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[Logo]
ATLAS ASSETS, INC.
794 Davis Street
San Leandro, CA 94577
1-800-933-ATLAS (1-800-933-2852)
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ATLAS ASSETS, INC.
Atlas Assets, Inc. (the "Company") is an open- end, management investment
company, or mutual fund, offering fifteen portfolios (the Atlas "Funds").
The family of Atlas Funds consists of three money market funds (the "Money
Funds"), seven bond funds (the "Bond Funds"), and five funds that invest
primarily in equity securities (the "Stock Funds") as follows:
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MONEY FUNDS
Atlas U.S. Treasury Money Fund
Atlas National Municipal Money Fund
Atlas California Municipal Money Fund
(California residents only)
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BOND FUNDS
Atlas U.S. Government Intermediate Fund
Atlas U.S. Government and Mortgage
Securities Fund
Atlas National Insured Intermediate
Municipal Fund
Atlas National Municipal Bond Fund
Atlas California Insured Intermediate
Municipal Fund (California residents only)
Atlas California Municipal Bond Fund
(California residents only)
Atlas Strategic Income Fund
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STOCK FUNDS
Atlas Balanced Fund
Atlas Growth and Income Fund
Atlas Strategic Growth Fund
Atlas Global Growth Fund
Atlas Emerging Growth Fund
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Please read this Prospectus dated April 30, 1997 before investing and keep
it for future reference. It provides important information about the Atlas
Funds and will help you decide which
Funds are appropriate for you. A Statement of Additional Information (the
"SAI") further describing the Company and the Atlas Funds, dated April 30,
1997 was filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference. A copy of a current SAI is
available without charge by calling or writing the Company.
THE ATLAS STRATEGIC INCOME FUND IS A DIVERSIFIED PORTFOLIO DESIGNED FOR
INVESTORS WILLING TO ASSUME ADDITIONAL RISKS IN RETURN FOR SEEKING HIGH
CURRENT INCOME. THE FUND MAY INVEST UP TO 100% OF ITS ASSETS IN "JUNK BONDS"
OR FOREIGN DEBT SECURITIES RATED BELOW INVESTMENT GRADE, WHICH ARE
CONSIDERED SPECULATIVE AND INVOLVE GREATER RISKS, INCLUDING RISK OF DEFAULT,
THAN HIGHER-RATED SECURITIES. YOU SHOULD CAREFULLY REVIEW THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THE FUND. SEE "WHAT ARE THE FUNDS' INVEST-
MENT POLICIES?"
ATLAS SECURITIES, INC. (DBA ATLAS FUNDS DISTRIBUTORS, INC. IN ARIZONA), THE
DISTRIBUTOR OF THE COMPANY'S SHARES, IS NOT A SAVINGS AND LOAN ASSOCIATION
OR A BANK. ATLAS FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF A SAVINGS
AND LOAN ASSOCIATION OR A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL ENTITY INCLUDING THE
SECURITIES INVESTOR PROTECTION CORPORATION. ATLAS FUND SHARES ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE
THAT THE MONEY FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE. ALTHOUGH THE INTEREST AND PRINCIPAL PAYMENTS OF INSURED
MUNICIPAL SECURITIES ARE GUARANTEED BY PRIVATE INSURANCE COMPANIES, THIS
INSURANCE DOES NOT GUARANTEE THE MARKET VALUE OF THOSE SECURITIES OR THE
VALUE OF SHARES IN A FUND, WHICH WILL VARY IN RESPONSE TO MARKET CONDITIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
1
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ATLAS FUNDS AT A GLANCE 3
THE FUNDS
What are the Funds' fees and expenses? 5
Financial Highlights 8
What are the Funds' investment objectives? 18
What Companies are affiliated with the
Funds? 22
What are the Funds' investment limitations? 22
What are the Funds' investment policies? 23
How are the Funds administered? 27
INVESTOR'S MANUAL
How can I communicate with the Funds? 31
How can I invest? 32
What price will I pay? 32
What is the Class A sales charge option? 34
What is the Class B sales charge
alternative? 35
What else should I know about purchases? 36
What services are available? 38
How can I redeem shares? 42
What else should I know about redemptions? 42
What dividends and distributions can I
receive? 44
How can taxes affect my investment? 45
How will the Funds communicate with me? 46
How can I interpret a Fund's performance? 46
APPENDIX I: INVESTMENT STRATEGIES
Portfolio strategies - All Funds 48
Investment guidelines - All Funds 48
Portfolio strategies - Money Funds 50
Investment guidelines - Money Funds 50
Portfolio strategies - Bond Funds 51
Portfolio strategies - Stock Funds 53
Investment guidelines - Bond and Stock
Funds 53
APPENDIX II: DESCRIPTION OF RATINGS 63
</TABLE>
COLLECTIVE REFERENCES FOUND IN THE PROSPECTUS:
The "Money Funds", "Bond Funds", and the "Stock Funds" are listed under these
designations on page 1 of the Prospectus.
The "Municipal Funds" are Atlas National Municipal Money Fund, Atlas California
Municipal Money Fund, Atlas National Municipal Bond Fund, Atlas California
Municipal Bond Fund, Atlas National Insured Intermediate Municipal Fund and
Atlas California Insured Intermediate Municipal Fund.
The "National Funds" are Atlas National Municipal Money Fund, Atlas National
Municipal Bond
Fund, and Atlas National Insured Intermediate Municipal Fund.
The "California Funds" are Atlas California Municipal Money Fund, Atlas
California Municipal Bond Fund, and Atlas California Insured Intermediate
Municipal Fund.
The "Insured Funds" are Atlas National Insured
Intermediate Municipal Fund and Atlas California Insured Intermediate Municipal
Fund.
