<PAGE> 1
File Nos. 33-
-----
As filed with the Securities and Exchange Commission on August 22, 1997
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre -Effective Amendment No. [ ]
-----
Post-Effective Amendment No. [ ]
-----
ATLAS ASSETS, INC.
(Exact Name of Registrant as Specified in Charter)
794 Davis Street
San Leandro, California 94577
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (510) 297-7444
Steven J. Gray
Atlas Assets, Inc.
794 Davis Street
San Leandro, California 94577
(Name and Address of Agent for Service)
Copy to:
Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
It is proposed that this filing will become effective on September 22, 1997
pursuant to Rule 488.
- -------------------------------------------------------------------------------
No filing fee is required because an indefinite number of shares of Registrant
have previously been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Pursuant to Rule 429, this Registration Statement relates
to shares previously registered on Form N-1A (File No. 33-20318). The Registrant
filed the notice required by Rule 24f-2 for its most recent fiscal period on
February 26, 1997.
- --------------------------------------------------------------------------
<PAGE> 2
ATLAS ASSETS, INC.
CROSS-REFERENCE SHEET
Items Required by Form N-14
PART A ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
Item No. Item Caption Prospectus Caption
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE
Page of Prospectus OF PROXY STATEMENT AND
PROSPECTUS
2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3. Synopsis Information and SUMMARY; RISK FACTORS
Risk Factors
4. Information About the INFORMATION CONCERNING THE
Transaction MEETING; PROPOSAL TO
APPROVE AGREEMENT AND PLAN
OF REORGANIZATION
5. Information About the PROSPECTUS COVER PAGE;
Registrant INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
6. Information About the PROSPECTUS COVER PAGE;
Company Being Acquired INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
7. Voting Information PROSPECTUS COVER PAGE;
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS; SUMMARY;
INFORMATION CONCERNING THE
MEETING
8. Interest of Certain Persons NONE
and Experts
9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters
10. Cover Page COVER PAGE OF STATEMENT OF
ADDITIONAL INFORMATION
- i -
<PAGE> 3
PART B
Caption in Statement of
Item No. Item Caption Additional Information
11. Table of Contents INCORPORATION OF DOCUMENTS
BY REFERENCE IN STATEMENT
OF ADDITIONAL INFORMATION
12. Additional Information INCORPORATION OF DOCUMENTS
About the Registrant BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
13. Additional Information INCORPORATION OF DOCUMENTS
About the Company Being BY REFERENCE IN PROSPECTUS
Acquired AND STATEMENT OF ADDITIONAL
INFORMATION
14. Financial Statements INCORPORATION OF DOCUMENTS
BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
PART C
Item No.
15-17 Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
- ii -
<PAGE> 4
ATLAS ASSETS, INC.
CROSS-REFERENCE SHEET
Items Required by Form N-14
PART A ATLAS NATIONAL MUNICIPAL BOND FUND
Item No. Item Caption Prospectus Caption
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE
Page of Prospectus OF PROXY STATEMENT AND
PROSPECTUS
2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3. Synopsis Information and SUMMARY; RISK FACTORS
Risk Factors
4. Information About the INFORMATION CONCERNING THE
Transaction MEETING; PROPOSAL TO
APPROVE AGREEMENT AND PLAN
OF REORGANIZATION
5. Information About the PROSPECTUS COVER PAGE;
Registrant INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
6. Information About the PROSPECTUS COVER PAGE;
Company Being Acquired INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
7. Voting Information PROSPECTUS COVER PAGE;
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS; SUMMARY;
INFORMATION CONCERNING THE
MEETING
8. Interest of Certain Persons NONE
and Experts
9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters
10. Cover Page COVER PAGE OF STATEMENT OF
ADDITIONAL INFORMATION
- i -
<PAGE> 5
PART B
Caption in Statement of
Item No. Item Caption Additional Information
11. Table of Contents INCORPORATION OF DOCUMENTS
BY REFERENCE IN STATEMENT
OF ADDITIONAL INFORMATION
12. Additional Information INCORPORATION OF DOCUMENTS
About the Registrant BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
13. Additional Information INCORPORATION OF DOCUMENTS
About the Company Being BY REFERENCE IN PROSPECTUS
Acquired AND STATEMENT OF ADDITIONAL
INFORMATION
14. Financial Statements INCORPORATION OF DOCUMENTS
BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
PART C
Item No.
15-17 Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
- ii -
<PAGE> 6
ATLAS ASSETS, INC.
CROSS-REFERENCE SHEET
Items Required by Form N-14
PART A ATLAS CALIFORNIA MUNICIPAL BOND FUND
Item No. Item Caption Prospectus Caption
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE
Page of Prospectus OF PROXY STATEMENT AND
PROSPECTUS
2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3. Synopsis Information and SUMMARY; RISK FACTORS
Risk Factors
4. Information About the INFORMATION CONCERNING THE
Transaction MEETING; PROPOSAL TO
APPROVE AGREEMENT AND PLAN
OF REORGANIZATION
5. Information About the PROSPECTUS COVER PAGE;
Registrant INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
6. Information About the PROSPECTUS COVER PAGE;
Company Being Acquired INTRODUCTION; SUMMARY;
BUSINESS OF THE FUNDS;
AVAILABLE INFORMATION
7. Voting Information PROSPECTUS COVER PAGE;
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS; SUMMARY;
INFORMATION CONCERNING THE
MEETING
8. Interest of Certain Persons NONE
and Experts
9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters
10. Cover Page COVER PAGE OF STATEMENT OF
ADDITIONAL INFORMATION
- i -
<PAGE> 7
PART B
Caption in Statement of
Item No. Item Caption Additional Information
11. Table of Contents INCORPORATION OF DOCUMENTS
BY REFERENCE IN STATEMENT
OF ADDITIONAL INFORMATION
12. Additional Information INCORPORATION OF DOCUMENTS
About the Registrant BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
13. Additional Information INCORPORATION OF DOCUMENTS
About the Company Being BY REFERENCE IN PROSPECTUS
Acquired AND STATEMENT OF ADDITIONAL
INFORMATION
14. Financial Statements INCORPORATION OF DOCUMENTS
BY REFERENCE IN PROSPECTUS
AND STATEMENT OF ADDITIONAL
INFORMATION
PART C
Item No.
15-17 Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
- ii -
<PAGE> 8
PART A - ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
<PAGE> 9
BOXED:
In brief...
The Board of Directors asks for your approval to merge the Atlas U.S. Government
Intermediate Fund (the "Atlas Intermediate Fund") into the Atlas U.S. Government
and Mortgage Securities Fund (the "Atlas Government Fund"). The goal of this
re-organization is to produce a higher level of income for you. The merger
should produce this increased income by spreading overhead costs over a
substantially larger asset base and by giving you the opportunity to benefit
from the higher level of income associated with Atlas' high-quality longer-term
Government Fund.
Upon approval, your shares in the Atlas Government Fund will have exactly the
same value as the shares in the Atlas Intermediate Fund you owned immediately
prior to the merger. In the opinion of Atlas' tax counsel, the proposed
transaction will have no tax implications to you.
This merger should benefit you immediately and in the long-term and the Board Of
Directors recommends that you vote FOR the proposal.
[DATE]
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
U.S. Government Intermediate Fund to be held at 1901 Harrison Street, Oakland,
California on November 24, 1997 at 10:00 a.m., Pacific Time.
At this meeting, you and other shareholders of the Atlas U.S. Government
Intermediate Fund will be asked to approve a plan to effect the transfer of the
assets of your Fund to the Atlas U.S. Government and Mortgage Securities Fund.
Please return the enclosed proxy in the postpaid envelope provided. Your vote is
important. I urge you to return your proxy as soon as possible.
Why are we proposing this change?
The Board of Directors believes that after over four years, the Atlas
Intermediate Fund is too small and lacks any reasonable prospects for growth in
the foreseeable future. Atlas Advisers and Atlas Securities have subsidized the
Fund's expenses since its inception and have notified the Board that they are
unable to continue doing so. It is unlikely that the Fund, with its narrow
investment policies, can absorb all its expenses and still produce a competitive
yield.
What is the proposed change?
<PAGE> 10
The Atlas Government Fund has compatible investment objectives and invests in
similar types of securities as the Atlas Intermediate Fund. The conservative
management philosophy behind both Atlas bond funds means that the proposed
changes should not have a significant impact on either the credit quality or the
volatility of your investment. For example, both funds invest only in securities
rated AAA or the equivalent. And, historically, the share prices of both funds
have responded similarly to interest rate changes.
How will the proposed change benefit current shareholders?
By agreeing to this reorganization, it is expected that investors in the Atlas
Intermediate Fund will be able to meet their original objective of investing in
a high-quality government mortgage securities fund and also take advantage of
certain economies of scale possible only in a fund with a substantial asset
base. The Atlas Government Fund had net assets of approximately $213 million as
of June 30, 1997 compared to approximately $6 million for the Atlas Intermediate
Fund.
You should also benefit from the increased income potential of long-term bonds
in your portfolio.
For these reasons, I believe your approval of the proposed reorganization
agreement will make your Atlas investment work even harder for you.
Will current Fund management change?
No, both the Atlas Government Fund and the Atlas Intermediate Fund are guided by
the same experienced, conservative managers.
In summary, I believe that this proposed reorganization will benefit
shareholders by spreading operating expenses over a larger asset base and by
virtue of the higher yields possible from the high-quality, longer-term bonds in
the Atlas Government Fund's portfolio. Therefore, I recommend that you vote
"FOR" the proposal on the enclosed Proxy.
Details of the proposal are contained in the accompanying Proxy Statement, which
I urge you to read. Your prompt response will ensure that your shares are
counted at the meeting, that a quorum is present at the meeting to conduct
business and that the expense of additional solicitation of proxies from
shareholders can be avoided. Your continued support is appreciated.
Sincerely,
/s/ Marian O. Sandler
(Mrs.) Marion O. Sandler
President and Chief Executive Officer
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
<PAGE> 11
ATLAS ASSETS, INC.
(A MARYLAND CORPORATION)
1901 Harrison Street, Oakland, California 94612
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
ATLAS U.S. GOVERNMENT INTERMEDIATE FUND
TO BE HELD ON NOVEMBER 24, 1997
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Atlas U.S. Government Intermediate Fund (the "Fund"), a
separate series of Atlas Assets, Inc. (the "Company"), will be held at the World
Savings Center, 1901 Harrison Street, Fourth Floor, Oakland, California on
November 24, 1997 at 10:00 a.m. Pacific Time. This Meeting will be held for the
following purposes:
1. To approve an Agreement and Plan of Reorganization between the
Fund and the Atlas U.S. Government and Mortgage Securities
Fund (the "Government Fund"), another separate series of the
Company, providing for the transfer of all of the assets of
the Fund to the Government Fund in exchange for shares of the
Government Fund and the distribution of the shares of the
Government Fund to the shareholders of the Fund in liquidation
of the Fund (the "Proposal"); and
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September
____, 1997 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Meeting or any adjournments thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
POSTAGE PREPAID ENVELOPE PROVIDED WITH THE PROXY STATEMENT. YOUR PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT THAT YOU
ATTEND THE MEETING.
By Order of the Board of Directors
Steven J. Gray, Secretary
September ____, 1997
<PAGE> 12
- --------------------------------------------------------------------------------
IMPORTANT
YOU MAY HELP AVOID THE EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE
REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
- --------------------------------------------------------------------------------
2
<PAGE> 13
ATLAS ASSETS, INC.
1901 HARRISON STREET, OAKLAND, CALIFORNIA 94612
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
OF
ATLAS U.S. GOVERNMENT INTERMEDIATE FUND
________________, 1997
---------------------------------------------
The enclosed Proxy is being solicited by the Board of Directors of
Atlas Assets, Inc. (the "Company" or "Atlas Funds") for use at the Special
Meeting of Shareholders (the "Meeting") of the Atlas U.S. Government
Intermediate Fund (the "Fund"), a separate series of the Company to be held at
the World Savings Center, 1901 Harrison Street, Fourth Floor, Oakland,
California on November 24, 1997 at 10:00 a.m. Pacific Time or at any adjournment
or adjournments thereof. Series of the Company other than the Fund are not being
solicited by this Proxy Statement. This Proxy Statement and the accompanying
form of Proxy are first being mailed to shareholders on or about September ___,
1997.
The Meeting is called for the purpose of considering an Agreement
and Plan of Reorganization (the "Agreement") between the Fund and the Atlas U.S.
Government and Mortgage Securities Fund (the "Government Fund"), another series
of the Company, providing for the transfer of all of the assets of the Fund to
the Government Fund in exchange solely for shares of beneficial interest of the
Government Fund (the "Government Fund Shares") at their net asset value with no
sales charge, and the distribution, pursuant to the Agreement, of the Government
Fund Shares to the shareholders of the Fund. Shareholders of the Fund will
receive shares of the Government Fund of the same class and having the same
value in the aggregate as their shares of the Fund.
This Proxy Statement also serves as a Prospectus of the Government
Fund under the Securities Act of 1933, as amended, for the issuance of the
Government Fund Shares in exchange for the Fund's assets. The terms and
conditions of these transactions are more fully described in this Proxy
Statement and Prospectus and in the Agreement which is attached hereto as
Appendix A. This Proxy Statement and Prospectus includes and incorporates by
reference the enclosed Prospectus of the Atlas Funds dated April
3
<PAGE> 14
30, 1997 (the "Atlas Funds Prospectus") which is enclosed as Appendix B.
The Company is an open-end management investment company organized
as a Maryland corporation consisting of 15 series. This Proxy Statement and
Prospectus pertains only to the Fund and the Government Fund. The investment
objective of the Government Fund is to seek a high level of current income
consistent with prudent investment management and preservation of capital.
This Proxy Statement and Prospectus sets forth concisely the
information you should know before voting on the proposed reorganization. It
should be read and retained for future reference.
A Statement of Additional Information dated September __, 1997 and a
Statement of Additional Information dated April 30, 1997 relating to the Fund
and the Government Fund are on file with the Securities and Exchange Commission
and are incorporated by reference herein. They are respectively available, upon
oral or written request, and at no charge, from the Company at 794 Davis Street,
San Leandro, California 94577, telephone number 1-800-933-ATLAS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement and Prospectus is September __, 1997.
4
<PAGE> 15
TABLE OF CONTENTS
PAGE
SUMMARY .....................................................
INFORMATION CONCERNING THE MEETING...........................
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION.....
CAPITALIZATION ..............................................
TAX CONSIDERATIONS ..........................................
BUSINESS OF THE FUNDS .......................................
General ...............................................
Financial Highlights ..................................
Investment Objectives and Policies ....................
Directors and Officers ................................
Investment Adviser ....................................
Expenses ..............................................
Purchase of Fund Shares ...............................
Redemption of Fund Shares .............................
Dividends, Distributions and Taxes ....................
Transfer Agent, Dividend Agent and Custodian ..........
FINANCIAL STATEMENTS ........................................
EXPERTS .....................................................
LEGAL MATTERS ...............................................
AVAILABLE INFORMATION .......................................
APPENDICES
A Form of Agreement and Plan of Reorganization by and between the
Atlas U.S. Government and Mortgage Securities Fund and the Atlas
U.S. Government Intermediate Fund
B Prospectus of the Atlas Funds dated April 30, 1997
5
<PAGE> 16
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement and Prospectus and is qualified by reference
to the more complete information contained in the Proxy Statement and Prospectus
and in the attached Appendices.
COMPARISON OF THE FUND
AND NATIONAL BOND FUND The Fund and the Government Fund are both separate
series of the Company. The Fund began operations
in October 1992 and, as of June 30, 1997, had net
assets of approximately $5,675,484. The Government
Fund began operations in January 1990 and, as of
June 30, 1997, had net assets of approximately
$213,263,059.
INVESTMENT OBJECTIVES
AND POLICIES Both Funds have a common investment objective of
seeking high current income consistent with
prudent investment management and preservation of
capital. The Funds also have similar investment
strategies and policies, and utilize the same
personnel to implement their investment programs.
Both Funds invest primarily in a diversified
portfolio of intermediate and long-term U.S.
Government Securities, including mortgage-backed
securities issued by the Government National
Mortgage Association, Federated National Mortgage
Association and Federal Home Loan Mortgage
Corporation. To minimize credit risk, each Fund
adheres to a policy of investing 100% of its
assets in securities that are backed by the U.S.
Government.
The principal difference between the policies of
the Fund and the Government Fund is in the area
of portfolio maturity. In order to reduce market
risk, the Fund maintains a dollar weighted average
portfolio maturity of between three and ten years.
The Government Fund does not have any similar
policy limiting the maturity of its investment
portfolio. As of
6
<PAGE> 17
June 30, 1997, the dollar weighted average
maturity of the Fund's portfolio was 8.1 years. As
of the same date, the dollar weighted average
maturity of the Government Fund's portfolio was
24.3 years. However, the duration of the Fund's
portfolio as of that date was 3.9% compared to
5.9% for the Government Fund. Duration takes into
account call features and similar provisions which
affect the period of time in which a position can
actually be owned and is, therefore, looked at by
investment professionals as a more accurate
measure of a portfolio's volatility than maturity.
Based on duration, the expected volatility of the
Government Fund's portfolio is somewhat higher
than that of the Fund, but substantially less than
would be expected by looking only at the relative
maturities of the two portfolios. Please see
"Risk Factors" below.
OPERATIONAL MATTERS As described in the Atlas Funds Prospectus, the
share purchase and redemption procedures, exchange
privileges, dividend and distribution procedures,
pricing options, special features, contractual
arrangements and all other customer
service/operational matters are the same for both
Funds.
OPERATING EXPENSES Atlas Advisers, Inc. ("Advisers") provides
portfolio management and administrative services
to both Funds. Each Fund has agreed to pay
Advisers a monthly fee at the annual rate of .55%
of the first $500 million and .50% of the amount
in excess of $500 million of the value of the
average daily net assets of the Fund as
compensation for such services. Atlas Securities,
Inc. ("Securities") is the distributor of each
Fund's shares. Under the Class A Shares
distribution plan, Securities may receive
reimbursement up to a maximum annual rate of .25%
of each Fund's average daily net assets for
distribution related costs incurred relative to
Class A shares. Under the Class B Shares
distribution plan, each
7
<PAGE> 18
Fund has agreed to pay Securities a distribution
fee of up to a maximum annual rate of .75% of each
Fund's average daily net assets for distribution
related services provided relative to Class B
shares. Both Funds incur additional expenses in
connection with their operation, including legal,
accounting, transfer agent and custodial fees.
The Fund's ratio of expenses to average net assets
for its Class A shares was 0.69% and 0.59% for
1995 and 1996, respectively. For fiscal years 1995
and 1996, the ratio of expenses to average net
assets for the Fund's Class B shares was 1.21% and
1.29%, respectively. For all four years of the
Fund's existence, including 1995 and 1996,
Advisers and Securities provided significant fee
reduction and expense reimbursement to the Fund to
enable it to operate at the above expense levels.
However, effective January 1, 1997, Advisers and
Securities have notified the Board of Directors
that they intended to stop subsidizing the Fund's
operations. The Government Fund's ratio of
expenses to average net assets annualized for its
Class A shares was 1.02% and 1.03%, respectively,
for 1995 and 1996, and 1.53% and 1.53%,
respectively, for its Class B shares. During those
years, Advisers and Securities did subsidize the
Government Fund's operations; however, due to its
larger asset size, the level of subsidization was
much less than it was for the Fund. Given the
Government Fund's current size, it is expected
that it will be able to cover its own operating
expenses without any need for Advisers or
Securities to subsidize its operations, while
providing shareholders with a competitive return.
Without such fee reductions and expense
absorption, the ratio of expenses to average net
assets (annualized) would have been as follows:
8
<PAGE> 19
<TABLE>
<CAPTION>
CLASS A CLASS B
1996 1995 1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Fund 1.24% 1.32% 3.25% 3.25%
Government Fund 1.03% 1.04% 1.82% 2.27%
</TABLE>
REORGANIZATION
EFFECT OF THE Pursuant to the terms of the Agreement, the
REORGANIZATION proposed reorganization will consist of the
transfer of all of the assets of the Fund and the
assumption by the Government Fund of all
liabilities of the Fund, in exchange solely for
shares of beneficial interest of the Government
Fund having an aggregate value equal to the value
of the net assets transferred by the Fund, and the
distribution pursuant to the Agreement, of the
Government Fund Shares to the shareholders of the
Fund in liquidation of the Fund as provided in the
Agreement. (These transactions are referred to
hereinafter as the "Reorganization.")
If approved by the Fund's shareholders, the
Reorganization will become effective on or shortly
after the date such approval is obtained (the
"Closing Date"), which is currently anticipated to
occur on or about November 24, 1997. The assets of
the Fund and the shares of the Government Fund
will be valued at the close of business on the
last business day prior to the Closing Date (the
"Valuation Date").
TAX CONSIDERATIONS The consummation of the Reorganization is subject
to the receipt of an opinion of counsel, in form,
scope and substance satisfactory to the Fund and
the Government Fund, to the effect that the
Reorganization will be treated as a tax-free
reorganization for federal income tax purposes.
Investors should review the discussion under "Tax
Considerations" below for a better understanding
of the specific points to
9
<PAGE> 20
be addressed in counsel's opinion. Investors who
redeem shares of the Fund or exchange their shares
for shares of another Atlas Fund, instead of
participating in the Reorganization, and who are
not exempt from federal income tax, will be
required to recognize any realized gain (or loss)
on the redemption or exchange, as more fully
described in the accompanying Atlas Funds
Prospectus.
THE MEETING
TIME, PLACE AND DATE The meeting will be held on November 24, 1997 at
10:00 a.m. Pacific Time, at the World Savings
Center, 1901 Harrison Street, Oakland, California
94612.
RECORD DATE September ____, 1997
VOTE REQUIRED Approval of the Reorganization requires the
FOR APPROVAL affirmative vote of a majority of the Fund's
shares of beneficial interest outstanding and
entitled to vote as a whole without reference to
share class.
RISK FACTORS Because the Government Fund has maintained in the
past, and would be expected to continue to
maintain, a portfolio with a greater weighted
average maturity and somewhat higher duration than
that maintained by the Fund, shareholders of the
Fund could be exposed to increased market risk as
a result of the Reorganization. However,
shareholders should also be expected to enjoy
higher yields after the Reorganization. For more
detailed historical information on the performance
and portfolio maturities and credit quality of the
Funds, shareholders are directed to the Annual
Report to Shareholders as of December 31, 1996 and
the Semi-Annual Report to Shareholders as of June
30, 1997 which have been previously distributed.
Additional copies of such reports are available
from the Company without charge upon request.
10
<PAGE> 21
INFORMATION CONCERNING THE MEETING
SOLICITATION, REVOCATION AND USE OF PROXIES
A shareholder executing a proxy has the power to revoke it at any
time before it is exercised by filing with the Fund a written notice of
revocation or returning a duly executed proxy bearing a later date prior to the
time of the Meeting. Any shareholder who has executed a proxy but is present at
the Meeting and who wishes to vote in person may revoke his proxy by notifying
the Secretary of the Company at any time before it is voted.
All shares represented by properly executed proxies, unless such
proxies have previously been revoked, will be voted at the Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted "FOR" the approval of the Agreement.
It is not anticipated that any matters other than the approval of
the Agreement will be brought before the Meeting. If, however, any other
business is properly brought before the Meeting, proxies will be voted in
accordance with the best judgment of the persons designated on such proxies.
RECORD DATE AND OUTSTANDING SHARES
Only Fund shareholders of record at the close of business on
September ___, 1997 (the "Record Date") are entitled to notice of and to vote at
the Meeting and any postponement or adjournment thereof. At the close of
business on June 30, 1997, there were 591,619 shares of the Fund issued and
outstanding (the "Fund Shares"). As of that date, there were 21,138,527 shares
of the Government Fund issued and outstanding.
SECURITY OWNERSHIP OF THE FUND AND GOVERNMENT FUND
To the Fund's knowledge, as of August ___, 1997, no shareholder
owned beneficially 5% or more of the outstanding shares of the Fund. As of that
date, the Directors and officers of the Fund owned as a group less than 1% of
the outstanding shares of the Fund.
As of August ___, 1997, to the knowledge of the Government Fund, no
shareholder owned beneficially 5% or more of the outstanding shares of the
Government Fund. The Directors and officers of the Company owned beneficially as
a group less than 1% of the outstanding shares of the Government Fund.
Golden West Financial Corporation, the parent corporation of
Advisers and Securities, is the sole shareholder
11
<PAGE> 22
that beneficially owns in excess of 5% of any outstanding class of shares of the
other series of the Company. In each instance, such ownership will not
significantly impact shareholder voting on matters affecting the Government
Fund.
VOTING RIGHTS, QUORUM AND REQUIRED VOTE
Each Fund share is entitled to one vote. A majority of the shares
entitle to vote at the Meeting constitutes a quorum to conduct business at the
Meeting. In the event a quorum is not present at the Meeting or in the event
that a quorum is present but sufficient votes to approve the Agreement are not
received, the persons named as proxies may propose one or more adjournments of
such Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those Shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR the Proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST the
proposal against any such adjournment. Approval of the Agreement requires the
affirmative vote of a majority of the outstanding shares of the Fund as a whole
without reference to share class, as defined under the 1940 Act, as amended,
which means the lesser of (a) 67% or more of the voting securities of the Fund
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy thereat, or (b) more than 50% of
the outstanding voting securities of the Fund. No approval is required by
shareholders of the Government Fund.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of shareholders of the Fund are governed by Maryland law,
the provisions of the Company's Articles of Incorporation and By-Laws, and by
Rule 22c-1 under the 1940 Act.
Rule 22c-1 under the 1940 Act provides that no open-end investment
company may redeem its shares other than at the net asset value next computed
after receipt of a tender of such security for redemption. Therefore, any
shareholder who does not wish to receive Government Fund Shares as part of the
exchange of the assets of the Fund for Government Fund Shares, may redeem his or
her shares at the net asset value next computed after receipt of a proper
redemption request by the Fund at any time prior to the Closing Date. In
addition, as described in the Atlas Funds Prospectus, shareholders of the Fund
have the ability to exchange their shares in the Fund for shares of another
Atlas Fund at their relative net asset values at any time prior to the Closing
Date. Neither the Articles of Incorporation nor the By-Laws provide for any
special treatment for dissenting shareholders who wish not to participate in a
merger, consolidation or reorganization.
12
<PAGE> 23
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
GENERAL
The shareholders of the Fund are being asked to approve the
Agreement between the Fund and the Government Fund. A copy of the Agreement is
attached hereto as Appendix A. Detailed information with respect to the
Government Fund is set forth in the Atlas Funds Prospectus, which is attached
hereto as Appendix B. The Reorganization will involve the Fund's exchange of
substantially all of its assets for Government Fund Shares, followed by the
Fund's distribution of the Government Fund Shares to the Fund's shareholders in
liquidation of the Fund. The number of Government Fund Shares to be issued in
the Reorganization will be calculated on the basis of the fair value of the
assets of the Fund to be acquired, net of liabilities to be assumed, by the
Government Fund immediately prior to the transfer of assets, as more fully
described under "Description of Agreement."
Pursuant to the Agreement, the Fund will liquidate and distribute
the Government Fund Shares received as described above pro rata to its
shareholders of record ("Fund Shareholders"), determined as of the close of
business on the New York Stock Exchange on the last day such Exchange is open
for unrestricted trading immediately preceding the effective date of the
Reorganization. The result of the Reorganization will be that the Government
Fund will add to its investment portfolio substantially all of the assets of the
Fund, and the Fund Shareholders who do not redeem their shares will become
shareholders of the Government Fund with Government Fund Shares having the same
aggregate net asset value as the Fund Shares owned on the day of the
Reorganization. If any of the assets acquired from the Fund are not consistent
with the investment objectives and restrictions of the Government Fund, such
assets will be sold by the Government Fund and the Government Fund will incur
brokerage commissions in executing such transactions.
The Agreement and the transactions provided for therein were
considered and approved by the Board of Directors of the Company at a meeting
held on August 15, 1997. In the event that the Reorganization is not
consummated, the Fund will continue to engage in business as a management
investment company, and the Board will reconsider what further action should be
taken, including the possible liquidation of the Fund. See "Business of the
Funds" below.
13
<PAGE> 24
REASONS FOR THE PROPOSED REORGANIZATION
The Board of Directors of the Company believes that the proposed
Reorganization will be advantageous to shareholders of the Fund. The Fund incurs
substantial overhead costs for accounting services, legal services, printing,
insurance, custodial, transfer agency, advisory and administrative services. At
its current asset size, the Fund is too small to operate in a cost efficient
manner and Advisers has been voluntarily subsidizing the Fund's operations by
reducing its management fees and absorbing some of the Fund's other expenses in
order that the Fund might be able to provide a competitive yield to
shareholders. In addition, Securities has been voluntarily reducing its
distribution fees. Advisers and Securities do not foresee any significant
increases in the Fund's asset size in the near future, and have informed the
Board that they are unwilling to continue subsidizing the Fund's operations in
the future. Although the Government Fund incurs similar expenses, as a larger
fund it can spread these expenses over a substantially larger asset and income
base. Because the investment objectives, current portfolios, and policies of the
Fund and the Government Fund are so similar, Fund Shareholders should be able to
continue to meet their primary investment goals of high current income
consistent with prudent investment management and capital preservation as
shareholders of the Government Fund.
The only other alternative to the Reorganization considered by the
Board of Directors to be practical would be a taxable liquidation of the Fund,
which the Directors have determined would not be preferable to the tax-free
Reorganization with the Government Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED
REORGANIZATION.
DESCRIPTION OF AGREEMENT
The following explanation of the Agreement is a summary, does not
purport to be complete, and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Agreement. A copy of the
Agreement is annexed hereto as Appendix A of this Proxy Statement and Prospectus
and should be read in its entirety.
METHOD OF CARRYING OUT REORGANIZATION. If shareholders holding a
majority of the outstanding shares of the Fund approve the Agreement, the
Reorganization will be effected on the Closing Date, which has been set for a
date on or about December ___, 1997; however, in no event will the Closing Date
be later than ten
14
<PAGE> 25
business days after shareholder approval is obtained (the "Effective Date").
On the Effective Date, the Fund will transfer all of its assets in
exchange for Government Fund Shares having an aggregate net asset value equal to
the aggregate value of the transferred assets (less liabilities assumed) as of
the close of business on the business day next preceding the Closing Date (the
"Valuation Date"). The value of the Fund's assets and the net asset value of a
Government Fund Share will be determined in accordance with the valuation
procedures set forth in the Agreement and the Atlas Funds Prospectus. The
Government Fund Shares will be distributed pro rata to the Fund Shareholders.
SURRENDER OF CERTIFICATES. Shareholders of the Fund whose shares are
represented by one or more share certificates should, prior to the Effective
Date, either surrender such certificates to the Fund or deliver to the Fund an
affidavit with respect to lost certificates, in such form and accompanied by
such surety bonds as the Fund may require (collectively an "Affidavit"). On the
Effective Date, all certificates which have not been so surrendered will be
deemed to be converted into Government Fund Shares and will no longer evidence
ownership of the Fund's Shares. Government Fund Shares attributable to the
conversion of the Fund shares represented by unsurrendered certificates (for
which no Affidavit has been delivered) will be held by NFDS in trust for the
former holders of such shares. Such shareholders may not redeem Government Fund
Shares represented by Fund certificates received in the Reorganization until
they have surrendered their certificates or delivered an Affidavit relating
thereto. Until such certificates are surrendered or an Affidavit relating
thereto has been delivered, dividends and other distributions payable on
Government Fund Shares held in trust by NFDS will be paid to NFDS for the
benefit of such shareholders. After a former shareholder surrenders his or her
certificates or delivers an Affidavit, the Government Fund Shares, dividends and
distributions held by NFDS for his or her benefit will be transferred to an
account in the name of such shareholder.
EXPENSES OF THE REORGANIZATION. The Government Fund will pay all
expenses of the Reorganization.
CAPITALIZATION
The following table sets forth the respective capitalization of the
Government Fund and the Fund as of June 30, 1997, and the pro forma combined
capitalization of both as if the Reorganization had occurred on that date. The
table reflects a
15
<PAGE> 26
opro forma exchange ratio of approximately .95 Government Fund Shares being
issued for each Fund share. If the Reorganization is consummated, the actual
exchange ratio on the Effective Date may vary from the ratio indicted as a
result of, among other matters, changes in the market value of the portfolio
securities of both the Government Fund and the Fund between June 30, 1997 and
the Valuation Date and changes in the amount of net investment income of the
Government Fund and the Fund earned during that period less distributions made.
The pooling method will be utilized to account for the Reorganization.
June 30, 1997
<TABLE>
<CAPTION>
==========================================================================================================
PRO FORMA
GOVERNMENT FUND FUND COMBINED
-------------------------------------------------------------------------------------
CLASS A Class B Class A Class B Class A Class B
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Assets $207,017,166 $6,245,893 $5,322,433(1) $353,041(1) $212,339,609 $6,598,934
- ----------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share $ 10.09 $ 10.09 $ 9.59(1) $ 9.59(1) $ 10.09 $ 10.09
- ----------------------------------------------------------------------------------------------------------
Shares 20,519,481 619,046 554,819 36,800 21,046,978(2) 654,035(2)
Outstanding
- ----------------------------------------------------------------------------------------------------------
Shares Authorized 50,000,000 25,000,000 50,000,000
==========================================================================================================
</TABLE>
(1) Net Assets and Net Asset Value Per Share of the Fund represent the aggregate
and per share value of the Fund's net assets which would have been transferred
to the Government Fund if the Reorganization had been consummated on June 30,
1997.
(2) If the Reorganization had taken place on June 30, 1997, the Fund would have
received 527,497 Class A and 34,989 Class B Government Fund Shares, which would
be available for distribution to its shareholders. No assurances can be given as
to how many Government Fund Shares the Fund will receive on the Effective Date.
The foregoing is merely an example of what the Fund would have received and
distributed had the Reorganization been consummated on June 30, 1997, and should
not be relied upon to reflect the amount which actually will be received on or
after the Effective Date.
TAX CONSIDERATIONS
The consummation of the Reorganization is subject to the receipt of
a favorable opinion of Paul, Hastings, Janofsky & Walker LLP in form, scope and
substance satisfactory to the Company to the effect that:
16
<PAGE> 27
(i) The acquisition by the Government Fund of substantially all of
the assets of the Fund solely in exchange for Government Fund Shares, followed
by the distribution by the Fund, in liquidation of the Fund, of Government Fund
Shares to the shareholders of the Fund in exchange for their Fund Shares will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and the Fund and the
Government Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized to the Fund upon the
transfer of substantially all of its assets to the Government Fund solely in
exchange for the Government Fund Shares;
(iii) No gain or loss will be recognized to the Government Fund upon
the receipt of the assets of the Fund solely in exchange for Government Fund
Shares;
(iv) The basis of the assets of the Fund acquired by the Government
Fund will be, in each instance, the same as the basis of those assets in the
hands of the Fund immediately prior to the transfer;
(v) The holding period of the assets of the Fund in the hands of the
Government Fund will include the period during which those assets were held by
the Fund;
(vi) No gain or loss will be recognized by the shareholders of the
Fund upon the exchange of all of their Fund Shares solely for Government Fund
Shares as part of the transaction;
(vii) The basis of the Government Fund Shares to be received by the
Fund's shareholders will be the same as the basis of the Fund Shares surrendered
in exchange therefor; and
(viii) The holding period of the Government Fund Shares to be
received by the Fund's shareholders will include the period during which the
Fund Shares surrendered in exchange therefor were held, provided the Fund Shares
constituted capital assets in their hands on the date of the exchange.
BUSINESS OF THE FUNDS
GENERAL
For a general description of the Funds see "How are the Funds administered?" in
the Atlas Funds Prospectus. With regard to
17
<PAGE> 28
each of the items described under this section, except as described above, there
are no differences between the business of the Fund and that of the Government
Fund.
