory purposes or for distribution to
existing shareholders of the Funds).
3. While this Plan is in effect the Distributor will be compensated
by each Fund with Class B Shares for such distribution expenses that are
incurred, and services and facilities that are provided, in connection with
Class B Shares of the Fund on a monthly basis, at the annual rate not to exceed
.75 of 1% as set forth in the Fund's then current Prospectus(es), which rate is
based on the Fund's average daily net assets during such month for its Class B
Shares. These monthly payments to the Distributor will be made in accordance
with and subject to the conditions set forth below. For the purposes of
determining the amounts payable under the Plan, the value of a Fund's net assets
attributable to its Class B Shares shall be computed in the manner specified in
the Fund's Prospectus and Statement of Additional Information as then in effect
for the computation of the value of the Fund's net assets.
The distribution fees payable to the Distributor are designed to
compensate the Distributor for the expenses it incurs and the services it
renders in distributing Class B Shares of the Funds. However, because this Plan
is a compensation plan, the distribution fees are payable even if the amount
paid exceeds the Distributor's actual expenses. If in any year the
Distributor's expenses incurred in connection with the distribution of Class B
Shares of a Fund exceed the distribution fees paid by the Fund, the Distributor
will recover such excess only if this Plan with respect to the Fund continues to
be in effect in some later year when the distribution fees exceed the
Distributor's expenses. There is no limit on the periods during which
unreimbursed expenses may be carried forward, although the Company is not
obligated to repay any unreimbursed expenses for a Fund that may exist at such
time, if any, as this Plan terminates or is not continued with respect to the
Fund. No interest, carrying or finance charge will be imposed on any amounts
carried forward.
Payment made out of or charged against the assets of a particular Fund
must be in payment for distribution expenses incurred on behalf of such Fund and
which are described herein.
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4. Payments by the Distributor to a Service Organization described
in this Plan shall be subject to compliance by the Service Organization with the
terms of a selling group agreement between the Service Organization and the
Distributor. If an investor in a Fund ceases to be a client of a Service
Organization that has entered into a selling group agreement with the
Distributor, but continues to hold shares of the Plan, the Distributor will be
entitled to receive similar payments in respect of the distribution assistance
provided with respect to such investor.
5. The Distributor shall provide the Board, at least quarterly, with
a written report of all amounts expended pursuant to this Plan. The report
shall state the purposes for which the amounts were expended.
6. This Plan shall not take effect with respect to a Fund until it
has been approved by a vote of a majority of the outstanding voting securities
(as defined in the Act) of the Class B Shares of the Fund, which may be by vote
of the initial shareholder of the Fund's Class B Shares. If so approved, this
Plan, unless earlier terminated in accordance with its terms, shall continue in
full force and effect thereafter and shall continue automatically for successive
annual periods provided such continuance is approved by a majority of the Board,
including a majority of the Directors who are not "interested persons" (as
defined in the Act) of the Company and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into in
connection with this Plan (the "Disinterested Directors"), pursuant to a vote
cast in person at a meeting called for the purpose of voting on the continuance
of the Plan.
7. This Plan may be amended at any time by the Board provided that
(i) any amendment to increase materially the costs which any Fund may bear for
distribution pursuant to this Plan shall be effective only upon approval by a
vote of a majority of the outstanding voting securities of the respective Fund's
Class B Shares and (ii) any material amendments of the terms of this Plan shall
become effective only upon approval by a majority of the Board and a majority of
the Disinterested Directors pursuant to a vote cast in person at a meeting
called for the purpose of voting on the Plan.
8. This Plan is terminable, as to any Fund, without penalty at any
time by (i) vote of the majority of the Disinterested Directors, or (ii) vote of
a majority of the outstanding voting Class B Shares of such Fund.
9. Any agreement related to this Plan shall be in writing, and shall
provide:
(a) that such agreement may be terminated as to any
Fund at any time, without
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payment of any penalty, by vote of a majority of the Independent
Directors or by a vote of a majority of the outstanding Class B Shares
of the Fund, on not more than sixty (60) days' written notice to any
other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
10. It is recognized that the costs of distributing the Company's
Class B Shares may exceed the sum of the sales charges collected on sales of
shares and payments made by the Company pursuant to this Plan. In view of this,
if and to the extent that any investment advisory fees paid by the Company might
be considered as indirectly financing any activity which is primarily intended
to result in the sale of Company shares, the payment by the Company of such fees
hereby is authorized under this Plan.
11. While this Plan is in effect, the selection and nomination of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) shall be committed to the discretion of the Directors
who are not interested persons.
12. The Company shall preserve copies of this Plan and any related
agreement and all reports made pursuant to paragraph 6 hereof for a period of
not less than six (6) years from the date of this Plan, or such agreement or
reports, as the case may be, the first two (2) years of which such reports shall
be stored in an easily accessible place.