The "Government Funds" are Atlas U.S. Government Intermediate Fund and Atlas
U.S. Government and Mortgage Securities Fund.
The "Intermediate Funds" are the Insured Funds and Atlas U.S. Government
Intermediate Fund.
The "Municipal Money Funds" are Atlas National Municipal Money Fund and Atlas
California Municipal Money Fund.
We Want You To Know...Atlas Funds are not FDIC-insured and are not deposits or
obligations of, or guaranteed by World Savings. Mutual fund returns and
principal value will vary and you may have a gain or loss when you sell.
2
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ATLAS FUNDS AT
A GLANCE
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For your convenience, Atlas Funds provides this summary of the Prospectus.
The summary is qualified in its entirety by the more detailed information in
the Prospectus itself.
INVESTMENT OBJECTIVES:
The Money Funds seek short-term yields with liquidity and stability of
principal. The Bond Funds seek higher long-term yields for investors who can
accept price fluctuations. In pursuing this objective, the Intermediate
Funds can generally be expected to provide higher yields than the Money
Funds with less price fluctuations than long-term bond funds, and the
Insured Funds seek to minimize credit risk. The Stock Funds seek a varying
mix of long-term capital growth and current income for investors who can
accept price fluctuations. Of course there can be no assurance that a Fund's
investment objectives will be achieved.
SPECIAL RISK CONSIDERATIONS:
The Bond Funds invest in intermediate and long-term debt securities, which
fluctuate in price inversely with interest rate levels. The Stock Funds
invest primarily in common stocks, including the stocks of small unseasoned
companies, preferred stocks and securities convertible into common stocks,
which may fluctuate in price based on market conditions. The Bond and Stock
Funds may engage, to varying extents, in transactions in futures, options,
repurchase agreements, when-issued securities and securities lending, and
may also invest in zero coupon securities. Some of the Bond Funds and all of
the Stock Funds may borrow funds and enter into reverse repurchase and
dollar reverse repurchase agreements, which create leverage. Since these
transactions can increase investment risk, limitations are placed on their
use. Although none of the Bond and Stock Funds trade for short-term profits,
their portfolio turnover in pursuit of their respective objectives is not
limited. A high turnover rate increases transaction costs. The Stock Funds
may purchase foreign securities which are subject to risks different from
those of U.S. securities. The California Funds are not diversified due to
the limited supply of securities meeting those Funds' quality standards. The
Global Growth and Strategic Income Funds can normally be expected to invest
a substantial portion of each of their assets in foreign securities, which
may increase the risks of investing in those Funds and each Fund's operating
costs. The Strategic Income Fund may invest up to 100% of its assets in
lower-rated, high-yield debt securities commonly known as "junk bonds" and
foreign debt securities rated below investment grade. Such securities are
considered speculative and involve greater risks, including risk of default,
than higher-rated securities. The Strategic Income Fund may also invest in a
number of different kinds of "derivative" securities. For more about special
risk considerations, please see Appendix I: Investment Strategies.
TAXABILITY OF INCOME:
All Atlas Municipal Funds seek income exempt from federal income tax, and
the Atlas California Funds seek income exempt from California state personal
income tax as well. The Atlas Treasury Money Fund seeks income that,
although subject to federal income tax, is exempt from most states' income
taxes. The Atlas Government Funds and the Atlas Strategic Income Fund seek
taxable current income for investors who desire high pre-tax yield, and the
Stock Funds seek varying levels of taxable current income.
INVESTMENT MANAGERS:
Atlas Advisers, Inc. ("Adviser"), a Golden
West Financial Corporation subsidiary and an affiliate of World Savings and
Loan Association ("World"), was organized solely to manage the Atlas Funds
investments and began its operations with the January 10, 1990 inception of
the Company. The Adviser has retained professionals with substantial fund
experience, including Boston Safe Advisors, Inc., the Subadviser to the
Municipal Funds, and OppenheimerFunds, Inc., the Subadviser to the Stock
Funds and the Strategic Income Fund.
3
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HOW TO INVEST:
Call 1-800-933-ATLAS (1-800-933-2852) and speak to an Atlas Investment
Representative
or meet with one in person at most World branches. Just call 1-800-933-ATLAS
for more information on this Person-to-Person program or to make an
appointment. You can also pick up Atlas Funds literature at any World
branch. The Funds are currently offered exclusively by Atlas Securities,
Inc. (the "Distributor").
Each Fund, except the Municipal Money Funds, offers two classes of shares.
All Bond and Stock Fund shares are sold subject to a sales charge. You may
elect to purchase shares with a sales charge imposed at the time of purchase
(the "Class A shares" or "Class A"), or on a contingent deferred basis (the
"Class B shares" or "Class B"). Class A Money Fund shares can be purchased
at net asset value without any sales charge. Class B Money Fund shares are
subject to a contingent deferred sales charge. Both classes are subject to a
distribution fee, with the Class B fee higher than Class A.
The contingent deferred sales charge (the "CDSC") will be imposed on most
redemptions of Class B shares that occur within five years of purchase. This
alternative purchase arrangement permits you to choose the method of
purchasing shares that is most beneficial depending on the amount of the
purchase, the length of time you expect to hold the shares and other
circumstances.
HOW TO EXCHANGE:
Call or write to us to exchange shares of one Atlas Fund for shares of
another fund in the same Class within the Atlas family or to take advantage
of our Automatic exchange feature. Atlas provides exchange service free of
charge.
DIVIDENDS:
Money Fund income dividends are declared and reinvested daily and
distributed monthly. Bond Fund dividends are declared daily and reinvested
and distributed monthly. Balanced Fund and Growth and Income Fund dividends
are declared, reinvested and distributed quarterly. Strategic Growth Fund,
Emerging Growth Fund and Global Growth Fund dividends, if any, are declared,
reinvested and distributed annually.