FINANCIAL HIGHLIGHTS
See "Financial Highlights" in the Atlas Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of the Funds' investment objectives and policies, see "What are
the Funds' investment objectives?" and "What are the Funds' investment
policies?" in the Atlas Funds Prospectus.
DIRECTORS AND OFFICERS
For a discussion of the responsibilities of the Atlas Funds Board of Directors,
see "How are the Funds administered?" in the Atlas Funds Prospectus.
INVESTMENT ADVISER
For a description of the Funds' Adviser, see "How are the Funds administered?"
in the Atlas Funds Prospectus.
EXPENSES
For a description of the Funds' expenses, see "What are the Funds' fees and
expenses?" in the Atlas Funds Prospectus.
PURCHASE OF FUND SHARES
For a description of how shares of the Atlas Funds may be purchased, see "How
can I invest?" in the Atlas Funds Prospectus.
REDEMPTION OF FUND SHARES
For a description of how shares of the Atlas Funds may be redeemed, see "How can
I redeem shares?" in the Atlas Funds Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of the Funds' policy with respect to dividends, distributions
and taxes, see "What dividends and distributions can I receive?" and "How can
taxes affect my investment?" in the Atlas Funds Prospectus.
18
<PAGE> 29
TRANSFER AGENT, DIVIDEND AGENT AND CUSTODIAN
For information regarding the Fund's transfer agent, dividend agent and
custodian bank, see "How are the Funds administered?" and the back cover page of
the Atlas Funds Prospectus.
FINANCIAL STATEMENTS
The audited financial statements of the Atlas Funds for the year
ended December 31, 1996, set forth in the Company's Annual Report to
Shareholders, and the unaudited financial statements of the Funds for the six
months ended June 30, 1997, set forth in the Company's Semi-Annual Report to
Shareholders are incorporated herein by reference.
EXPERTS
The financial statements included in the Company's 1996 Annual
Report to Shareholders incorporated by reference in this combined proxy and
prospectus and elsewhere in this registration statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report included
in such Annual Report, and are incorporated by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
Government Fund Shares will be passed upon for the Company by Paul, Hastings,
Janofsky & Walker LLP.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Investment
Company Act of 1940, and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed with
respect to the Fund and the Government Fund can be inspected and copied at the
public reference facilities of the Commission at Room 1024, Mail Stop 1-2, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices: Chicago (Room 1400, Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661); and New York (Room 1300,
19
<PAGE> 30
Northwest Regional Office, 7 World Trade Center, New York, New York 10048).
Copies of such material can also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
20
<PAGE> 31
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
day of , 1997 by and between the Atlas U.S. Government and
Mortgage Securities Fund (the "Government Fund") and the Atlas U.S. Government
Intermediate Fund (the "Government Intermediate Fund"), each a separate series
of Atlas Assets, Inc. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of the transfer of substantially all of the assets of the Government
Intermediate Fund and the assumption by the Government Fund of liabilities of
the Government Intermediate Fund in exchange solely for shares of beneficial
interest of the Government Fund (the "Government Fund Shares") and the
distribution, after the Closing Date hereinafter referred to, of the Government
Fund Shares to the Shareholders of the Government Intermediate Fund in
liquidation of the Government Intermediate Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Government
Intermediate Fund agrees to transfer its assets as set forth in paragraph 1.2,
and its liabilities as set forth in paragraph 1.3 shall be assigned and
transferred to the Government Fund and the Company agrees to deliver to the
Government Intermediate Fund in exchange therefor the number of Government Fund
Shares, determined by dividing the value of the Government Intermediate Fund's
assets, computed in the manner and as of the time and date set forth in
paragraph 2.1, net of liabilities transferred to the Government Fund pursuant to
paragraph 1.3, by the net asset value of one Government Fund Share computed in
the manner and as of the time and date set forth in paragraph 2.2. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2 (a) The assets of the Government Intermediate Fund to be acquired
by the Government Fund shall consist of all cash, securities and due bills for
dividends, interest, or other receivables or rights to receive any of the
foregoing, any other property or money, unamortized organization expenses,
receivables for shares sold, any other property of any kind and all other assets
having a value to the Government Fund following the Closing,
1
<PAGE> 32
which are owned by and reflected on the books of the Government Intermediate
Fund on the closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Government Intermediate Fund has provided the
Government Fund with a list of the current securities holdings of the Government
Intermediate Fund as of the date of execution of this Agreement. The Government
Intermediate Fund reserves the right to sell any of these securities in the
ordinary course of business.
1.3 The Government Fund shall assume and be responsible and liable for
only those liabilities or obligations of the Government Intermediate Fund that
(i) have arisen in the ordinary course of the Government Intermediate Fund's
business, (ii) have been previously reserved for on the books of account of the
Government Intermediate Fund, and (iii) relate to the period prior to the
Closing Date. The Government Intermediate Fund will attempt to discharge all of
the Government Intermediate Fund's known liabilities and obligations for which
invoices or other documentation have been rendered by vendors or service
providers prior to the Closing Date. Except as otherwise expressly provided in
this paragraph 1.3, the Government Fund does not assume, nor does it agree to be
responsible for, any liabilities not known and reflected on the books of the
Government Intermediate Fund on the Valuation Date (as defined in paragraph
2.1).
1.4 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Government Intermediate Fund will be liquidated and
will distribute pro rata to its Shareholders of record (the "Intermediate Fund
Shareholders"), determined as of the close of business on the New York Stock
Exchange on the last day such Exchange is open for unrestricted trading
immediately preceding the Closing Date, the Government Fund Shares received by
the Government Intermediate Fund pursuant to paragraph 1.1. Such liquidation and
distribution will be accomplished by the transfer of the Government Fund Shares
then credited to the account of the Government Intermediate Fund on the books of
the Government Fund, to open accounts on the share records of the Government
Fund in the names of the Government Intermediate Fund Shareholders and
representing the respective pro rata number of Government Fund Shares due such
Government Intermediate Fund Shareholders and by such other action as may be
deemed appropriate to complete the liquidation as determined by applicable law.
1.5 The Government Intermediate Fund Shareholders holding share
certificates representing their ownership of shares of the Intermediate Fund
("Intermediate Fund Shares") shall be requested to surrender such certificates
or deliver an affidavit with respect to lost certificates, in such form and
accompanied by such surety bonds as the Government Intermediate Fund may require
(collectively, an "Affidavit"), to the Government Intermediate Fund prior to the
Closing Date. Any Government Intermediate Fund
2
<PAGE> 33
certificate which remains outstanding on the Closing Date shall be deemed to be
converted into Government Fund Shares and shall no longer evidence ownership of
the Government Intermediate Fund Shares. The Government Fund Shares issued upon
conversion of the Government Intermediate Fund Shares evidenced by an
outstanding certificate (as to which no Affidavit has been delivered) shall be
held by National Financial Data Services ("NFDS") in trust for the benefit of
the former holders of such Government Intermediate Fund Shares. Unless and until
any such certificate(s) shall be so surrendered or an Affidavit relating thereto
shall be delivered, dividends and other distributions payable by the Government
Fund subsequent to the Liquidation Date with respect to the Government Fund
Shares held by NFDS shall not be paid to the holder of such certificate(s), but
shall be paid to NFDS for the benefit of such holder. After such Shareholder
surrenders such certificate(s) or delivers such Affidavit to NFDS, NFDS shall
transfer any Government Fund Shares and any such dividends and distributions
held for the benefit of such Shareholder to an account in the name of such
Shareholder, who shall then be treated for all purposes as the owner of such
transferred Government Fund Shares, dividends and distributions.
1.6 Any transfer taxes payable upon issuance of Government Fund Shares
in a name other than the registered holder of the corresponding Government
Intermediate Fund Shares on the books of the Government Intermediate Fund as of
that time shall, as a condition of such issuance and transfer, be paid by the
person to whom such Government Fund Shares are to be issued and transferred.
1.7 The existence of the Government Intermediate Fund shall be
terminated promptly following the Closing Date in accordance with the provisions
of Article V, Section (e)(4) of the Articles of Incorporation of the Company.
2. VALUATION
2.1 The value of the Government Intermediate Fund's assets to be
acquired by the Government Fund hereunder shall be the fair value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Company's then current Prospectus or Statement of Additional
Information.
2.2 The net asset value of each Government Fund Share shall be the net
asset value per share computed as of the close of business on the New York Stock
Exchange on the Valuation Date, using the valuation procedures set forth in the
Company's then current Prospectus or Statement of Additional Information.
2.3 The number of Government Fund Shares to be issued (including
fractional shares, if any) in exchange for the
3
<PAGE> 34
Government Intermediate Fund's assets shall be determined by dividing the value
of such assets determined in accordance with paragraph 2.1, less the liabilities
transferred to the Government Fund in accordance with paragraph 1.3, by the net
asset value of a Government Fund Share determined in accordance with paragraph
2.2.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be as soon as practicable after approval by
the Government Intermediate Fund Shareholders of the transactions contemplated
by this Agreement; however, in no event will the Closing Date be later than ten
(10) days after such Shareholder approval has been obtained. The Closing shall
be held at 794 Davis Street, San Leandro, California 94577, in the offices of
the Company or at such other place as the parties may agree.
3.2 The Government Intermediate Fund's portfolio securities shall be
available for inspection by the Government Fund, its custodian bank or such
other agent of the Company as the Company shall designate, at the offices of the
Company's custodian, Investors Bank & Trust Company ("IBT"), 200 Clarendon
Street, Boston, Massachusetts 02116, no later than five business days preceding
the Valuation Date. Such Government Intermediate Fund portfolio securities and
cash shall be delivered by the Government Intermediate Fund to IBT, as custodian
for the Government Fund for the account of the Government Fund on the Closing
Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all applicable state stock transfer stamps or a check
for the appropriate purchase price thereof, or, in lieu thereof, a due bill for
such Government Intermediate Fund securities and cash shall be delivered by the
Government Intermediate Fund to IBT for the account of the Government Fund. The
cash delivered shall be in the form of currency or certified or official bank
checks, payable to the order of "Investors Bank & Trust Company, Custodian for
the Atlas U.S. Government and Mortgage Securities Fund."
3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted, or
(b) trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Government Fund or the Government Intermediate Fund is impracticable, the
Closing Date shall be postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have been restored.
3.4 The Government Intermediate Fund shall deliver at the Closing a
list containing the name, address, federal tax identification numbers and backup
withholding and nonresident alien status of each Government Intermediate Fund
Shareholder and the number and percentage ownership of outstanding shares of the
4
<PAGE> 35
Government Intermediate Fund Shares owned by each Shareholder, all as of the
close of business on the Valuation Date. The Government Fund shall issue and
deliver a confirmation evidencing the Government Fund Shares to be credited on
the Closing Date, or provide evidence satisfactory to the Government
Intermediate Fund that such Government Fund Shares have been credited to the
Government Intermediate Fund's account on the books of the Government Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as such other party
may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Government Intermediate Fund represents and warrants
to the Government Fund as follows:
(a) At the Closing Date, the Government Intermediate
Fund will have good and marketable title to its assets;
(b) The Government Intermediate Fund is not, and the
execution, delivery and performance of this Agreement will not result, in the
violation of any agreement, indenture, instrument, contract, lease or other
undertaking to which the Government Intermediate Fund is a party or by which it
is bound;
(c) All material contracts or other commitments (other than
this Agreement) to which the Government Intermediate Fund is a party will be
terminated without liability to the Government Intermediate Fund or the
Government Fund prior to or as of the Closing Date;
(d) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened as to the Government Intermediate Fund or any of its properties or
assets. The Government Intermediate Fund knows of no facts which might form the
basis for the institution of such proceedings, and the Government Intermediate
Fund is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated;
(e) The statements of assets and liabilities, the statement of
operations, and the statements of changes in net assets of the Government
Intermediate Fund at December 31, 1992, 1993, 1994, 1995 and 1996 have been
audited by Deloitte & Touche LLP, independent auditors, and prepared in
accordance with generally accepted accounting principles consistently applied,
and such statements fairly reflect the financial condition, results of
operations, and changes in net assets of the Government Intermediate Fund as of
and for the periods ended on such dates, and there are no liabilities of the
Fund as of the dates of such
5
<PAGE> 36
financial statements, other than liabilities disclosed or provided for in the
foregoing statements;
(f) The unaudited statement of assets and liabilities, the
unaudited statement of operations, and the unaudited statement of changes in net
assets of the Government Intermediate Fund at June 30, 1997 have been prepared
in accordance with generally accepted accounting principles consistently
applied, and such statements fairly reflect the financial condition, results of
operations, and changes in net assets of the Government Intermediate Fund as of
and for the period ended on such date, and there are no liabilities of the
Government Intermediate Fund as of the date of such financial statements, other
than liabilities disclosed or provided for in the foregoing statements;
(g) Since June 30, 1997, there has been no material change in
the Government Intermediate Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business;
(h) At the date hereof and at the Closing Date, all federal,
state and other tax returns and reports of the Government Intermediate Fund
required by law to have been filed by such dates, including returns for any
penalties required to be self assessed on IRS Form 8210 for each year, shall
have been filed, and all federal, state and other taxes, interest and penalties
shall have been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Government Intermediate Fund's knowledge
no such return is currently under audit and no assessment has been asserted with
respect to such returns;
(i) At the date hereof and on the Closing Date, the Government
Intermediate Fund has complied and will have complied with the information
reporting requirements of Sections 6042 and 6045 of the Code and the withholding
requirements of Sections 3406, 1441 and 1442 of the Code since its inception or
has paid or will have paid by the Closing Date any applicable taxes, interest
and penalties that have been or may be assessed for the failure to comply with
such requirement;
(j) The Government Intermediate Fund has met the requirements
of Subchapter M of the Code, and has elected to be treated as a regulated
investment company, for the fiscal periods or years ended December 31, 1992,
1993, 1994, 1995 and 1996 (its only taxable years) and will qualify as such on
the Closing Date;
(k) All issued and outstanding Government Intermediate Fund
Shares are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued and outstanding
shares of the Government Intermediate Fund will, at the time of Closing, be held
by the persons and in the amounts set forth in the list of Shareholders
submitted to the Company pursuant to paragraph 3.4. The Government Intermediate
6
<PAGE> 37
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Government Intermediate Fund Shares, nor is there
outstanding any security convertible into any Government Intermediate Fund
Shares;
(l) At the Closing Date, the Government Intermediate Fund will
have good and marketable title to its assets to be transferred to the Government
Fund pursuant to paragraph 1.2, and full right, power, and authority to sell,
assign, transfer and deliver such assets hereunder, and upon delivery and
payment for such assets, the Government Fund will acquire good and marketable
title thereto, free and clear of restrictions on the full transfer thereof,
including such restrictions as might arise under the Securities Act of 1933 (the
"1933 Act");
(m) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary
actions on the part of the Company's Board of Directors and the Government
Intermediate Fund Shareholders, and this Agreement constitutes a valid and
binding obligation of the Government Intermediate Fund enforceable in accordance
with its terms, subject to the approval by the Government Intermediate Fund
Shareholders.
4.2 The Government Fund represents and warrants to the
Government Intermediate Fund as follows:
(a) At the Closing Date, the Government Fund will have
good and marketable title to its assets;
(b) The Government Fund is not, and the execution, delivery
and performance of this Agreement will not result, in violation of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the Government Fund is a party or by which it is bound;
(c) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the Government Fund or any of its properties or assets.
The Company knows of no facts which might form the basis for the institution of
such proceedings and the Company is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(d) The statements of assets and liabilities, the statement of
operations and the statements of changes in net assets at December 31, 1990,
1991, 1992, 1993, 1994, 1995 and 1996 audited by Deloitte & Touche LLP fairly
and accurately reflect the financial condition of the Government Fund as of such
dates and the results of its operations for the periods then ended in accordance
with generally accepted accounting principles consistently applied;
7
<PAGE> 38
(e) The unaudited statement of assets and liabilities, the
unaudited statement of operations and the unaudited statement of changes in net
assets at June 30, 1997 fairly and accurately reflect the financial condition of
the Government Fund as of such dates and the results of its operations for the
periods then ended and have been prepared in accordance with generally accepted
accounting principles consistently applied;
(f) Since June 30, 1997, there has not been any material
adverse change in the Government Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business. For
the purposes of this subparagraph (f), a decline in net value per share of the
Government Fund Shares shall not constitute a material adverse change;
(g) By the Closing Date, all federal, state and other tax
returns and reports of the Government Fund required by law then to be filed
shall have been filed, and all federal, state and other taxes shown due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof;
(h) The Government Fund has met the requirements of Subchapter
M of the Code, and has elected to be treated as a regulated investment company,
for each fiscal year of its operation and will qualify as such as of the Closing
Date;
(i) All issued and outstanding Government Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. The Government Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Government Fund
Shares, nor is there outstanding any security convertible into any Government
Fund Shares;
(j) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the Company's Board of Directors and this Agreement constitutes a
valid and binding obligation of the Government Fund enforceable in accordance
with its terms;
(k) The Government Fund Shares to be issued and delivered to
the Government Intermediate Fund pursuant to the terms of this Agreement will at
the Closing Date have been duly authorized and, when so issued and delivered,
will be duly and validly issued Government Fund Shares, and will be fully paid
and non-assessable.
5. COVENANTS OF THE PARTIES
5.1 The Government Fund and the Government Intermediate Fund each will
operate its business in the ordinary course between the
8
<PAGE> 39
date hereof and the Closing Date, it being understood that such ordinary course
of business will include customary dividends and distributions.
5.2 The Government Intermediate Fund will, as soon as possible, call a
meeting of the Shareholders of the Government Intermediate Fund to consider and
act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 The Government Intermediate Fund covenants that the Government Fund
Shares to be issued hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.4 Subject to the provisions of this Agreement, the Government Fund
and the Government Intermediate Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
5.5 As promptly as practicable after the Closing Date, the Government
Intermediate Fund shall furnish the Government Fund a statement of the earnings
and profits and capital loss carryovers of the Government Intermediate Fund for
federal income tax purposes which will be carried over to the Government Fund in
accordance with and subject to the limitations of Sections 381 and 383 of the
Code, and which will be certified by the Government Intermediate Fund's
Treasurer.
5.6 The Company will, as soon as possible, prepare a Prospectus (the
"Prospectus") which will include a Proxy Statement (the "Proxy Statement"), all
to be included in a Registration Statement on Form N-14 of the Company (the
"Registration Statement")to be filed in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Investment
Company Act of 1940 in connection with the special meeting of the Government
Intermediate Fund Shareholders to consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE GOVERNMENT
INTERMEDIATE FUND
The obligations of the Government Intermediate Fund to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by the Government Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and in addition thereto, the following
further conditions:
6.1 All representations and warranties of the Government Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be
9
<PAGE> 40
affected by the transactions contemplated by this Agreement, as of the Closing
Date with the same force and effect as if made on and as of the Closing Date.
6.2 The Government Fund has performed all applicable
covenants contained in this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE GOVERNMENT FUND
The obligations of the Government Fund to complete the transactions provided for
herein shall be subject, at its election, to the performance by the Government
Intermediate Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Government Intermediate
Fund contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The Government Intermediate Fund has performed all applicable
covenants contained in this Agreement.
7.3 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Government Intermediate Fund in accordance with applicable law.
7.4 The parties shall have received a favorable opinion of Paul,
Hastings, Janofsky & Walker LLP (rendered in reliance upon, and the form of
which may be affected by, certain factual representations by the parties),
satisfactory to the Company substantially to the effect that for federal income
tax purposes:
(a) The acquisition by the Government Fund of substantially
all of the assets of the Government Intermediate Fund solely in exchange for the
Government Fund Shares and the assumption of liabilities of the Government
Intermediate Fund, followed by the distribution by the Government Intermediate
Fund, in liquidation of the Government Intermediate Fund, of the Government Fund
Shares to the Government Intermediate Fund Shareholders in exchange for their
Government Intermediate Fund Shares will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, and the Government Intermediate
Fund and the Government Fund will each be "a party to a reorganization" within
the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Government
Intermediate Fund upon the transfer of substantially all of its assets to the
Government
10
<PAGE> 41
Fund solely in exchange for the Government Fund Shares and the assumption of
liabilities of the Intermediate Fund.
(c) No gain or loss will be recognized by the Government Fund
upon the receipt of the assets and the assumption of liabilities of the
Government Intermediate Fund solely in exchange for the Government Fund Shares.
(d) The basis of the assets of the Government Intermediate
Fund acquired by the Government Fund will be, in each instance, the same as the
basis of those assets in the hands of the Government Intermediate Fund
immediately prior to the transfer.
(e) The holding period of the assets of the Government
Intermediate Fund in the hands of the Government Fund will include the period
during which those assets were held by the Government Intermediate Fund.
(f) No gain or loss will be recognized by the Government
Intermediate Fund Shareholders upon the exchange of all of their Government
Intermediate Fund Shares solely for the Government Fund Shares as part of the
transaction.
(g) The basis of the Government Fund Shares to be received by
the Government Intermediate Fund Shareholders will be the same as the basis of
the Government Intermediate Fund Shares surrendered in exchange therefor.
(h) The holding period of the Government Fund Shares to be
received by the Government Intermediate Fund Shareholders will include the
period during which the Government Intermediate Fund Shares surrendered in
exchange therefor were held, provided the Government Intermediate Fund Shares
constituted capital assets in their hands on the date of the exchange.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE GOVERNMENT
FUND AND THE GOVERNMENT INTERMEDIATE FUND
The obligations of the Government Intermediate Fund hereunder are at the option
of the Government Fund, and the obligations of the Government Fund hereunder are
at the option of the Government Intermediate Fund, each subject to the further
conditions that on or before the Closing Date:
8.1 No action, suit or other proceeding shall be pending before any
court or governmental agency in which it is sought to restrain or prohibit, or
obtain damages or other relief in connection with, this Agreement or the
transactions contemplated herein;
8.2 All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory
11
<PAGE> 42
authorities (including those of the Securities Exchange Commission and state
Blue Sky and securities authorities, including "no-action" positions of such
federal or state authorities) deemed necessary by the Government Fund or the
Government Intermediate Fund to permit consummation in all material respects of
the transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties of the Government Fund or
the Government Intermediate Fund;
8.3 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
9. RESPONSIBILITY FOR FEES AND EXPENSES
9.1 The Government Fund and the Government Intermediate Fund shall each
be responsible for their own expenses in connection with this Agreement,
although each may be reimbursed by their investment adviser for all or a portion
of such expenses incurred in connection with entering into and carrying out of
the provisions of this Agreement, whether or not the transactions contemplated
are consummated.
10. ENTIRE AGREEMENT, SURVIVAL OR WARRANTIES
10.1 The Government Fund and the Government Intermediate Fund agree
that neither party has made any representation, warranty or covenant with
respect to the transactions contemplated herein that are not set forth herein
and that this Agreement constitutes the entire agreement between the parties
with respect to such transactions.
10.2 The Representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder for a
period of one year from the Closing Date and shall then terminate.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Government Fund and the Government Intermediate Fund. In addition, either the
Government Fund or the Government Intermediate Fund may at its option terminate
this Agreement at or prior to the Closing Date because:
12
<PAGE> 43
(a) of a material breach by the other of any representation,
warranty or agreement contained herein to be performed at or prior to the
Closing Date; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of either the Government Fund or the Government
Intermediate Fund, or their respective directors or officers, to the other party
or its directors or officers, but each shall bear, except as otherwise provided
in paragraph 9.1, the expenses incurred by them incidental to the preparation
and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Government
Intermediate Fund and the Government Fund; provided, however, that following the
meeting of the Government Intermediate Fund Shareholders pursuant to paragraph
5.2 of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of the Government Fund Shares to be issued
to the Government Intermediate Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of California, except as to matters relating to the
internal organization of the Government Intermediate Fund and the Government
Fund, and as to such matters shall be governed by the laws of the state of
Maryland.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
13
<PAGE> 44
successors and assigns, any rights or remedies under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President and attested to by its Secretary.
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS U.S. GOVERNMENT AND MORTGAGE
SECURITIES FUND
By:
- --------------------------- ---------------------------------
Secretary Group Senior Vice President
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS U.S. GOVERNMENT INTERMEDIATE
FUND
By:
- --------------------------- --------------------------------
Secretary Group Senior Vice President
14
<PAGE> 45
PART A - ATLAS NATIONAL MUNICIPAL BOND FUND
<PAGE> 46
BOXED:
In brief...
The Board of Directors asks for your approval to merge the Atlas National
Insured Intermediate Municipal Fund (the "Atlas Intermediate Fund") into the
Atlas National Municipal Bond Fund (the "Atlas National Bond Fund"). The goal of
this re-organization is to produce a higher level of income to you. The merger
should produce this increased income by spreading overhead costs over a
substantially larger asset base and by giving you the opportunity to benefit
from the higher level of income associated with Atlas' high-quality,
longer-term National Bond Fund.
Upon approval, your shares in the Atlas National Bond Fund will have exactly the
same value as the shares in the Atlas Intermediate Fund you owned immediately
prior to the merger. In the opinion of Atlas' tax counsel, the proposed
transaction will have no tax implications to you.
This merger should benefit you immediately and in the long-term and the Board Of
Directors recommends that you vote FOR the proposal.
[DATE]
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
Atlas National Insured Intermediate Municipal Fund to be held at 1901 Harrison
Street, Oakland, California on November 24, 1997 at 10:00 a.m., Pacific Time.
At this meeting, you and other shareholders of the Atlas National Insured
Intermediate Municipal Fund will be asked to approve a plan to effect the
transfer of the assets of your Fund to the Atlas National Municipal Bond Fund.
Please return the enclosed proxy in the postpaid envelope provided. Your vote is
important. I urge you to return your proxy as soon as possible.
Why are we proposing this change?
The Board of Directors believes that after over four years, the Atlas
Intermediate Fund is too small and lacks any reasonable prospects for growth in
the foreseeable future. Atlas Advisers and Atlas Securities have subsidized the
Fund's expenses since its inception and have notified the Board that they are
unable to continue doing so. It is unlikely that the Fund, with its narrow
investment policies, can absorb all its expenses and still produce a competitive
yield.
What is the proposed change?
<PAGE> 47
The Atlas National Bond Fund has compatible investment objectives and invests in
similar types of securities as the Atlas Intermediate Fund. The conservative
management philosophy behind both Atlas bond funds means that the proposed
changes should not have a significant impact on either the credit quality or the
volatility of your investment. For example, while the Atlas Intermediate Fund
must be at least 65% insured, the Atlas National Bond Fund, which can invest in
a wide variety of investment grade credit instruments, was 55% insured as of
June 30, 1997. And, historically, the share prices of both funds have responded
similarly to interest rate changes.
How will the proposed change benefit current shareholders?
By agreeing to this reorganization, it is expected that investors in the Atlas
Intermediate Fund will be able to meet their original objective of investing in
a high-quality municipal bond fund and also take advantage of certain economies
of scale possible only in a fund with a substantial asset base. The Atlas
National Bond Fund had net assets of approximately $50 million as of June 30,
1997 compared to approximately $12 million for the Atlas Intermediate Fund.
You should also benefit from the increased income potential of long-term bonds
in your portfolio.
For these reasons, I believe your approval of the proposed reorganization
agreement will make your Atlas investment work even harder for you.
Will current Fund management change?
No, both the Atlas National Bond Fund and the Atlas Intermediate Fund are guided
by the same experienced, conservative managers.
In summary, I believe that this proposed reorganization will benefit
shareholders by spreading operating expenses over a larger asset base and by
virtue of the higher yields possible from the high-quality, longer-term bonds in
the Atlas National Bond Fund's portfolio. Therefore, I recommend that you vote
"FOR" the proposal on the enclosed Proxy.
Details of the proposal are contained in the accompanying Proxy Statement, which
I urge you to read. Your prompt response will ensure that your shares are
counted at the meeting, that a quorum is present at the meeting to conduct
business and that the expense of additional solicitation of proxies from
shareholders can be avoided. Your continued support is appreciated.
Sincerely,
/s/ Marian O. Sandler
(Mrs.) Marion O. Sandler
President and Chief Executive Officer
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
<PAGE> 48
ATLAS ASSETS, INC.
(A MARYLAND CORPORATION)
1901 Harrison Street, Oakland, California 94612
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND
TO BE HELD ON NOVEMBER 24, 1997
Notice is hereby given that a Special Meeting of Shareholders
(the "Meeting") of the Atlas National Insured Intermediate Municipal Fund (the
"Fund"), a separate series of Atlas Assets, Inc. (the "Company"), will be held
at the World Savings Center, 1901 Harrison Street, Fourth Floor, Oakland,
California on November 24, 1997 at 10:00 a.m. Pacific Time. This Meeting will be
held for the following purposes:
1. To approve an Agreement and Plan of Reorganization
between the Fund and the Atlas National Municipal
Bond Fund (the "National Bond Fund"), another
separate series of the Company, providing for the
transfer of all of the assets of the Fund to the
National Bond Fund in exchange for shares of the
National Bond Fund and the distribution of the
shares of the National Bond Fund to the
shareholders of the Fund in liquidation of the
Fund (the "Proposal"); and
2. To transact such other business as may properly
come before the Meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on
September ____, 1997 as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Meeting or any adjournments
thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN
THE POSTAGE PREPAID ENVELOPE PROVIDED WITH THE PROXY STATEMENT. YOUR PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT THAT YOU
ATTEND THE MEETING.
By Order of the Board of Directors
Steven J. Gray, Secretary
September ____, 1997
<PAGE> 49
- --------------------------------------------------------------------------------
IMPORTANT
YOU MAY HELP AVOID THE EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A
QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED
AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
2
<PAGE> 50
ATLAS ASSETS, INC.
1901 HARRISON STREET, OAKLAND, CALIFORNIA 94612
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
OF
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND
________________, 1997
---------------------------------------------
The enclosed Proxy is being solicited by the Board of
Directors of Atlas Assets, Inc. (the "Company" or "Atlas Funds") for use at the
Special Meeting of Shareholders (the "Meeting") of the Atlas National Insured
Intermediate Municipal Fund (the "Fund"), a separate series of the Company to be
held at the World Savings Center, 1901 Harrison Street, Fourth Floor, Oakland,
California on November 24, 1997 at 10:00 a.m. Pacific Time or at any adjournment
or adjournments thereof. Series of the Company other than the Fund are not being
solicited by this Proxy Statement. This Proxy Statement and the accompanying
form of Proxy are first being mailed to shareholders on or about September__,
1997.
The Meeting is called for the purpose of considering an
Agreement and Plan of Reorganization (the "Agreement") between the Fund and the
Atlas National Municipal Bond Fund (the "National Bond Fund"), another series of
the Company, providing for the transfer of all of the assets of the Fund to the
National Bond Fund in exchange solely for shares of beneficial interest of the
National Bond Fund (the "National Bond Fund Shares") at their net asset value
with no sales charge, and the distribution, pursuant to the Agreement, of the
National Bond Fund Shares to the shareholders of the Fund. Shareholders of the
Fund will receive shares of the National Bond Fund of the same class and having
the same value in the aggregate as their shares of the Fund.
This Proxy Statement also serves as a Prospectus of the
National Bond Fund under the Securities Act of 1933, as amended, for the
issuance of the National Bond Fund Shares in exchange for the Fund's assets. The
terms and conditions of these transactions are more fully described in this
Proxy Statement and Prospectus and in the Agreement which is attached hereto as
3
<PAGE> 51
Appendix A. This Proxy Statement and Prospectus includes and incorporates by
reference the attached Prospectus of the Atlas Funds dated April 30, 1997 (the
"Atlas Funds Prospectus") which
is attached as Appendix B.
The Company is an open-end management investment company
organized as a Maryland corporation consisting of 15 series. This Proxy
Statement and Prospectus pertains only to the Fund and the National Bond Fund.
The investment objective of the National Bond Fund is to seek a high level of
current income consistent with prudent investment management and preservation of
capital, excludable from gross income for federal income tax purposes.
This Proxy Statement and Prospectus sets forth concisely the
information you should know before voting on the proposed reorganization. It
should be read and retained for future reference.
A Statement of Additional Information dated September __, 1997
and a Statement of Additional Information dated April 30, 1997 relating to the
Fund and the National Bond Fund are on file with the Securities and Exchange
Commission and are incorporated by reference herein. They are respectively
available, upon oral or written request, and at no charge, from the Company at
794 Davis Street, San Leandro, California 94577, telephone number
1-800-933-ATLAS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement and Prospectus is September __, 1997.
4
<PAGE> 52
TABLE OF CONTENTS
PAGE
SUMMARY .....................................................
INFORMATION CONCERNING THE MEETING...........................
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION.....
CAPITALIZATION ..............................................
TAX CONSIDERATIONS ..........................................
BUSINESS OF THE FUNDS .......................................
General ............................................
Financial Highlights ...............................
Investment Objectives and Policies .................
Directors and Officers .............................
Investment Adviser .................................
Expenses ...........................................
Purchase of Fund Shares ............................
Redemption of Fund Shares ..........................
Dividends, Distributions and Taxes .................
Transfer Agent, Dividend Agent and Custodian .......
FINANCIAL STATEMENTS ........................................
EXPERTS .....................................................
LEGAL MATTERS ...............................................
AVAILABLE INFORMATION .......................................
APPENDICES
A Form of Agreement and Plan of Reorganization by and between the Atlas
National Municipal Bond Fund and the Atlas National Insured
Intermediate Municipal Fund
B Proforma combining Statements of Assets and Liabilities and Schedule of
Investments as of June 30, 1997 and proforma combining Statements of
Operations for the year ended December 31, 1996 and the six-month
period ended June 30, 1997
C Prospectus of the Atlas Funds dated April 30, 1997
5
<PAGE> 53
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement and Prospectus and is qualified by reference
to the more complete information contained in the Proxy Statement and Prospectus
and in the attached Appendices.
COMPARISON OF THE FUND
AND NATIONAL BOND FUND The Fund and the National Bond Fund are both
separate series of the Company. The Fund
began operations in June 1993 and, as of
June 30, 1997, had net assets of
approximately $11,892,094. The National Bond
Fund began operations in January 1990 and,
as of June 30, 1997, had net assets of
approximately $50,269,401.
INVESTMENT OBJECTIVES
AND POLICIES Both Funds have a common investment
objective of seeking high current income
consistent with prudent investment
management and preservation of capital,
excludable from gross income for federal
income tax purposes. The Funds also have
similar investment strategies and policies,
and utilize the same personnel to implement
their investment programs. Both Funds invest
primarily in a diversified portfolio of
intermediate and long-term municipal
securities of various issuers.
The principal differences between the
policies of the Fund and the National Bond
Fund are in the areas of portfolio maturity
and insurance. In order to reduce market
risk, the Fund maintains a dollar weighted
average portfolio maturity of between three
and ten years. The National Bond Fund does
not have any similar policy limiting the
maturity of its investment portfolio. As of
June 30, 1997, the dollar weighted average
maturity of the Fund's portfolio was 9.3
years. As of the same date, the dollar
weighted average maturity of the National
Bond Fund's portfolio was 16.2 years.
However, the duration of the Fund's
portfolio as of that date was
6
<PAGE> 54
5.48% compared to 6.61% for the National
Bond Fund. Duration takes into account call
features and similar provisions which affect
the period of time in which a position can
actually be owned and is, therefore, looked
at by investment professionals as a more
accurate measure of a portfolio's volatility
than maturity. Based on duration, the
expected volatility of the National Bond
Fund's portfolio is somewhat higher than
that of the Fund, but substantially less
than would be expected by looking only at
the relative maturities of the two Fund's
portfolios.