13. The Board has adopted this Plan as of February 18, 1994.
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<PAGE>
EXHIBIT A
DISTRIBUTION PLAN FOR CLASS B SHARES
OF ATLAS ASSETS, INC.
AS AMENDED ON FEBRUARY 16, 1996
The provisions of the Distribution Plan for Class B Shares of Atlas Assets,
Inc. between ATLAS ASSETS, INC. (the "Company") and ATLAS SECURITIES, INC. (the
"Distributor") apply to the following series of the Company:
Atlas National Municipal Bond Fund
Atlas California Municipal Bond Fund
Atlas U.S. Government and Mortgage Securities Fund
Atlas Growth and Income Fund
Atlas U.S. Treasury Money Fund
Atlas U.S. Government Intermediate Fund
(Formerly Atlas U.S. Treasury Intermediate Fund)
Atlas National Insured Intermediate Municipal Fund
Atlas California Insured Intermediate Municipal Fund
Atlas Balanced Fund
Atlas Strategic Growth Fund
Atlas Global Growth Fund
Atlas Strategic Income Fund
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<PAGE>
ATLAS FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan ("Plan") has been prepared, pursuant to the
requirements of Rule 18f-3(d) under the Investment Company Act of 1940
("Investment Company Act" or "Act"), in connection with the offer and sales of
shares of Atlas Assets, Inc. (the "Company"). The Company is a multiple class
fund within the meaning of Rule 18f-3.
In accordance with the requirements of Rule 18f-3, this Plan describes the
differences between the classes of shares that are issued by the Company,
including the various services offered to shareholders, the distribution
arrangement that pertains to each class, the methods of allocating expenses
relating to those differences, and the conversion features or exchange
privileges relating to the classes.
This Plan shall become effective immediately upon filing with the
Securities and Exchange Commission as an exhibit to the Form N-1A filed for
registering shares of the Company.
I. BACKGROUND
The Company is an open-end investment company registered under the
Investment Company Act. The Company has twelve separate series ("Funds")
namely:
Atlas National Municipal Money Fund
Atlas California Municipal Money Fund
Atlas National Municipal Bond Fund
Atlas California Municipal Bond Fund
Atlas National Insured Intermediate Municipal Fund
Atlas California Insured Intermediate Municipal Fund
Atlas U.S. Government and Mortgage Securities Fund
Atlas U.S. Treasury Money Fund
Atlas U.S. Treasury Intermediate Fund
Atlas Growth and Income Fund
Atlas Balanced Fund
Atlas Strategic Growth Fund
Each Fund, other than the California and National Municipal Money Funds,
has two classes of shares, Class A and Class B. The classes of each Fund
represent interests in the same portfolio of investments held by that Fund and,
except as described below, are identical in all respects. The classes differ in
the following respects: (1) in the manner in which an investor may pay for the
distribution of shares of the Funds; (2) in the expenses that may
<PAGE>
be incurred by one class as compared to another, and in the method
of allocating expenses between the classes; (3) in the exchange privileges and
conversion features applicable to one class as compared to another; and (4) in
the voting rights accorded to each class. These differences are discussed below
in more detail.
II. DISCUSSION OF DIFFERENCES
A. DISTRIBUTION AND SERVICE ARRANGEMENTS
An investor in the Funds may pay for the distribution of Fund shares in one
of two ways: by paying a front-end sales load in connection with the purchase of
Class A shares and possibly subject to a distribution fee and/or a service fee,
or by paying a "contingent deferred sales charge" in connection with the
purchase of Class B shares and possibly subject to a distribution fee and/or a
service fee. These two arrangements permit an investor to choose the method of
purchasing shares that the investor determines is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares, and other circumstances.
For example, an investor who intends to remain invested for the long-term
may decide to purchase a Class A share and pay a front-end sales load since,
over the long-term, as described below, a purchaser of Class B shares may pay
more under a "deferred load" design than an investor who pays a front-end sales
load in connection with the purchase of Class A shares. In addition, an
investor who may qualify for a significantly reduced sales load in connection
with the purchase of Class A shares, as described below, may find it more
advantageous to purchase such shares.
A Class A shareholder of a Fund pays a front-end sales charge of a
percentage of the offering price at time of investing in the Fund. The offering
price is based on the Fund's net asset value per share plus the front-end sales
load. In addition, a Class A shareholder of a Fund pays a Rule 12b-1
distribution fee assessed at a rate of up to 0.25% of the average annual net
assets of the Funds. The distribution fee is paid pursuant to a Rule 12b-1 Plan
that has been adopted by the Company.