DISTRIBUTIONS:
Capital gains distributions, when available, are normally declared and
distributed annually, although they can be paid more frequently.
REINVESTMENT:
Dividends and capital gains distributions of a Fund will be automatically
reinvested (without sales charge) in additional shares of that Fund, unless
you request to receive them by check or elect to have them invested in
another Atlas Fund of the same class.
FIRST PURCHASE:
$2,500 minimum ($250 for IRAs)
LATER PURCHASES:
$250 minimum
PRICES/YIELDS:
Net asset value is normally calculated each business day at 4:00 pm Eastern
time (1:00 pm Pacific time). For current information on prices and yields,
call toll free: 1-800-933-ATLAS (1-800-933-2852) 24 hours a day, 7 days a
week.
SPECIAL FEATURES:
Bank wire purchase, Telephone redemption, Telephone exchange, Expedited
payment, Automatic purchase, Automatic exchanges, Automatic redemption,
Checkwriting (Class A Money and Bond Funds only)
PRICING OPTIONS:
Volume discounts (Class A only)
Right of accumulation (Class A only)
WorldLink (Class A only)
Letter of intent (Class A only)
Contingent deferred sales charge (Class B only)
Net asset value (Class A only)
4
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THE FUNDS
WHAT ARE THE FUNDS' FEES AND EXPENSES?
The summary below is presented to help you understand the direct and
indirect costs and expenses associated with investing in any of the Atlas
Funds. For a more complete description of fees and expenses, please see "How
are the Funds administered?" and "What price will I pay?"
<TABLE>
<CAPTION>
SUMMARY OF FEES U.S. TREASURY CALIFORNIA MUNICIPAL FUNDS
AND EXPENSES MONEY FUND
INSURED
MONEY INTERMEDIATE BOND
CLASS A CLASS B CLASS A CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge-purchases.................. None None None 3.0% None 3.0% None
Sales charge-reinvested dividends............... None None None None None None None
Maximum deferred sales charge(1)................ None 3.0% None None 3.0% None 3.0%
Redemption fee.................................. None None None None None None None
Exchange fee.................................... None None None None None None None
ANNUAL OPERATING EXPENSES:(after fee/expense
reductions)(2)
(as a percentage of average net assets)
Management fees(2).............................. 0.25% 0.25% 0.38% 0.52% 0.52% 0.55% 0.55%
12b-1 distribution fees(2)...................... 0.00% 0.66% 0.00% 0.02% 0.70% 0.25% 0.75%
Other expenses(2)............................... 0.27% 0.27% 0.25% 0.28% 0.28% 0.16% 0.16%
Total annual operating expenses(2).............. 0.52% 1.18% 0.63% 0.82% 1.50% 0.96% 1.46%
EXAMPLE OF FUND EXPENSES:(3)
Redeemed end of year 1.......................... $ 5 $ 42 $ 6 $ 38 $ 45 $ 40 $ 45
Redeemed end of year 3.......................... $17 $ 57 $20 $ 55 $ 67 $ 60 $ 66
Redeemed end of year 5.......................... $29 $ 75 $35 $ 74 $ 92 $ 81 $ 90
Redeemed end of year 10......................... $65 $100 $79 $128 $135 $144 $127
No redemptions end of year 1.................... $ 5 $ 12 $ 6 $ 38 $ 15 $ 40 $ 15
No redemptions end of year 3.................... $17 $ 37 $20 $ 55 $ 47 $ 60 $ 46
No redemptions end of year 5.................... $29 $ 65 $35 $ 74 $ 82 $ 81 $ 80
No redemptions end of year 10................... $65 $100 $79 $128 $135 $144 $127
</TABLE>
(1) A contingent deferred sales charge is imposed on the proceeds of Class B
shares redeemed within five years of their purchase, subject to certain
exceptions. That charge is imposed as a percentage of the net asset value
per share at the time of purchase or redemption, whichever is less, and
declines from 3.0% in the first and second years that shares are held, to
2.0% in the third and fourth years, and 1.0% in the fifth year. There is no
contingent deferred sales charge imposed on Class B shares held for more
than five years. See "What is the Class B sales charge alternative?".
(2) Expense information is based on results for 1996, except for the Strategic
Income, Global Growth and Emerging Growth Funds which are based on current
fee waivers and estimated other expenses for 1997. The Adviser has
voluntarily agreed to limit 1997 total annual operating expenses for the
Emerging Growth Fund as set forth in the table. The Adviser reduced its fees
and absorbed certain expenses in 1996. In addition, the Distributor waived a
portion of its distribution fees for Class A and/or Class B shares of
certain of the Funds. Without such reductions, the Management fees would
have been .50% for each of the Money Funds, .55% for each of the Bond Funds
(except for the Strategic Income Fund which would be .75%) and .70% for each
of the Stock Funds (except for the Global Growth and Emerging Growth Funds
which would be .80%); and the 12b-1 distribution fees would have been .25%
for all Class A shares and .75% for all Class B shares. Without such
actions, total operating expenses would have been as follows for Class A
shares: 1.02% for the U.S. Treasury Money Fund; 1.24% for the U.S.