In addition, to minimize credit risk, the
Fund is required to invest at least 65% of
its assets in securities that are insured by
private insurance companies as to the timely
payment of principal and interest. The
National Bond Fund can invest in a wide
array of credits other than insured
securities. Nevertheless, because of its
very conservative orientation, as of June
30, 1997, 54.14% of the National Bond Fund's
portfolio was comprised of insured
securities, another 2.76% of the portfolio
securities were pre-refunded with U.S.
treasury securities and approximately 94% of
the portfolio securities were rated in the
two highest rating quality grades, such as
S&P (AAA, AA). (Please see "Risk Factors"
below).
OPERATIONAL MATTERS As described in the Atlas Funds Prospectus,
the share purchase and redemption
procedures, exchange privileges, dividend
and distribution procedures, pricing
options, special features, contractual
arrangements and all other customer
service/operational matters are the same for
both Funds.
OPERATING EXPENSES Atlas Advisers, Inc. ("Advisers") provides
portfolio management and administrative
services to both Funds. Each Fund has agreed
to pay Advisers a monthly fee at the annual
rate of .55% of the first $500 million and
.50% of the amount in excess of $500 million
of
7
<PAGE> 55
the value of the average daily net assets of
the Fund as compensation for such services.
Atlas Securities, Inc. ("Securities") is the
distributor of each Fund's shares. Under the
Class A Shares distribution plan, Securities
may receive reimbursement up to a maximum
annual rate of .25% of each Fund's average
daily net assets for distribution related
costs incurred relative to Class A shares.
Under the Class B Shares distribution plan,
each Fund has agreed to pay Securities a
distribution fee of up to a maximum annual
rate of .75% of each Fund's average daily
net assets for distribution related services
provided relative to Class B shares. Both
Funds incur additional expenses in
connection with their operation, including
legal, accounting, transfer agent and
custodial fees.
The Fund's ratio of expenses to average net
assets for its Class A shares was 0.77% and
0.80% for 1995 and 1996, respectively. For
fiscal years 1995 and 1996, the ratio of
expenses to average net assets for the
Fund's Class B shares was 1.29% and 1.48%,
respectively. For all four years of the
Fund's existence, including 1995 and 1996,
Advisers and Securities provided significant
fee reduction and expense reimbursement to
the Fund to enable it to operate at the
above expense levels. However, effective
January 1, 1997, Advisers and Securities
have notified the Board of Directors that
they intended to stop subsidizing the Fund's
operations. The National Bond Fund's ratio
of expenses to average net assets annualized
for its Class A shares was 0.91% and 1.01%,
respectively, for 1995 and 1996, and 1.44%
and 1.51%, respectively, for its Class B
shares. During those years, Advisers and
Securities did subsidize the National Bond
Fund's operations; however, due to its
larger asset size, the level of
subsidization was much less than it was for
the Fund. Given the National Bond Fund's
current size, it is
8
<PAGE> 56
expected that it will be able to cover its
own operating expenses without any need for
Advisers or Securities to subsidize its
operations, while providing shareholders
with a competitive return.
Without such fee reductions and expense
absorption, the ratio of expenses to average
net assets (annualized) would have been as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
1996 1995 1996 1995
---------------------- ----------------------
<S> <C> <C> <C> <C>
Fund 1.12% 1.19% 3.25% 3.25%
National Bond Fund 1.01% 1.05% 2.29% 3.25%
</TABLE>
REORGANIZATION
EFFECT OF THE Pursuant to the terms of the Agreement, the
REORGANIZATION proposed reorganization will consist of the
transfer of all of the assets of the Fund
and the assumption by the National Bond Fund
of all liabilities of the Fund, in exchange
solely for shares of beneficial interest of
the National Bond Fund having an aggregate
value equal to the value of the net assets
transferred by the Fund, and the
distribution pursuant to the Agreement, of
the National Bond Fund Shares to the
shareholders of the Fund in liquidation of
the Fund as provided in the Agreement.
(These transactions are referred to
hereinafter as the "Reorganization.")
If approved by the Fund's shareholders, the
Reorganization will become effective on or
shortly after the date such approval is
obtained (the "Closing Date"), which is
currently anticipated to occur on or about
November 24, 1997. The assets of the Fund
and the shares of the National Bond Fund
will be valued at the close of business on
the last business day prior to the Closing
Date (the "Valuation Date").
9
<PAGE> 57
TAX CONSIDERATIONS The consummation of the Reorganization is
subject to the receipt of an opinion of
counsel, in form, scope and substance
satisfactory to the Fund and the National
Bond Fund, to the effect that the
Reorganization will be treated as a tax-free
reorganization for federal income tax
purposes. Investors should review the
discussion under "Tax Considerations" below
for a better understanding of the specific
points to be addressed in counsel's opinion.
Investors who redeem shares of the Fund or
exchange their shares for shares of another
Atlas Fund, instead of participating in the
Reorganization, and who are not exempt from
federal income tax, will be required to
recognize any realized gain (or loss) on the
redemption or exchange, as more fully
described in the accompanying Atlas Funds
Prospectus.
THE MEETING
TIME, PLACE AND DATE The meeting will be held on November 24,
1997 at 10:00 a.m. Pacific Time, at the
World Savings Center, 1901 Harrison Street,
Oakland, California 94612.
RECORD DATE September ____, 1997
VOTE REQUIRED Approval of the Reorganization requires the
FOR APPROVAL affirmative vote of a majority of the Fund's
shares of beneficial interest outstanding
and entitled to vote as a whole without
reference to share class.
RISK FACTORS Because the National Bond Fund has
maintained in the past, and would be
expected to continue to maintain, a
portfolio with a greater weighted average
maturity than that maintained by the Fund,
shareholders of the Fund could be exposed to
increased market risk as a result of the
Reorganization. Similarly, because the
National Bond Fund would be expected to have
a level of investment in securities that are
insured as to the timely payment of
principal and interest that is lower than
the required minimum investment in such
securities by the Fund,
10
<PAGE> 58
shareholders of the Fund could be exposed to
increased credit risk as a result of the
Reorganization. However, as noted above, the
credit quality of the National Bond Fund's
portfolio has been, and is expected to
continue to be, very high, with a policy
prohibiting any below investment grade
credits.
Shareholders should also be expected to
enjoy higher yields after the
Reorganization. For more detailed historical
information on the performance and portfolio
maturities and credit quality of the Funds,
shareholders are directed to the Annual
Report to Shareholders as of December 31,
1996 and the Semi-Annual Report to
Shareholders as of June 30, 1997 which have
been previously distributed. Additional
copies of such reports are available from
the Company without charge upon request.
INFORMATION CONCERNING THE MEETING
SOLICITATION, REVOCATION AND USE OF PROXIES
A shareholder executing a proxy has the power to revoke it at
any time before it is exercised by filing with the Fund a written notice of
revocation or returning a duly executed proxy bearing a later date prior to the
time of the Meeting. Any shareholder who has executed a proxy but is present at
the Meeting and who wishes to vote in person may revoke his proxy by notifying
the Secretary of the Company at any time before it is voted.
All shares represented by properly executed proxies, unless
such proxies have previously been revoked, will be voted at the Meeting in
accordance with the directions on the proxies. If no direction is indicated, the
shares will be voted "FOR" the approval of the Agreement.
It is not anticipated that any matters other than the approval
of the Agreement will be brought before the Meeting. If, however, any other
business is properly brought before the Meeting, proxies will be voted in
accordance with the best judgment of the persons designated on such proxies.
11
<PAGE> 59
RECORD DATE AND OUTSTANDING SHARES
Only Fund shareholders of record at the close of business on
September__, 1997 (the "Record Date") are entitled to notice of and to vote at
the Meeting and any postponement or adjournment thereof. At the close of
business on June 30, 1997, there were 1,159,288 shares of the Fund issued and
outstanding (the "Fund Shares"). As of that date, there were 4,462,751 shares of
the National Bond Fund issued and outstanding.
SECURITY OWNERSHIP OF THE FUND AND NATIONAL BOND FUND
To the Fund's knowledge, as of August ___, 1997, no
shareholder owned beneficially 5% or more of the outstanding shares of the Fund.
As of that date, the Directors and officers of the Fund owned as a group less
than 1% of the outstanding shares of the Fund.
As of August ___, 1997, to the knowledge of the National Bond
Fund, no shareholder owned beneficially 5% or more of the outstanding shares of
the National Bond Fund. The Directors and officers of the Company owned
beneficially as a group less than 1% of the outstanding shares of the National
Bond Fund.
Golden West Financial Corporation, the parent corporation of
Advisers and Securities, is the sole shareholder that beneficially owns in
excess of 5% of any outstanding class of shares of the other series of the
Company. In each instance, such ownership will not significantly impact
shareholder voting on matters affecting the National Bond Fund.
VOTING RIGHTS, QUORUM AND REQUIRED VOTE
Each Fund share is entitled to one vote. A majority of the
shares entitle to vote at the Meeting constitutes a quorum to conduct business
at the Meeting. In the event a quorum is not present at the Meeting or in the
event that a quorum is present but sufficient votes to approve the Agreement are
not received, the persons named as proxies may propose one or more adjournments
of such Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those Shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR the Proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST the
proposal against any such adjournment. Approval of the Agreement requires the
affirmative vote of a majority of the outstanding shares of the Fund as a whole
without reference to share class, as defined under the 1940 Act, as amended,
which means the lesser of (a) 67% or more of the voting securities of the Fund
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by
12
<PAGE> 60
proxy thereat, or (b) more than 50% of the outstanding voting securities of the
Fund. No approval is required by shareholders of the National Bond Fund.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of shareholders of the Fund are governed by
Maryland law, the provisions of the Company's Articles of Incorporation and
By-Laws, and by Rule 22c-1 under the 1940 Act.
Rule 22c-1 under the 1940 Act provides that no open-end
investment company may redeem its shares other than at the net asset value next
computed after receipt of a tender of such security for redemption. Therefore,
any shareholder who does not wish to receive National Bond Fund Shares as part
of the exchange of the assets of the Fund for National Bond Fund Shares, may
redeem his or her shares at the net asset value next computed after receipt of a
proper redemption request by the Fund at any time prior to the Closing Date. In
addition, as described in the Atlas Funds Prospectus, shareholders of the Fund
have the ability to exchange their shares in the Fund for shares of another
Atlas Fund at their relative net asset values at any time prior to the Closing
Date. Neither the Articles of Incorporation nor the ByLaws provide for any
special treatment for dissenting shareholders who wish not to participate in a
merger, consolidation or reorganization.
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
GENERAL
The shareholders of the Fund are being asked to approve the
Agreement between the Fund and the National Bond Fund. A copy of the Agreement
is attached hereto as Appendix A. Detailed information with respect to the
National Bond Fund is set forth in the Atlas Funds Prospectus, which is attached
hereto as Appendix B. The Reorganization will involve the Fund's exchange of
substantially all of its assets for National Bond Fund Shares, followed by the
Fund's distribution of the National Bond Fund Shares to the Fund's shareholders
in liquidation of the Fund. The number of National Bond Fund Shares to be issued
in the Reorganization will be calculated on the basis of the fair value of the
assets of the Fund to be acquired, net of liabilities to be assumed, by the
National Bond Fund immediately prior to the transfer of assets, as more fully
described under "Description of Agreement."
Pursuant to the Agreement, the Fund will liquidate and
distribute the National Bond Fund Shares received as described above pro rata to
its shareholders of record ("Fund
13
<PAGE> 61
Shareholders"), determined as of the close of business on the New York Stock
Exchange on the last day such Exchange is open for unrestricted trading
immediately preceding the effective date of the Reorganization. The result of
the Reorganization will be that the National Bond Fund will add to its
investment portfolio substantially all of the assets of the Fund, and the Fund
Shareholders who do not redeem their shares will become shareholders of the
National Bond Fund with National Bond Fund Shares having the same aggregate net
asset value as the Fund Shares owned on the day of the Reorganization. If any of
the assets acquired from the Fund are not consistent with the investment
objectives and restrictions of the National Bond Fund, such assets will be sold
by the National Bond Fund and the National Bond Fund will incur brokerage
commissions in executing such transactions.
The Agreement and the transactions provided for therein were
considered and approved by the Board of Directors of the Company at a meeting
held on August 15, 1997. In the event that the Reorganization is not
consummated, the Fund will continue to engage in business as a management
investment company, and the Board will reconsider what further action should be
taken, including the possible liquidation of the Fund. See "Business of the
Funds" below.
REASONS FOR THE PROPOSED REORGANIZATION
The Board of Directors of the Company believes that the
proposed Reorganization will be advantageous to shareholders of the Fund. The
Fund incurs substantial overhead costs for accounting services, legal services,
printing, insurance, custodial, transfer agency, advisory and administrative
services. At its current asset size, the Fund is too small to operate in a cost
efficient manner and Advisers has been voluntarily subsidizing the Fund's
operations by reducing its management fees and absorbing some of the Fund's
other expenses in order that the Fund might be able to provide a competitive
yield to shareholders. In addition, Securities has been voluntarily reducing its
distribution fees. Advisers and Securities do not foresee any significant
increases in the Fund's asset size in the near future, and have informed the
Board that they are unwilling to continue subsidizing the Fund's operations in
the future. Although the National Bond Fund incurs similar expenses, as a larger
fund it can spread these expenses over a substantially larger asset and income
base. Because the investment objectives, current portfolios, and policies of the
Fund and the National Bond Fund are so similar, Fund Shareholders should be able
to continue to meet their primary investment goals of high tax-exempt yield and
capital preservation as shareholders of the National Bond Fund.
14
<PAGE> 62
The only other alternative to the Reorganization considered by
the Board of Directors to be practical would be a taxable liquidation of the
Fund, which the Directors have determined would not be preferable to the
tax-free Reorganization with the National Bond Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" THE PROPOSED REORGANIZATION.
DESCRIPTION OF AGREEMENT
The following explanation of the Agreement is a summary, does
not purport to be complete, and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Agreement. A copy of the
Agreement is annexed hereto as Appendix A of this Proxy Statement and Prospectus
and should be read in its entirety.
METHOD OF CARRYING OUT REORGANIZATION. If shareholders holding
a majority of the outstanding shares of the Fund approve the Agreement, the
Reorganization will be effected on the Closing Date, which has been set for a
date on or about December__, 1997; however, in no event will the Closing Date be
later than ten business days after shareholder approval is obtained (the
"Effective Date").
On the Effective Date, the Fund will transfer all of its
assets in exchange for National Bond Fund Shares having an aggregate net asset
value equal to the aggregate value of the transferred assets (less liabilities
assumed) as of the close of business on the business day next preceding the
Closing Date (the "Valuation Date"). The value of the Fund's assets and the net
asset value of a National Bond Fund Share will be determined in accordance with
the valuation procedures set forth in the Agreement and the Atlas Funds
Prospectus. The National Bond Fund Shares will be distributed pro rata to the
Fund Shareholders.
SURRENDER OF CERTIFICATES. Shareholders of the Fund whose
shares are represented by one or more share certificates should, prior to the
Effective Date, either surrender such certificates to the Fund or deliver to the
Fund an affidavit with respect to lost certificates, in such form and
accompanied by such surety bonds as the Fund may require (collectively an
"Affidavit"). On the Effective Date, all certificates which have not been so
surrendered will be deemed to be converted into National Bond Fund Shares and
will no longer evidence ownership of the Fund's Shares. National Bond Fund
Shares attributable to the conversion of the Fund shares represented by
unsurrendered certificates (for which no Affidavit has been delivered) will be
15
<PAGE> 63
held by NFDS in trust for the former holders of such shares. Such shareholders
may not redeem National Bond Fund Shares represented by Fund certificates
received in the Reorganization until they have surrendered their certificates or
delivered an Affidavit relating thereto. Until such certificates are surrendered
or an Affidavit relating thereto has been delivered, dividends and other
distributions payable on National Bond Fund Shares held in trust by NFDS will be
paid to NFDS for the benefit of such shareholders. After a former shareholder
surrenders his or her certificates or delivers an Affidavit, the National Bond
Fund Shares, dividends and distributions held by NFDS for his or her benefit
will be transferred to an account in the name of such shareholder.
EXPENSES OF THE REORGANIZATION. The National Bond Fund will
pay all expenses of the Reorganization.
CAPITALIZATION
The following table sets forth the respective capitalization
of the National Bond Fund and the Fund as of June 30, 1997, and the pro forma
combined capitalization of both as if the Reorganization had occurred on that
date. The table reflects a pro forma exchange ratio of approximately .919
National Bond Fund Shares being issued for each Fund share. If the
Reorganization is consummated, the actual exchange ratio on the Effective Date
may vary from the ratio indicted as a result of, among other matters, changes in
the market value of the portfolio securities of both the National Bond Fund and
the Fund between June 30, 1997 and the Valuation Date and changes in the amount
of net investment income of the National Bond Fund and the Fund earned during
that period less distributions made. The pooling method will be utilized to
account for the Reorganization. (See Appendix C hereto - pro forma combined
financial statements.)
16
<PAGE> 64
June 30, 1997
<TABLE>
<CAPTION>
======================= ================================== ==================================== ====================================
PRO FORMA
NATIONAL BOND FUND FUND COMBINED
---------------------------------- ------------------------------------ ------------------------------------
CLASS A Class B Class A Class B Class A Class B
======================= ================ ================= ==================== =============== =================== ================
<S> <C> <C> <C> <C> <C> <C>
Net Assets $47,805,541 $2,463,860 $11,595,234(1) $296,860(1) $59,400,775 $2,760,720
- ----------------------- ---------------- ----------------- -------------------- --------------- ------------------- ----------------
Net Asset Value
Per Share $11.26 $11.27 $10.35(1) $10.35(1) $11.26 $11.27
- ----------------------- ---------------- ----------------- -------------------- --------------- ------------------- ----------------
Shares Outstanding 4,244,099 218,652 1,120,619 28,669 5,273,871(2) 244,993(2)
- ----------------------- ---------------- ----------------- -------------------- --------------- ------------------- ----------------
Shares Authorized 20,000,000 25,000,000 20,000,000
======================= ================================== ==================================== ====================================
</TABLE>
(1) Net Assets and Net Asset Value Per Share of the Fund represent the aggregate
and per share value of the Fund's net assets which would have been transferred
to the National Bond Fund if the Reorganization had been consummated on June 30,
1997.
(2) If the Reorganization had taken place on June 30, 1997, the Fund would have
received 1,029,772 Class A and 26,341 Class B National Bond Fund Shares, which
would be available for distribution to its shareholders. No assurances can be
given as to how many National Bond Fund Shares the Fund will receive on the
Effective Date. The foregoing is merely an example of what the Fund would have
received and distributed had the Reorganization been consummated on June 30,
1997, and should not be relied upon to reflect the amount which actually will be
received on or after the Effective Date.
TAX CONSIDERATIONS
The consummation of the Reorganization is subject to the
receipt of a favorable opinion of Paul, Hastings, Janofsky & Walker LLP
in form, scope and substance satisfactory to the Company to the effect
that:
(i) The acquisition by the National Bond Fund of
substantially all of the assets of the Fund solely in exchange for
National Bond Fund Shares, followed by the distribution by the Fund, in
liquidation of the Fund, of National Bond Fund Shares to the
shareholders of the Fund in exchange for their Fund Shares will
constitute a reorganization within the meaning of Section 368(a)(1)(C)
of the Internal Revenue Code of 1986, as amended (the "Code") and the
Fund and the National Bond Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized to the Fund upon the
transfer of substantially all of its assets to the
17
<PAGE> 65
National Bond Fund solely in exchange for the National Bond Fund Shares;
(iii) No gain or loss will be recognized to the National Bond
Fund upon the receipt of the assets of the Fund solely in exchange for National
Bond Fund Shares;
(iv) The basis of the assets of the Fund acquired by the
National Bond Fund will be, in each instance, the same as the basis of those
assets in the hands of the Fund immediately prior to the transfer;
(v) The holding period of the assets of the Fund in the
hands of the National Bond Fund will include the period during which those
assets were held by the Fund;
(vi) No gain or loss will be recognized by the shareholders
of the Fund upon the exchange of all of their Fund Shares solely for National
Bond Fund Shares as part of the transaction;
(vii) The basis of the National Bond Fund Shares to be
received by the Fund's shareholders will be the same as the basis of the Fund
Shares surrendered in exchange therefor; and
(viii) The holding period of the National Bond Fund Shares to
be received by the Fund's shareholders will include the period during which the
Fund Shares surrendered in exchange therefor were held, provided the Fund Shares
constituted capital assets in their hands on the date of the exchange.
BUSINESS OF THE FUNDS
GENERAL
For a general description of the Funds see "How are the Funds administered?" in
the Atlas Funds Prospectus. With regard to each of the items described under
this section, except as described above, there are no differences between the
business of the Fund and that of the National Bond Fund.
FINANCIAL HIGHLIGHTS
See "Financial Highlights" in the Atlas Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of the Funds' investment objectives and policies, see "What are
the Funds' investment objectives?" and
18
<PAGE> 66
"What are the Funds' investment policies?" in the Atlas Funds Prospectus.
DIRECTORS AND OFFICERS
For a discussion of the responsibilities of the Atlas Funds Board of Directors,
see "How are the Funds administered?" in the Atlas Funds Prospectus.
INVESTMENT ADVISER
For a description of the Funds' Adviser, see "How are the Funds administered?"
in the Atlas Funds Prospectus.
EXPENSES
For a description of the Funds' expenses, see "What are the Funds' fees and
expenses?" in the Atlas Funds Prospectus.
PURCHASE OF FUND SHARES
For a description of how shares of the Atlas Funds may be purchased, see "How
can I invest?" in the Atlas Funds Prospectus.
REDEMPTION OF FUND SHARES
For a description of how shares of the Atlas Funds may be redeemed, see "How can
I redeem shares?" in the Atlas Funds Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of the Funds' policy with respect to dividends, distributions
and taxes, see "What dividends and distributions can I receive?" and "How can
taxes affect my investment?" in the Atlas Funds Prospectus.
TRANSFER AGENT, DIVIDEND AGENT AND CUSTODIAN
For information regarding the Fund's transfer agent, dividend agent and
custodian bank, see "How are the Funds administered?" and the back cover page of
the Atlas Funds Prospectus.
FINANCIAL STATEMENTS
The audited financial statements of the Company for the year
ended December 31, 1996, set forth in the Company's 1996 Annual Report to
Shareholders, and the unaudited financial statements of the Company for the six
months ended June 30, 1997,
19
<PAGE> 67
set forth in the Company's 1997 Semi-Annual Report to Shareholders are
incorporated herein by reference. The unaudited proforma combining Statements of
Assets and Liabilities and Schedule of Investments as of June 30, 1997, and the
unaudited proforma combining Statements of Operations for the year ended
December 31, 1996 and the six-month period ended June 30, 1997 are set forth in
Appendix B hereto.
EXPERTS
The financial statements included in the Company's 1996 Annual
Report to Shareholders incorporated by reference in this combined proxy and
prospectus and elsewhere in this registration statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report included
in such Annual Report, and are incorporated by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
National Bond Fund Shares will be passed upon for the Company by Paul, Hastings,
Janofsky & Walker LLP.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Investment
Company Act of 1940, and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed with
respect to the Fund and the National Bond Fund can be inspected and copied at
the public reference facilities of the Commission at Room 1024, Mail Stop 1-2,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices: Chicago (Room 1400, Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661); and New York (Room 1300, Northwest
Regional Office, 7 World Trade Center, New York, New York 10048). Copies of such
material can also be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
20
<PAGE> 68
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
___ day of __________, 1997 by and between the Atlas National Municipal Bond
Fund (the "National Bond Fund") and the Atlas National Insured Intermediate
Municipal Fund (the "National Intermediate Fund"), each a separate series of
Atlas Assets, Inc. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of the transfer of substantially all of the assets of the National
Intermediate Fund and the assumption by the National Bond Fund of liabilities of
the National Intermediate Fund in exchange solely for shares of beneficial
interest of the National Bond Fund (the "National Bond Fund Shares") and the
distribution, after the Closing Date hereinafter referred to, of the National
Bond Fund Shares to the Shareholders of the National Intermediate Fund in
liquidation of the National Intermediate Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the National
Intermediate Fund agrees to transfer its assets as set forth in paragraph 1.2,
and its liabilities as set forth in paragraph 1.3 shall be assigned and
transferred to the National Bond Fund and the Company agrees to deliver to the
National Intermediate Fund in exchange therefor the number of National Bond Fund
Shares, determined by dividing the value of the National Intermediate Fund's
assets, computed in the manner and as of the time and date set forth in
paragraph 2.1, net of liabilities transferred to the National Bond Fund pursuant
to paragraph 1.3, by the net asset value of one National Bond Fund Share
computed in the manner and as of the time and date set forth in paragraph 2.2.
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
1.2 (a) The assets of the National Intermediate Fund to be acquired by
the National Bond Fund shall consist of all cash, securities and due bills for
dividends, interest, or other receivables or rights to receive any of the
foregoing, any other property or money, unamortized organization expenses,
receivables for shares sold, any other property of any kind and all other
1
<PAGE> 69
assets having a value to the National Bond Fund following the Closing, which are
owned by and reflected on the books of the National Intermediate Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The National Intermediate Fund has provided the National Bond
Fund with a list of the current securities holdings of the National Intermediate
Fund as of the date of execution of this Agreement. The National Intermediate
Fund reserves the right to sell any of these securities in the ordinary course
of business.
1.3 The National Bond Fund shall assume and be responsible and liable
for only those liabilities or obligations of the National Intermediate Fund that
(i) have arisen in the ordinary course of the National Intermediate Fund's
business, (ii) have been previously reserved for on the books of account of the
National Intermediate Fund, and (iii) relate to the period prior to the Closing
Date. The National Intermediate Fund will attempt to discharge all of the
National Intermediate Fund's known liabilities and obligations for which
invoices or other documentation have been rendered by vendors or service
providers prior to the Closing Date. Except as otherwise expressly provided in
this paragraph 1.3, the National Bond Fund does not assume, nor does it agree to
be responsible for, any liabilities not known and reflected on the books of the
National Intermediate Fund on the Valuation Date (as defined in paragraph 2.1).
1.4 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the National Intermediate Fund will be liquidated and will
distribute pro rata to its Shareholders of record (the "National Intermediate
Fund Shareholders"), determined as of the close of business on the New York
Stock Exchange on the last day such Exchange is open for unrestricted trading
immediately preceding the Closing Date, the National Bond Fund Shares received
by the National Intermediate Fund pursuant to paragraph 1.1. Such liquidation
and distribution will be accomplished by the transfer of the National Bond Fund
Shares then credited to the account of the National Intermediate Fund on the
books of the National Bond Fund, to open accounts on the share records of the
National Bond Fund in the names of the National Intermediate Fund Shareholders
and representing the respective pro rata number of National Bond Fund Shares due
such National Intermediate Fund Shareholders and by such other action as may be
deemed appropriate to complete the liquidation as determined by applicable law.
1.5 The National Intermediate Fund Shareholders holding share
certificates representing their ownership of shares of the National Intermediate
Fund ("National Intermediate Fund Shares") shall be requested to surrender such
certificates or deliver an affidavit with respect to lost certificates, in such
form and accompanied by such surety bonds as the National Intermediate Fund may
require (collectively, an "Affidavit"), to the National Intermediate Fund
2
<PAGE> 70
prior to the Closing Date. Any National Intermediate Fund certificate which
remains outstanding on the Closing Date shall be deemed to be converted into
National Bond Fund Shares and shall no longer evidence ownership of the National
Intermediate Fund Shares. The National Bond Fund Shares issued upon conversion
of the National Intermediate Fund Shares evidenced by an outstanding certificate
(as to which no Affidavit has been delivered) shall be held by National
Financial Data Services ("NFDS") in trust for the benefit of the former holders
of such National Intermediate Fund Shares. Unless and until any such
certificate(s) shall be so surrendered or an Affidavit relating thereto shall be
delivered, dividends and other distributions payable by the National Bond Fund
subsequent to the Liquidation Date with respect to the National Bond Fund Shares
held by NFDS shall not be paid to the holder of such certificate(s), but shall
be paid to NFDS for the benefit of such holder. After such Shareholder
surrenders such certificate(s) or delivers such Affidavit to NFDS, NFDS shall
transfer any National Bond Fund Shares and any such dividends and distributions
held for the benefit of such Shareholder to an account in the name of such
Shareholder, who shall then be treated for all purposes as the owner of such
transferred National Bond Fund Shares, dividends and distributions.
1.6 Any transfer taxes payable upon issuance of National Bond Fund
Shares in a name other than the registered holder of the corresponding National
Intermediate Fund Shares on the books of the National Intermediate Fund as of
the Closing Date shall, as a condition of such issuance and transfer, be paid by
the person to whom such National Bond Fund Shares are to be issued and
transferred.
1.7 The existence of the National Intermediate Fund shall be terminated
promptly following the Closing Date in accordance with the provisions of Article
V, Section (e)(4) of the Articles of Incorporation of the Company.
2. VALUATION
2.1 The value of the National Intermediate Fund's assets to be acquired
by the National Bond Fund hereunder shall be the fair value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Company's then current Prospectus or Statement of Additional
Information.
2.2 The net asset value of each National Bond Fund Share shall be the
net asset value per share computed as of the close of business on the New York
Stock Exchange on the Valuation Date, using the valuation procedures set forth
in the Company's then current Prospectus or Statement of Additional Information.
3
<PAGE> 71
2.3 The number of National Bond Fund Shares to be issued (including
fractional shares, if any) in exchange for the National Intermediate Fund's
assets shall be determined by dividing the value of such assets determined in
accordance with paragraph 2.1, less the liabilities transferred to the National
Bond Fund in accordance with paragraph 1.3, by the net asset value of a National
Bond Fund Share determined in accordance with paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be as soon as practicable after approval by
the National Intermediate Fund Shareholders of the transactions contemplated by
this Agreement; however, in no event will the Closing Date be later than ten
(10) days after such Shareholder approval has been obtained. The Closing shall
be held at 794 Davis Street, San Leandro, California 94577, in the offices of
the Company or at such other place as the parties may agree.
3.2 The National Intermediate Fund's portfolio securities shall be
available for inspection by the National Bond Fund, its custodian bank or such
other agent of the Company as the Company shall designate, at the offices of the
Company's custodian, Investors Bank & Trust Company ("IBT"), 200 Clarendon
Street, Boston, Massachusetts 02116, no later than five business days preceding
the Valuation Date. Such National Intermediate Fund portfolio securities and
cash shall be delivered by the National Intermediate Fund to IBT, as custodian
for the National Bond Fund for the account of the National Bond Fund on the
Closing Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all applicable state stock transfer stamps or a check
for the appropriate purchase price thereof, or, in lieu thereof, a due bill for
such National Intermediate Fund securities and cash shall be delivered by the
National Intermediate Fund to IBT for the account of the National Bond Fund. The
cash delivered shall be in the form of currency or certified or official bank
checks, payable to the order of "Investors Bank & Trust Company, Custodian for
the Atlas National Municipal Bond Fund."
3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted, or
(b) trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
National Bond Fund or the National Intermediate Fund is impracticable, the
Closing Date shall be postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have been restored.
3.4 The National Intermediate Fund shall deliver at the Closing a list
containing the name, address, federal tax identification numbers and backup
withholding and nonresident alien
4
<PAGE> 72
status of each National Intermediate Fund Shareholder and the number and
percentage ownership of outstanding shares of the National Intermediate Fund
Shares owned by each Shareholder, all as of the close of business on the
Valuation Date. The National Bond Fund shall issue and deliver a confirmation
evidencing the National Bond Fund Shares to be credited on the Closing Date, or
provide evidence satisfactory to the National Intermediate Fund that such
National Bond Fund Shares have been credited to the National Intermediate Fund's
account on the books of the National Bond Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The National Intermediate Fund represents and warrants to the
National Bond Fund as follows:
(a) At the Closing Date, the National Intermediate Fund will have
good and marketable title to its assets;
(b) The National Intermediate Fund is not, and the execution,
delivery and performance of this Agreement will not result, in the violation of
any agreement, indenture, instrument, contract, lease or other undertaking to
which the National Intermediate Fund is a party or by which it is bound;
(c) All material contracts or other commitments (other than this
Agreement) to which the National Intermediate Fund is a party will be terminated
without liability to the National Intermediate Fund or the National Bond Fund
prior to or as of the Closing Date;
(d) No litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or threatened as
to the National Intermediate Fund or any of its properties or assets. The
National Intermediate Fund knows of no facts which might form the basis for the
institution of such proceedings, and the National Intermediate Fund is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions herein contemplated;
(e) The statements of assets and liabilities, the statements of
operations, and the statements of changes in net assets of the National
Intermediate Fund at December 31, 1993, 1994, 1995 and 1996 have been audited by
Deloitte & Touche LLP, independent auditors, and prepared in accordance with
generally accepted accounting principles consistently applied, and such
statements fairly reflect the financial condition, results of operations, and
changes in net assets of the National Intermediate Fund as of and for the
periods ended on such dates, and there are
5
<PAGE> 73
no liabilities of the National Intermediate Fund as of the dates of such
financial statements, other than liabilities disclosed or provided for in the
foregoing statements;
(f) The unaudited statement of assets and liabilities, the
unaudited statement of operations, and the unaudited statement of changes in net
assets of the National Intermediate Fund at June 30, 1997 have been prepared in
accordance with generally accepted accounting principles consistently applied,
and such statements fairly reflect the financial condition, results of
operations, and changes in net assets of the National Intermediate Fund as of
and for the period ended on such date, and there are no liabilities of the
National Intermediate Fund as of the date of such financial statements, other
than liabilities disclosed or provided for in the foregoing statements;
(g) Since June 30, 1997, there has been no material change in
the National Intermediate Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business;
(h) At the date hereof and at the Closing Date, all federal,
state and other tax returns and reports of the National Intermediate Fund
required by law to have been filed by such dates, including returns for any
penalties required to be self assessed on IRS Form 8210 for each year, shall
have been filed, and all federal, state and other taxes, interest and penalties
shall have been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the National Intermediate Fund's knowledge
no such return is currently under audit and no assessment has been asserted with
respect to such returns;
(i) At the date hereof and on the Closing Date, the National
Intermediate Fund has complied and will have complied with the information
reporting requirements of Sections 6042 and 6045 of the Code and the withholding
requirements of Sections 3406, 1441 and 1442 of the Code since its inception or
has paid or will have paid by the Closing Date any applicable taxes, interest
and penalties that have been or may be assessed for the failure to comply with
such requirement;
(j) The National Intermediate Fund has met the requirements of
Subchapter M of the Code, and has elected to be treated as a regulated
investment company, for the fiscal periods or years ended December 31, 1993,
1994, 1995 and 1996 (its only taxable years) and will qualify as such on the
Closing Date;
(k) All issued and outstanding National Intermediate Fund
Shares are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued and outstanding
shares of the National Intermediate Fund will, at the time of Closing, be held
by the persons and in the amounts set forth in the list of Shareholders
submitted to the
6
<PAGE> 74
Company pursuant to paragraph 3.4. The National Intermediate Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any National Intermediate Fund Shares, nor is there outstanding any security
convertible into any National Intermediate Fund Shares;
(l) At the Closing Date, the National Intermediate Fund will
have good and marketable title to its assets to be transferred to the National
Bond Fund pursuant to paragraph 1.2, and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder, and upon delivery and
payment for such assets, the National Bond Fund will acquire good and marketable
title thereto, free and clear of restrictions on the full transfer thereof,
including such restrictions as might arise under the Securities Act of 1933 (the
"1933 Act");
(m) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary
actions on the part of the Company's Board of Directors and the National
Intermediate Fund Shareholders, and this Agreement constitutes a valid and
binding obligation of the National Intermediate Fund enforceable in accordance
with its terms, subject to the approval by the National Intermediate Fund
Shareholders.
4.2 The National Bond Fund represents and warrants to the
National Intermediate Fund as follows:
(a) At the Closing Date, the National Bond Fund will have good
and marketable title to its assets;
(b) The National Bond Fund is not, and the execution, delivery
and performance of this Agreement will not result, in violation of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the National Bond Fund is a party or by which it is bound;
(c) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the National Bond Fund or any of its properties or assets.