A Class B shareholder of a Fund pays a distribution fee and a contingent
deferred sales load ("CDSL"). The distribution fee is assessed pursuant to a
Distribution Plan adopted by the Board of Directors for the Funds in accordance
with the requirements of rule 12b-1 under the Investment Company Act. This fee
is assessed at a rate of up to 0.75% of the average annual net assets of each
Fund. Neither Class A nor Class B shareholders currently pay a separate
shareholder servicing fee but the Company may, in the future, adopt a
shareholder servicing plan for one or both classes of shares.
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The net income attributable to Class B shares and the dividends payable on
Class B shares will be reduced by the amount of the distribution fee
attributable to Class B shares, as well as by certain incremental expenses
associated with such fee, as described below. A Class A shareholder incurs
these expenses to a lesser degree.
Over time, the accumulated continuing distribution and shareholder
servicing fees related to Class B shares may exceed the initial sales load and
ongoing distribution and shareholder servicing fees related to Class A shares.
Such ongoing fees, however, will be offset to the extent any return is realized
on the additional funds that will be invested under the "deferred load"
distribution alternative when compared with the funds invested under the front-
end sales load method of paying for distribution.
B. PAYING FOR EXPENSES
1. EXPENSES ALLOCATED TO A PARTICULAR CLASS
Certain expenses of each Fund will be allocated solely to a particular
class of shares of that Fund because they relate only to the distribution of
shares of that class or to services provided only to the shareholders of that
class. Such expenses include:
(a) distribution expenses associated with the sale of shares of a specific
class and for which a distribution fee will be assessed;
(b) incremental transfer agent fees identified by the transfer agent as
being attributable to a specific class;
(c) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses, and proxies to
shareholders of a particular class;
(d) blue sky registration fees incurred by a particular class;
(e) SEC registration fees incurred by a particular class;
(f) the expenses of administrative personnel and services as required to
support the shareholders of a particular class;
(g) litigation, tax liens or other legal expenses relating to one class;
(h) directors' fees incurred as a result of issues relating to one class;
(i) any other incremental expenses subsequently identified that should be
properly allocated to one class of shares.
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2. EXPENSES ALLOCATED TO BOTH CLASSES
Other expenses of the each Fund will be allocated to both classes of shares
of the Fund in accordance with the requirements of Rule 18f-3(c). These include
the advisory fee paid to Atlas Advisers, Inc. ("Advisers"), the advisor to
the Funds; the custodial fee; and certain other expenses of the Funds. These
expenses will be allocated to each class of a Fund based on the net asset
value of such class in relation to the net asset value of the Fund.
C. DIFFERENCES IN SERVICES OFFERED
1. REDUCED SALES CHARGE FOR CLASS A PURCHASES
Holders of Class A shares of a Fund may obtain a reduced sales charge for
larger purchases and under a right of accumulation, letter of intent or other
discount purchase plans as set forth in the current prospectus of the Funds.
Holders of Class B shares are not eligible for any quantity discounts or
other reductions in sales load.
2. CONVERSIONS OR EXCHANGES OF CLASSES OF SHARES
Class B shares will convert to Class A shares five years after purchase.
The two classes have the following exchange privileges:
(a) Class A shares of any Fund purchased with a front-end sales load, as
well as additional shares acquired through reinvestment of dividends or
distributions on such shares, may be exchanged without a sales load for Class A
shares of any other Fund.
(b) Class A shares of any Fund acquired by a previous exchange transaction
involving shares on which a sales load has directly or indirectly been paid
(E.G., shares purchased with a sales load or issued in connection with an
exchange transaction involving shares that had been purchased with a sales
load), as well as additional shares acquired through reinvestment of dividends
or distributions on such shares, may be redeemed, and the proceeds used to
purchase without a sales load Class A shares of any other Fund. To accomplish
an exchange transaction as described in this paragraph, investors must notify
the Funds' transfer agent of their prior ownership of shares and their account
number.
(c) Class B shares of any Fund, as well as additional shares acquired
through reinvestment of dividends or distributions on shares, may be exchanged
for Class B shares of any other Fund. The purchase date for Class B shares
exchanged will be used to
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determine the holding period for the shares received in the exchange for
purposes of determining the applicable contingent deferred sales charge upon
redemption and the automatic conversion date.
(d) Except as described above, a sales load will be assessed when shares
of any Fund that were purchased or otherwise acquired without a sales load are
exchanged for shares of another Fund.
D. VOTING OF CLASS SHARES
Shareholders of a Class of shares of a Fund have exclusive voting rights
with respect to the approval of the Distribution Plan with respect to that
Class. In all other respects, the voting rights of a Class A and Class B
shareholder of a Fund are the same. Each shareholder is entitled to one vote
for each full share held and fractional votes for fractional shares held.
Shareholders will vote in the aggregate and not by class or series, except as
noted above and where otherwise required by law (or when permitted by the Board
of Directors).
5