Government Intermediate Fund; 1.00% for the California Municipal Money Fund;
1.08% for the California Insured Intermediate Municipal Fund; 0.96% for the
California Municipal Bond Fund; 1.32% for the National Municipal Money Fund;
1.12% for the National Insured Intermediate Municipal Fund; 1.01% for the
National Municipal Bond Fund; 1.03% for the U.S. Government and Mortgage
Securities Fund; 1.31% for the Strategic Growth Fund; 1.28% for the Balanced
Fund; 1.16% for the Growth and Income Fund; 2.58% for the Global Growth
Fund; and 1.93% for the Strategic Income Fund. (CONTINUED NEXT PAGE)
5
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WHAT ARE THE FUNDS' FEES AND EXPENSES? (CONTINUED)
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL FUNDS U.S. GOVERNMENT
INTERMEDIATE
FUND
INSURED
MONEY INTERMEDIATE BOND
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge-purchases.................. None 3.0% None 3.0% None 3.0% None
Sales charge-reinvested dividends............... None None None None None None None
Maximum deferred sales charge(1)................ None None 3.0% None 3.0% None 3.0%
Redemption fee.................................. None None None None None None None
Exchange fee.................................... None None None None None None None
ANNUAL OPERATING EXPENSES:(after fee/expense
reductions)(2)
(as a percentage of average net assets)
Management fees (after fee reduction)(2)........ 0.11% 0.48% 0.48% 0.55% 0.55% 0.15% 0.15%
12b-1 distribution fees (after fee
reduction)(2)................................... 0.00% 0.00% 0.68% 0.25% 0.75% 0.00% 0.70%
Other expenses (after expense reduction)(2)..... 0.57% 0.32% 0.32% 0.21% 0.21% 0.44% 0.44%
Total annual operating expenses(2).............. 0.68% 0.80% 1.48% 1.01% 1.51% 0.59% 1.29%
EXAMPLE OF FUND EXPENSES:(3)
Redeemed end of year 1.......................... $ 7 $ 38 $ 45 $ 40 $ 45 $ 36 $ 43
Redeemed end of year 3.......................... $22 $ 55 $ 67 $ 61 $ 68 $ 48 $ 61
Redeemed end of year 5.......................... $38 $ 73 $ 91 $ 84 $ 92 $ 62 $ 81
Redeemed end of year 10......................... $85 $126 $134 $150 $133 $102 $110
No redemptions end of year 1.................... $ 7 $ 38 $ 15 $ 40 $ 15 $ 36 $ 13
No redemptions end of year 3.................... $22 $ 55 $ 47 $ 61 $ 48 $ 48 $ 41
No redemptions end of year 5.................... $38 $ 73 $ 81 $ 84 $ 82 $ 62 $ 71
No redemptions end of year 10................... $85 $126 $134 $150 $133 $102 $110
</TABLE>
(2) (CONTINUED) In 1997, total operating expenses for Class A shares of the
Emerging Growth Fund would be estimated to be 2.75% without such actions.
Other expenses would have been 0.85% and 1.31%, respectively, for the Class
A shares of the Strategic Income Fund and the Global Growth Fund. Other
expenses and total operating expenses, respectively, would have been as
follows for Class B shares: 2.00% and 3.25% for the Treasury Money Fund;
1.95% and 3.25% for the California Insured Intermediate Municipal Fund, the
National Insured Intermediate Fund and the U.S. Government Intermediate
Fund; 0.53% and 1.83% for the California Municipal Bond Fund; 0.99% and
2.29% for the National Municipal Bond Fund; 0.52% and 1.82% for the U.S.
Government and Mortgage Securities Fund; 0.76% and 2.21% for the Balanced
Fund; 0.67% and 2.12% for the Strategic Growth Fund; 0.38% and 1.83% for the
Growth and Income Fund; 1.75% and 3.25% for the Strategic Income Fund; and
1.70% and 3.25% for the Global Growth Fund. In 1997, total operating
expenses for Class B shares of the Emerging Growth Fund would be estimated
to be 3.25% without such actions.
(3) The above examples are based on a hypothetical $1,000 investment, and assume
that the annual operating expenses remain constant, that each Fund earns a
5% annual rate of return, and that the maximum sales charge was paid on
Class A shares. After 5 full years, Class B shares automatically convert to
Class A shares under the terms and conditions described under "What is the
Class B sales charge alternative?". Therefore, years 6 through 10 reflect
the Class A expenses shown above. THE EXAMPLES SHOULD NOT BE CONSIDERED
REPRESENTATIONS OF FUTURE EXPENSES OR PERFORMANCE. THE ACTUAL RATES OF
RETURN AND ANNUAL OPERATING EXPENSES OF THE FUNDS MAY VARY.