The Company knows of no facts which might form the basis for the institution of
such proceedings and the Company is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(d) The statements of assets and liabilities, the statement of
operations and the statements of changes in net assets at December 31, 1990,
1991, 1992, 1993, 1994, 1995 and 1996 audited by Deloitte & Touche LLP fairly
and accurately reflect the financial condition of the National Bond Fund as of
such dates and the results of its operations for the periods then ended in
7
<PAGE> 75
accordance with generally accepted accounting principles consistently applied;
(e) The unaudited statement of assets and liabilities, the
unaudited statement of operations and the unaudited statement of changes in net
assets at June 30, 1997 fairly and accurately reflect the financial condition of
the National Bond Fund as of such dates and the results of its operations for
the periods then ended and have been prepared in accordance with generally
accepted accounting principles consistently applied;
(f) Since June 30, 1997, there has not been any material
adverse change in the National Bond Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course of
business. For the purposes of this subparagraph (f), a decline in net value per
share of the National Bond Fund Shares shall not constitute a material adverse
change;
(g) By the Closing Date, all federal, state and other tax
returns and reports of the National Bond Fund required by law then to be filed
shall have been filed, and all federal, state and other taxes shown due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof;
(h) The National Bond Fund has met the requirements of
Subchapter M of the Code, and has elected to be treated as a regulated
investment company, for each fiscal year of its operation and will qualify as
such as of the Closing Date;
(i) All issued and outstanding National Bond Fund Shares are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. The National Bond Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any National Bond
Fund Shares, nor is there outstanding any security convertible into any National
Bond Fund Shares;
(j) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the Company's Board of Directors and this Agreement constitutes a
valid and binding obligation of the National Bond Fund enforceable in accordance
with its terms;
(k) The National Bond Fund Shares to be issued and delivered
to the National Intermediate Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and, when so issued and delivered,
will be duly and validly issued National Bond Fund Shares, and will be fully
paid and non-assessable.
8
<PAGE> 76
5. COVENANTS OF THE PARTIES
5.1 The National Bond Fund and the National Intermediate Fund each will
operate its business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include customary dividends and distributions.
5.2 The National Intermediate Fund will, as soon as possible, call a
meeting of the Shareholders of the National Intermediate Fund to consider and
act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 The National Intermediate Fund covenants that the National Bond
Fund Shares to be issued hereunder are not being acquired for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.4 Subject to the provisions of this Agreement, the National Bond Fund
and the National Intermediate Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
5.5 As promptly as practicable after the Closing Date, the National
Intermediate Fund shall furnish the National Bond Fund a statement of the
earnings and profits and capital loss carryovers of the National Intermediate
Fund for federal income tax purposes which will be carried over to the National
Bond Fund in accordance with and subject to the limitations of Sections 381 and
383 of the Code, and which will be certified by the National Intermediate Fund's
Treasurer.
5.6 The Company will, as soon as possible, prepare a Prospectus (the
"Prospectus") which will include a Proxy Statement (the "Proxy Statement"), all
to be included in a Registration Statement on Form N-14 of the Company (the
"Registration Statement")to be filed in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Investment
Company Act of 1940 in connection with the special meeting of the National
Intermediate Fund Shareholders to consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NATIONAL INTERMEDIATE FUND
The obligations of the National Intermediate Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
National Bond Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and in addition thereto, the following further
conditions:
9
<PAGE> 77
6.1 All representations and warranties of the National Bond Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The National Bond Fund has performed all applicable covenants
contained in this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NATIONAL BOND FUND
The obligations of the National Bond Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the National
Intermediate Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the National Intermediate
Fund contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The National Intermediate Fund has performed all applicable
covenants contained in this Agreement.
7.3 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the National Intermediate Fund in accordance with applicable law.
7.4 The parties shall have received a favorable opinion of Paul,
Hastings, Janofsky & Walker LLP (rendered in reliance upon, and the form of
which may be affected by, certain factual representations by the parties),
satisfactory to the Company substantially to the effect that for federal income
tax purposes:
(a) The acquisition by the National Bond Fund of substantially all
of the assets of the National Intermediate Fund solely in exchange for the
National Bond Fund Shares and the assumption of liabilities of the National
Intermediate Fund, followed by the distribution by the National Intermediate
Fund, in liquidation of the National Intermediate Fund, of the National Bond
Fund Shares to the National Intermediate Fund Shareholders in exchange for their
National Intermediate Fund Shares will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, and the National Intermediate Fund
and the National Bond Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code.
10
<PAGE> 78
(b) No gain or loss will be recognized by the National
Intermediate Fund upon the transfer of substantially all of its assets to the
National Bond Fund solely in exchange for the National Bond Fund Shares and the
assumption of liabilities of the National Intermediate Fund.
(c) No gain or loss will be recognized by the National Bond
Fund upon the receipt of the assets and the assumption of liabilities of the
National Intermediate Fund solely in exchange for the National Bond Fund Shares.
(d) The basis of the assets of the National Intermediate Fund
acquired by the National Bond Fund will be, in each instance, the same as the
basis of those assets in the hands of the National Intermediate Fund immediately
prior to the transfer.
(e) The holding period of the assets of the National
Intermediate Fund in the hands of the National Bond Fund will include the period
during which those assets were held by the National Intermediate Fund.
(f) No gain or loss will be recognized by the National
Intermediate Fund Shareholders upon the exchange of all of their National
Intermediate Fund Shares solely for the National Bond Fund
Shares as part of the transaction.
(g) The basis of the National Bond Fund Shares to be received
by the National Intermediate Fund Shareholders will be the same as the basis of
the National Intermediate Fund Shares surrendered in exchange therefor.
(h) The holding period of the National Bond Fund Shares to be
received by the National Intermediate Fund Shareholders will include the period
during which the National Intermediate Fund Shares surrendered in exchange
therefor were held, provided the National Intermediate Fund Shares constituted
capital assets in their hands on the date of the exchange.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NATIONAL BOND FUND
AND THE NATIONAL INTERMEDIATE FUND
The obligations of the National Intermediate Fund hereunder are at the option of
the National Bond Fund, and the obligations of the National Bond Fund hereunder
are at the option of the National Intermediate Fund, each subject to the further
conditions that on or before the Closing Date:
8.1 No action, suit or other proceeding shall be pending before
any court or governmental agency in which it is sought to restrain or prohibit,
or obtain damages or other relief in connection with, this Agreement or the
transactions contemplated herein;
11
<PAGE> 79
8.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Securities Exchange Commission and state Blue Sky and securities
authorities, including "no-action" positions of such federal or state
authorities) deemed necessary by the National Bond Fund or the National
Intermediate Fund to permit consummation in all material respects of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the National Bond Fund or
the National Intermediate Fund;
8.3 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
9. RESPONSIBILITY FOR FEES AND EXPENSES
9.1 The National Bond Fund and the National Intermediate Fund shall
each be responsible for their own expenses in connection with this Agreement,
although each may be reimbursed by their investment adviser for all or a portion
of such expenses incurred in connection with entering into and carrying out of
the provisions of this Agreement, whether or not the transactions contemplated
are consummated.
10. ENTIRE AGREEMENT, SURVIVAL OR WARRANTIES
10.1 The National Bond Fund and the National Intermediate Fund agree
that neither party has made any representation, warranty or covenant with
respect to the transactions contemplated herein that are not set forth herein
and that this Agreement constitutes the entire agreement between the parties
with respect to such transactions.
10.2 The Representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder for a
period of one year from the Closing Date and shall then terminate.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
National Bond Fund and the National Intermediate Fund. In addition, either the
National Bond Fund or the National Intermediate Fund may at its option terminate
this Agreement at or prior to the Closing Date because:
12
<PAGE> 80
(a) of a material breach by the other of any representation,
warranty or agreement contained herein to be performed at or prior to the
Closing Date; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no
liability for damages on the part of either the National Bond Fund or the
National Intermediate Fund, or their respective directors or officers, to the
other party or its directors or officers, but each shall bear, except as
otherwise provided in paragraph 9.1, the expenses incurred by them incidental to
the preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the National
Intermediate Fund and the National Bond Fund; provided, however, that following
the meeting of the National Intermediate Fund Shareholders pursuant to paragraph
5.2 of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of the National Bond Fund Shares to be
issued to the National Intermediate Fund Shareholders under this Agreement to
the detriment of such shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of California, except as to matters
relating to the internal organization of the National Intermediate Fund and the
National Bond Fund, and as to such matters shall be governed by the laws of the
state of Maryland.
13.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
13
<PAGE> 81
successors and assigns, any rights or remedies under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President and attested to by its Secretary.
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS NATIONAL MUNICIPAL BOND FUND
____________________________ By:________________________________
Secretary Group Senior Vice President
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS NATIONAL INSURED INTERMEDIATE
MUNICIPAL FUND
____________________________ By:________________________________
Secretary Group Senior Vice President
14
<PAGE> 82
Appendix B
Pro Forma Statements of Assets and Liabilities June 30, 1997
<TABLE>
<CAPTION>
National Insured National Municipal Pro Forma Pro Forma
Intermediate Bond Fund Adjustments Combined
ASSETS: Municipal Fund
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in securities, at identified cost $ 11,432,735 $48,303,396 $ 59,736,131
------------ ------------ ------------
Investment in securities, at value $ 11,776,015 $51,060,795 $ 62,836,810
Cash 12,690 76,238 88,928
Receivables for:
Sales of Fund's shares 0 10,285 10,285
Accrued interest and dividends 132,718 658,787 791,505
Unamortized organization costs 1,436 1,436 2,872
------------ ------------ ------------
Total assets 11,922,859 51,807,541 63,730,400
------------ ------------ ------------
LIABILITIES:
Payables for:
Purchases of investments 0 1,435,590 1,435,590
Redemptions of Fund's shares 4,576 0 4,576
Dividends 15,138 41,877 57,015
Accrued expenses 11,051 60,673 $ (7,277)(a) 64,447
------------ ----------- ------------ ------------
Total liabilities 30,765 1,538,140 (7,277) 1,561,628
------------ ----------- ------------ ------------
NET ASSETS $ 11,892,094 $50,269,401 $ 7,277 $62,168,772
============ =========== ============ ============
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) $ 343,280 $ 2,757,399 $ 3,100,679
Accumulated net realized gain (loss) (299,877) 271,911 (27,966)
Undistributed net investment income 0 0 7,277 (a) 7,277
Paid in capital 11,848,691 47,240,091 59,088,782
------------ ----------- ------------ ------------
NET ASSETS $ 11,892,094 $50,269,401 $ 7,277 $62,168,772
============ =========== ============ ============
NET ASSET VALUE PER SHARE:
Class A
Shares outstanding 1,120,619 4,244,099 (90,847)(b) 5,273,871
Net asset value per share $ 10.35 $ 11.26 $ 11.26
Maximum offering price per share
(net asset value plus sales charge
of 3.0% ) $ 10.67 $ 11.61 $ 11.61
Class B
Shares outstanding 28,669 218,652 (2,328)(b) 244,993
Net asset value per share and maximum
offering price $ 10.35 $ 11.27 $ 11.27
CAPITAL SHARES AUTHORIZED: 25,000,000 20,000,000 20,000,000
============ =========== ===========
</TABLE>
(a) Reflects reduction in expenses due to elimination of duplicative services
and adjustments to expense waivers.
(b) Reflects net new shares issued.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 83
Pro Forma Statements of Operations For the Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
National Insured National Municipal Pro Forma Pro Forma
Intermediate Bond Fund Adjustments Combined
Municipal Fund
-------------- --------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 308,444 $ 1,452,294 $ 1,760,738
Dividends 0 0 0
----------- ----------- ------------
Total income 308,444 1,452,294 1,760,738
----------- ----------- ------------
Expenses:
Management fees 33,847 138,975 172,822
12b-1 fees:
Class A 15,022 60,430 75,452
Class B 1,090 8,221 9,311
Transfer agency fees and expenses 13,103 25,059 $ (12,119)(a) 26,043
Custodian fees and expenses 6,681 17,600 (6,138)(a) 18,143
Directors' fees 274 1,125 1,399
Registration fees 882 1,039 (882)(a) 1,039
Accounting and legal fees 7,058 7,241 (6,999)(a) 7,300
Printing and postage 710 2,733 3,443
Other 412 2,231 130 (a) 2,773
----------- ----------- ------------ -----------
Gross expenses 79,079 264,654 (26,008) 317,725
Waiver of management fees (190) 0 190 (a) 0
Waiver of 12b-1 fees:
Class A (10,335) 0 10,335 (a) 0
Class B 0 0 0 0
Expense reimbursement (8,272) (7,975) 8,206 (a) (8,041)
----------- ----------- ------------ -----------
Net expenses 60,282 256,679 (7,277) 309,684
----------- ----------- ------------ -----------
Net investment income 248,162 1,196,615 7,277 1,452,054
----------- ----------- ------------ -----------
REALIZED GAIN (LOSS) AND UNREALIZED
APPRECIATION (DEPRECIATION) ON INVESTMENTS:
Realized gain (loss):
Proceeds from sales 3,077,787 8,389,185 11,466,972
Cost of securities sold (3,031,960) (8,116,971) (11,148,931)
----------- ----------- -----------
Net realized gain 45,827 272,214 318,041
----------- ----------- -----------
Unrealized appreciation (depreciation):
Beginning of period 370,336 2,809,382 3,179,718
End of period 343,280 2,757,399 3,100,679
----------- ----------- -----------
Unrealized depreciation (27,056) (51,983) (79,039)
----------- ----------- -----------
Net realized gain and unrealized
depreciation on
investments 18,771 220,231 239,002
----------- ----------- -----------
Net increase in net assets
resulting from operations $ 266,933 $ 1,415,846 $ 7,277 $ 1,690,056
=========== =========== ============ ===========
</TABLE>
(a) Reflects reduction in expenses due to elimination of duplicative services
and adjustments to expense waivers.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 84
Pro Forma Statements of Operations For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
National Insured National Municipal Pro Forma Pro Forma
Intermediate Bond Fund Adjustments Combined
Municipal Fund
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 709,131 $ 2,931,603 $ 3,640,734
Dividends 0 0 0
----------- ------------ ------------
Total income 709,131 2,931,603 3,640,734
----------- ------------ ------------
Expenses:
Management fees 79,447 287,002 366,449
12b-1 fees:
Class A 35,392 126,299 161,691
Class B 2,160 12,469 14,629
Transfer agency fees and expenses 27,241 52,898 $ (27,241)(a) 52,898
Custodian fees and expenses 16,413 44,532 (15,789)(a) 45,156
Directors' fees 729 2,630 3,359
Registration fees 1,392 1,392 (1,392)(a) 1,392
Accounting and legal fees 12,777 13,240 (12,600)(a) 13,417
Printing and postage 2,143 7,365 9,508
Other 1,935 1,010 (785)(a) 2,160
----------- ------------ ------------ -----------
Gross expenses 179,629 548,837 (57,807) 670,659
Waiver of management fees (10,696) 0 10,696 (a) 0
Waiver of 12b-1 fees:
Class A (34,736) 0 34,736 (a) 0
Class B (231) 0 231 (a) 0
Expense reimbursement (15,927) (15,703) 15,758 (a) (15,872)
----------- ------------ ------------ -----------
Net expenses 118,039 533,134 3,614 654,787
----------- ------------ ------------ -----------
Net investment income 591,092 2,398,469 (3,614) 2,985,947
----------- ------------ ------------ -----------
REALIZED GAIN (LOSS) AND UNREALIZED
APPRECIATION (DEPRECIATION) ON INVESTMENTS:
Realized gain (loss):
Proceeds from sales 9,017,732 28,943,820 37,961,552
Cost of securities sold (8,956,622) (28,424,905) (37,381,527)
------------ ------------ -----------
Net realized gain 61,110 518,915 580,025
------------ ------------ -----------
Unrealized appreciation (depreciation):
Beginning of period 539,819 3,939,837 4,479,656
End of period 370,336 2,809,382 3,179,718
------------ ------------ -----------
Unrealized depreciation (169,483) (1,130,455) (1,299,938)
------------ ------------ -----------
Net realized gain and unrealized
depreciation on
investments (108,373) (611,540) (719,913)
------------ ------------ -----------
Net increase in net assets
resulting from operations $ 482,719 $ 1,786,929 $ (3,614) $ 2,266,034
============ ============ ============ ===========
</TABLE>
(a) Reflects effect to expenses due to elimination of duplicative services and
adjustments to expense waivers.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 85
Notes to Pro Forma Financial Statements
1. General
The accompanying pro forma financial statements present the effect of the
proposed acquisition of Atlas National Insured Intermediate Municipal Fund (the
Fund) by Atlas National Municipal Bond Fund (ANMBF).
Under the terms of the Plan of Reorganization , the combination of the Fund and
ANMBF will be a tax-free business combination and accordingly will be accounted
for by a method of accounting for tax free mergers of investment companies
(sometimes referred to as the pooling without restatement method). The
acquisition would be accomplished by the transfer of all of the assets and
liabilities of the Fund in exchange solely for shares of ANMBF at net asset
value. The Pro Forma Statements of Assets and Liabilities of the Fund and ANMBF
have been combined as of June 30, 1997, and the related Pro Forma Statements of
Operations have been combined for the year ended December 31, 1996 and for the
six-month period ended June 30, 1997.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of the Fund and ANMBF
which are included in their respective annual reports dated December 31, 1996
and their semi-annual reports dated June 30, 1997.
2. Significant Accounting Policies
Atlas Assets, Inc., a series fund comprised of 15 funds including the Fund and
ANMBF, is a Maryland corporation, registered under the Investment Company Act of
1940, as amended, as an open-end management investment company.
The significant accounting policies consistently followed by the ANMBF are (a)
securities transactions are accounted for on the trade date (b) securities are
valued daily by pricing services (c) interest income and estimated expenses are
accrued daily (d) realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and federal income tax purposes (e) direct expenses are charged to each fund and
then allocated amongst the share classes or charged to the responsible share
class; management fees and common fund expenses are allocated on the basis of
relative net assets of the share classes (f) dividends and distributions to
shareholders are recorded on the ex-dividend date and (g) ANMBF intends to
comply with the requirements of the Internal Revenue Code pertaining to
regulated investment companies and to make the required distributions to
shareholders; therefore, no provision for federal income taxes has been made.
3. Pro Forma Adjustments
The accompanying pro forma financial statements reflect changes in fund shares
as if the merger had taken place on June 30, 1997. Adjustments are shown to
expenses for duplicated services that would not have been incurred if the merger
had taken place on January 1, 1996 and for the effect of expense waivers in
place during the period.
4. Transactions with Affiliated Persons
Atlas Advisers, Inc. is the investment manager of the Fund and ANMBF and
supervises the services of the sub-adviser to the funds. The Fund and ANMBF pay
Atlas Advisers, Inc. a management fee calculated at an annual rate of 0.55% on
the first $500 million of aggregate average daily net assets and 0.50% on the
aggregate average daily net assets in excess of $500 million. All fees are
calculated daily and paid monthly.
Atlas Securities, Inc. is the distributor and principal underwriter of the Fund
and ANMBF. Atlas Securities, Inc. receives a commission for sales of Class A
shares and redemptions of Class B shares of the Fund and ANMBF. Under separate
Class A and Class B Distribution Plans, each fund pays Atlas Securities, Inc. up
to a maximum of 0.25% per year of its average daily Class A net assets and up to
0.75% per year of its average daily Class B net assets.
5. Investments
At June 30, 1997, the Fund had a net capital loss carryover of approximately
$346,000 available to offset future capital gains. To the extent that these
carryover losses can be used to offset capital gains, ANMBF intends not to make
distributions from capital gains while a capital loss carryover remains.
<PAGE> 86
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
National Insured
Intermediate Fund
-----------------
value
face amount (note 1)
----------- --------
Bonds - 96.90%
<S> <C> <C>
Adams County, Colorado, School District 12, Thornton, Series A, MBIA Insured, 6.75% due 12/15/07 $ -- $ --
Alabama State Docks Department, Docks Facilities Revenue, AMT,
MBIA Insured, 6.10% due 10/01/13 -- --
Anchorage, Alaska, Electric Utility Revenue Refunding, Senior Lien,
MBIA Insured, 8% due 12/01/10 -- --
Boulder, Larimer & Weld Counties, Colorado, Saint Vrain Valley School District RE1J Refunding,
Series A, MBIA Insured, 5.80% due 12/15/07 500,000 525,640
California State Public Works Board, Lease Revenue, Department of Corrections, California
State Prison, Series B, MBIA Insured, 5.375% due 12/01/19 -- --
Central Coast Water Authority, California Revenue Refunding State Water Project,
Regional Facilities, Series A, AMBAC Insured, 5% due 10/01/22 -- --
Chicago, Illinois, Metropolitan Water Reclamation District, Greater Chicago Capital Improvement,
7.25% due 12/01/12 -- --
Chicago, Illinois, Park District Aquarium & Museum, Series B, 6.50% due 11/15/13 -- --
Chicago, Illinois, Public Building Commission Mortgage Revenue, Board of Education,
Series A, MBIA Insured, 7.125% due 01/01/15 -- --
Cleveland, Ohio, Waterworks Revenue First Mortgage Refunding,
Series F-92B, AMBAC Insured, 6.25% due 01/01/16 -- --
Colorado, Housing Finance Authority, Single Family Program, Senior Series A-1,
AMT, 7.40% due 11/01/27 -- --
Colorado Springs, Colorado, Utilities Revenue Refunding, Series A, 6.50% due 11/15/15 -- --
Cook County, Illinois
Series C, FGIC Insured, 6% due 11/15/08 500,000 542,040
MBIA Insured, 7.25% due 11/01/07 620,000 734,787
Cumberland County, New Jersey, Improvement Authority, Solid Waste Disposal Revenue,
FGIC Insured, 6% due 01/01/01 -- --
Dallas, Fort Worth, Texas, Regional Airport Revenue, Joint Dallas-Fort, AMT, MBIA Insured,
5.50% due 11/01/23 -- --
Denver, Colorado City and County School District 1, COP, Colorado Association of Schools,
Series B, MBIA Insured, 6.75% due 12/01/12 1,000,000 1,116,490
Denver Metropolitan Major League Baseball Stadium District, Colorado, Revenue Refunding and
Improvement, Sales Tax, Series A, FGIC Insured, 6% due 10/01/11 600,000 642,048
Eagle, Garfield & Routt Counties, Colorado, School District RE50J,
FGIC Insured, 6.10% due 12/01/03 400,000 433,700
Fowlerville, Michigan, Community Schools, School District, MBIA-SBLF Insured, 6.50% due 05/01/05 550,000 608,531
Georgia, Municipal Electric Authority Power Revenue, Series O, 8.125% due 01/01/17 -- --
Harris County, Texas Toll Road, Senior Lien, FGIC Insured, 5.375% due 08/15/20 -- --
Illinois Health Facilities Authority Revenue Refunding, Sherman Hospital Project
</TABLE>
<TABLE>
<CAPTION>
National Municipal
Bond Fund
------------------
value
face amount (note 1)
----------- --------
Bonds - 96.90%
<S> <C> <C>
Adams County, Colorado, School District 12, Thornton, Series A, MBIA Insured, 6.75% due 12/15/07 $1,065,000 $1,233,217
Alabama State Docks Department, Docks Facilities Revenue, AMT,
MBIA Insured, 6.10% due 10/01/13 1,000,000 1,048,380
Anchorage, Alaska, Electric Utility Revenue Refunding, Senior Lien,
MBIA Insured, 8% due 12/01/10 985,000 1,240,214
Boulder, Larimer & Weld Counties, Colorado, Saint Vrain Valley School District RE1J Refunding,
Series A, MBIA Insured, 5.80% due 12/15/07 1,500,000 1,576,920
California State Public Works Board, Lease Revenue, Department of Corrections, California
State Prison, Series B, MBIA Insured, 5.375% due 12/01/19 1,150,000 1,102,965
Central Coast Water Authority, California Revenue Refunding State Water Project,
Regional Facilities, Series A, AMBAC Insured, 5% due 10/01/22 1,000,000 923,140
Chicago, Illinois, Metropolitan Water Reclamation District, Greater Chicago Capital Improvement,
7.25% due 12/01/12 1,500,000 1,811,655
Chicago, Illinois, Park District Aquarium & Museum, Series B, 6.50% due 11/15/13 2,500,000 2,716,575
Chicago, Illinois, Public Building Commission Mortgage Revenue, Board of Education,
Series A, MBIA Insured, 7.125% due 01/01/15 125,000 136,148
Cleveland, Ohio, Waterworks Revenue First Mortgage Refunding,
Series F-92B, AMBAC Insured, 6.25% due 01/01/16 1,000,000 1,062,520
Colorado, Housing Finance Authority, Single Family Program, Senior Series A-1,
AMT, 7.40% due 11/01/27 1,000,000 1,109,440
Colorado Springs, Colorado, Utilities Revenue Refunding, Series A, 6.50% due 11/15/15 2,000,000 2,151,120
Cook County, Illinois
Series C, FGIC Insured, 6% due 11/15/08 -- --
MBIA Insured, 7.25% due 11/01/07 -- --
Cumberland County, New Jersey, Improvement Authority, Solid Waste Disposal Revenue,
FGIC Insured, 6% due 01/01/01 500,000 521,325
Dallas, Fort Worth, Texas, Regional Airport Revenue, Joint Dallas-Fort, AMT, MBIA Insured,
5.50% due 11/01/23 1,500,000 1,445,370
Denver, Colorado City and County School District 1, COP, Colorado Association of Schools,
Series B, MBIA Insured, 6.75% due 12/01/12 -- --
Denver Metropolitan Major League Baseball Stadium District, Colorado, Revenue Refunding and
Improvement, Sales Tax, Series A, FGIC Insured, 6% due 10/01/11 -- --
Eagle, Garfield & Routt Counties, Colorado, School District RE50J,
FGIC Insured, 6.10% due 12/01/03 -- --
Fowlerville, Michigan, Community Schools, School District, MBIA-SBLF Insured, 6.50% due 05/01/05 -- --
Georgia, Municipal Electric Authority Power Revenue, Series O, 8.125% due 01/01/17 50,000 51,971
Harris County, Texas Toll Road, Senior Lien, FGIC Insured, 5.375% due 08/15/20 1,000,000 957,220
Illinois Health Facilities Authority Revenue Refunding, Sherman Hospital Project
</TABLE>
<TABLE>
<CAPTION>
Combined
value
(note 1)
--------
Bonds - 96.90%
<S> <C>
Adams County, Colorado, School District 12, Thornton, Series A, MBIA Insured, 6.75% due 12/15/07 $1,233,217
Alabama State Docks Department, Docks Facilities Revenue, AMT,
MBIA Insured, 6.10% due 10/01/13 1,048,380
Anchorage, Alaska, Electric Utility Revenue Refunding, Senior Lien,
MBIA Insured, 8% due 12/01/10 1,240,214
Boulder, Larimer & Weld Counties, Colorado, Saint Vrain Valley School District RE1J Refunding,
Series A, MBIA Insured, 5.80% due 12/15/07 2,102,560
California State Public Works Board, Lease Revenue, Department of Corrections, California
State Prison, Series B, MBIA Insured, 5.375% due 12/01/19 1,102,965
Central Coast Water Authority, California Revenue Refunding State Water Project,
Regional Facilities, Series A, AMBAC Insured, 5% due 10/01/22 923,140
Chicago, Illinois, Metropolitan Water Reclamation District, Greater Chicago Capital Improvement,
7.25% due 12/01/12 1,811,655
Chicago, Illinois, Park District Aquarium & Museum, Series B, 6.50% due 11/15/13 2,716,575
Chicago, Illinois, Public Building Commission Mortgage Revenue, Board of Education,
Series A, MBIA Insured, 7.125% due 01/01/15 136,148
Cleveland, Ohio, Waterworks Revenue First Mortgage Refunding,
Series F-92B, AMBAC Insured, 6.25% due 01/01/16 1,062,520
Colorado, Housing Finance Authority, Single Family Program, Senior Series A-1,
AMT, 7.40% due 11/01/27 1,109,440
Colorado Springs, Colorado, Utilities Revenue Refunding, Series A, 6.50% due 11/15/15 2,151,120
Cook County, Illinois
Series C, FGIC Insured, 6% due 11/15/08 542,040
MBIA Insured, 7.25% due 11/01/07 734,787
Cumberland County, New Jersey, Improvement Authority, Solid Waste Disposal Revenue,
FGIC Insured, 6% due 01/01/01 521,325
Dallas, Fort Worth, Texas, Regional Airport Revenue, Joint Dallas-Fort, AMT, MBIA Insured,
5.50% due 11/01/23 1,445,370
Denver, Colorado City and County School District 1, COP, Colorado Association of Schools,
Series B, MBIA Insured, 6.75% due 12/01/12 1,116,490
Denver Metropolitan Major League Baseball Stadium District, Colorado, Revenue Refunding and
Improvement, Sales Tax, Series A, FGIC Insured, 6% due 10/01/11 642,048
Eagle, Garfield & Routt Counties, Colorado, School District RE50J,
FGIC Insured, 6.10% due 12/01/03 433,700
Fowlerville, Michigan, Community Schools, School District, MBIA-SBLF Insured, 6.50% due 05/01/05 608,531
Georgia, Municipal Electric Authority Power Revenue, Series O, 8.125% due 01/01/17 51,971
Harris County, Texas Toll Road, Senior Lien, FGIC Insured, 5.375% due 08/15/20 957,220
Illinois Health Facilities Authority Revenue Refunding, Sherman Hospital Project
</TABLE>
<PAGE> 87
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
National Insured
Intermediate Fund
-----------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
MBIA Insured, 6.75% due 08/01/11 -- --
Indiana State Office Building Commission, Capital Complex Revenue,
Senate Avenue Parking, Series A, MBIA Insured, 7.25% due 07/01/12 -- --
Indianapolis, Indiana, Airport Authority Revenue, Special Facilities, Federal Express Corp.,
AMT, 7.10% due 01/15/17 -- --
Jacksonville, Florida, Electric Authority Revenue Refunding, Saint John's River Project,
Issue 2, Series 5, 6.50% due 10/01/14 -- --
Johnson County, Kansas, Refunding, Internal Improvement, Series A,
FSA Insured, 5.60% due 09/01/03 500,000 526,285
Kansas City, Kansas, Utility System Revenue Refunding and Improvement,
FGIC Insured, 6.375% due 09/01/23 -- --
Kern, California High School District, Series 1990-C Election, MBIA Insured, 6.25% due 08/01/10 -- --
Lakota, Ohio, Local School District, AMBAC Insured, 7% due 12/01/09 -- --
Lansing, Illinois, Refunding, FGIC Insured, 8.25% due 12/01/07 -- --
Maine State Housing Authority Mortgage Purchase, Series A-1, AMT,
AMBAC Insured, 6.40% due 11/15/14 -- --
Maricopa County, Arizona, Unified School District 69, Paradise Valley Refunding,
MBIA Insured, 6.35% due 07/01/10 -- --
Massachusetts, State Construction Loan, Series A, FGIC Insured,
6.90% due 03/01/04 30,000 31,200
Massachusetts State Health and Educational Facilities Authority Revenue,
Northeastern University, Series E, MBIA Insured, 6.55% due 10/01/22 -- --
Metropolitan Pier & Exposition Authority, Illinois, Dedicated State Tax Revenue,
McCormick Place Expansion Project, Series A, 7.25% due 06/15/05 -- --
Metropolitan Transportation Authority, New York, Transportation Facilities Revenue, Series A,
MBIA Insured, 6% due 07/01/07 190,000 206,059
Michigan State University Revenue, Series A, 6.125% due 08/15/08 -- --
Mississippi Higher Education Assistance Corp. Student Loan Revenue, Series C,
AMT, 6.05% due 09/01/07 -- --
Nevada Housing Division, Single Family Mortgage, Series C, AMT,
6.60% due 04/01/14 -- --
New York City, New York, Series F, 6% due 08/01/11 -- --
New York City, New York, Series I, 5.875% due 03/15/14 -- --
New York City, New York, Series L, 5.75% due 08/01/12 -- --
New York City, New York, Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B, FGIC Insured, 7.625% due 06/15/17 -- --
New York State Urban Development Corp. Revenue, Correctional Facilities, Series A,
5.50% due 01/01/16 -- --
New York State Dormitory Authority Revenue, Pooled Capital Program,
</TABLE>
<TABLE>
<CAPTION>
National Municipal
Bond Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
MBIA Insured, 6.75% due 08/01/11 1,000,000 1,078,320
Indiana State Office Building Commission, Capital Complex Revenue,
Senate Avenue Parking, Series A, MBIA Insured, 7.25% due 07/01/12 50,000 55,008
Indianapolis, Indiana, Airport Authority Revenue, Special Facilities, Federal Express Corp.,
AMT, 7.10% due 01/15/17 500,000 551,850
Jacksonville, Florida, Electric Authority Revenue Refunding, Saint John's River Project,
Issue 2, Series 5, 6.50% due 10/01/14 500,000 531,710
Johnson County, Kansas, Refunding, Internal Improvement, Series A,
FSA Insured, 5.60% due 09/01/03 -- --
Kansas City, Kansas, Utility System Revenue Refunding and Improvement,
FGIC Insured, 6.375% due 09/01/23 1,500,000 1,626,870
Kern, California High School District, Series 1990-C Election, MBIA Insured, 6.25% due 08/01/10 545,000 605,936
Lakota, Ohio, Local School District, AMBAC Insured, 7% due 12/01/09 1,740,000 2,057,202
Lansing, Illinois, Refunding, FGIC Insured, 8.25% due 12/01/07 25,000 25,952
Maine State Housing Authority Mortgage Purchase, Series A-1, AMT,
AMBAC Insured, 6.40% due 11/15/14 1,400,000 1,452,066
Maricopa County, Arizona, Unified School District 69, Paradise Valley Refunding,
MBIA Insured, 6.35% due 07/01/10 600,000 673,698
Massachusetts, State Construction Loan, Series A, FGIC Insured,
6.90% due 03/01/04 -- --
Massachusetts State Health and Educational Facilities Authority Revenue,
Northeastern University, Series E, MBIA Insured, 6.55% due 10/01/22 500,000 544,295
Metropolitan Pier & Exposition Authority, Illinois, Dedicated State Tax Revenue,
McCormick Place Expansion Project, Series A, 7.25% due 06/15/05 250,000 288,415
Metropolitan Transportation Authority, New York, Transportation Facilities Revenue, Series A,
MBIA Insured, 6% due 07/01/07 -- --
Michigan State University Revenue, Series A, 6.125% due 08/15/08 500,000 526,225
Mississippi Higher Education Assistance Corp. Student Loan Revenue, Series C,
AMT, 6.05% due 09/01/07 950,000 981,663
Nevada Housing Division, Single Family Mortgage, Series C, AMT,
6.60% due 04/01/14 1,000,000 1,041,290
New York City, New York, Series F, 6% due 08/01/11 500,000 512,585
New York City, New York, Series I, 5.875% due 03/15/14 500,000 504,100
New York City, New York, Series L, 5.75% due 08/01/12 500,000 500,835
New York City, New York, Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B, FGIC Insured, 7.625% due 06/15/17 125,000 131,279
New York State Urban Development Corp. Revenue, Correctional Facilities, Series A,
5.50% due 01/01/16 1,000,000 959,660
New York State Dormitory Authority Revenue, Pooled Capital Program,
</TABLE>
<TABLE>