6
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<TABLE>
<CAPTION>
U.S. GOVERNMENT STRATEGIC INCOME BALANCED FUND GROWTH AND STRATEGIC GROWTH GLOBAL GROWTH EMERGING GROWTH
AND MORTGAGE FUND INCOME FUND FUND FUND FUND
SECURITIES FUND
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None
None None None None None None None None None None None None None None
None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0% None 3.0%
None None None None None None None None None None None None None None
None None None None None None None None None None None None None None
0.55% 0.55% 0.42% 0.42% 0.70% 0.70% 0.68% 0.68% 0.70% 0.70% 0.80% 0.80% 0.00% 0.00%
0.25% 0.75% 0.00% 0.75% 0.25% 0.75% 0.25% 0.75% 0.25% 0.75% 0.25% 0.75% 0.00% 0.75%
0.23% 0.23% 0.33% 0.33% 0.32% 0.32% 0.23% 0.23% 0.36% 0.36% 0.67% 0.67% 1.50% 1.50%
1.03% 1.53% 0.75% 1.50% 1.27% 1.77% 1.16% 1.66% 1.31% 1.81% 1.72% 2.22% 1.50% 2.25%
$ 40 $ 46 $ 37 $ 45 $ 43 $ 48 $ 41 $ 47 $ 43 $ 48 $ 47 $ 53 $ 45 $ 53
$ 62 $ 68 $ 53 $ 67 $ 69 $ 76 $ 66 $ 72 $ 70 $ 77 $ 83 $ 89 $ 76 $ 90
$ 85 $ 93 $ 70 $ 92 $ 98 $106 $ 92 $100 $100 $108 $121 $129 $109 $130
$152 $135 $120 $131 $179 $162 $167 $150 $183 $166 $227 $211 $204 $214
$ 40 $ 16 $ 37 $ 15 $ 43 $ 18 $ 41 $ 17 $ 43 $ 18 $ 47 $ 23 $ 45 $ 23
$ 62 $ 48 $ 53 $ 47 $ 69 $ 56 $ 66 $ 52 $ 70 $ 57 $ 83 $ 69 $ 76 $ 70
$ 85 $ 83 $ 70 $ 82 $ 98 $ 96 $ 92 $ 90 $100 $ 98 $121 $119 $109 $120
$152 $135 $120 $131 $179 $162 $167 $150 $183 $166 $227 $211 $204 $214
</TABLE>
7
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FINANCIAL HIGHLIGHTS
The following tables present per share financial information for the Funds'
fiscal years or periods ended December 31, 1990, 1991, 1992, 1993, 1994,
1995 and 1996, which information has been audited and reported on by
Deloitte & Touche LLP, the Funds' independent auditors, whose report dated
February 7, 1997, appears in the Funds' Annual Report to Shareholders for
the year ended December 31, 1996 and is incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
MONEY FUNDS
U.S. TREASURY MONEY FUND
CLASS A CLASS B
1996(1) 1995(1) 1994(1) 1993(1) 1992(2) 1996(1) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.046 0.050 0.036 0.030 0.023 0.040 0.044 0.018
Net gain or loss on securities
(both realized and unrealized)... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations....................... 0.046 0.050 0.036 0.030 0.023 0.040 0.044 0.018
------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net investment
income).......................... (0.046) (0.050) (0.036) (0.030) (0.023) (0.040) (0.044) (0.018)
Distributions (from realized
capital gains)................... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of
realized gains).................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- ------- ------- -------
Total distributions.............. (0.046) (0.050) (0.036) (0.030) (0.023) (0.040) (0.044) (0.018)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
Total return(5).................... 4.74% 5.13% 3.67% 3.03% 2.32% 4.07% 4.45% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's).......................... $65,479 $51,385 $33,448 $14,168 $ 7,632 $ 120 $ 113 $ 28
Ratio of expenses to average net
assets
(annualized)(6).................. 0.52% 0.64% 0.46% 0.15% 0.00% 1.18% 1.24% 1.13%
Ratio of net investment income to
average net assets
(annualized)..................... 4.63% 4.99% 3.75% 2.98% 3.32% 3.95% 4.34% 3.71%
Portfolio turnover rate.......... -- -- -- -- -- -- -- --
</TABLE>
(1) For the year ended December 31.
(2) For the period May 1, 1992 (inception of operations) to December 31, 1992.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period January 10, 1990 (effective date of registration) to December
31, 1990.
(5) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(6) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------------
PERIOD ENDED 1996 1995 1994 1993 1992 1991 1990 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Fund........... 1.02% 1.05% 1.08% 1.10% 1.37% NA NA 3.25% 3.25% 3.25%
California Municipal Money Fund.... 1.00% 1.00% 1.00% 0.98% 1.03% 1.13% 1.50% NA NA NA
National Municipal Money Fund...... 1.32% 1.29% 1.25% 1.28% 1.35% 1.51% 1.93% NA NA NA
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL MONEY FUND NATIONAL MUNICIPAL MONEY FUND
CLASS A CLASS A
1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4) 1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.028 0.032 0.024 0.021 0.027 0.045 0.052 0.029 0.032 0.026 0.022 0.029 0.048 0.055
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.028 0.032 0.024 0.021 0.027 0.045 0.052 0.029 0.032 0.026 0.022 0.029 0.048 0.055
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.028) (0.032) (0.024) (0.021) (0.027) (0.045) (0.052) (0.029) (0.032) (0.026) (0.022) (0.029) (0.048) (0.055)
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.028) (0.032) (0.024) (0.021) (0.027) (0.045) (0.052) (0.029) (0.032) (0.026) (0.022) (0.029) (0.048) (0.055)
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
2.82% 3.22% 2.47% 2.13% 2.75% 4.61% 5.40% 2.96% 3.26% 2.60% 2.25% 2.94% 4.87% 5.66%
$37,355 $39,439 $42,979 $45,784 $55,890 $59,007 $20,190 $ 7,514 $ 7,860 $10,110 $ 9,424 $ 8,139 $ 9,816 $ 4,150
0.63% 0.67% 0.46% 0.48% 0.46% 0.00% 0.00% 0.68% 0.75% 0.49% 0.55% 0.54% 0.00% 0.00%
2.78% 3.18% 2.44% 2.10% 2.73% 4.47% 5.50% 2.92% 3.21% 2.57% 2.23% 2.92% 4.71% 5.79%
-- -- -- -- -- -- -- -- -- -- -- -- -- --
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUNDS
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
CLASS A CLASS B
1996(1) 1995(1) 1994(1) 1993(4) 1996(1) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $ 10.37 $ 9.64 $ 10.48 $ 10.01 $ 10.37 $ 9.64 $ 9.91
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.41 0.40 0.42 0.26 0.34 0.34 0.17
Net gain or loss on securities
(both realized and
unrealized)...................... (0.01) 0.73 (0.84) 0.47 (0.02) 0.73 (0.27)
------- ------- ------- ------- ------- ------- -------
Total from investment
operations....................... 0.40 1.13 (0.42) 0.73 0.32 1.07 (0.10)
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net investment
income).......................... (0.41) (0.40) (0.42) (0.26) (0.34) (0.34) (0.17)
Distributions (from realized
capital gains)................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions (in excess of
realized gains).................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- -------
Total distributions.............. (0.41) (0.40) (0.42) (0.26) (0.34) (0.34) (0.17)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period..... $ 10.36 $ 10.37 $ 9.64 $ 10.48 $ 10.35 $ 10.37 $ 9.64
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Total return(5).................... 3.93% 11.84% (4.10)% 7.31% 3.14% 11.26% (1.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's).......................... $20,005 $24,582 $23,634 $24,235 $ 593 $ 443 $ 227
Ratio of expenses to average net
assets (annualized)(6)........... 0.82% 0.77% 0.40% 0.32% 1.50% 1.30% 1.08%
Ratio of net investment income to
average net assets
(annualized)..................... 3.96% 3.90% 4.16% 4.25% 3.28% 3.37% 3.62%
Portfolio turnover rate.......... 44.43% 59.28% 31.48% 5.73% 44.43% 59.28% 31.48%
</TABLE>
(1) For the year ended December 31.