<CAPTION>
Combined
value
(note 1)
--------
<S> <C>
MBIA Insured, 6.75% due 08/01/11 1,078,320
Indiana State Office Building Commission, Capital Complex Revenue,
Senate Avenue Parking, Series A, MBIA Insured, 7.25% due 07/01/12 55,008
Indianapolis, Indiana, Airport Authority Revenue, Special Facilities, Federal Express Corp.,
AMT, 7.10% due 01/15/17 551,850
Jacksonville, Florida, Electric Authority Revenue Refunding, Saint John's River Project,
Issue 2, Series 5, 6.50% due 10/01/14 531,710
Johnson County, Kansas, Refunding, Internal Improvement, Series A,
FSA Insured, 5.60% due 09/01/03 526,285
Kansas City, Kansas, Utility System Revenue Refunding and Improvement,
FGIC Insured, 6.375% due 09/01/23 1,626,870
Kern, California High School District, Series 1990-C Election, MBIA Insured, 6.25% due 08/01/10 605,936
Lakota, Ohio, Local School District, AMBAC Insured, 7% due 12/01/09 2,057,202
Lansing, Illinois, Refunding, FGIC Insured, 8.25% due 12/01/07 25,952
Maine State Housing Authority Mortgage Purchase, Series A-1, AMT,
AMBAC Insured, 6.40% due 11/15/14 1,452,066
Maricopa County, Arizona, Unified School District 69, Paradise Valley Refunding,
MBIA Insured, 6.35% due 07/01/10 673,698
Massachusetts, State Construction Loan, Series A, FGIC Insured,
6.90% due 03/01/04 31,200
Massachusetts State Health and Educational Facilities Authority Revenue,
Northeastern University, Series E, MBIA Insured, 6.55% due 10/01/22 544,295
Metropolitan Pier & Exposition Authority, Illinois, Dedicated State Tax Revenue,
McCormick Place Expansion Project, Series A, 7.25% due 06/15/05 288,415
Metropolitan Transportation Authority, New York, Transportation Facilities Revenue, Series A,
MBIA Insured, 6% due 07/01/07 206,059
Michigan State University Revenue, Series A, 6.125% due 08/15/08 526,225
Mississippi Higher Education Assistance Corp. Student Loan Revenue, Series C,
AMT, 6.05% due 09/01/07 981,663
Nevada Housing Division, Single Family Mortgage, Series C, AMT,
6.60% due 04/01/14 1,041,290
New York City, New York, Series F, 6% due 08/01/11 512,585
New York City, New York, Series I, 5.875% due 03/15/14 504,100
New York City, New York, Series L, 5.75% due 08/01/12 500,835
New York City, New York, Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B, FGIC Insured, 7.625% due 06/15/17 131,279
New York State Urban Development Corp. Revenue, Correctional Facilities, Series A,
5.50% due 01/01/16 959,660
New York State Dormitory Authority Revenue, Pooled Capital Program,
</TABLE>
<PAGE> 88
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
National Insured
Intermediate Fund
-----------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
FGIC Insured, 7.80% due 12/01/05 -- --
North Reading, Massachusetts, Refunding, MBIA Insured, 6.30% due 06/15/01 500,000 535,090
Northern California Power Agency, Public Power Revenue Refunding,
Hydroelectric Project 1, Series A, MBIA Insured, 6.25% due 07/01/12 -- --
Pennsylvania, State Industrial Development Authority Revenue, Economic Development,
AMBAC Insured, 7% due 07/01/06 500,000 577,275
Pinal County, Arizona, Unified School District 43, Apache JCT, Series A,
FGIC Insured, 6.80% due 07/01/09 425,000 494,258
Red River Authority, Texas, Pollution Control Revenue, Hoechst Celanese Corp. Project,
AMT, 6.875% due 04/01/17 -- --
Rhode Island, Housing and Mortgage Finance Corp., Multi-Family Housing,
Series A, AMBAC Insured, 5.55% due 07/01/05 500,000 512,650
Rhode Island, State Refunding, Series A, FGIC Insured, 6% due 06/15/02 500,000 532,305
Sacramento, California, Municipal Utility District Electric Revenue Refunding,
Series Z, FGIC Insured, 6.45% due 07/01/10 -- --
Shawnee County, Kansas, Unified School District 501, FGIC Insured, 7.30% due 02/01/02 250,000 278,978
Springfield, Illinois, General Obligation, 6.30% due 12/01/13 -- --
Superior, Wisconsin, Limited Obligation Revenue Refunding,
Midwest Energy Resources, Series E, FGIC Insured, 6.90% due 08/01/21 -- --
Tacoma, Washington, Electric System Revenue, 7.50% due 01/01/12 -- --
Tallassee, Alabama, Industrial Development Board Revenue Refunding,
Dow United Technologies Corp., Series B, 6.10% due 08/01/14 -- --
Tarrant County, Texas, Health Facilities Development Corp., Health System Revenue Refunding,
Harris Methodist Health System, Series A, AMBAC Insured, 6% due 09/01/04 750,000 803,520
Texas Health Facilities Development Corp. Hospital Revenue,
Cook-Fort Worth Children's Center Refunding, FGIC Insured, 6.25% due 12/01/12 -- --
Thornton, Colorado, Water Refunding, FGIC Insured, 5.65% due 12/01/03 600,000 635,472
Tulsa, Okahama, Airport Transportation Revenue, American Airlines, Inc., AMT,
7.375% due 12/01/20 -- --
University of Colorado, University Revenue Refunding, Resh Building Revolving Fund,
MBIA Insured, 6% due 06/01/05 620,000 668,087
University of Maryland, System Auxiliary Facility and Tuition Revenue,
Series A, 6.30% due 02/01/10 -- --
Utah State Board of Regents Student Loan Revenue, Series N, AMT,
AMBAC Insured, 5.90% due 11/01/07 -- --
Vallejo, California, Revenue, Water Improvement Project, Series B, FGIC Insured,
6.50% due 11/01/14 -- --
Washington State Public Power Supply System Refunding Revenue,
Nuclear Project 1 Revenue Pre-Refunded, Series A, 7.50% due 07/01/15 -- --
Nuclear Project 1 Revenue Un-Refunded, Series A, 7.50% due 07/01/15 -- --
Nuclear Project 2 Revenue Refunding, Series A, 7.25% due 07/01/06 -- --
</TABLE>
<TABLE>
<CAPTION>
National Municipal
Bond Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
FGIC Insured, 7.80% due 12/01/05 150,000 160,532
North Reading, Massachusetts, Refunding, MBIA Insured, 6.30% due 06/15/01 -- --
Northern California Power Agency, Public Power Revenue Refunding,
Hydroelectric Project 1, Series A, MBIA Insured, 6.25% due 07/01/12 750,000 801,383
Pennsylvania, State Industrial Development Authority Revenue, Economic Development,
AMBAC Insured, 7% due 07/01/06 -- --
Pinal County, Arizona, Unified School District 43, Apache JCT, Series A,
FGIC Insured, 6.80% due 07/01/09 -- --
Red River Authority, Texas, Pollution Control Revenue, Hoechst Celanese Corp. Project,
AMT, 6.875% due 04/01/17 1,500,000 1,611,705
Rhode Island, Housing and Mortgage Finance Corp., Multi-Family Housing,
Series A, AMBAC Insured, 5.55% due 07/01/05 -- --
Rhode Island, State Refunding, Series A, FGIC Insured, 6% due 06/15/02 -- --
Sacramento, California, Municipal Utility District Electric Revenue Refunding,
Series Z, FGIC Insured, 6.45% due 07/01/10 600,000 644,910
Shawnee County, Kansas, Unified School District 501, FGIC Insured, 7.30% due 02/01/02 -- --
Springfield, Illinois, General Obligation, 6.30% due 12/01/13 100,000 104,826
Superior, Wisconsin, Limited Obligation Revenue Refunding,
Midwest Energy Resources, Series E, FGIC Insured, 6.90% due 08/01/21 500,000 590,545
Tacoma, Washington, Electric System Revenue, 7.50% due 01/01/12 100,000 107,590
Tallassee, Alabama, Industrial Development Board Revenue Refunding,
Dow United Technologies Corp., Series B, 6.10% due 08/01/14 1,000,000 1,043,270
Tarrant County, Texas, Health Facilities Development Corp., Health System Revenue Refunding,
Harris Methodist Health System, Series A, AMBAC Insured, 6% due 09/01/04 -- --
Texas Health Facilities Development Corp. Hospital Revenue,
Cook-Fort Worth Children's Center Refunding, FGIC Insured, 6.25% due 12/01/12 1,000,000 1,056,970
Thornton, Colorado, Water Refunding, FGIC Insured, 5.65% due 12/01/03 -- --
Tulsa, Okahama, Airport Transportation Revenue, American Airlines, Inc., AMT,
7.375% due 12/01/20 2,000,000 2,149,720
University of Colorado, University Revenue Refunding, Resh Building Revolving Fund,
MBIA Insured, 6% due 06/01/05 -- --
University of Maryland, System Auxiliary Facility and Tuition Revenue,
Series A, 6.30% due 02/01/10 500,000 536,620
Utah State Board of Regents Student Loan Revenue, Series N, AMT,
AMBAC Insured, 5.90% due 11/01/07 1,000,000 1,051,260
Vallejo, California, Revenue, Water Improvement Project, Series B, FGIC Insured,
6.50% due 11/01/14 1,000,000 1,127,710
Washington State Public Power Supply System Refunding Revenue,
Nuclear Project 1 Revenue Pre-Refunded, Series A, 7.50% due 07/01/15 155,000 167,767
Nuclear Project 1 Revenue Un-Refunded, Series A, 7.50% due 07/01/15 105,000 113,649
Nuclear Project 2 Revenue Refunding, Series A, 7.25% due 07/01/06 500,000 572,635
</TABLE>
<TABLE>
<CAPTION>
Combined
value
(note 1)
--------
<S> <C>
FGIC Insured, 7.80% due 12/01/05 160,532
North Reading, Massachusetts, Refunding, MBIA Insured, 6.30% due 06/15/01 535,090
Northern California Power Agency, Public Power Revenue Refunding,
Hydroelectric Project 1, Series A, MBIA Insured, 6.25% due 07/01/12 801,383
Pennsylvania, State Industrial Development Authority Revenue, Economic Development,
AMBAC Insured, 7% due 07/01/06 577,275
Pinal County, Arizona, Unified School District 43, Apache JCT, Series A,
FGIC Insured, 6.80% due 07/01/09 494,258
Red River Authority, Texas, Pollution Control Revenue, Hoechst Celanese Corp. Project,
AMT, 6.875% due 04/01/17 1,611,705
Rhode Island, Housing and Mortgage Finance Corp., Multi-Family Housing,
Series A, AMBAC Insured, 5.55% due 07/01/05 512,650
Rhode Island, State Refunding, Series A, FGIC Insured, 6% due 06/15/02 532,305
Sacramento, California, Municipal Utility District Electric Revenue Refunding,
Series Z, FGIC Insured, 6.45% due 07/01/10 644,910
Shawnee County, Kansas, Unified School District 501, FGIC Insured, 7.30% due 02/01/02 278,978
Springfield, Illinois, General Obligation, 6.30% due 12/01/13 104,826
Superior, Wisconsin, Limited Obligation Revenue Refunding,
Midwest Energy Resources, Series E, FGIC Insured, 6.90% due 08/01/21 590,545
Tacoma, Washington, Electric System Revenue, 7.50% due 01/01/12 107,590
Tallassee, Alabama, Industrial Development Board Revenue Refunding,
Dow United Technologies Corp., Series B, 6.10% due 08/01/14 1,043,270
Tarrant County, Texas, Health Facilities Development Corp., Health System Revenue Refunding,
Harris Methodist Health System, Series A, AMBAC Insured, 6% due 09/01/04 803,520
Texas Health Facilities Development Corp. Hospital Revenue,
Cook-Fort Worth Children's Center Refunding, FGIC Insured, 6.25% due 12/01/12 1,056,970
Thornton, Colorado, Water Refunding, FGIC Insured, 5.65% due 12/01/03 635,472
Tulsa, Okahama, Airport Transportation Revenue, American Airlines, Inc., AMT,
7.375% due 12/01/20 2,149,720
University of Colorado, University Revenue Refunding, Resh Building Revolving Fund,
MBIA Insured, 6% due 06/01/05 668,087
University of Maryland, System Auxiliary Facility and Tuition Revenue,
Series A, 6.30% due 02/01/10 536,620
Utah State Board of Regents Student Loan Revenue, Series N, AMT,
AMBAC Insured, 5.90% due 11/01/07 1,051,260
Vallejo, California, Revenue, Water Improvement Project, Series B, FGIC Insured,
6.50% due 11/01/14 1,127,710
Washington State Public Power Supply System Refunding Revenue,
Nuclear Project 1 Revenue Pre-Refunded, Series A, 7.50% due 07/01/15 167,767
Nuclear Project 1 Revenue Un-Refunded, Series A, 7.50% due 07/01/15 113,649
Nuclear Project 2 Revenue Refunding, Series A, 7.25% due 07/01/06 572,635
</TABLE>
<PAGE> 89
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
National Insured
Intermediate Fund
-----------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
Nuclear Project 2 Revenue Refunding, Series B, 7% due 07/01/12 -- --
Nuclear Project 3 Revenue Refunding, Series B, 7.20% due 07/01/99 -- --
Wayne Charter County, Michigan, Airport Revenue Sub. Lien, Detroit Metro Airport,
Series A, MBIA Insured, 6.50% due 12/01/11 -- --
West Virginia School Building Authority Revenue, Series A, MBIA Insured,
7.25% due 07/01/15 -- --
Westminster, Colorado, Sales & Use Tax Refunding Revenue, Series A,
FGIC Insured, 6.25% due 12/01/12 500,000 542,395
Wisconsin State Health and Educational Facilities Authority Revenue,
Aurora Medical Group, Inc. Project, FSA Insured,
5.75% due 11/15/07 500,000 529,205
6% due 11/15/10 -- --
----------
Total Bonds (cost: $57,136,131) 11,476,015
----------
Variable Rate Demand Notes* - 4.18%
Grapevine, Texas, Industrial Development Corp., American Airlines,
Series A1, 4.10% due 12/01/24 -- --
Series A3, 4.10% due 12/01/24 100,000 100,000
Los Angeles, Regional Airports Improvement Corp. Lease Revenue, American Airlines - LAX,
Series E, 4.10% due 12/01/24 -- --
4.10% due 12/01/25 -- --
Los Angeles International Airport, AMT, 4.15% due 12/01/25 -- --
Phenix City, Alabama, Industrial Development Board Environmental Improvement Revenue,
AMT, 4.15% due 06/01/28 -- --
South Carolina, Jobs Economic Development Authority, Series 1992, AMT, 4.55% due 12/01/12 100,000 100,000
Southampton County, Virginia, Industrial Development Authority, Hadson Power, Series 90A,
AMT, 4.55% due 04/01/15 100,000 100,000
-----------
Total Variable Rate Demand Notes (cost $2,600,000) 300,000
-----------
Total Securities (cost: $59,736,131) - 101.08% 11,776,015
Other Assets and Liabilities, Net - (1.08)% 116,079
-----------
Net Assets - 100.00% $11,892,094
===========
</TABLE>
<TABLE>
<CAPTION>
National Municipal
Bond Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
Nuclear Project 2 Revenue Refunding, Series B, 7% due 07/01/12 140,000 153,048
Nuclear Project 3 Revenue Refunding, Series B, 7.20% due 07/01/99 250,000 262,958
Wayne Charter County, Michigan, Airport Revenue Sub. Lien, Detroit Metro Airport,
Series A, MBIA Insured, 6.50% due 12/01/11 500,000 550,410
West Virginia School Building Authority Revenue, Series A, MBIA Insured,
7.25% due 07/01/15 50,000 55,008
Westminster, Colorado, Sales & Use Tax Refunding Revenue, Series A,
FGIC Insured, 6.25% due 12/01/12 1,000,000 1,084,790
Wisconsin State Health and Educational Facilities Authority Revenue,
Aurora Medical Group, Inc. Project, FSA Insured,
5.75% due 11/15/07 -- --
6% due 11/15/10 1,000,000 1,076,350
-----------
Total Bonds (cost: $57,136,131) 48,760,795
-----------
Variable Rate Demand Notes* - 4.18%
Grapevine, Texas, Industrial Development Corp., American Airlines,
Series A1, 4.10% due 12/01/24 100,000 100,000
Series A3, 4.10% due 12/01/24 -- --
Los Angeles, Regional Airports Improvement Corp. Lease Revenue, American Airlines - LAX,
Series E, 4.10% due 12/01/24 200,000 200,000
4.10% due 12/01/25 600,000 600,000
Los Angeles International Airport, AMT, 4.15% due 12/01/25 100,000 100,000
Phenix City, Alabama, Industrial Development Board Environmental Improvement Revenue,
AMT, 4.15% due 06/01/28 1,300,000 1,300,000
South Carolina, Jobs Economic Development Authority, Series 1992, AMT, 4.55% due 12/01/12 -- --
Southampton County, Virginia, Industrial Development Authority, Hadson Power, Series 90A,
AMT, 4.55% due 04/01/15 -- --
-----------
Total Variable Rate Demand Notes (cost $2,600,000) 2,300,000
-----------
Total Securities (cost: $59,736,131) - 101.08% 51,060,795
Other Assets and Liabilities, Net - (1.08)% (791,394)
----------
Net Assets - 100.00% $50,269,401
===========
</TABLE>
<TABLE>
<CAPTION>
Combined
value
(note 1)
--------
<S> <C>
Nuclear Project 2 Revenue Refunding, Series B, 7% due 07/01/12 153,048
Nuclear Project 3 Revenue Refunding, Series B, 7.20% due 07/01/99 262,958
Wayne Charter County, Michigan, Airport Revenue Sub. Lien, Detroit Metro Airport,
Series A, MBIA Insured, 6.50% due 12/01/11 550,410
West Virginia School Building Authority Revenue, Series A, MBIA Insured,
7.25% due 07/01/15 55,008
Westminster, Colorado, Sales & Use Tax Refunding Revenue, Series A,
FGIC Insured, 6.25% due 12/01/12 1,627,185
Wisconsin State Health and Educational Facilities Authority Revenue,
Aurora Medical Group, Inc. Project, FSA Insured,
5.75% due 11/15/07 529,205
6% due 11/15/10 1,076,350
-----------
Total Bonds (cost: $57,136,131) 60,236,810
-----------
Variable Rate Demand Notes* - 4.18%
Grapevine, Texas, Industrial Development Corp., American Airlines,
Series A1, 4.10% due 12/01/24 100,000
Series A3, 4.10% due 12/01/24 100,000
Los Angeles, Regional Airports Improvement Corp. Lease Revenue, American Airlines - LAX,
Series E, 4.10% due 12/01/24 200,000
4.10% due 12/01/25 600,000
Los Angeles International Airport, AMT, 4.15% due 12/01/25 100,000
Phenix City, Alabama, Industrial Development Board Environmental Improvement Revenue,
AMT, 4.15% due 06/01/28 1,300,000
South Carolina, Jobs Economic Development Authority, Series 1992, AMT, 4.55% due 12/01/12 100,000
Southampton County, Virginia, Industrial Development Authority, Hadson Power, Series 90A,
AMT, 4.55% due 04/01/15 100,000
-----------
Total Variable Rate Demand Notes (cost $2,600,000) 2,600,000
-----------
Total Securities (cost: $59,736,131) - 101.08% 62,836,810
Other Assets and Liabilities, Net - (1.08)% (675,315)
-----------
Net Assets - 100.00% $62,161,495
===========
</TABLE>
<PAGE> 90
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
National Insured National Municipal
Intermediate Fund Bond Fund
----------------- ------------------
Combined
value value value
face amount (note 1) face amount (note 1) (note 1)
----------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
* Variable rate demand notes are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula (computed
daily or weekly) and an unconditional right of demand to receive
payment of the unpaid principal balance plus accrued interest upon
short notice prior to specified dates. The interest rate may change on
specified dates in relationship with changes in a designated rate
(such as the prime interest or U.S. Treasury Bill rates).
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 91
PART A - ATLAS CALIFORNIA MUNICIPAL BOND FUND
<PAGE> 92
BOXED:
In brief...
The Board of Directors asks for your approval to merge the Atlas California
Insured Intermediate Municipal Fund (the "Atlas Intermediate Fund") into the
Atlas California Municipal Bond Fund (the "Atlas California Bond Fund"). The
goal of this re-organization is to produce a higher level of income for you. The
merger should produce this increased income by spreading overhead costs over a
substantially larger asset base and by giving you the opportunity to benefit
from the higher level of income associated with Atlas' high-quality,
longer-term Atlas California Bond Fund.
Upon approval, your shares in the Atlas California Bond Fund will have exactly
the same value as your shares in the Atlas Intermediate Fund you owned
immediately prior to the merger. In the opinion of the Atlas' tax counsel, the
proposed transaction will have no tax implications to you.
This merger should benefit you immediately and in the long-term and the Board Of
Directors recommends that you vote FOR the proposal.
[DATE]
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
Atlas California Insured Intermediate Municipal Fund to be held at 1901 Harrison
Street, Oakland, California on November 24, 1997 at 10:00 a.m., Pacific Time.
At this meeting, you and other shareholders of the Atlas California Insured
Intermediate Municipal Fund will be asked to approve a plan to effect the
transfer of the assets of your Fund to the Atlas California Municipal Bond Fund.
Please return the enclosed proxy in the postpaid envelope provided. Your vote is
important. I urge you to return your proxy as soon as possible.
Why are we proposing this change?
The Board of Directors believes that after over four years, the Atlas
Intermediate Fund is too small and lacks any reasonable prospects for growth in
the foreseeable future. Atlas Advisers and Atlas Securities have subsidized the
Fund's expenses since its inception and have notified the Board that they are
unable to continue doing so. It is unlikely that the Fund, with its narrow
investment policies, can absorb all its expenses and still produce a competitive
yield.
<PAGE> 93
What is the proposed change?
The Atlas California Bond Fund has compatible investment objectives and invests
in similar types of securities as the Atlas Intermediate Fund. The conservative
management philosophy behind both Atlas bond funds means that the proposed
changes should not have a significant impact on either the credit quality or the
volatility of your investment. For example, while the Atlas Intermediate Fund
must be at least 65% insured, the Atlas California Bond Fund, which can invest
in a wide variety of investment grade credit instruments, was 71% insured as of
June 30, 1997. And, historically, the share prices of both funds have responded
similarly to interest rate changes.
How will the proposed change benefit current shareholders?
By agreeing to this reorganization, it is expected that investors in the Atlas
Intermediate Fund will be able to meet their original objective of investing in
a high-quality municipal bond fund and also take advantage of certain economies
of scale possible only in a fund with a substantial asset base. The Atlas
California Bond Fund had net assets of approximately $180 million as of June 30,
1997 compared to approximately $19 million for the Atlas Intermediate Fund.
You should also benefit from the increased income potential of long-term bonds
in your portfolio.
For these reasons, I believe your approval of the proposed reorganization
agreement will make your Atlas investment work even harder for you.
Will current Fund management change?
No, both the Atlas California Bond Fund and the Atlas Intermediate Fund are
guided by the same experienced, conservative managers.
In summary, I believe that this proposed reorganization will benefit
shareholders by spreading operating expenses over a larger asset base and by
virtue of the higher yields possible from the high-quality, longer-term bonds in
the Atlas California Bond Fund's portfolio. Therefore, I recommend that you vote
"FOR" the proposal on the enclosed Proxy.
Details of the proposal are contained in the accompanying Proxy Statement, which
I urge you to read. Your prompt response will ensure that your shares are
counted at the meeting, that a quorum is present at the meeting to conduct
business and that the expense of additional solicitation of proxies from
shareholders can be avoided. Your continued support is appreciated.
Sincerely,
/s/ Marion O. Sandler
(Mrs.) Marion O. Sandler
President and Chief Executive Officer
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
<PAGE> 94
ATLAS ASSETS, INC.
(A MARYLAND CORPORATION)
1901 Harrison Street, Oakland, California 94612
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
ATLAS CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
TO BE HELD ON NOVEMBER 24, 1997
Notice is hereby given that a Special Meeting of Shareholders
(the "Meeting") of the Atlas California Insured Intermediate Municipal Fund (the
"Fund"), a separate series of Atlas Assets, Inc. (the "Company"), will be held
at the World Savings Center, 1901 Harrison Street, Fourth Floor, Oakland,
California on November 24, 1997 at 10:00 a.m. Pacific Time. This Meeting will be
held for the following purposes:
1. To approve an Agreement and Plan of Reorganization
between the Fund and the Atlas California
Municipal Bond Fund (the "California Bond Fund"),
another separate series of the Company, providing
for the transfer of all of the assets of the Fund
to the California Bond Fund in exchange for shares
of the California Bond Fund and the distribution
of the shares of the California Bond Fund to the
shareholders of the Fund in liquidation of the
Fund (the "Proposal"); and
2. To transact such other business as may properly
come before the Meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on
September ____, 1997 as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Meeting or any adjournments
thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN
THE POSTAGE PREPAID ENVELOPE PROVIDED WITH THE PROXY STATEMENT. YOUR PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT THAT YOU
ATTEND THE MEETING.
By Order of the Board of Directors
Steven J. Gray, Secretary
September ____, 1997
<PAGE> 95
- --------------------------------------------------------------------------------
IMPORTANT
YOU MAY HELP AVOID THE EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A
QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED
AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
2
<PAGE> 96
ATLAS ASSETS, INC.
1901 HARRISON STREET, OAKLAND, CALIFORNIA 94612
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
OF
ATLAS CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
________________, 1997
---------------------------------------------
The enclosed Proxy is being solicited by the Board of
Directors of Atlas Assets, Inc. (the "Company" or "Atlas Funds") for use at the
Special Meeting of Shareholders (the "Meeting") of the Atlas California Insured
Intermediate Municipal Fund (the "Fund"), a separate series of the Company to be
held at the World Savings Center, 1901 Harrison Street, Fourth Floor, Oakland,
California on November 24, 1997 at 10:00 a.m. Pacific Time or at any adjournment
or adjournments thereof. Series of the Company other than the Fund are not being
solicited by this Proxy Statement. This Proxy Statement and the accompanying
form of Proxy are first being mailed to shareholders on or about September__,
1997.
The Meeting is called for the purpose of considering an
Agreement and Plan of Reorganization (the "Agreement") between the Fund and the
Atlas California Municipal Bond Fund (the "California Bond Fund"), another
series of the Company, providing for the transfer of all of the assets of the
Fund to the California Bond Fund in exchange solely for shares of beneficial
interest of the California Bond Fund (the "California Bond Fund Shares") at
their net asset value with no sales charge, and the distribution, pursuant to
the Agreement, of the California Bond Fund Shares to the shareholders of the
Fund. Shareholders of the Fund will receive shares of the California Bond Fund
of the same class and having the same value in the aggregate as their shares of
the Fund.
This Proxy Statement also serves as a Prospectus of the
California Bond Fund under the Securities Act of 1933, as amended, for the
issuance of the California Bond Fund Shares in exchange for the Fund's assets.
The terms and conditions of these transactions are more fully described in this
Proxy Statement and Prospectus and in the Agreement which is attached
3
<PAGE> 97
hereto as Appendix A. This Proxy Statement and Prospectus includes and
incorporates by reference the attached Prospectus of the Atlas Funds dated April
30, 1997 (the "Atlas Funds Prospectus") which is attached as Appendix B.
The Company is an open-end management investment company
organized as a Maryland corporation consisting of 15 series. This Proxy
Statement and Prospectus pertains only to the Fund and the California Bond Fund.
The investment objective of the California Bond Fund is to seek a high level of
current income consistent with prudent investment management and preservation of
capital, excludable from gross income for federal income tax purposes.
This Proxy Statement and Prospectus sets forth concisely the
information you should know before voting on the proposed reorganization. It
should be read and retained for future reference.
A Statement of Additional Information dated September __, 1997
and a Statement of Additional Information dated April 30, 1997 relating to the
Fund and the California Bond Fund are on file with the Securities and Exchange
Commission and are incorporated by reference herein. They are respectively
available, upon oral or written request, and at no charge, from the Company at
794 Davis Street, San Leandro, California 94577, telephone number
1-800-933-ATLAS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement and Prospectus is September __, 1997.
4
<PAGE> 98
TABLE OF CONTENTS
PAGE
SUMMARY .....................................................
INFORMATION CONCERNING THE MEETING...........................
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION.....
CAPITALIZATION ..............................................
TAX CONSIDERATIONS ..........................................
BUSINESS OF THE FUNDS .......................................
General ............................................
Financial Highlights ...............................
Investment Objectives and Policies .................
Directors and Officers .............................
Investment Adviser .................................
Expenses ...........................................
Purchase of Fund Shares ............................
Redemption of Fund Shares ..........................
Dividends, Distributions and Taxes .................
Transfer Agent, Dividend Agent and Custodian .......
FINANCIAL STATEMENTS ........................................
EXPERTS .....................................................
LEGAL MATTERS ...............................................
AVAILABLE INFORMATION .......................................
APPENDICES
A Form of Agreement and Plan of Reorganization by and between the Atlas
California Municipal Bond Fund and the Atlas California Insured
Intermediate Municipal Fund
B Proforma combining Statements of Assets and Liabilities and Schedules
of Investments as of June 30, 1997 and proforma combining Statements of
Operations for the year ended December 31, 1996 and the six-month
period ended June 30, 1997.
C Prospectus of the Atlas Funds dated April 30, 1997
5
<PAGE> 99
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement and Prospectus and is qualified by reference
to the more complete information contained in the Proxy Statement and Prospectus
and in the attached Appendices.
COMPARISON OF THE FUND
AND CALIFORNIA BOND FUND The Fund and the California Bond Fund are
both separate series of the Company. The
Fund began operations in June 1993 and, as
of June 30, 1997, had net assets of
approximately $19,008,128. The California
Bond Fund began operations in January 1990
and, as of June 30, 1997, had net assets of
approximately $180,168,254.
INVESTMENT OBJECTIVES
AND POLICIES Both Funds have a common investment
objective of seeking high current income
consistent with prudent investment
management and preservation of capital,
excludable from gross income for federal
income tax purposes. The Funds also have
similar investment strategies and policies,
and utilize the same personnel to implement
their investment programs. Both Funds invest
primarily in a diversified portfolio of
intermediate and long-term municipal
securities of various issuers.
The principal differences between the
policies of the Fund and the California Bond
Fund are in the areas of portfolio maturity
and insurance. In order to reduce market
risk, the Fund maintains a dollar weighted
average portfolio maturity of between three
and ten years. The California Bond Fund does
not have any similar policy limiting the
maturity of its investment portfolio. As of
June 30, 1997, the dollar weighted average
maturity of the Fund's portfolio was 7.2
years. As of the same date, the dollar
weighted average maturity of the California
Bond Fund's portfolio was 19.1 years.
However, the duration of the Fund's
portfolio as of that date was
6
<PAGE> 100
5.38% compared to 6.85% for the California
Bond Fund. Duration takes into account call
features and similar provisions which affect
the period of time in which a position can
actually be owned and is, therefore, looked
at by investment professionals as a more
accurate measure of a portfolio's volatility
than maturity. Based on duration, the
expected volatility of the California Bond
Fund's portfolio is somewhat higher than
that of the Fund, but substantially less
than would be expected by looking only at
the relative maturities of the two Fund's
portfolios.
In addition, to minimize credit risk, the
Fund is required to invest at least 65% of
its assets in securities that are insured by
private insurance companies as to the timely
payment of principal and interest. The
California Bond Fund can invest in a wide
array of credits other than insured
securities. Nevertheless, because of its
very conservative orientation, as of June
30, 1997, 72.27% of the California Bond
Fund's portfolio was comprised of insured
securities and approximately 98% of the
portfolio securities were rated in the two
highest rating quality grades, such as S&P
(AAA, AA). (Please see "Risk Factors"
below).
OPERATIONAL MATTERS As described in the Atlas Funds Prospectus,
the share purchase and redemption
procedures, exchange privileges, dividend
and distribution procedures, pricing
options, special features, contractual
arrangements and all other customer
service/operational matters are the same for
both Funds.
OPERATING EXPENSES Atlas Advisers, Inc. ("Advisers") provides
portfolio management and administrative
services to both Funds. Each Fund has agreed
to pay Advisers a monthly fee at the annual
rate of .55% of the first $500 million and
.50% of the amount in excess of $500 million
of the value of the average daily net assets
of the Fund as compensation for
7
<PAGE> 101
such services. Atlas Securities, Inc.
("Securities") is the distributor of each
Fund's shares. Under the Class A Shares
distribution plan, Securities may receive
reimbursement up to a maximum annual rate of
.25% of each Fund's average daily net assets
for distribution related costs incurred
relative to Class A shares. Under the Class
B Shares distribution plan, each Fund has
agreed to pay Securities a distribution fee
of up to a maximum annual rate of .75% of
each Fund's average daily net assets for
distribution related services provided
relative to Class B shares. Both Funds incur
additional expenses in connection with their
operation, including legal, accounting,
transfer agent and custodial fees.
The Fund's ratio of expenses to average net
assets for its Class A shares was 0.77% and
0.82% for 1995 and 1996, respectively. For
fiscal years 1995 and 1996, the ratio of
expenses to average net assets for the
Fund's Class B shares was 1.30% and 1.50%,
respectively. For all four years of the
Fund's existence, including 1995 and 1996,
Advisers and Securities provided significant
fee reduction and expense reimbursement to
the Fund to enable it to operate at the
above expense levels. However, effective
January 1, 1997, Advisers and Securities
have notified the Board of Directors that
they intended to stop subsidizing the Fund's
operations. The California Bond Fund's ratio
of expenses to average net assets annualized
for its Class A shares was 0.93% and 0.96%,
respectively, for 1995 and 1996, and 1.46%
and 1.46%, respectively, for its Class B
shares. During those years, Advisers and
Securities did subsidize the California Bond
Fund's operations; however, due to its
larger asset size, the level of
subsidization was much less than it was for
the Fund. Given the California Bond Fund's
current size, it is expected that it will be
able to cover its own operating expenses
without
8
<PAGE> 102
any need for Advisers or Securities to
subsidize its operations, while providing
shareholders with a competitive return.
Without such fee reductions and expense
absorption, the ratio of expenses to average
net assets (annualized) would have been as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
1996 1995 1996 1995
------------- ---------------
<S> <C> <C> <C> <C>
Fund 1.08% 1.11% 3.25% 3.25%
California
Bond Fund 0.96% 0.96% 1.83% 3.24%
</TABLE>
REORGANIZATION
EFFECT OF THE Pursuant to the terms of the Agreement, the
REORGANIZATION proposed reorganization will consist of the
transfer of all of the assets of the Fund
and the assumption by the California Bond
Fund of all liabilities of the Fund, in
exchange solely for shares of beneficial
interest of the California Bond Fund having
an aggregate value equal to the value of the
net assets transferred by the Fund, and the
distribution pursuant to the Agreement, of
the California Bond Fund Shares to the
shareholders of the Fund in liquidation of
the Fund as provided in the Agreement.
(These transactions are referred to
hereinafter as the "Reorganization.")
If approved by the Fund's shareholders, the
Reorganization will become effective on or
shortly after the date such approval is
obtained (the "Closing Date"), which is
currently anticipated to occur on or about
November 24, 1997. The assets of the Fund
and the shares of the California Bond Fund
will be valued at the close of business on
the last business day prior to the Closing
Date (the "Valuation Date").
9
<PAGE> 103
TAX CONSIDERATIONS The consummation of the Reorganization is
subject to the receipt of an opinion of
counsel, in form, scope and substance
satisfactory to the Fund and the California
Bond Fund, to the effect that the
Reorganization will be treated as a tax-free
reorganization for federal income tax
purposes. Investors should review the
discussion under "Tax Considerations" below
for a better understanding of the specific
points to be addressed in counsel's opinion.
Investors who redeem shares of the Fund or
exchange their shares for shares of another
Atlas Fund, instead of participating in the
Reorganization, and who are not exempt from
federal income tax, will be required to
recognize any realized gain (or loss) on the
redemption or exchange, as more fully
described in the accompanying Atlas Funds
Prospectus.
THE MEETING
TIME, PLACE AND DATE The meeting will be held on November 24,
1997 at 10:00 a.m. Pacific Time, at the
World Savings Center, 1901 Harrison Street,
Oakland, California 94612.
RECORD DATE September ____, 1997
VOTE REQUIRED Approval of the Reorganization requires the
FOR APPROVAL affirmative vote of a majority of the Fund's
shares of beneficial interest outstanding
and entitled to vote as a whole without
reference to share class.
RISK FACTORS Because the California Bond Fund has
maintained in the past, and would be
expected to continue to maintain, a
portfolio with a greater weighted average
maturity than that maintained by the Fund,
shareholders of the Fund could be exposed to
increased market risk as a result of the
Reorganization. Similarly, because the
California Bond Fund would be expected to
have a level of investment in securities
that are insured as to the timely payment of
principal and interest that is lower than
the required minimum investment in such
securities by the Fund,
10
<PAGE> 104
shareholders of the Fund could be exposed to
increased credit risk as a result of the
Reorganization. However, as noted above, the
credit quality of the California Bond Fund's
portfolio has been, and is expected to
continue to be, very high, with a policy
prohibiting any below investment grade
credits.
Shareholders should also be expected to
enjoy higher yields after the
Reorganization. For more detailed historical
information on the performance and portfolio
maturities and credit quality of the Funds,
shareholders are directed to the Annual
Report to Shareholders as of December 31,
1996 and the Semi-Annual Report to
Shareholders as of June 30, 1997 which have
been previously distributed. Additional
copies of such reports are available from
the Company without charge upon request.
INFORMATION CONCERNING THE MEETING
SOLICITATION, REVOCATION AND USE OF PROXIES
A shareholder executing a proxy has the power to revoke it at
any time before it is exercised by filing with the Fund a written notice of
revocation or returning a duly executed proxy bearing a later date prior to the
time of the Meeting. Any shareholder who has executed a proxy but is present at
the Meeting and who wishes to vote in person may revoke his proxy by notifying
the Secretary of the Company at any time before it is voted.
All shares represented by properly executed proxies, unless
such proxies have previously been revoked, will be voted at the Meeting in
accordance with the directions on the proxies. If no direction is indicated, the
shares will be voted "FOR" the approval of the Agreement.
It is not anticipated that any matters other than the approval
of the Agreement will be brought before the Meeting. If, however, any other
business is properly brought before the Meeting, proxies will be voted in
accordance with the best judgment of the persons designated on such proxies.
11
<PAGE> 105
RECORD DATE AND OUTSTANDING SHARES
Only Fund shareholders of record at the close of business on
September__, 1997 (the "Record Date") are entitled to notice of and to vote at
the Meeting and any postponement or adjournment thereof. At the close of
business on June 30, 1997, there were 1,826,651 shares of the Fund issued and
outstanding (the "Fund Shares"). As of that date, there were 16,160,079 shares
of the California Bond Fund issued and outstanding.
SECURITY OWNERSHIP OF THE FUND AND CALIFORNIA BOND FUND
To the Fund's knowledge, as of August ___, 1997, no
shareholder owned beneficially 5% or more of the outstanding shares of the Fund.
As of that date, the Directors and officers of the Fund owned as a group less
than 1% of the outstanding shares of the Fund.
As of June 30, 1997, to the knowledge of the California Bond
Fund, no shareholder owned beneficially 5% or more of the outstanding shares of
the California Bond Fund. The Directors and officers of the Company owned
beneficially as a group less than 1% of the outstanding shares of the California
Bond Fund.
Golden West Financial Corporation, the parent corporation of
Advisers and Securities, is the sole shareholder that beneficially owns in
excess of 5% of any outstanding class of shares of the other series of the
Company. In each instance, such ownership will not significantly impact
shareholder voting on matters affecting the California Bond Fund.
VOTING RIGHTS, QUORUM AND REQUIRED VOTE
Each Fund share is entitled to one vote. A majority of the
shares entitle to vote at the Meeting constitutes a quorum to conduct business
at the Meeting. In the event a quorum is not present at the Meeting or in the
event that a quorum is present but sufficient votes to approve the Agreement are
not received, the persons named as proxies may propose one or more adjournments
of such Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those Shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR the Proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST the
proposal against any such adjournment. Approval of the Agreement requires the
affirmative vote of a majority of the outstanding shares of the Fund as a whole
without reference to share class, as defined under the 1940 Act, as amended,
which means the lesser of (a) 67% or more of the voting securities of the Fund
present at a meeting, if the holders of more than 50% of
12
<PAGE> 106
the outstanding voting securities are present or represented by proxy thereat,
or (b) more than 50% of the outstanding voting securities of the Fund. No
approval is required by shareholders of the California Bond Fund.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of shareholders of the Fund are governed by
Maryland law, the provisions of the Company's Articles of Incorporation and
By-Laws, and by Rule 22c-1 under the 1940 Act.
Rule 22c-1 under the 1940 Act provides that no open-end
investment company may redeem its shares other than at the net asset value next
computed after receipt of a tender of such security for redemption. Therefore,
any shareholder who does not wish to receive California Bond Fund Shares as part
of the exchange of the assets of the Fund for California Bond Fund Shares, may
redeem his or her shares at the net asset value next computed after receipt of a
proper redemption request by the Fund at any time prior to the Closing Date. In
addition, as described in the Atlas Funds Prospectus, shareholders of the Fund
have the ability to exchange their shares in the Fund for shares of another
Atlas Fund at their relative net asset values at any time prior to the Closing
Date. Neither the Articles of Incorporation nor the By-Laws provide for any
special treatment for dissenting shareholders who wish not to participate in a
merger, consolidation or reorganization.
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
GENERAL
The shareholders of the Fund are being asked to approve the
Agreement between the Fund and the California Bond Fund. A copy of the Agreement
is attached hereto as Appendix A. Detailed information with respect to the
California Bond Fund is set forth in the Atlas Funds Prospectus, which is
attached hereto as Appendix B. The Reorganization will involve the Fund's
exchange of substantially all of its assets for California Bond Fund Shares,
followed by the Fund's distribution of the California Bond Fund Shares to the
Fund's shareholders in liquidation of the Fund. The number of California Bond
Fund Shares to be issued in the Reorganization will be calculated on the basis
of the fair value of the assets of the Fund to be acquired, net of liabilities
to be assumed, by the California Bond Fund immediately prior to the transfer of
assets, as more fully described under "Description of Agreement."
Pursuant to the Agreement, the Fund will liquidate and
distribute the California Bond Fund Shares received as described
13
<PAGE> 107
above pro rata to its shareholders of record ("Fund Shareholders"), determined
as of the close of business on the New York Stock Exchange on the last day such
Exchange is open for unrestricted trading immediately preceding the effective
date of the Reorganization. The result of the Reorganization will be that the
California Bond Fund will add to its investment portfolio substantially all of
the assets of the Fund, and the Fund Shareholders who do not redeem their shares
will become shareholders of the California Bond Fund with California Bond Fund
Shares having the same aggregate net asset value as the Fund Shares owned on the
day of the Reorganization. If any of the assets acquired from the Fund are not
consistent with the investment objectives and restrictions of the California
Bond Fund, such assets will be sold by the California Bond Fund and the
California Bond Fund will incur brokerage commissions in executing such
transactions.
The Agreement and the transactions provided for therein were
considered and approved by the Board of Directors of the Company at a meeting
held on August 15, 1997. In the event that the Reorganization is not
consummated, the Fund will continue to engage in business as a management
investment company, and the Board will reconsider what further action should be
taken, including the possible liquidation of the Fund. See "Business of the
Funds" below.
REASONS FOR THE PROPOSED REORGANIZATION
The Board of Directors of the Company believes that the
proposed Reorganization will be advantageous to shareholders of the Fund. The
Fund incurs substantial overhead costs for accounting services, legal services,
printing, insurance, custodial, transfer agency, advisory and administrative
services. At its current asset size, the Fund is too small to operate in a cost
efficient manner and Advisers has been voluntarily subsidizing the Fund's
operations by reducing its management fees and absorbing some of the Fund's
other expenses in order that the Fund might be able to provide a competitive
yield to shareholders. In addition, Securities has been voluntarily reducing its
distribution fees. Advisers and Securities do not foresee any significant
increases in the Fund's asset size in the near future, and have informed the
Board that they are unwilling to continue subsidizing the Fund's operations in
the future. Although the California Bond Fund incurs similar expenses, as a
larger fund it can spread these expenses over a substantially larger asset and
income base. Because the investment objectives, current portfolios, and policies
of the Fund and the California Bond Fund are so similar, Fund Shareholders
should be able to continue to meet their primary investment goals of high
tax-exempt yield and capital preservation as shareholders of the California Bond
Fund.
14
<PAGE> 108
The only other alternative to the Reorganization considered by
the Board of Directors to be practical would be a taxable liquidation of the
Fund, which the Directors have determined would not be preferable to the
tax-free Reorganization with the California Bond Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" THE PROPOSED REORGANIZATION.
DESCRIPTION OF AGREEMENT
The following explanation of the Agreement is a summary, does
not purport to be complete, and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Agreement. A copy of the
Agreement is annexed hereto as Appendix A of this Proxy Statement and Prospectus
and should be read in its entirety.
METHOD OF CARRYING OUT REORGANIZATION. If shareholders holding
a majority of the outstanding shares of the Fund approve the Agreement, the
Reorganization will be effected on the Closing Date, which has been set for a
date on or about December__, 1997; however, in no event will the Closing Date be
later than ten business days after shareholder approval is obtained (the
"Effective Date").
On the Effective Date, the Fund will transfer all of its
assets in exchange for California Bond Fund Shares having an aggregate net asset
value equal to the aggregate value of the transferred assets (less liabilities
assumed) as of the close of business on the business day next preceding the
Closing Date (the "Valuation Date"). The value of the Fund's assets and the net
asset value of a California Bond Fund Share will be determined in accordance
with the valuation procedures set forth in the Agreement and the Atlas Funds
Prospectus. The California Bond Fund Shares will be distributed pro rata to the
Fund Shareholders.
SURRENDER OF CERTIFICATES. Shareholders of the Fund whose
shares are represented by one or more share certificates should, prior to the
Effective Date, either surrender such certificates to the Fund or deliver to the
Fund an affidavit with respect to lost certificates, in such form and
accompanied by such surety bonds as the Fund may require (collectively an
"Affidavit"). On the Effective Date, all certificates which have not been so
surrendered will be deemed to be converted into California Bond Fund Shares and
will no longer evidence ownership of the Fund's Shares. California Bond Fund
Shares attributable to the conversion of the Fund shares represented by
unsurrendered
15
<PAGE> 109
certificates (for which no Affidavit has been delivered) will be held by NFDS in
trust for the former holders of such shares. Such shareholders may not redeem
California Bond Fund Shares represented by Fund certificates received in the
Reorganization until they have surrendered their certificates or delivered an
Affidavit relating thereto. Until such certificates are surrendered or an
Affidavit relating thereto has been delivered, dividends and other distributions
payable on California Bond Fund Shares held in trust by NFDS will be paid to
NFDS for the benefit of such shareholders. After a former shareholder surrenders
his or her certificates or delivers an Affidavit, the California Bond Fund
Shares, dividends and distributions held by NFDS for his or her benefit will be
transferred to an account in the name of such shareholder.
EXPENSES OF THE REORGANIZATION. The California Bond Fund will
pay all expenses of the Reorganization.
CAPITALIZATION
The following table sets forth the respective capitalization
of the California Bond Fund and the Fund as of June 30, 1997, and the pro forma
combined capitalization of both as if the Reorganization had occurred on that
date. The table reflects a pro forma exchange ratio of approximately .93
California Bond Fund Shares being issued for each Fund share. If the
Reorganization is consummated, the actual exchange ratio on the Effective Date
may vary from the ratio indicted as a result of, among other matters, changes in
the market value of the portfolio securities of both the California Bond Fund
and the Fund between June 30, 1997 and the Valuation Date and changes in the
amount of net investment income of the California Bond Fund and the Fund earned
during that period less distributions made. The pooling method will be utilized
to account for the Reorganization. (See Appendix C hereto - pro forma combined
financial statements.)
16
<PAGE> 110
June 30, 1997
<TABLE>
<CAPTION>
===================== ================================== ====================================== ====================================
PRO FORMA
CALIFORNIA BOND FUND COMBINED
FUND
---------------------------------- -------------------------------------- ------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
===================== ================= ================ =================== ================== ================== =================
<S> <C> <C> <C> <C> <C> <C>
Net Assets $174,029,933 $6,138,321 $18,451,471(1) $556,657(1) $192,501,404 $6,694,978
- --------------------- ----------------- ---------------- ------------------- ------------------ ------------------ -----------------
Net Asset Value
Per Share $11.15 $11.16 $10.41(1) $10.40(1) $11.15 $11.16
- --------------------- ----------------- ---------------- ------------------- ------------------ ------------------ -----------------
Shares Outstanding 15,609,822 550,257 1,773,125 53,526 17,264,662(2) 600,137(2)
- --------------------- ---------------------------------- ------------------- ------------------ ------------------ -----------------
Shares Authorized 50,000,000 25,000,000 50,000,000
===================== ================================== ====================================== ====================================
</TABLE>
(1) Net Assets and Net Asset Value Per Share of the Fund represent the aggregate
and per share value of the Fund's net assets which would have been transferred
to the California Bond Fund if the Reorganization had been consummated on June
30, 1997.
(2) If the Reorganization had taken place on June 30, 1997, the Fund would have
received 1,654,840 Class A and 49,880 Class B California Bond Fund Shares, which
would be available for distribution to its shareholders. No assurances can be
given as to how many California Bond Fund Shares the Fund will receive on the
Effective Date. The foregoing is merely an example of what the Fund would have
received and distributed had the Reorganization been consummated on June 30,
1997, and should not be relied upon to reflect the amount which actually will be
received on or after the Effective Date.
TAX CONSIDERATIONS
The consummation of the Reorganization is subject to the
receipt of a favorable opinion of Paul, Hastings, Janofsky & Walker LLP in form,
scope and substance satisfactory to the Company to the effect that:
(i) The acquisition by the California Bond Fund of
substantially all of the assets of the Fund solely in exchange for California
Bond Fund Shares, followed by the distribution by the Fund, in liquidation of
the Fund, of California Bond Fund Shares to the shareholders of the Fund in
exchange for their Fund Shares will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
(the "Code") and the Fund and the California Bond Fund will each be "a party to
a reorganization" within the meaning of Section 368(b) of the Code;
17
<PAGE> 111
(ii) No gain or loss will be recognized to the Fund upon the
transfer of substantially all of its assets to the California Bond Fund solely
in exchange for the California Bond Fund Shares;
(iii) No gain or loss will be recognized to the California
Bond Fund upon the receipt of the assets of the Fund solely in exchange for
California Bond Fund Shares;
(iv) The basis of the assets of the Fund acquired by the
California Bond Fund will be, in each instance, the same as the basis of those
assets in the hands of the Fund immediately prior to the transfer;
(v) The holding period of the assets of the Fund in the
hands of the California Bond Fund will include the period during which those
assets were held by the Fund;
(vi) No gain or loss will be recognized by the shareholders
of the Fund upon the exchange of all of their Fund Shares solely for California
Bond Fund Shares as part of the transaction;
(vii) The basis of the California Bond Fund Shares to be
received by the Fund's shareholders will be the same as the basis of the Fund
Shares surrendered in exchange therefor; and
(viii) The holding period of the California Bond Fund Shares
to be received by the Fund's shareholders will include the period during which
the Fund Shares surrendered in exchange therefor were held, provided the Fund
Shares constituted capital assets in their hands on the date of the exchange.
BUSINESS OF THE FUNDS
GENERAL
For a general description of the Funds see "How are the Funds administered?" in
the Atlas Funds Prospectus. With regard to each of the items described under
this section, except as described above, there are no differences between the
business of the Fund and that of the California Bond Fund.
FINANCIAL HIGHLIGHTS
See "Financial Highlights" in the Atlas Funds Prospectus.
18
<PAGE> 112
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of the Funds' investment objectives and policies, see "What are
the Funds' investment objectives?" and "What are the Funds' investment
policies?" in the Atlas Funds Prospectus.
DIRECTORS AND OFFICERS
For a discussion of the responsibilities of the Atlas Funds Board of Directors,
see "How are the Funds administered?" in the Atlas Funds Prospectus.
INVESTMENT ADVISER
For a description of the Funds' Adviser, see "How are the Funds administered?"
in the Atlas Funds Prospectus.
EXPENSES
For a description of the Funds' expenses, see "What are the Funds' fees and
expenses?" in the Atlas Funds Prospectus.
PURCHASE OF FUND SHARES
For a description of how shares of the Atlas Funds may be purchased, see "How
can I invest?" in the Atlas Funds Prospectus.
REDEMPTION OF FUND SHARES
For a description of how shares of the Atlas Funds may be redeemed, see "How can
I redeem shares?" in the Atlas Funds Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of the Funds' policy with respect to dividends, distributions
and taxes, see "What dividends and distributions can I receive?" and "How can
taxes affect my investment?" in the Atlas Funds Prospectus.
TRANSFER AGENT, DIVIDEND AGENT AND CUSTODIAN
For information regarding the Fund's transfer agent, dividend agent and
custodian bank, see "How are the Funds administered?" and the back cover page of
the Atlas Funds Prospectus.
19
<PAGE> 113
FINANCIAL STATEMENTS
The audited financial statements of the Company for the year
ended December 31, 1996, set forth in the Company's 1996 Annual Report to
Shareholders, and the unaudited financial statements of the Company for the six
months ended June 30, 1997, set forth in the Company's 1997 Semi-Annual Report
to Shareholders are incorporated herein by reference. The unaudited proforma
combining Statements of Assets and Liabilities, and Schedule of Investments as
of June 30, 1997, and the unaudited proforma combining Statements of Operations
for the year ended December 31, 1996 and the six-month period ended June 30,
1997 are set forth in Appendix B hereto.
EXPERTS
The financial statements included in the Company's 1996 Annual
Report to Shareholders incorporated by reference in this combined proxy and
prospectus and elsewhere in this registration statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report included
in such Annual Report, and are incorporated by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
California Bond Fund Shares will be passed upon for the Company by Paul,
Hastings, Janofsky & Walker LLP.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Investment Company Act of 1940, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed with respect to the Fund and the California Bond Fund can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, Mail Stop 1-2, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following regional offices: Chicago (Room 1400, Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661); and New York
(Room 1300, Northwest Regional Office, 7 World Trade Center, New York, New York
10048). Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
20
<PAGE> 114
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
day of , 1997 by and between the Atlas California Municipal Bond
Fund (the "California Bond Fund") and the Atlas California Insured Intermediate
Municipal Fund (the "California Intermediate Fund"), each a separate series of
Atlas Assets, Inc. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of the transfer of substantially all of the assets of the California
Intermediate Fund and the assumption by the California Bond Fund of liabilities
of the California Intermediate Fund in exchange solely for shares of beneficial
interest of the California Bond Fund (the "California Bond Fund Shares") and the
distribution, after the Closing Date hereinafter referred to, of the California
Bond Fund Shares to the Shareholders of the California Intermediate Fund in
liquidation of the California Intermediate Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the California
Intermediate Fund agrees to transfer its assets as set forth in paragraph 1.2,
and its liabilities as set forth in paragraph 1.3 shall be assigned and
transferred to the California Bond Fund and the Company agrees to deliver to the
California Intermediate Fund in exchange therefor the number of California Bond
Fund Shares, determined by dividing the value of the California Intermediate
Fund's assets, computed in the manner and as of the time and date set forth in
paragraph 2.1, net of liabilities transferred to the California Bond Fund
pursuant to paragraph 1.3, by the net asset value of one California Bond Fund
Share computed in the manner and as of the time and date set forth in paragraph
2.2. Such transactions shall take place at the closing provided for in paragraph
3.1 (the "Closing").
1.2 (a) The assets of the California Intermediate Fund to be acquired
by the California Bond Fund shall consist of all cash, securities and due bills
for dividends, interest, or other receivables or rights to receive any of the
foregoing, any other property or money, unamortized organization expenses,
receivables for shares sold, any other property of any kind and all other
1
<PAGE> 115
assets having a value to the California Bond Fund following the Closing, which
are owned by and reflected on the books of the California Intermediate Fund on
the closing date provided in paragraph 3.1 (the "Closing Date").
(b) The California Intermediate Fund has provided the
California Bond Fund with a list of the current securities holdings of the
California Intermediate Fund as of the date of execution of this Agreement. The
California Intermediate Fund reserves the right to sell any of these securities
in the ordinary course of
business.
1.3 The California Bond Fund shall assume and be responsible and liable
for only those liabilities or obligations of the California Intermediate Fund
that (i) have arisen in the ordinary course of the California Intermediate
Fund's business, (ii) have been previously reserved for on the books of account
of the California Intermediate Fund, and (iii) relate to the period prior to the
Closing Date. The California Intermediate Fund will attempt to discharge all of
the California Intermediate Fund's known liabilities and obligations for which
invoices or other documentation have been rendered by vendors or service
providers prior to the Closing Date. Except as otherwise expressly provided in
this paragraph 1.3, the California Bond Fund does not assume, nor does it agree
to be responsible for, any liabilities not known and reflected on the books of
the California Intermediate Fund on the Valuation Date (as defined in paragraph
2.1).
1.4 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the California Intermediate Fund will be liquidated and
will distribute pro rata to its Shareholders of record (the "California
Intermediate Fund Shareholders"), determined as of the close of business on the
New York Stock Exchange on the last day such Exchange is open for unrestricted
trading immediately preceding the Closing Date, the California Bond Fund Shares
received by the California Intermediate Fund pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
California Bond Fund Shares then credited to the account of the California
Intermediate Fund on the books of the California Bond Fund, to open accounts on
the share records of the California Bond Fund in the names of the California
Intermediate Fund Shareholders and representing the respective pro rata number
of California Bond Fund Shares due such California Intermediate Fund
Shareholders and by such other action as may be deemed appropriate to complete
the liquidation as determined by applicable law.
1.5 The California Intermediate Fund Shareholders holding share
certificates representing their ownership of shares of the California
Intermediate Fund ("California Intermediate Fund Shares") shall be requested to
surrender such certificates or deliver an affidavit with respect to lost
certificates, in such form and accompanied by such surety bonds as the
California
2
<PAGE> 116
Intermediate Fund may require (collectively, an "Affidavit"), to the California
Intermediate Fund prior to the Closing Date. Any California Intermediate Fund
certificate which remains outstanding on the Closing Date shall be deemed to be
converted into California Bond Fund Shares and shall no longer evidence
ownership of the California Intermediate Fund Shares. The California Bond Fund
Shares issued upon conversion of the California Intermediate Fund Shares
evidenced by an outstanding certificate (as to which no Affidavit has been
delivered) shall be held by California Financial Data Services ("NFDS") in trust
for the benefit of the former holders of such California Intermediate Fund
Shares. Unless and until any such certificate(s) shall be so surrendered or an
Affidavit relating thereto shall be delivered, dividends and other distributions
payable by the California Bond Fund subsequent to the Liquidation Date with
respect to the California Bond Fund Shares held by NFDS shall not be paid to the
holder of such certificate(s), but shall be paid to NFDS for the benefit of such
holder. After such Shareholder surrenders such certificate(s) or delivers such
Affidavit to NFDS, NFDS shall transfer any California Bond Fund Shares and any
such dividends and distributions held for the benefit of such Shareholder to an
account in the name of such Shareholder, who shall then be treated for all
purposes as the owner of such transferred California Bond Fund Shares, dividends
and distributions.
1.6 Any transfer taxes payable upon issuance of California Bond Fund
Shares in a name other than the registered holder of the corresponding
California Intermediate Fund Shares on the books of the California Intermediate
Fund as of the Closing Date shall, as a condition of such issuance and transfer,
be paid by the person to whom such California Bond Fund Shares are to be issued
and transferred.
1.7 The existence of the California Intermediate Fund shall be
terminated promptly following the Closing Date in accordance with the provisions
of Article V, Section (e)(4) of the Articles of Incorporation of the Company.
2. VALUATION
2.1 The value of the California Intermediate Fund's assets to be
acquired by the California Bond Fund hereunder shall be the fair value of such
assets computed as of the close of business on the New York Stock Exchange on
the business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Company's then current Prospectus or Statement of Additional
Information.
2.2 The net asset value of each California Bond Fund Share shall be the
net asset value per share computed as of the close of business on the New York
Stock Exchange on the Valuation Date,
3
<PAGE> 117
using the valuation procedures set forth in the Company's then current
Prospectus or Statement of Additional Information.
2.3 The number of California Bond Fund Shares to be issued (including
fractional shares, if any) in exchange for the California Intermediate Fund's
assets shall be determined by dividing the value of such assets determined in
accordance with paragraph 2.1, less the liabilities transferred to the
California Bond Fund in accordance with paragraph 1.3, by the net asset value of
a California Bond Fund Share determined in accordance with paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be as soon as practicable after approval by
the California Intermediate Fund Shareholders of the transactions contemplated
by this Agreement; however, in no event will the Closing Date be later than ten
(10) days after such Shareholder approval has been obtained. The Closing shall
be held at 794 Davis Street, San Leandro, California 94577, in the offices of
the Company or at such other place as the parties may agree.
3.2 The California Intermediate Fund's portfolio securities shall be
available for inspection by the California Bond Fund, its custodian bank or such
other agent of the Company as the Company shall designate, at the offices of the
Company's custodian, Investors Bank & Trust Company ("IBT"), 200 Clarendon
Street, Boston, Massachusetts 02116, no later than five business days preceding
the Valuation Date. Such California Intermediate Fund portfolio securities and
cash shall be delivered by the California Intermediate Fund to IBT, as custodian
for the California Bond Fund for the account of the California Bond Fund on the
Closing Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all applicable state stock transfer stamps or a check
for the appropriate purchase price thereof, or, in lieu thereof, a due bill for
such California Intermediate Fund securities and cash shall be delivered by the
California Intermediate Fund to IBT for the account of the California Bond Fund.
The cash delivered shall be in the form of currency or certified or official
bank checks, payable to the order of "Investors Bank & Trust Company, Custodian
for the Atlas California Municipal Bond Fund."
3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted, or
(b) trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
California Bond Fund or the California Intermediate Fund is impracticable, the
Closing Date shall be postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have been restored.
4
<PAGE> 118
3.4 The California Intermediate Fund shall deliver at the Closing a
list containing the name, address, federal tax identification numbers and backup
withholding and nonresident alien status of each California Intermediate Fund
Shareholder and the number and percentage ownership of outstanding shares of the
California Intermediate Fund Shares owned by each Shareholder, all as of the
close of business on the Valuation Date. The California Bond Fund shall issue
and deliver a confirmation evidencing the California Bond Fund Shares to be
credited on the Closing Date, or provide evidence satisfactory to the California
Intermediate Fund that such California Bond Fund Shares have been credited to
the California Intermediate Fund's account on the books of the California Bond
Fund. At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts or other documents as such
other party may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The California Intermediate Fund represents and warrants
to the California Bond Fund as follows:
(a) At the Closing Date, the California Intermediate
Fund will have good and marketable title to its assets;
(b) The California Intermediate Fund is not, and the
execution, delivery and performance of this Agreement will not result, in the
violation of any agreement, indenture, instrument, contract, lease or other
undertaking to which the California Intermediate Fund is a party or by which it
is bound;
(c) All material contracts or other commitments (other than
this Agreement) to which the California Intermediate Fund is a party will be
terminated without liability to the California Intermediate Fund or the
California Bond Fund prior to or as of the Closing Date;
(d) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened as to the California Intermediate Fund or any of its properties or
assets. The California Intermediate Fund knows of no facts which might form the
basis for the institution of such proceedings, and the California Intermediate
Fund is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated;
(e) The statements of assets and liabilities, the statements
of operations, and the statements of changes in net assets of the California
Intermediate Fund at December 31, 1993, 1994, 1995 and 1996 have been audited by
Deloitte & Touche LLP, independent auditors, and prepared in accordance with
generally
5
<PAGE> 119
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition, results of operations, and changes in net
assets of the California Intermediate Fund as of and for the periods ended on
such dates, and there are no liabilities of the California Intermediate Fund as
of the dates of such financial statements, other than liabilities disclosed or
provided for in the foregoing statements;
(f) The unaudited statement of assets and liabilities, the
unaudited statement of operations, and the unaudited statement of changes in net
assets of the California Intermediate Fund at June 30, 1997 have been prepared
in accordance with generally accepted accounting principles consistently
applied, and such statements fairly reflect the financial condition, results of
operations, and changes in net assets of the California Intermediate Fund as of
and for the period ended on such date, and there are no liabilities of the
California Intermediate Fund as of the date of such financial statements, other
than liabilities disclosed or provided for in the foregoing statements;
(g) Since June 30, 1997, there has been no material change in
the California Intermediate Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business;
(h) At the date hereof and at the Closing Date, all federal,
state and other tax returns and reports of the California Intermediate Fund
required by law to have been filed by such dates, including returns for any
penalties required to be self assessed on IRS Form 8210 for each year, shall
have been filed, and all federal, state and other taxes, interest and penalties
shall have been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the California Intermediate Fund's knowledge
no such return is currently under audit and no assessment has been asserted with
respect to such returns;
(i) At the date hereof and on the Closing Date, the California
Intermediate Fund has complied and will have complied with the information
reporting requirements of Sections 6042 and 6045 of the Code and the withholding
requirements of Sections 3406, 1441 and 1442 of the Code since its inception or
has paid or will have paid by the Closing Date any applicable taxes, interest
and penalties that have been or may be assessed for the failure to comply with
such requirement;
(j) The California Intermediate Fund has met the requirements
of Subchapter M of the Code, and has elected to be treated as a regulated
investment company, for the fiscal periods or years ended December 31, 1993,
1994, 1995 and 1996 (its only taxable years) and will qualify as such on the
Closing Date;
(k) All issued and outstanding California Intermediate
Fund Shares are, and at the Closing Date will be, duly and validly
6
<PAGE> 120
issued and outstanding, fully paid and non-assessable. All of the issued and
outstanding shares of the California Intermediate Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in the list of
Shareholders submitted to the Company pursuant to paragraph 3.4. The California
Intermediate Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any California Intermediate Fund Shares, nor
is there outstanding any security convertible into any California Intermediate
Fund Shares;
(l) At the Closing Date, the California Intermediate Fund will
have good and marketable title to its assets to be transferred to the California
Bond Fund pursuant to paragraph 1.2, and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder, and upon delivery and
payment for such assets, the California Bond Fund will acquire good and
marketable title thereto, free and clear of restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities Act of
1933 (the "1933 Act");
(m) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary
actions on the part of the Company's Board of Directors and the California
Intermediate Fund Shareholders, and this Agreement constitutes a valid and
binding obligation of the California Intermediate Fund enforceable in accordance
with its terms, subject to the approval by the California Intermediate Fund
Shareholders.
4.2 The California Bond Fund represents and warrants to the
California Intermediate Fund as follows:
(a) At the Closing Date, the California Bond Fund will
have good and marketable title to its assets;
(b) The California Bond Fund is not, and the execution,
delivery and performance of this Agreement will not result, in violation of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the California Bond Fund is a party or by which it is bound;
(c) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the California Bond Fund or any of its properties or
assets. The Company knows of no facts which might form the basis for the
institution of such proceedings and the Company is not a party to or subject to
the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(d) The statements of assets and liabilities, the
statement of operations and the statements of changes in net assets
7
<PAGE> 121
at December 31, 1990, 1991, 1992, 1993, 1994, 1995 and 1996 audited by Deloitte
& Touche LLP fairly and accurately reflect the financial condition of the
California Bond Fund as of such dates and the results of its operations for the
periods then ended in accordance with generally accepted accounting principles
consistently applied;
(e) The unaudited statement of assets and liabilities, the
unaudited statement of operations and the unaudited statement of changes in net
assets at June 30, 1997 fairly and accurately reflect the financial condition of
the California Bond Fund as of such dates and the results of its operations for
the periods then ended and have been prepared in accordance with generally
accepted accounting principles consistently applied;
(f) Since June 30, 1997, there has not been any material
adverse change in the California Bond Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course of
business. For the purposes of this subparagraph (f), a decline in net value per
share of the California Bond Fund Shares shall not constitute a material adverse
change;
(g) By the Closing Date, all federal, state and other tax
returns and reports of the California Bond Fund required by law then to be filed
shall have been filed, and all federal, state and other taxes shown due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof;
(h) The California Bond Fund has met the requirements of
Subchapter M of the Code, and has elected to be treated as a regulated
investment company, for each fiscal year of its operation and will qualify as
such as of the Closing Date;
(i) All issued and outstanding California Bond Fund Shares
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. The California Bond Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any California Bond Fund Shares, nor is there outstanding any security
convertible into any California Bond Fund Shares;
(j) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the Company's Board of Directors and this Agreement constitutes a
valid and binding obligation of the California Bond Fund enforceable in
accordance with its terms;
(k) The California Bond Fund Shares to be issued and delivered
to the California Intermediate Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and, when so issued and delivered,
will be duly and
8
<PAGE> 122
validly issued California Bond Fund Shares, and will be fully paid and
non-assessable.
5. COVENANTS OF THE PARTIES
5.1 The California Bond Fund and the California Intermediate Fund each
will operate its business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include customary dividends and distributions.
5.2 The California Intermediate Fund will, as soon as possible, call a
meeting of the Shareholders of the California Intermediate Fund to consider and
act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 The California Intermediate Fund covenants that the California Bond
Fund Shares to be issued hereunder are not being acquired for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.4 Subject to the provisions of this Agreement, the California Bond
Fund and the California Intermediate Fund will each take, or cause to be taken,
all action, and do or cause to be done, all things reasonably necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement.
5.5 As promptly as practicable after the Closing Date, the California
Intermediate Fund shall furnish the California Bond Fund a statement of the
earnings and profits and capital loss carryovers of the California Intermediate
Fund for federal income tax purposes which will be carried over to the
California Bond Fund in accordance with and subject to the limitations of
Sections 381 and 383 of the Code, and which will be certified by the California
Intermediate Fund's Treasurer.
5.6 The Company will, as soon as possible, prepare a Prospectus (the
"Prospectus") which will include a Proxy Statement (the "Proxy Statement"), all
to be included in a Registration Statement on Form N-14 of the Company (the
"Registration Statement")to be filed in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Investment
Company Act of 1940 in connection with the special meeting of the California
Intermediate Fund Shareholders to consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CALIFORNIA
INTERMEDIATE FUND
The obligations of the California Intermediate Fund to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by the California Intermediate Fund of
9
<PAGE> 123
all the obligations to be performed by it hereunder on or before the Closing
Date, and in addition thereto, the following further conditions:
6.1 All representations and warranties of the California Bond Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The California Bond Fund has performed all applicable covenants
contained in this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CALIFORNIA BOND
FUND
The obligations of the California Bond Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
California Intermediate Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the California Intermediate
Fund contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The California Intermediate Fund has performed all
applicable covenants contained in this Agreement.
7.3 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the California Intermediate Fund in accordance with applicable law.
7.4 The parties shall have received a favorable opinion of Paul,
Hastings, Janofsky & Walker LLP (rendered in reliance upon, and the form of
which may be affected by, certain factual representations by the parties),
satisfactory to the Company substantially to the effect that for federal income
tax purposes:
(a) The acquisition by the California Bond Fund of
substantially all of the assets of the California Intermediate Fund solely in
exchange for the California Bond Fund Shares and the assumption of liabilities
of the California Intermediate Fund, followed by the distribution by the
California Intermediate Fund, in liquidation of the California Intermediate
Fund, of the California Bond Fund Shares to the California Intermediate Fund
Shareholders in exchange for their California Intermediate Fund Shares will
constitute a reorganization within the meaning of
10
<PAGE> 124
Section 368(a)(1)(C) of the Code, and the California Intermediate Fund and the
California Bond Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the California
Intermediate Fund upon the transfer of substantially all of its assets to the
California Bond Fund solely in exchange for the California Bond Fund Shares and
the assumption of liabilities of the California Intermediate Fund.