(2) For the period October 5, 1992 (inception of operations) to December 31,
1992.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period June 1, 1993 (effective date of registration) to December 31,
1993.
(5) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(6) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------------
PERIOD ENDED 1996 1995 1994 1993 1992 1991 1990 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Insured Intermediate
Municipal Fund.................... 1.08% 1.11% 1.11% 1.26% NA NA NA 3.25% 3.25% 3.25%
National Insured Intermediate
Municipal Fund.................... 1.12% 1.19% 1.19% 1.39% NA NA NA 3.25% 3.25% 3.25%
U.S. Government Intermediate
Fund.............................. 1.24% 1.32% 1.28% 1.26% 2.09% NA NA 3.25% 3.25% 3.25%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND
CLASS A CLASS B
1996(1) 1995(1) 1994(1) 1993(4) 1996(1) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10.37 $ 9.64 $ 10.48 $ 10.02 $ 10.38 $ 9.65 $ 9.91
------- ------- ------- ------- ------- ------- -------
0.42 0.41 0.42 0.26 0.35 0.36 0.18
(0.05) 0.73 (0.84) 0.46 (0.05) 0.73 (0.26)
------- ------- ------- ------- ------- ------- -------
0.37 1.14 (0.42) 0.72 0.30 1.09 (0.08)
------- ------- ------- ------- ------- ------- -------
(0.42) (0.41) (0.42) (0.26) (0.35) (0.36) (0.18)
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- -------
(0.42) (0.41) (0.42) (0.26) (0.35) (0.36) (0.18)
------- ------- ------- ------- ------- ------- -------
$ 10.32 $ 10.37 $ 9.64 $ 10.48 $ 10.33 $ 10.38 $ 9.65
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
3.68% 12.01% (4.05)% 7.25% 2.99% 11.43% (0.87)%
$12,886 $15,782 $16,224 $15,535 $ 286 $ 284 $ 186
0.80% 0.77% 0.43% 0.35% 1.48% 1.29% 1.09%
4.11% 4.06% 4.22% 4.28% 3.44% 3.54% 3.72%
46.95% 84.85% 32.26% 0.00% 46.95% 84.85% 32.26%
<CAPTION>
U.S. GOVERNMENT INTERMEDIATE FUND
CLASS A CLASS B
1996(1) 1995(1) 1994(1) 1993(1) 1992(2) 1996(1) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 9.76 $ 9.32 $ 10.03 $ 9.69 $ 10.00 $ 9.76 $ 9.32 $ 9.48
------- ------- ------- ------- ------- ------- ------- -------
0.54 0.48 0.46 0.51 0.13 0.47 0.43 0.19
(0.18) 0.44 (0.71) 0.41 (0.31) (0.18) 0.44 (0.16)
------- ------- ------- ------- ------- ------- ------- -------
0.36 0.92 (0.25) 0.92 (0.18) 0.29 0.87 0.03
------- ------- ------- ------- ------- ------- ------- -------
(0.54) (0.48) (0.46) (0.51) (0.13) (0.47) (0.43) (0.19)
0.00 0.00 0.00 (0.07) 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- -------
(0.54) (0.48) (0.46) (0.58) (0.13) (0.47) (0.43) (0.19)
------- ------- ------- ------- ------- ------- ------- -------
$ 9.58 $ 9.76 $ 9.32 $ 10.03 $ 9.69 $ 9.58 $ 9.76 $ 9.32
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
3.81% 10.12% (2.51)% 9.64% (1.83)% 3.12% 9.54% 0.36%
$ 7,168 $ 8,209 $ 9,699 $ 8,930 $ 3,235 $ 487 $ 426 $ 321
0.59% 0.69% 0.43% 0.23% 0.00% 1.29% 1.21% 1.08%
5.61% 5.03% 4.80% 4.98% 5.50% 4.92% 4.53% 4.24%
46.51% 82.88% 55.09% 37.80% 0.00% 46.51% 82.88% 55.09%
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUNDS
CALIFORNIA MUNICIPAL BOND FUND
CLASS A
1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(3)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 11.26 $ 10.31 $ 11.56 $ 10.74 $ 10.64 $ 10.12 $ 10.00
-------- -------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income....... 0.53 0.54 0.59 0.59 0.60 0.66 0.65
Net gain or loss on
securities (both realized
and unrealized)............. (0.11) 0.95 (1.25) 0.83 0.21 0.56 0.12
-------- -------- -------- -------- -------- -------- -------
Total from investment
operations.................. 0.42 1.49 (0.66) 1.42 0.81 1.22 0.77
-------- -------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends (from net
investment income).......... (0.53) (0.54) (0.59) (0.59) (0.60) (0.66) (0.65)
Distributions (from realized
capital gains).............. 0.00 0.00 0.00 (0.01) (0.11) (0.04) 0.00
Distributions (in excess of
realized gains)............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------
Total distributions......... (0.53) (0.54) (0.59) (0.60) (0.71) (0.70) (0.65)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of
period....................... $ 11.15 $ 11.26 $ 10.31 $ 11.56 $ 10.74 $ 10.64 $ 10.12
-------- -------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------- -------
Total return(4)............... 3.90% 14.76% (5.83)% 13.52% 7.86% 12.53% 9.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)..................... $177,593 $184,283 $171,768 $197,394 $141,108 $106,592 $20,329
Ratio of expenses to average
net assets
(annualized)(5)............. 0.96% 0.93% 0.57% 0.53% 0.54% 0.00% 0.00%
Ratio of net investment
income to average net assets
(annualized)................ 4.82% 4.98% 5.43% 5.25% 5.66% 6.43% 7.13%
Portfolio turnover rate..... 29.28% 25.90% 30.32% 7.44% 46.55% 30.61% 64.18%
</TABLE>
(1) For the year ended December 31.
(2) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(3) For the period January 10, 1990 (effective date of registration) to December
31, 1990.
(4) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(5) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------------
PERIOD ENDED 1996(1) 1995 1994 1993 1992 1991 1990 1996(1) 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Municipal Bond
Fund......................... 0.96% 0.96% 0.97% 0.98% 1.04% 1.14% 1.70% 1.83% 3.24% 3.25%
National Municipal Bond
Fund......................... 1.01% 1.05% 1.06% 1.06% 1.16% 1.33% 2.64% 2.29% 3.25% 3.25%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL BOND FUND
CLASS B CLASS A CLASS B
1996(1) 1995(1) 1994(2) 1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(3) 1996(1) 1995(1) 1994(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 11.26 $10.32 $10.74 $ 11.39 $ 10.41 $ 11.61 $ 10.80 $ 10.61 $ 10.03 $ 10.00 $11.39 $ 10.41 $ 10.76
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.48 0.48 0.25 0.52 0.53 0.58 0.60 0.60 0.68 0.66 0.46 0.47 0.24
(0.11) 0.94 (0.42) (0.12) 0.98 (1.20) 0.82 0.32 0.60 0.03 (0.12 ) 0.98 (0.35)
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.37 1.42 (0.17) 0.40 1.51 (0.62) 1.42 0.92 1.28 0.69 0.34 1.45 (0.11)
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.48) (0.48) (0.25) (0.52) (0.53) (0.58) (0.60) (0.60) (0.68) (0.66) (0.46 ) (0.47) (0.24)
0.00 0.00 0.00 (0.06) 0.00 0.00 (0.01) (0.13) (0.02) 0.00 (0.06 ) 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.48) (0.48) (0.25) (0.58) (0.53) (0.58) (0.61) (0.73) (0.70) (0.66) (0.52 ) (0.47) (0.24)
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 11.15 $11.26 $10.32 $ 11.21 $ 11.39 $ 10.41 $ 11.61 $ 10.80 $ 10.61 $ 10.03 $11.21 $ 11.39 $ 10.41
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
--------- ------ ------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
3.39% 14.05% (1.59)% 3.58% 14.76% (5.41)% 13.39% 8.97% 13.22% 8.52% 3.07 % 14.16% (0.99)%
$ 5,360 $3,162 $1,416 $49,597 $53,387 $50,037 $57,590 $39,463 $26,432 $ 3,261 $1,952 $ 1,051 $ 342
1.46% 1.46% 1.28% 1.01% 0.91% 0.57% 0.50% 0.54% 0.00% 0.00% 1.51 % 1.44% 1.28%
4.33% 4.42% 4.91% 4.63% 4.79% 5.35% 5.29% 5.61% 6.59% 7.20% 4.14 % 4.22% 4.72%
29.28% 25.90% 30.32% 44.76% 53.43% 37.52% 3.72% 39.20% 14.47% 15.37% 44.76 % 54.30% 37.52%
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUNDS
U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
CLASS A
1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 10.30 $ 9.55 $ 10.60 $ 10.57 $ 10.59 $ 10.02 $ 10.00
-------- -------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income....... 0.67 0.69 0.70 0.74 0.82 0.91 0.92
Net gain or loss on
securities (both realized
and unrealized)............. (0.23) 0.75 (1.05) 0.03 (0.02) 0.57 0.02
-------- -------- -------- -------- -------- -------- -------
Total from investment
operations.................. 0.44 1.44 (0.35) 0.77 0.80 1.48 0.94
-------- -------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends (from net
investment income).......... (0.67) (0.69) (0.70) (0.74) (0.82) (0.91) (0.92)
Distributions (from realized
capital gains).............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions (in excess of
realized gains)............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------
Total distributions......... (0.67) (0.69) (0.70) (0.74) (0.82) (0.91) (0.92)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of
period....................... $ 10.07 $ 10.30 $ 9.55 $ 10.60 $ 10.57 $ 10.59 $ 10.02
-------- -------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------- -------
Total return(6)............... 4.50% 15.50% (3.30)% 7.49% 7.85% 15.53% 10.46%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)..................... $224,301 $255,614 $245,715 $311,089 $209,593 $114,130 $ 7,387
Ratio of expenses to average
net assets
(annualized)(7)............. 1.03% 1.02% 0.80% 0.78% 0.60% 0.00% 0.00%
Ratio of net investment
income to average net assets
(annualized)................ 6.67% 6.90% 7.05% 6.93% 7.74% 8.79% 9.84%
Portfolio turnover rate..... 27.45% 48.39% 16.33% 25.63% 25.50% 4.35% 12.47%
Average commission rate
paid........................ -- -- -- -- -- -- --
</TABLE>
(1) For the year ended December 31.