(c) No gain or loss will be recognized by the California Bond
Fund upon the receipt of the assets and the assumption of liabilities of the
California Intermediate Fund solely in exchange for the California Bond Fund
Shares.
(d) The basis of the assets of the California Intermediate
Fund acquired by the California Bond Fund will be, in each instance, the same as
the basis of those assets in the hands of the California Intermediate Fund
immediately prior to the transfer.
(e) The holding period of the assets of the California
Intermediate Fund in the hands of the California Bond Fund will include the
period during which those assets were held by the California Intermediate Fund.
(f) No gain or loss will be recognized by the California
Intermediate Fund Shareholders upon the exchange of all of their California
Intermediate Fund Shares solely for the California Bond
Fund Shares as part of the transaction.
(g) The basis of the California Bond Fund Shares to be
received by the California Intermediate Fund Shareholders will be the same as
the basis of the California Intermediate Fund Shares surrendered in exchange
therefor.
(h) The holding period of the California Bond Fund Shares to
be received by the California Intermediate Fund Shareholders will include the
period during which the California Intermediate Fund Shares surrendered in
exchange therefor were held, provided the California Intermediate Fund Shares
constituted capital assets in their hands on the date of the exchange.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CALIFORNIA
BOND FUND AND THE CALIFORNIA INTERMEDIATE FUND
The obligations of the California Intermediate Fund hereunder are at the option
of the California Bond Fund, and the obligations of the California Bond Fund
hereunder are at the option of the California Intermediate Fund, each subject to
the further conditions that on or before the Closing Date:
11
<PAGE> 125
8.1 No action, suit or other proceeding shall be pending before any
court or governmental agency in which it is sought to restrain or prohibit, or
obtain damages or other relief in connection with, this Agreement or the
transactions contemplated herein;
8.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Securities Exchange Commission and state Blue Sky and securities
authorities, including "no-action" positions of such federal or state
authorities) deemed necessary by the California Bond Fund or the California
Intermediate Fund to permit consummation in all material respects of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the California Bond Fund
or the California Intermediate Fund;
8.3 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
9. RESPONSIBILITY FOR FEES AND EXPENSES
9.1 The California Bond Fund and the California Intermediate Fund shall
each be responsible for their own expenses in connection with this Agreement,
although each may be reimbursed by their investment adviser for all or a portion
of such expenses incurred in connection with entering into and carrying out of
the provisions of this Agreement, whether or not the transactions contemplated
are consummated.
10. ENTIRE AGREEMENT, SURVIVAL OR WARRANTIES
10.1 The California Bond Fund and the California Intermediate Fund
agree that neither party has made any representation, warranty or covenant with
respect to the transactions contemplated herein that are not set forth herein
and that this Agreement constitutes the entire agreement between the parties
with respect to such transactions.
10.2 The Representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder for a
period of one year from the Closing Date and shall then terminate.
12
<PAGE> 126
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
California Bond Fund and the California Intermediate Fund. In addition, either
the California Bond Fund or the California Intermediate Fund may at its option
terminate this Agreement at or prior to the Closing Date because:
(a) of a material breach by the other of any representation,
warranty or agreement contained herein to be performed at or prior to the
Closing Date; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of either the California Bond Fund or the California
Intermediate Fund, or their respective directors or officers, to the other party
or its directors or officers, but each shall bear, except as otherwise provided
in paragraph 9.1, the expenses incurred by them incidental to the preparation
and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the California
Intermediate Fund and the California Bond Fund; provided, however, that
following the meeting of the California Intermediate Fund Shareholders pursuant
to paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the California Bond Fund
Shares to be issued to the California Intermediate Fund Shareholders under this
Agreement to the detriment of such shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of California, except as to matters relating to the
internal organization of the California Intermediate Fund and the California
Bond Fund, and as to such matters shall be governed by the laws of the state of
Maryland.
13
<PAGE> 127
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President and attested to by its Secretary.
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS CALIFORNIA MUNICIPAL BOND FUND
By:
- ------------------------------- ---------------------------------
Secretary Group Senior Vice President
Attest: ATLAS ASSETS, INC., on behalf of
ATLAS CALIFORNIA INSURED
INTERMEDIATE MUNICIPAL FUND
By:
- ------------------------------- ---------------------------------
Secretary Group Senior Vice President
14
<PAGE> 128
Appendix B
Pro Forma Statements of Assets and Liabilities June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate California Municipal Pro Forma Pro Forma
ASSETS: Municipal Fund Bond Fund Adjustments Combined
------------------ ------------------- ----------- ---------
<S> <C> <C> <C> <C>
Investment in securities, at identified cost $ 18,164,877 $ 167,151,352 $ 185,316,229
============= ============= =============
Investment in securities, at value $ 18,678,369 $ 177,294,905 $ 195,973,274
Cash 33,881 54,809 88,690
Receivables for:
Sales of Fund's shares 0 58,858 58,858
Accrued interest and dividends 334,030 3,221,619 3,555,649
Unamortized organization costs 1,436 1,436 2,872
------------- ------------- -------------
Total assets 19,047,716 180,631,627 199,679,343
------------- ------------- -------------
LIABILITIES:
Payables for:
Redemptions of Fund's shares 0 33,982 33,982
Dividends 18,665 215,803 234,468
Accrued expenses 20,923 213,588 $ (11,980)(a) 222,531
------------ ------------- ------------- ------------
Total liabilities 39,588 463,373 (11,980) 490,981
------------ ------------- ------------- ------------
NET ASSETS $ 19,008,128 $ 180,168,254 $ 11,980 $199,188,362
============ ============= ============= ============
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) $ 513,492 $10,143,553 $ 10,657,045
Accumulated net realized gain (loss) (391,775) (205,526) (597,301)
Undistributed net investment income 0 0 11,980 (a) 11,980
Paid in capital 18,886,411 170,230,227 189,116,638
------------ ------------- ------------- ------------
NET ASSETS $ 19,008,128 $ 180,168,254 $ 11,980 $199,188,362
============ ============= ============= ============
NET ASSET VALUE PER SHARE:
Class A
Shares outstanding 1,773,125 15,609,822 (118,285)(b) 17,264,662
Net asset value per share $ 10.41 $ 11.15 $ 11.15
Maximum offering price per share
(net asset value plus sales charge
of 3.0%) $ 10.73 $ 11.49 $ 11.49
Class B
Shares outstanding 53,526 550,257 (3,646)(b) 600,137
Net asset value per share and maximum
offering price $ 10.40 $ 11.16 $ 11.16
CAPITAL SHARES AUTHORIZED: 25,000,000 50,000,000 50,000,000
============ ============= ============
</TABLE>
(a) Reflects reduction in expenses due to elimination of duplicative services
and adjustments to expense waivers.
(b) Reflects net new shares issued.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 129
Pro Forma Statements of Operations For the Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
California Insured California Municipal Pro Forma Pro Forma
Intermediate Bond Fund Adjustments Combined
Municipal Fund
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 487,775 $ 5,204,722 $ 5,692,497
Dividends 0 0 0
----------- ------------ -----------
Total income 487,775 5,204,722 5,692,497
----------- ------------ -----------
Expenses:
Management fees 54,521 493,880 548,401
12b-1 fees:
Class A 24,070 217,447 241,517
Class B 2,136 21,133 23,269
Transfer agency fees and expenses 15,214 54,352 $ (13,841)(a) 55,725
Custodian fees and expenses 9,438 53,229 (8,565)(a) 54,102
Directors' fees 442 3,996 4,438
Registration fees 882 1,193 (881)(a) 1,194
Accounting and legal fees 7,094 7,859 (7,000)(a) 7,953
Printing and postage 973 7,735 8,708
Other 492 7,709 380 (a) 8,581
----------- ------------ ------------ -----------
Gross expenses 115,262 868,533 (29,907) 953,888
Waiver of management fees 0 0 0
Waiver of 12b-1 fees:
Class A (9,705) 0 9,705 (a) 0
Class B 0 0 0
Expense reimbursement (8,227) (8,540) 8,222 (a) (8,545)
----------- ------------ ------------ -----------
Net expenses 97,330 859,993 (11,980) 945,343
----------- ------------ ------------ -----------
Net investment income 390,445 4,344,729 11,980 4,747,154
----------- ------------ ------------ -----------
REALIZED GAIN (LOSS) AND UNREALIZED
APPRECIATION (DEPRECIATION) ON INVESTMENTS:
Realized gain (loss):
Proceeds from sales 3,494,737 16,347,264 19,842,001
Cost of securities sold (3,437,157) (15,798,480) (19,235,637)
----------- ------------ -----------
Net realized gain 57,580 548,784 606,364
----------- ------------ -----------
Unrealized appreciation (depreciation):
Beginning of period 496,510 10,669,890 11,166,400
End of period 513,492 10,143,553 10,657,045
---------- ------------ -----------
Unrealized appreciation (depreciation) 16,982 (526,337) (509,355)
---------- ------------ -----------
Net realized gain and unrealized
appreciation (depreciation) on
investments 74,562 22,447 97,009
---------- ------------ -----------
Net increase in net assets
resulting from operations $ 465,007 $ 4,367,176 $ 11,980 $ 4,844,163
=========== ============ ============ ===========
</TABLE>
(a) Reflects reduction in expenses due to elimination of duplicative services
and adjustments to expense waivers.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 130
Pro Forma Statements of Operations For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
California Insured California Municipal Pro Forma Pro Forma
Intermediate Bond Fund Adjustments Combined
Municipal Fund
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 1,042,841 $ 10,575,595 $ 11,618,436
Dividends 0 0 0
------------ ------------ ------------
Total income 1,042,841 10,575,595 11,618,436
------------ ------------ ------------
Expenses:
Management fees 120,119 1,006,052 1,126,171
12b-1 fees:
Class A 53,335 446,620 499,955
Class B 3,793 32,030 35,823
Transfer agency fees and expenses 35,293 125,356 $ (35,293)(a) 125,356
Custodian fees and expenses 21,766 128,460 (20,794)(a) 129,432
Directors' fees 1,103 9,216 10,319
Registration fees 1,392 1,392 (1,392)(a) 1,392
Accounting and legal fees 12,868 14,842 (12,599)(a) 15,111
Printing and postage 2,840 20,540 23,380
Other 2,633 5,025 (895)(a) 6,763
------------ ------------ ------------ ------------
Gross expenses 255,142 1,789,533 (70,973) 1,973,702
Waiver of management fees (5,620) 0 5,620 (a) 0
Waiver of 12b-1 fees:
Class A (50,962) 0 50,962 (a) 0
Class B (372) 0 372 (a) 0
Expense reimbursement (15,890) (16,155) 15,807 (a) (16,238)
------------ ------------ ------------ ------------
Net expenses 182,298 1,773,378 1,788 1,957,464
------------ ------------ ------------ ------------
Net investment income 860,543 8,802,217 (1,788) 9,660,972
------------ ------------ ------------ ------------
REALIZED GAIN (LOSS) AND UNREALIZED
APPRECIATION (DEPRECIATION) ON INVESTMENTS:
Realized gain (loss):
Proceeds from sales 13,880,683 53,883,958 67,764,641
Cost of securities sold (13,734,258) (52,715,116) (66,449,374)
------------ ------------ ------------
Net realized gain 146,425 1,168,842 1,315,267
----------- ------------ ------------
Unrealized appreciation (depreciation):
Beginning of period 734,722 13,639,556 14,374,278
End of period 496,510 10,669,890 11,166,400
----------- ------------ ------------
Unrealized appreciation (depreciation) (238,212) (2,969,666) (3,207,878)
----------- ------------ ------------
Net realized gain and unrealized
appreciation (depreciation) on
investments (91,787) (1,800,824) (1,892,611)
----------- ------------ ------------
Net increase in net assets
resulting from operations $ 768,756 $ 7,001,393 ($ 1,788) $ 7,768,361
============ ============ ============ ============
</TABLE>
(a) Reflects effect to expenses due to elimination of duplicative services and
adjustments to expense waivers.
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 131
Notes to Pro Forma Financial Statements
1. General
The accompanying pro forma financial statements present the effect of the
proposed acquisition of Atlas California Insured Intermediate Municipal Fund
(the Fund) by Atlas California Municipal Bond Fund (ACMBF).
Under the terms of the Plan of Reorganization, the combination of the Fund and
ACMBF will be a tax-free business combination and accordingly will be accounted
for by a method of accounting for tax free mergers of investment companies
(sometimes referred to as the pooling without restatement method). The
acquisition would be accomplished by the transfer of all of the assets and
liabilities of the Fund in exchange solely for shares of ACMBF at net asset
value. The Pro Forma Statements of Assets and Liabilities of the Fund and ACMBF
have been combined as of June 30, 1997, and the related Pro Forma Statements of
Operations have been combined for the year ended December 31, 1996 and for the
six-month period ended June 30, 1997.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of the Fund and ACMBF
which are included in their respective annual reports dated December 31, 1996
and their semi-annual reports dated June 30, 1997.
2. Significant Accounting Policies
Atlas Assets, Inc., a series fund comprised of 15 funds including the Fund and
ACMBF, is a Maryland corporation, registered under the Investment Company Act of
1940, as amended, as an open-end management investment company.
The significant accounting policies consistently followed by the ACMBF are (a)
securities transactions are accounted for on the trade date (b) securities are
valued daily by pricing services (c) interest income and estimated expenses are
accrued daily (d) realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and federal income tax purposes (e) direct expenses are charged to each fund and
then allocated amongst the share classes or charged to the responsible share
class; management fees and common fund expenses are allocated on the basis of
relative net assets of the share classes (f) dividends and distributions to
shareholders are recorded on the ex-dividend date and (g) ACMBF intends to
comply with the requirements of the Internal Revenue Code pertaining to
regulated investment companies and to make the required distributions to
shareholders; therefore, no provision for federal income taxes has been made.
3. Pro Forma Adjustments
The accompanying pro forma financial statements reflect changes in fund shares
as if the merger had taken place on June 30, 1997. Adjustments are shown to
expenses for duplicated services that would not have been incurred if the merger
had taken place on January 1, 1996 and for the effect of expense waivers in
place during the period.
4. Transactions with Affiliated Persons
Atlas Advisers, Inc. is the investment manager of the Fund and ACMBF and
supervises the services of the sub-adviser to the funds. The Fund and ACMBF pay
Atlas Advisers, Inc. a management fee calculated at an annual rate of 0.55% on
the first $500 million of aggregate average daily net assets and 0.50% on the
aggregate average daily net assets in excess of $500 million. All fees are
calculated daily and paid monthly.
Atlas Securities, Inc. is the distributor and principal underwriter of the Fund
and ACMBF. Atlas Securities, Inc. receives a commission for sales of Class A
shares and redemptions of Class B shares of the Fund and ACMBF. Under separate
Class A and Class B Distribution Plans, each fund pays Atlas Securities, Inc. up
to a maximum of 0.25% per year of its average daily Class A net assets and up to
0.75% per year of its average daily Class B net assets.
5. Investments
At June 30, 1997, the Fund and ACMBF had net capital loss carryovers of
approximately $449,000 and $723,000, respectively, available to offset future
capital gains. To the extent that these carryover losses can be used to offset
capital gains, ACMBF intends not to make distributions from capital gains while
a capital loss carryover remains.
<PAGE> 132
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
Bonds - 96.99%
Acalanes Unified High School District, Series C, FGIC Insured,
6.25% due 08/01/14 $ - $ -
6.25% due 08/01/15 - -
Alameda County, COP, BIG Insured, 7.25% due 12/01/08 - -
Anaheim Public Financing Authority, Lease Revenue Public Improvements Project,
Series A, FSA Insured, 5.00% due 03/01/37 - -
Benicia Unified School District, Series A, AMBAC Insured, 6.85% due 08/01/16 - -
Brea, Public Finance Authority Revenue Tax Allocation, Redevelopment Project AB,
Pre-Refunded, Series A, MBIA Insured, 6.75% due 08/01/22 - -
Un-Refunded, Series A, MBIA Insured, 6.75% due 08/01/22 - -
Burbank, Glendale, Pasadena Airport Authority , Airport Revenue Refunding,
AMBAC Insured, 6.40% due 06/01/10 - -
Calleguas Municipal Water District, COP, System Improvement Project,
AMBAC Insured, 6.25% due 07/01/11 - -
Central Coast Water Authority, Revenue Refunding, State Water Project, Regional
Facilities, Series A, AMBAC Insured, 5% due 10/01/22 - -
Contra Costa, Transportation Authority Sales Tax Revenue, Series A,
FGIC Insured, 6% due 03/01/08 500,000 546,980
Contra Costa Water District, Water Treatment Revenue Refunding, Series G,
MBIA Insured, 5.90% due 10/01/08 - -
Cotati-Rohnert Park Unified School District, Series A, FGIC Insured,
6% due 08/01/14 - -
6% due 08/01/15 - -
Cupertino Unified School District, Series A, FGIC Insured, 6.75% due 08/01/05 500,000 571,155
Elk Grove Unified School District, Special Tax Refunding, Community Facilities
District 1, AMBAC Insured,
6.50% due 12/01/06 600,000 682,878
6.50% due 12/01/24 - -
Encina Financing Joint Powers Authority, Wastewater Revenue, Series A,
AMBAC Insured, 5.50% due 08/01/06 400,000 423,424
Folsom School Facilities Project, Series B, FGIC Insured,
6% due 08/01/98 425,000 434,958
6% due 08/01/99 225,000 233,912
Fresno Water System Revenue, Water Remediation Project, Series A, FGIC Insured,
7.50% due 06/01/04 500,000 585,885
7.50% due 06/01/05 715,000 845,609
Kern High School District Refunding, MBIA Insured
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
Bonds - 96.99%
Acalanes Unified High School District, Series C, FGIC Insured,
6.25% due 08/01/14 $ 500,000 $522,640 $ 522,640
6.25% due 08/01/15 500,000 522,640 522,640
Alameda County, COP, BIG Insured, 7.25% due 12/01/08 1,000,000 1,112,830 1,112,830
Anaheim Public Financing Authority, Lease Revenue Public Improvements Project,
Series A, FSA Insured, 5.00% due 03/01/37 4,000,000 3,595,760 3,595,760
Benicia Unified School District, Series A, AMBAC Insured, 6.85% due 08/01/16 1,000,000 1,090,110 1,090,110
Brea, Public Finance Authority Revenue Tax Allocation, Redevelopment Project AB,
Pre-Refunded, Series A, MBIA Insured, 6.75% due 08/01/22 1,590,000 1,764,375 1,764,375
Un-Refunded, Series A, MBIA Insured, 6.75% due 08/01/22 660,000 716,536 716,536
Burbank, Glendale, Pasadena Airport Authority , Airport Revenue Refunding,
AMBAC Insured, 6.40% due 06/01/10 2,000,000 2,135,040 2,135,040
Calleguas Municipal Water District, COP, System Improvement Project,
AMBAC Insured, 6.25% due 07/01/11 1,680,000 1,830,881 1,830,881
Central Coast Water Authority, Revenue Refunding, State Water Project, Regional
Facilities, Series A, AMBAC Insured, 5% due 10/01/22 1,250,000 1,153,925 1,153,925
Contra Costa, Transportation Authority Sales Tax Revenue, Series A,
FGIC Insured, 6% due 03/01/08 - - 546,980
Contra Costa Water District, Water Treatment Revenue Refunding, Series G,
MBIA Insured, 5.90% due 10/01/08 3,600,000 3,857,184 3,857,184
Cotati-Rohnert Park Unified School District, Series A, FGIC Insured,
6% due 08/01/14 845,000 871,136 871,136
6% due 08/01/15 905,000 932,992 932,992
Cupertino Unified School District, Series A, FGIC Insured, 6.75% due 08/01/05 - - 571,155
Elk Grove Unified School District, Special Tax Refunding, Community Facilities
District 1, AMBAC Insured,
6.50% due 12/01/06 - - 682,878
6.50% due 12/01/24 1,500,000 1,718,040 1,718,040
Encina Financing Joint Powers Authority, Wastewater Revenue, Series A,
AMBAC Insured, 5.50% due 08/01/06 - - 423,424
Folsom School Facilities Project, Series B, FGIC Insured,
6% due 08/01/98 - - 434,958
6% due 08/01/99 - - 233,912
Fresno Water System Revenue, Water Remediation Project, Series A, FGIC Insured,
7.50% due 06/01/04 - - 585,885
7.50% due 06/01/05 - - 845,609
Kern High School District Refunding, MBIA Insured
</TABLE>
<PAGE> 133
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- -------
<S> <C> <C>
Series A, 6% due 08/01/04 500,000 543,475
Series 1990-C, 6.25% due 08/01/12 - -
Lincoln Unified School District, Special Tax Refunding, Community Facilities District 1,
AMBAC Insured, 6% due 09/01/06 580,000 634,247
Long Beach Harbor Revenue, AMT, MBIA Insured, 5.25% due 05/15/25 - -
Los Angeles, Harbor Development Revenue, 7.60% due 10/01/18 - -
Los Angeles, Wastewater System Revenue Refunding,
Series A, MBIA Insured, 5.875% due 06/01/24 - -
Series B, AMBAC Insured, 5.90% due 06/01/03 450,000 482,643
Series B, AMBAC Insured, 6.25% due 06/01/12 - -
Series C, AMBAC Insured, 7% due 06/01/11 - -
Series D, MBIA Insured, 6.70% due 12/01/21 - -
Los Angeles Convention and Exhibition Center Authority Refunding,
COP Refunding, AMBAC Insured, 7% due 08/15/08 - -
Los Angeles County, Metropolitan Transportation Authority Sales Tax Revenue,
Proposition C, AMBAC Insured,
Second Series A, 5.90% due 07/01/06 500,000 544,780
Second Series B, 8% due 07/01/00 500,000 552,485
Los Angeles County, Public Works Financing Authority, Lease Revenue Refunding,
Series B, MBIA Insured, 5.25% due 09/01/15 - -
AMBAC Insured, 6% due 12/01/07 750,000 819,218
Los Angeles County, Transportation Commission, Sales Tax Revenue, Proposition C,
Second Series A, MBIA Insured, 6.25% due 07/01/13 - -
Series B, AMBAC Insured, 6.50% due 07/01/13 - -
Los Angeles Department of Water and Power, Electric Plant Revenue,
7.10% due 01/15/31 - -
7.125% due 05/15/30 - -
MSR Public Power Agency, San Juan Project Revenue,
Series E, MBIA Insured, 6.75% due 07/01/11 - -
Manhattan Beach Unified School District, Series A,
FGIC Insured, 0% due 09/01/16 - -
Marin Municipal Water District Water Revenue, MBIA Insured, 5.65% due 07/01/23 - -
Maritime Infrastructure Authority, Airport Revenue, San Diego University, Port
District Airport, AMT, AMBAC Insured, 5% due 11/01/20 - -
Metropolitan Water District, Southern California Waterworks Revenue,
5.50% due 07/01/19 - -
Series C, 5% due 07/01/27 - -
Series G, 6.50% due 03/01/12 - -
Mountain View Capital Improvements Financing Authority Revenue,
City Hall Community Theater, MBIA Insured, 6.25% due 08/01/12 - -
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
Series A, 6% due 08/01/04 - - 543,475
Series 1990-C, 6.25% due 08/01/12 1,200,000 1,329,216 1,329,216
Lincoln Unified School District, Special Tax Refunding, Community Facilities
District 1, AMBAC Insured, 6% due 09/01/06 - - 634,247
Long Beach Harbor Revenue, AMT, MBIA Insured, 5.25% due 05/15/25 2,000,000 1,864,380 1,864,380
Los Angeles, Harbor Development Revenue, 7.60% due 10/01/18 140,000 173,977 173,977
Los Angeles, Wastewater System Revenue Refunding,
Series A, MBIA Insured, 5.875% due 06/01/24 2,250,000 2,288,115 2,288,115
Series B, AMBAC Insured, 5.90% due 06/01/03 - - 482,643
Series B, AMBAC Insured, 6.25% due 06/01/12 2,500,000 2,668,250 2,668,250
Series C, AMBAC Insured, 7% due 06/01/11 1,000,000 1,067,430 1,067,430
Series D, MBIA Insured, 6.70% due 12/01/21 3,000,000 3,292,530 3,292,530
Los Angeles Convention and Exhibition Center Authority Refunding,
COP Refunding, AMBAC Insured, 7% due 08/15/08 500,000 549,970 549,970
Los Angeles County, Metropolitan Transportation Authority Sales Tax Revenue,
Proposition C, AMBAC Insured,
Second Series A, 5.90% due 07/01/06 - - 544,780
Second Series B, 8% due 07/01/00 - - 552,485
Los Angeles County, Public Works Financing Authority, Lease Revenue Refunding,
Series B, MBIA Insured, 5.25% due 09/01/15 1,000,000 972,550 972,550
AMBAC Insured, 6% due 12/01/07 - - 819,218
Los Angeles County, Transportation Commission, Sales Tax Revenue, Proposition C,
Second Series A, MBIA Insured, 6.25% due 07/01/13 8,980,000 9,599,350 9,599,350
Series B, AMBAC Insured, 6.50% due 07/01/13 1,750,000 1,889,457 1,889,457
Los Angeles Department of Water and Power, Electric Plant Revenue,
7.10% due 01/15/31 500,000 544,975 544,975
7.125% due 05/15/30 1,875,000 2,029,669 2,029,669
MSR Public Power Agency, San Juan Project Revenue,
Series E, MBIA Insured, 6.75% due 07/01/11 3,000,000 3,253,500 3,253,500
Manhattan Beach Unified School District, Series A,
FGIC Insured, 0% due 09/01/16 2,690,000 922,778 922,778
Marin Municipal Water District Water Revenue, MBIA Insured, 5.65% due 07/01/23 2,000,000 1,978,500 1,978,500
Maritime Infrastructure Authority, Airport Revenue, San Diego University, Port
District Airport, AMT, AMBAC Insured, 5% due 11/01/20 9,500,000 8,635,500 8,635,500
Metropolitan Water District, Southern California Waterworks Revenue,
5.50% due 07/01/19 2,500,000 2,431,650 2,431,650
Series C, 5% due 07/01/27 2,000,000 1,831,980 1,831,980
Series G, 6.50% due 03/01/12 2,500,000 2,611,600 2,611,600
Mountain View Capital Improvements Financing Authority Revenue,
City Hall Community Theater, MBIA Insured, 6.25% due 08/01/12 1,500,000 1,602,735 1,602,735
</TABLE>
<PAGE> 134
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
New Haven Unified School District Refunding, MBIA Insured,
5.75% due 08/01/11 - -
Northern California Power Agency Public Power Revenue Refunding, Hydroelectric
Project 1, Series A,
AMBAC Insured, 7.50% due 07/01/23 - -
MBIA Insured, 6.25% due 07/01/12 - -
Oakland Redevelopment Agency, Revenue Refunding, Pension Financing,
Series A, FGIC Insured, 7.60% due 08/01/21 - -
Orange County, Sanitation Districts, COP Numbers 1, 2, 3, 5, 6, 7, and 11,
Series B, FGIC Insured, 6% due 08/01/16 - -
Palo Alto Unified School District, Series B, 5.375% due 08/01/18 - -
Pleasanton Unified School District, Series F, FGIC Insured,
6.25% due 08/01/14 - -
6.25% due 08/01/15 - -
6.25% due 08/01/16 - -
Port of Oakland, Port Revenue, Series E, AMT, MBIA Insured, 6% due 11/01/02 500,000 534,705
Puerto Rico, Electric Power Authority Power Revenue, MBIA Insured,
Series W, 6.50% due 07/01/05 250,000 281,325
Series Y, 6.50% due 07/01/06 500,000 565,840
Puerto Rico, Public Buildings Authority Revenue, Gtd. Government Facilities,
Series A, AMBAC Insured,
6.25% due 07/01/14 - -
6.75% due 07/01/04 700,000 793,261
Puerto Rico Commonwealth Refunding, MBIA Insured, 6.25% due 07/01/12 - -
Redding Joint Powers Financing Authority, Electric Systems Revenue Refunding,
Series A, MBIA Insured, 5.25% due 06/01/15 - -
Riverside County Transportation Commission, Sales Tax Revenue, Series A,
AMBAC Insured, 6.625% due 06/01/02 1,000,000 1,101,830
FGIC Insured, 6% due 06/01/09 400,000 436,704
Riverside Electric Revenue, 6% due 10/01/15 - -
Rural Home Mortgage Financing Authority, Single Family Revenue Refunding,
Series C, AMT, 7.50% due 08/01/27 - -
Sacramento Municipal Utility District, Electric Revenue Refunding, Series Z,
FGIC Insured, 6% due 07/01/02 475,000 509,675
6.45% due 07/01/10 - -
San Bernardino County, COP, Medical Center Financing Project,
MBIA Insured, 5% due 08/01/28 - -
San Bernardino County Transportation Authority Sales Tax Revenue,
Series A, FGIC Insured, 6% due 03/01/10 - -
San Bernardino Health Care System Revenue, Sisters of Charity,
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
New Haven Unified School District Refunding, MBIA Insured,
5.75% due 08/01/11 925,000 955,340 955,340
Northern California Power Agency Public Power Revenue Refunding, Hydroelectric
Project 1, Series A,
AMBAC Insured, 7.50% due 07/01/23 50,000 62,265 62,265
MBIA Insured, 6.25% due 07/01/12 1,500,000 1,602,765 1,602,765
Oakland Redevelopment Agency, Revenue Refunding, Pension Financing,
Series A, FGIC Insured, 7.60% due 08/01/21 1,250,000 1,319,862 1,319,862
Orange County, Sanitation Districts, COP Numbers 1, 2, 3, 5, 6, 7, and 11,
Series B, FGIC Insured, 6% due 08/01/16 2,000,000 2,163,620 2,163,620
Palo Alto Unified School District, Series B, 5.375% due 08/01/18 1,250,000 1,230,575 1,230,575
Pleasanton Unified School District, Series F, FGIC Insured,
6.25% due 08/01/14 570,000 600,244 600,244
6.25% due 08/01/15 610,000 642,367 642,367
6.25% due 08/01/16 650,000 684,489 684,489
Port of Oakland, Port Revenue, Series E, AMT, MBIA Insured, 6% due 11/01/02 - - 534,705
Puerto Rico, Electric Power Authority Power Revenue, MBIA Insured,
Series W, 6.50% due 07/01/05 - - 281,325
Series Y, 6.50% due 07/01/06 - - 565,840
Puerto Rico, Public Buildings Authority Revenue, Gtd. Government Facilities,
Series A, AMBAC Insured,
6.25% due 07/01/14 1,000,000 1,110,360 1,110,360
6.75% due 07/01/04 - - 793,261
Puerto Rico Commonwealth Refunding, MBIA Insured, 6.25% due 07/01/12 1,000,000 1,111,760 1,111,760
Redding Joint Powers Financing Authority, Electric Systems Revenue Refunding,
Series A, MBIA Insured, 5.25% due 06/01/15 2,000,000 1,963,480 1,963,480
Riverside County Transportation Commission, Sales Tax Revenue, Series A,
AMBAC Insured, 6.625% due 06/01/02 - - 1,101,830
FGIC Insured, 6% due 06/01/09 - - 436,704
Riverside Electric Revenue, 6% due 10/01/15 1,500,000 1,531,365 1,531,365
Rural Home Mortgage Financing Authority, Single Family Revenue Refunding,
Series C, AMT, 7.50% due 08/01/27 1,205,000 1,340,791 1,340,791
Sacramento Municipal Utility District, Electric Revenue Refunding,
Series Z, FGIC Insured, 6% due 07/01/02 - - 509,675
6.45% due 07/01/10 2,500,000 2,687,125 2,687,125
San Bernardino County, COP, Medical Center Financing Project,
MBIA Insured, 5% due 08/01/28 1,500,000 1,357,890 1,357,890
San Bernardino County Transportation Authority Sales Tax Revenue,
Series A, FGIC Insured, 6% due 03/01/10 2,500,000 2,661,675 2,661,675
San Bernardino Health Care System Revenue, Sisters of Charity,
</TABLE>
<PAGE> 135
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
Series A, 7% due 07/01/21 - -
San Diego Public Safety Communication Project, 6.50% due 07/15/09 - -
San Francisco Bay Area Rapid Transit District, Sales Tax Revenue, FGIC Insured,
6.20% due 07/01/01 750,000 803,025
San Francisco City and County,
Series 95 A & B, FGIC Insured, 5.50% due 06/15/13 - -
Series E, 6.50% due 06/15/11 - -
San Francisco City and County Airport Commission, International Airport Revenue
Refunding, Second Series,
Issue 1, AMBAC Insured, 6.30% due 05/01/11 - -
Issue 1, AMBAC Insured, 6.50% due 05/01/13 - -
Issue 12, FGIC Insured, 5.625% due 05/01/06 500,000 529,385
San Francisco City and County Public Utilities Commission Water Revenue
Refunding, Series A, - -
6.50% due 11/01/17 - -
San Francisco City and County Sewer Revenue Refunding, AMBAC Insured,
6% due 10/01/11 - -
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
0% due 01/01/07 - -
0% due 01/01/09 - -
San Jose Redevelopment Agency Tax Allocation, Merged Area Redevelopment Project
Refunding, MBIA Insured, 5% due 08/01/20 - -
Santa Barbara, Revenue COP, Retirement Services, 5.75% due 08/01/20 - -
Santa Clara Electric Revenue, Series A, MBIA Insured, 6.25% due 07/01/19 - -
Santa Clara Local Government Finance Authority Revenue Refunding, BIG Insured,
7.25% due 02/01/13 - -
Santa Margarita, Dana Point Authority Revenue Refunding, Improvement District 3,
3A, 4, and 4A, Series B, MBIA Insured,
7.25% due 08/01/07 500,000 597,450
7.25% due 08/01/13 - -
Santa Monica, Malibu Unified School District, Public School Facilities
Reconstruction Projects A, 01/11 - -
Saugus Unified School District, Series A, MBIA Insured, 5.65% due 09/01/11 - -
Southern California Public Power Authority Power Project Revenue Refunding,
Hydroelectric Hoover Uprating Project, Series A, 6.625% due 10/01/05 - -
Southern California Public Power Authority Transmission Project Revenue Refunding,
Southern Transportation System, 5.75% due 07/01/10 - -
Southern California Rapid Transit District, COP, Workers Compensation Fund,
MBIA Insured, 6% due 07/01/10 - -
State, Refunding, AMBAC Insured, 5.25% due 06/01/21 - -
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
Series A, 7% due 07/01/21 3,230,000 3,600,772 3,600,772
San Diego Public Safety Communication Project, 6.50% due 07/15/09 1,525,000 1,737,463 1,737,463
San Francisco Bay Area Rapid Transit District, Sales Tax Revenue, FGIC Insured,
6.20% due 07/01/01 - - 803,025
San Francisco City and County,
Series 95 A & B, FGIC Insured, 5.50% due 06/15/13 1,145,000 1,157,458 1,157,458
Series E, 6.50% due 06/15/11 2,220,000 2,341,456 2,341,456
San Francisco City and County Airport Commission, International Airport Revenue
Refunding, Second Series,
Issue 1, AMBAC Insured, 6.30% due 05/01/11 3,000,000 3,222,090 3,222,090
Issue 1, AMBAC Insured, 6.50% due 05/01/13 2,000,000 2,170,500 2,170,500
Issue 12, FGIC Insured, 5.625% due 05/01/06 - - 529,385
San Francisco City and County Public Utilities Commission Water Revenue Refunding,
Series A,6% due 11/01/15 1,000,000 1,029,280 1,029,280
6.50% due 11/01/17 1,000,000 1,104,840 1,104,840
San Francisco City and County Sewer Revenue Refunding, AMBAC Insured,
6% due 10/01/11 2,280,000 2,394,433 2,394,433
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
0% due 01/01/07 1,000,000 837,100 837,100
0% due 01/01/09 1,000,000 848,160 848,160
San Jose Redevelopment Agency Tax Allocation, Merged Area Redevelopment Project
Refunding, MBIA Insured, 5% due 08/01/20 2,500,000 2,297,775 2,297,775
Santa Barbara, Revenue COP, Retirement Services, 5.75% due 08/01/20 2,000,000 1,974,720 1,974,720
Santa Clara Electric Revenue, Series A, MBIA Insured, 6.25% due 07/01/19 3,750,000 4,003,687 4,003,687
Santa Clara Local Government Finance Authority Revenue Refunding, BIG Insured,
7.25% due 02/01/13 250,000 267,115 267,115
Santa Margarita, Dana Point Authority Revenue Refunding, Improvement District 3,
3A, 4, and 4A, Series B, MBIA Insured,
7.25% due 08/01/07 - - 597,450
7.25% due 08/01/13 2,000,000 2,416,800 2,416,800
Santa Monica, Malibu Unified School District, Public School Facilities ,
Reconstruction Projects A,6.90% due 08/01/11 500,000 550,080 550,080
Saugus Unified School District, Series A, MBIA Insured, 5.65% due 09/01/11 2,035,000 2,092,713 2,092,713
Southern California Public Power Authority Power Project Revenue Refunding,
Hydroelectric Hoover Uprating Project, Series A, 6.625% due 10/01/05 600,000 655,308 655,308
Southern California Public Power Authority Transmission Project Revenue Refunding,
Southern Transportation System, 5.75% due 07/01/10 2,000,000 2,020,140 2,020,140
Southern California Rapid Transit District, COP, Workers Compensation Fund,
MBIA Insured, 6% due 07/01/10 1,000,000 1,048,180 1,048,180
State, Refunding, AMBAC Insured, 5.25% due 06/01/21 1,000,000 957,940 957,940
</TABLE>
<PAGE> 136
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
State, Various Purpose, 6.125% due 10/01/11 - -
State Department of Water Resources Central Valley Project Revenue,
Series J-2, 6.125% due 12/01/13 - -
Series J-3, 5.50% due 12/01/23 - -
Series O, 5% due 12/01/15 - -
Series O, 4.75% due 12/01/25 - -
State Educational Facilities Authority Revenue Refunding,
Pepperdine University, MBIA Insured, 6.10% due 03/15/14 - -
Santa Clara University, MBIA Insured, 5.75% due 09/01/18 - -
State Health Facilities Financing Authority Revenue Refunding,
Adventist Health System West, Series B, MBIA Insured, 6.40% due 03/01/02 - -
Sutter Health Systems, Series A, AMBAC-TCRS Insured, 6.70% due 01/01/13 - -
State Housing Finance Agency Revenue, Home Mortgage, AMT, MBIA Insured,
Series L, 5.55% due 08/01/05 800,000 817,832
State Housing Finance Agency Revenue Home Mortgage,
Series B, AMT, AMBAC Insured, 6.05% due 08/01/16 - -
Series H, AMT, 6.15% due 08/01/16 - -
Series K, MBIA Insured, 6.15% due 08/01/16 - -
Series Q, MBIA Insured, 5.85% due 08/01/16 - -
State Pollution Control Financing Authority, Pollution Control Revenue, MBIA Insured,
Pacific Gas & Electric Co., Series B, 5.85% due 12/01/23 - -
Southern California Edison, Series A, AMT, 6.90% due 09/01/06 410,000 435,424
Southern California Edison, AMT, 6.90% due 12/01/17 - -
State Public Works Board, Lease Revenue, Department of Corrections, AMBAC Insured,
Series A, 5.25% due 01/01/21 - -
Tri-City Hospital District Revenue Refunding, Series A, MBIA Insured 6% due 02/15/03 700,000 750,547
Truckee, Donner Public Utility District, COP, Water System Improvement Project,
MBIA Insured, 6.75% due 11/15/21 - -
Turlock Irrigation District Revenue Refunding, Series A, MBIA Insured,
5.90% due 01/01/02 80,000 84,988
6% due 01/01/07 1,000,000 1,093,100
6% due 01/01/10 - -
University of Puerto Rico, University Revenue Refunding, Series N, MBIA Insured,
6% due 06/01/99 500,000 517,530
Vallejo Revenue Water Improvement Project, Series B, FGIC Insured, 6.50% due 11/01/14 - -
Watsonville Water Revenue Refunding, Series A, MBIA Insured, 6% due 05/15/16 - -
Westside Unified School District Refunding, Series C, AMBAC Insured, 6% due 08/01/14 300,000 324,099
----------
Total Bonds (cost: $182,516,229) 18,078,369
----------
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
State, Various Purpose, 6.125% due 10/01/11 1,000,000 1,098,570 1,098,570
State Department of Water Resources Central Valley Project Revenue,
Series J-2, 6.125% due 12/01/13 2,225,000 2,324,213 2,324,213
Series J-3, 5.50% due 12/01/23 3,000,000 2,906,490 2,906,490
Series O, 5% due 12/01/15 2,000,000 1,880,600 1,880,600
Series O, 4.75% due 12/01/25 2,000,000 1,731,540 1,731,540
State Educational Facilities Authority Revenue Refunding,
Pepperdine University, MBIA Insured, 6.10% due 03/15/14 2,595,000 2,724,049 2,724,049
Santa Clara University, MBIA Insured, 5.75% due 09/01/18 3,255,000 3,284,262 3,284,262
State Health Facilities Financing Authority Revenue Refunding,
Adventist Health System West, Series B, MBIA Insured, 6.40% due 03/01/02 1,000,000 1,080,890 1,080,890
Sutter Health Systems, Series A, AMBAC-TCRS Insured, 6.70% due 01/01/13 1,000,000 1,040,680 1,040,680
State Housing Finance Agency Revenue, Home Mortgage, AMT, MBIA Insured,
Series L, 5.55% due 08/01/05 - - 817,832
State Housing Finance Agency Revenue Home Mortgage,
Series B, AMT, AMBAC Insured, 6.05% due 08/01/16 2,000,000 2,027,280 2,027,280
Series H, AMT, 6.15% due 08/01/16 2,020,000 2,057,249 2,057,249
Series K, MBIA Insured, 6.15% due 08/01/16 3,000,000 3,094,710 3,094,710
Series Q, MBIA Insured, 5.85% due 08/01/16 1,000,000 1,019,040 1,019,040
State Pollution Control Financing Authority, Pollution Control Revenue, MBIA Insured,
Pacific Gas & Electric Co., Series B, 5.85% due 12/01/23 2,000,000 2,009,120 2,009,120
Southern California Edison, Series A, AMT, 6.90% due 09/01/06 - - 435,424
Southern California Edison, AMT, 6.90% due 12/01/17 1,000,000 1,084,720 1,084,720
State Public Works Board, Lease Revenue, Department of Corrections, AMBAC Insured,
Series A, 5.25% due 01/01/21 2,000,000 1,914,160 1,914,160
Tri-City Hospital District Revenue Refunding, Series A, MBIA Insured 6% due 02/15/03 - - 750,547
Truckee, Donner Public Utility District, COP, Water System Improvement Project,
MBIA Insured, 6.75% due 11/15/21 1,000,000 1,115,430 1,115,430
Turlock Irrigation District Revenue Refunding, Series A, MBIA Insured,
5.90% due 01/01/02 - - 84,988
6% due 01/01/07 - - 1,093,100
6% due 01/01/10 1,000,000 1,087,280 1,087,280
University of Puerto Rico, University Revenue Refunding, Series N, MBIA Insured,
6% due 06/01/99 - - 517,530
Vallejo Revenue Water Improvement Project, Series B, FGIC Insured, 6.50% due 11/01/14 4,000,000 4,510,840 4,510,840
Watsonville Water Revenue Refunding, Series A, MBIA Insured, 6% due 05/15/16 1,915,000 1,987,598 1,987,598
Westside Unified School District Refunding, Series C, AMBAC Insured, 6% due 08/01/14 - - 324,099
----------- -----------
Total Bonds (cost: $182,516,229) 175,094,905 193,173,274
----------- -----------
</TABLE>
VARIABLE RATE DEMAND NOTES* - 1.40%
<PAGE> 137
PRO FORMA STATEMENTS OF INVESTMENTS June 30, 1997
<TABLE>
<CAPTION>
California Insured
Intermediate Fund
------------------
value
face amount (note 1)
----------- --------
<S> <C> <C>
Los Angeles, Regional Airports Improvement Corp. Lease Revenue, American Airlines - LAX,
Series B, 4.10% due 12/01/24 - -
Series D, 4.10% due 12/01/24 - -
Series F, 4.10% due 12/01/24 - -
4.10% due 12/01/25 - -
Los Angeles County, Regional Airports Improvement Corp., Terminal Facilities Completion Revenue,
Los Angeles International Airport, AMT, 4.15% due 12/01/25 600,000 600,000
Moorpark Multi-Family Revenue, LeClub Apartments Project, Series A, 4.05% due 11/01/15 - -
Palm Springs Community Redevelopment Agency, Project #2, 3.90% due 12/01/14 - -
State Educational Facilities Authority Revenue Refunding, Foundation for Educational Achievement,
Series A, 4.15% due 07/01/26 - -
State Pollution Control Financing Authority, Resource Recovery Revenue Refunding, Burney Forest - -
Products Project, AMT, 3.95% due 09/01/20
-----------
Total Variable Rate Demand Notes (cost $2,800,000) 600,000
-----------
Total Securities (cost: $185,316,229) - 98.39% 18,678,369
Other Assets and Liabilities, Net - 1.61% 329,759
-----------
Net Assets - 100.00% $19,008,128
===========
</TABLE>
<TABLE>
<CAPTION>
California Municipal
Bond Fund
--------------------
Combined
value value
face amount (note 1) (note 1)
----------- -------- --------
<S> <C> <C> <C>
Los Angeles, Regional Airports Improvement Corp. Lease Revenue,
American Airlines - LAX,
Series B, 4.10% due 12/01/24 100,000 100,000 100,000
Series D, 4.10% due 12/01/24 100,000 100,000 100,000
Series F, 4.10% due 12/01/24 100,000 100,000 100,000
4.10% due 12/01/25 200,000 200,000 200,000
Los Angeles County, Regional Airports Improvement Corp., Terminal
Facilities Completion Revenue,
Los Angeles International Airport, AMT, 4.15% due 12/01/25 200,000 200,000 800,000
Moorpark Multi-Family Revenue, LeClub Apartments Project, Series A,
4.05% due 11/01/15 300,000 300,000 300,000
Palm Springs Community Redevelopment Agency, Project #2, 3.90% due 12/01/14 300,000 300,000 300,000
State Educational Facilities Authority Revenue Refunding, Foundation
for Educational Achievement, Series A, 4.15% due 07/01/26 800,000 800,000 800,000
State Pollution Control Financing Authority, Resource Recovery Revenue
Refunding, Burney Forest 100,000 100,000 100,000
Products Project, AMT, 3.95% due 09/01/20 ------------ --------
Total Variable Rate Demand Notes (cost $2,800,000) 2,200,000 2,800,000
------------ ------------
Total Securities (cost: $185,316,229) - 98.39% 177,294,905 195,973,274
Other Assets and Liabilities, Net - 1.61% 2,873,349 3,203,108
------------ ------------
Net Assets - 100.00% $180,168,254 $199,176,382
============ ============
</TABLE>
* Variable rate demand notes are tax-exempt obligations which contain a floating
or variable interest rate adjustment formula (computed daily or weekly) and an
unconditional right of demand to receive payment of the unpaid principal
balance plus accrued interest upon short notice prior to specified dates. The
interest rate may change on specified dates in relationship with changes in a
designated rate (such as the prime interest or U.S. Treasury Bill rates).
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE> 138
PART B
<PAGE> 139
STATEMENT OF ADDITIONAL INFORMATION
ATLAS ASSETS, INC.
The following documents are incorporated by reference into this
Statement of Additional Information:
1. Statement of Additional Information of Atlas Assets,
Inc. (the "Atlas Funds"), dated April 30, 1997;
2. Annual Report to Shareholders of the Atlas Funds for
the period ending December 31, 1996; and
3. Semi-Annual Report to Shareholders of the Atlas Funds
for the period ending June 30,1997.
This Statement of Additional Information dated September __, 1997
relates to the combined Proxy Statement and Prospectus of Atlas Funds as of even
date and should be read in conjunction with such combined Proxy Statement and
Prospectus which is available without charge by writing to the Atlas Funds, 794
Davis Street, San Leandro, California 94577 or by calling 1-800-933-2852.
B-1
<PAGE> 140
ATLAS ASSETS, INC.
FORM N-14 REGISTRATION STATEMENT
PART C: OTHER INFORMATION
Item 15. 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
C-1
<PAGE> 141
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 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.
Registrant and the interested Directors and officers of the
Registrant have 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 1996. 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 16. EXHIBITS
1. Articles of Incorporation for the Registrant, as amended, and
including Articles Supplementary are incorporated herein by
reference to Exhibits No. 1(a) through 1(n) to Registration
Statement No. 33-20318.
2. Bylaws of Registrant are incorporated herein by reference to
Exhibit No. 2 to Registration Statement No. 33-20318.
3. None.
4. A. Agreement and Plan of Reorganization between Atlas
U.S. Government and Mortgage Securities Fund and
Atlas U.S. Government Intermediate Fund is filed
herein as Appendix A to the Proxy Statement and
Prospectus for those funds.
B. Agreement and Plan of Reorganization between Atlas
California Municipal Bond Fund and Atlas California
Insured Intermediate Fund is filed herein as Appendix
A to the Proxy Statement and Prospectus for those
funds.
C-2
<PAGE> 142
C. Agreement and Plan of Reorganization between Atlas
National Municipal Bond Fund and Atlas National
Insured Intermediate Municipal Fund is filed herein
as Appendix A to the Proxy Statement and Prospectus
for those funds.
5. None
6. Investment Advisory Agreement dated January 12, 1990, and
amended November 1, 1991, between Atlas Advisers, Inc. and
Registrant is incorporated herein by reference to Exhibit Nos.
5(a) and (5(b) to Registration Statement No. 33-20318.
7. Principal Underwriting Agreement dated January 12, 1990
between Atlas Securities, Inc. and Registrant is incorporated
herein by reference to Exhibit No. 6 to Registration Statement
No. 33-20318.
8. Not applicable.
9. Custodian Contract between Registrant and Investors Bank and
Trust Company is incorporated herein by reference to Exhibit
No. 8 to Registration Statement No. 33-20318.
10. The Distribution Plan dated January 12, 1990 and the
Distribution Plan dated February 18, 1994 for Class B Shares
between Atlas Securities, Inc. and the Registrant, and the
Atlas Funds Multiple Class Plan adopted on August 11, 1995
pursuant to Rule 18f-3 are incorporated herein by reference to
Exhibit Nos. 15(a), 15(b) and 15(c) to Registration Statement
No. 33-20318.
11. Form of opinion and consent of Paul, Hastings, Janofsky &
Walker LLP as to legality of shares (filed herewith).
12. Form of opinion and consent of Paul, Hastings, Janofsky &
Walker LLP as to tax matters (filed herewith).
13. Not applicable.
14. Consent of Independent Auditors (filed herewith).
15. Not applicable.
16. Power of Attorney (filed herewith).
C-3
<PAGE> 143
17. (a) The Atlas Funds Annual Report to Shareholders for the year
ended December 31, 1996 is incorporated herein by reference.
(b) The Atlas Funds Semi-Annual Report to Shareholders for the
period ended June 30, 1997 is incorporated herein by
reference.
(c) The Prospectus of the Atlas Funds, dated April 30, 1997,
is filed herein as Appendix B to the Proxy Statements and
Prospectuses.
(d) The Statement of Additional Information of the Atlas
Funds, dated April 30, 1997, is incorporated herein by
reference.
(e) Form of Proxy
Item 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by
any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part of
an amendment to the Registration Statement and will not be
used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933,
each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and
the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
C-4
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on behalf of the Registrant by the
undersigned, thereunto duly authorized in the City of San Leandro and State of
California, on the 15th day of August 1997.
ATLAS ASSETS, INC.
(Registrant)
By: Marion O. Sandler *
-----------------------------
Marion O. Sandler
Chairman, Chief Executive
Officer and President
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and as of the
date indicated
Marion O. Sandler * Chief Executive August 15, 1997
- ---------------------- Officer, President, ---------------
Marion O. Sandler and Chairman Date
Julius Louis Helvey * Chief Financial August 15, 1997
- ---------------------- Officer and Group ---------------
Julius Louis Helvey Senior Vice President Date
/s/ Edward L. Bisgaard Chief Accounting August 15, 1997
- ---------------------- Officer, Treasurer ---------------
Edward L. Bisgaard and Vice President Date
Russell W. Kettell * Director August 15, 1997
- ---------------------- ---------------
Russell W. Kettell Date
C-5
<PAGE> 145
SIGNATURES CONTINUED
Barbara A. Bond * Director August 15, 1997
- ---------------------- ---------------
Barbara A. Bond Date
Daniel L. Rubinfeld * Director August 15, 1997
- ---------------------- ---------------
Daniel L. Rubinfeld Date
David J. Teece * Director August 15, 1997
- ---------------------- ---------------
David J. Teece Date
*By /s/Larry E. LaCasse
- -----------------------------
Larry E. LaCasse,
Attorney-in-Fact
Pursuant to Power of Attorney
filed herewith.
C-6
<PAGE> 146
EXHIBIT INDEX
11. Form of Opinion and Consent
regarding legality
12. Form of Opinion and Consent
as to tax matters
14. Consent of Independent Auditors
16. Power of Attorney
17.(e) Form of Proxy
<PAGE> 1
Exhibit 11
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 West Flower Street
Los Angeles, California 90071
(213) 683-6000
_____________, 1997
Atlas Assets, Inc.
794 Davis Street
San Leandro, California 94577
Ladies and Gentlemen:
We have acted as counsel to Atlas Assets, Inc., a Maryland
corporation (the "Company"), in connection with the issuance of shares of common
stock ("Shares") in the Atlas National Municipal Bond Fund, Atlas U.S.
Government and Mortgage Securities Fund, and Atlas California Municipal Bond
Fund series of the Company (the "Funds") in a public offering pursuant to a
Registration Statement on Form N-14 (Registration No. 33-__________), as
amended, filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Registration Statement").
In our capacity as counsel for the Company, we have examined the
Articles of Incorporation of the Company, as amended, the bylaws of the Company,
as amended, originals or copies of actions of the Board of Directors of the
Company as furnished to us by the Company, certificates of public officials,
statutes and such other documents, records and certificates as we have deemed
necessary for the purposes of this opinion.
Based upon our examination as aforesaid, we are of the opinion
that the Shares are duly authorized and, when sold as described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion of counsel as an
exhibit to the Registration Statement.
Very truly yours,
PAUL, HASTINGS, JANOFSKY & WALKER LLP
<PAGE> 1
EXHIBIT 12
August ___, 1997
19539.83540
Atlas National Insured Intermediate Municipal Fund
794 Davis Street
San Leandro, California 94577
Atlas National Municipal Bond Fund
794 Davis Street
San Leandro, California 94577
Re: Reorganization of Atlas National Insured Intermediate
Municipal Fund and Atlas National Municipal Bond Fund
Ladies and Gentlemen:
You have requested our opinion as counsel for Atlas Assets,
Inc., a Maryland corporation (the "Company"), with respect to certain Federal
income tax matters in connection with the reorganization by and between Atlas
National Insured Intermediate Municipal Fund ("Intermediate Fund") and Atlas
National Municipal Bond Fund ("Bond Fund"), each a separate series of the
Company, whereby (i) Intermediate Fund will transfer substantially all of its
assets to Bond Fund in exchange solely for voting shares of Bond Fund, (ii)
Intermediate Fund will distribute, in complete liquidation, such shares to the
shareholders of Intermediate Fund in exchange for their shares in Intermediate
Fund and (iii) Intermediate Fund will dissolve as soon as practicable
thereafter. This opinion is rendered in connection with the transaction
described in the Agreement and Plan of Reorganization dated August ____, 1997,
by and between Intermediate Fund and Bond Fund (the "Reorganization Agreement"),
and adopts the applicable defined terms therein. This letter and the opinions
expressed herein are for delivery to Intermediate Fund and Bond Fund and may be
relied upon only by Intermediate Fund and Bond Fund and by the shareholders of
<PAGE> 2
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 2
Intermediate Fund and Bond Fund. This opinion also may be disclosed by
Intermediate Fund, Bond Fund or any such shareholder in connection with an audit
or other administrative proceeding before the Internal Revenue Service (the
"Service") affecting Intermediate Fund, Bond Fund or such shareholder or in
connection with any judicial proceeding relating to the Federal, state or local
tax liability of Intermediate Fund, Bond Fund or any such shareholder.
For purposes of this opinion we have assumed the truth and
accuracy of the following facts:
The Company was duly organized under the laws of the State of
Maryland on November ____, 1987, and is validly existing and in good standing
under the laws of that State. The Company is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
open-end management investment company.
Intermediate Fund is a series of the Company duly established
under the law of the State of Maryland on april ___, 1993, and is validly
existing under the laws of that State. Intermediate Fund has only one class of
stock, which is widely held. All Intermediate Fund shares sold have been sold
pursuant to an effective Registration Statement of the Company filed under the
Securities Act of 1933, as amended (the "1933 Act"), except for any shares sold
pursuant to an applicable exemption thereunder. Intermediate Fund has an
authorized capital of 25,000,000 shares of voting Capital Stock, par value
$0.0001 per share, of which _________ shares are currently outstanding, and each
outstanding share of Intermediate Fund is fully paid, non-assessable, fully
transferable and has full voting rights.
Bond Fund is a series of the Company duly established under
the laws of the State of Maryland on December 21, 1989, and is validly existing
under the laws of that State. Bond Fund has only one class of stock, which is
widely held. All Bond Fund shares sold have been sold pursuant to an effective
Registration Statement of the Company filed under the 1933 Act, except for any
shares sold pursuant to an applicable exemption thereunder. Bond Fund has an
authorized capital of 20,000,000 shares of voting Capital Stock, par value
$0.0001 per share, of which _________ shares are currently outstanding, and each
outstanding share of Bond Fund is fully paid, non-assessable, fully transferable
and has full voting rights. The shares of Capital Stock of Bond Fund
<PAGE> 3
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 3
issued pursuant to the Reorganization Agreement will be fully paid,
non-assessable, freely transferable and have full voting rights.
For valid business purposes, the following transaction will
take place in accordance with the laws of the State of Delaware and pursuant to
the Reorganization Agreement:
(a) On the date of the closing (the "Closing Date"),
Intermediate Fund will transfer to Bond Fund substantially all of the property,
assets and goodwill of Intermediate Fund solely in exchange for that number of
Bond Fund shares of beneficial interest calculated by dividing the aggregate
value of Intermediate Fund's assets by the net asset value per share of Bond
Fund, all such values determined as forth in Section 1.1 of the Reorganization
Agreement and the assumption by Bond Fund of the liabilities of Intermediate
Fund.
(b) Intermediate Fund will distribute, in complete
liquidation, all Bond Fund shares to the shareholders of Intermediate Fund in
proportion to their respective interests in Intermediate Fund.
(c) Intermediate Fund will wind up and dissolve as soon as
practicable thereafter.
In rendering the opinions stated below, we have examined and
relied upon the following, assuming the truth and accuracy of any statements
contained therein:
(1) The Reorganization Agreement.
(2) The Proxy Statement, included as part of the
Company's Registration Statement on Form N-14 as
filed with the Securities and Exchange Commission on
August ___, 1997.
(3) The current Prospectus and Statement of Additional
Information of the Company, dated April 30, 1997.
(4) The Articles of Incorporation of the Company, dated
November 13, 1987, as amended on December 20, 1989;
the Articles supplementary thereto with respect to
Intermediate
<PAGE> 4
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 4
Fund dated December 20, 1989, as amended January 23,
1992; and the Articles supplementary thereto with
respect to Bond Fund dated March 31, 1993.
(5) Such other documents, records and instruments as we
have deemed necessary in order to enable us to render
the opinions referred to in this letter.
For purposes of rendering the opinions stated below, we have
in addition relied upon the following representations by the Company on behalf
of Intermediate Fund and/or Bond Fund, as applicable:
(A) The fair market value of the shares of Bond Fund received
by the shareholders of Intermediate Fund will be approximately equal to the fair
market value of Intermediate Fund shares surrendered in the exchange. The
shareholders of Intermediate Fund will receive no consideration other than Bond
Fund shares in exchange for their Intermediate Fund shares.
(B) There is no plan or intention by the shareholders of
Intermediate Fund who owns 5% or more of Intermediate Fund shares, and to the
best of the knowledge of the management of the Intermediate Fund or the Company,
there is no plan or intention on the part of any shareholders of Intermediate
Fund to sell, exchange, or otherwise dispose of a number of Bond Fund shares
received in the transaction that would reduce Intermediate Fund shareholders'
ownership of Bond Fund shares to a number of shares having a value, as of the
date of the transaction, of less than 50% of the value of all of the formerly
outstanding shares of Intermediate Fund as of the same date. For purposes of
this representation, shares of Intermediate Fund exchanged for cash or other
property, surrendered by dissenters, or exchanged for cash in lieu of fractional
shares of Bond Fund, have been treated as outstanding shares of Intermediate
Fund on the date of the transaction. Further, in making this representation, the
Company has considered both shares of Intermediate Fund and shares of Bond Fund
that were sold, redeemed, or otherwise disposed of by the shareholders of
Intermediate Fund (except for shares which were required to be redeemed by
Intermediate Fund or Bond Fund in the ordinary course of their respective
businesses as series of an investment company).
<PAGE> 5
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 5
(C) Bond Fund will acquire at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets held by Intermediate Fund immediately prior to the transaction. For
purposes of this representation, amounts used by Intermediate Fund to pay its
reorganization expenses, amounts paid by Intermediate Fund to shareholders who
receive cash or other property, and all redemptions and distributions (except
for distributions and redemptions occurring in the ordinary course of
Intermediate Fund's business as a management investment company) made by
Intermediate Fund immediately preceding the transfer have been included as
assets of Intermediate Fund held immediately prior to the transaction.
(D) Bond Fund has no plan or intention to reacquire any of its
shares issued in the transaction.
(E) Bond Fund has no plan or intention to sell or otherwise
dispose of any of the assets of Intermediate Fund acquired in the transaction,
except for dispositions made in the ordinary course of its business as a series
of an investment company.
(F) In pursuance of the plan of reorganization, Intermediate
Fund will distribute as soon as practicable the shares of Bond Fund it receives
in the transaction.
(G) The liabilities of Intermediate Fund assumed by Bond Fund
and the liabilities to which the transferred assets of Intermediate Fund are
subject were incurred by Intermediate Fund in the ordinary course of its
business.
(H) Intermediate Fund has continued its historic business
enterprise in a substantially unchanged manner and has not disposed of and/or
acquired assets in order to satisfy the investment objectives of Bond Fund.
(I) Following the transaction, Bond Fund will continue the
historic business of Intermediate Fund or use a significant portion of
Intermediate Fund's historic business assets in a business.
(J) Intermediate Fund, Bond Fund and the shareholders of
Intermediate Fund their respective expenses, if any, incurred in connection with
<PAGE> 6
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 6
the transaction. Bond Fund will pay or assume only those expenses of
Intermediate Fund that are solely and directly related to the transaction in
accordance with the guidelines established in Rev. Rul. 73-54, 1973-1 C.B. 187.
(K) There is no indebtedness existing between Intermediate
Fund and Bond Fund that was issued, acquired, or will be settled at a discount.
(L) Intermediate Fund and Bond Fund have been at all times
prior to the Closing Date, and will be at the Closing Date, regulated investment
companies as defined in Section 851 of the Internal Revenue Code of 1986, as
amended (the "Code").
(M) Bond Fund does not own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any shares of
Intermediate Fund.
(N) Neither Intermediate Fund nor one or more of its
shareholders, or any combination thereof, will control (within the meaning of
Section 368(c) of the Code) Intermediate Fund immediately after the transfer.
(O) The fair market value of the assets of Intermediate Fund
transferred to Bond Fund will equal or exceed the sum of the liabilities assumed
by Bond Fund, plus the amount of liabilities, if any, to which the transferred
assets are subject.
(P) Intermediate Fund is not under the jurisdiction of a court
in a case under Title 11 of the United States Code or a receivership,
foreclosure, or similar proceeding in a Federal or state court.
Our opinions set forth in this letter are based upon the Code,
regulations of the Treasury Department, published administrative announcements
and rulings of the Service and court decisions, all as of the date of this
letter. Based on the foregoing facts and representations, and provided that the
transaction will take place in accordance with the terms of the Reorganization
Agreement, and further provided that Intermediate Fund distributes its remaining
assets as soon as practicable, we are of the opinion that:
<PAGE> 7
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 7
1. The acquisition by Bond Fund of substantially all of the
assets of Intermediate Fund solely in exchange for voting shares of Bond Fund,
followed by both the distribution by Intermediate Fund to its shareholders of
such shares, in complete liquidation of Intermediate Fund, and the dissolution
of Intermediate Fund, as described above, will be a reorganization within the
meaning of Section 368(a)(1)(C) of the Code. Bond Fund and Intermediate Fund
will each be "a party to a reorganization" within the meaning of Section 368(b)
of the Code.
2. No gain or loss will be recognized by Intermediate Fund
upon the transfer of substantially all its assets to Bond Fund in exchange
solely for voting shares of Bond Fund and the assumption by Bond Fund of
Intermediate Fund's liabilities pursuant to Sections 361(a) and 357(a) of the
Code.
3. No gain or loss will be recognized by Bond Fund upon the
receipt of substantially all of the assets of Intermediate Fund in exchange
solely for voting shares of Bond Fund pursuant to Section 1032(a) of the Code.
4. Provided that the shareholders of Intermediate Fund receive
solely Bond Fund shares in exchange for Intermediate Fund shares, no gain or
loss will be recognized by shareholders of Intermediate Fund pursuant to Section
354(a) of the Code.
5. The basis of the assets of Intermediate Fund received by
Bond Fund will be the same as the basis of such assets to Intermediate Fund
immediately prior to the exchange pursuant to Section 362(b) of the Code.
6. The basis of the shares of Bond Fund received by
shareholders of Intermediate Fund will be the same as the basis of the shares of
Intermediate Fund surrendered in exchange therefor.
7. The holding period of the assets of Intermediate Fund
received by Bond Fund will include the period during which such assets were held
by Intermediate Fund pursuant to Section 1223(2) of the Code.
8. The holding period of the shares of Bond Fund received by
the shareholders of Intermediate Fund will include the holding period of the
<PAGE> 8
Atlas National Insured Intermediate Municipal Fund
Atlas National Municipal Bond Fund
August ___, 1997
Page 8
shares of Intermediate Fund surrendered in exchange therefor, provided that the
shares of Intermediate Fund were held as a capital asset on the date of the
exchange, pursuant to Section 1223(1) of the Code.
The opinions set forth above represent our conclusions as to
the application of Federal income tax law existing as of the date of this letter
to the transactions described in the Proxy Statement, and we can give no
assurance that legislative enactments, administrative changes or court decisions
may not be forthcoming which would require modifications or revocations of our
opinions expressed herein. Moreover, there can be no assurance that positions
contrary to our opinions will not be taken by the Service, or that a court
considering the issues would not hold contrary to such opinions. Further, all
the opinions set forth above represent our conclusions based upon the documents
and facts referred to above. Any material amendments to such documents or
changes in any significant facts would affect the opinions referred to herein.
Although we have made such inquiries and performed such investigation as we have
deemed necessary to fulfill our professional responsibilities, we have not
undertaken an independent investigation of the facts referred to in this letter.
We express no opinion as to any Federal income tax issue or
other matter except those set forth above.
Very truly yours,
<PAGE> 1
Exhibit 14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Atlas Assets, Inc. (the "Company") on Form N-14 of our report dated February 7,
1997 appearing in the Company's 1996 Annual Report to Shareholders, which is
incorporated by reference in the combined Proxies and Prospectuses of the Atlas
U.S. Government and Mortgage Securities Fund, the Atlas National Municipal Bond
Fund, and the Atlas California Municipal Bond Fund, all of which are part of
this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
combined Proxies and Prospectuses.
DELOITTE & TOUCHE LLP
Oakland, California
August 18, 1997
<PAGE> 1
Exhibit 16
POWER OF ATTORNEY
Each of the undersigned Directors and Officers of ATLAS ASSETS, INC.
(the "Company") hereby appoints LARRY E. LACASSE, STEVEN J. GRAY and EDWARD L.
BISGAARD (with full power to each of them to act alone), his attorney-in-fact
and agent, in all capacities, to execute and to file any documents relating to
the Registration Statements on Forms N-1A and N-14 under the Investment Company
Act of 1940 and under the Securities Act of 1933 of the Company, including any
and all amendments thereto, covering the registration and the sale of shares by
the Company, including all exhibits and any and all documents required to be
filed with respect thereto with any regulatory authority, including applications
for exemptive orders or rulings. Each of the undersigned grants to each of said
attorneys full authority to do every act necessary to be done in order to
effectuate the same as fully, to all intents and purposes, as he could do if
personally present, thereby ratifying all that said attorneys-in-fact and agents
may lawfully do or cause to be done by virtue hereof.
The undersigned Directors and Officers hereby execute this Power of
Attorney as of this 15th day of August, 1997.
/s/ Marion O. Sandler /s/ Julius Louis Helvey
- ------------------------------ ------------------------------
Marion O. Sandler Julius Louis Helvey
Chief Executive Officer, Chief Financial Officer and
President and Chairman Group Senior Vice President
/s/ Edward L. Bisgaard /s/ Russell W. Kettell
- ------------------------------ ------------------------------
Edward L. Bisgaard Russell W. Kettell
Chief Accounting Officer, Director
Treasurer, and Vice President
/s/ Barbara A. Bond /s/ Daniel L. Rubinfeld
- ----------------------------- -----------------------------
Barbara A. Bond Daniel L. Rubinfeld
Director Director
/s/ David J. Teece
- -----------------------------
David J. Teece
Director
<PAGE> 1
Exhibit 17(e)
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND 00001
THE ATLAS FUNDS C/O NFDS
PO BOX 419056 KANSAS CITY MO 64141
00001 TAX I.D. OR SOC. SEC. NO.
ACCOUNT NO.
FUND NO.
RECORD DATE SHARES
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND
Proxy Solicited on Behalf of the Board of Directors of Atlas Assets, Inc. for
the Special Meeting of Shareholders of the Atlas National Insured Intermediate
Municipal Fund (the "Fund") on November 24, 1997.
The undersigned hereby appoints Steven Gray and Theresa Lee and each of them,
his/her true and lawful agents and proxies with full power of substitution in
each to represent the undersigned at the aforesaid Special Meeting of
Shareholders to be held at the World Savings Center, Fourth Floor, 1901 Harrison
Street, Oakland, California on November 24, 1997 at 10:00 a.m. Pacific Time, and
at any adjournment thereof, on all matters coming before said Meeting.
PROPOSAL(S)
1) To approve the Agreement and Plan of Reorganization between the Fund and the
Atlas National Municipal Bond Fund.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S) AND WILL AUTHORIZE THE PROXIES TO VOTE IN
THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
Place the ballot so that the return address, located on the reverse side of the
mail-in-stub, appears through the window of the envelope.
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND
PROXY VOTING MAIL-IN-STUB
RECORD DATE SHARES
Please sign exactly as your name or names appear on the proxy. All joint owners
must sign and each should sign personally. Proxies of corporation, partnerships,
and fiduciaries should be signed by the authorized person with full title
indicated.
PROPOSAL(S)
1) [ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: ______________________________, 1997
____________________________________________
____________________________________________
Signature(s) of Shareholder(s)