(2) For the period October 1, 1993 (inception of operations) to December 31,
1993.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period January 10, 1990 (effective date of registration) to December
31, 1990.
(5) For the period May 20, 1996 (inception of operations) to December 31, 1996.
(6) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(7) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------------
PERIOD ENDED 1996 1995 1994 1993 1992 1991 1990 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and Mortgage
Securities Fund.............. 1.03% 1.04% 1.05% 1.05% 1.12% 1.20% 2.15% 1.82% 2.27% 3.25%
Strategic Income Fund......... 1.85% NA NA NA NA NA NA 3.25% NA NA
Balanced Fund................. 1.28% 1.53% 1.56% 2.04% NA NA NA 2.21% 3.25% 3.25%
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
STOCK FUNDS
STRATEGIC INCOME
FUND
BALANCED FUND
CLASS B CLASS A CLASS B CLASS A CLASS B
1996(1) 1995(1) 1994(3) 1996(5) 1996(5) 1996(1) 1995(1) 1994(1) 1993(2) 1996(1) 1995(1) 1994(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10.30 $ 9.55 $ 9.80 $ 5.00 $ 5.00 $ 11.19 $ 9.23 $ 9.85 $ 10.00 $ 11.17 $ 9.22 $ 9.41
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.62 0.64 0.32 0.25 0.23 0.42 0.42 0.44 0.09 0.36 0.35 0.10
(0.23) 0.75 (0.25) 0.18 0.17 1.32 2.02 (0.62) (0.15) 1.32 2.03 (0.07)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.39 1.39 0.07 0.43 0.40 1.74 2.44 (0.18) (0.06) 1.68 2.38 0.03
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.62) (0.64) (0.32) (0.25) (0.23) (0.42) (0.42) (0.44) (0.09) (0.37) (0.37) (0.22)
0.00 0.00 0.00 (0.01) (0.01) (0.33) (0.06) 0.00 0.00 (0.33) (0.06) 0.00
0.00 0.00 0.00 (0.01) (0.01) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.62) (0.64) (0.32) (0.27) (0.25) (0.75) (0.48) (0.44) (0.09) (0.70) (0.43) (0.22)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 10.07 $ 10.30 $ 9.55 $ 5.16 $ 5.15 $ 12.18 $ 11.19 $ 9.23 $ 9.85 $ 12.15 $ 11.17 $ 9.22
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
3.98% 14.93% 0.69% 8.89% 8.25% 15.81% 26.76% (1.87)% (0.62)% 15.25% 26.08% 0.25%
$ 5,888 $ 3,799 $ 1,451 $17,863 $ 2,964 $29,289 $13,547 $ 9,654 $ 5,638 $ 4,802 $ 1,632 $ 586
1.53% 1.53% 1.43% 0.02% 0.74% 1.28% 1.48% 0.80% 0.00% 1.77% 1.99% 1.48%
6.19% 6.34% 6.82% 8.19% 7.47% 3.86% 4.15% 4.85% 5.02% 3.37% 3.66% 4.43%
27.45% 48.39% 16.33% 187.15% 187.15% 41.41% 25.84% 29.19% 0.00% 41.41% 25.84% 29.19%
-- -- -- -- -- $0.0591 -- -- -- $0.0591 -- --
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
STOCK FUNDS
GROWTH AND INCOME FUND
CLASS A
1996(1) 1995(1) 1994(1) 1993(1) 1992(1) 1991(1) 1990(4)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 15.91 $ 13.52 $ 14.01 $ 13.45 $ 13.52 $ 10.04 $ 10.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)...................... 0.14 0.20 0.16 0.22 0.25 0.31 0.04
Net gain or loss on
securities (both realized
and
unrealized)................. 3.06 4.26 (0.34) 1.17 (0.07) 3.48 0.04
------- ------- ------- ------- ------- ------- -------
Total from investment
operations.................. 3.20 4.46 (0.18) 1.39 0.18 3.79 0.08
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends (from net
investment income).......... (0.14) (0.20) (0.16) (0.22) (0.25) (0.31) (0.04)
Distributions (from realized
capital gains).............. (1.15) (1.87) (0.12) (0.59) 0.00 0.00 0.00
Distributions (in excess of
realized gains)............. 0.00 0.00 (0.03) (0.02) 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- -------
Total distributions......... (1.29) (2.07) (0.31) (0.83) (0.25) (0.31) (0.04)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period....................... $ 17.82 $ 15.91 $ 13.52 $ 14.01 $ 13.45 $ 13.52 $ 10.04
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Total return(6)............... 20.16% 33.06% (1.24)% 10.40% 1.40% 38.15% 0.78%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)..................... $138,604 $93,061 $69,590 $59,392 $38,200 $20,084 $ 1,082
Ratio of expenses to average
net assets
(annualized)(7)............. 1.16% 1.24% 1.04% 1.06% 0.87% 0.00% 0.00%
Ratio of net investment
income to average net assets
(annualized)................ 0.82% 1.26% 1.21% 1.59% 2.00% 3.44% 5.20%
Portfolio turnover rate..... 86.66% 125.28% 123.64% 178.91% 116.14% 146.31% 14.59%
Average commission rate
paid........................ $0.0602 -- -- -- -- -- --
</TABLE>
(1) For the year ended December 31.
(2) For the period October 1, 1993 (inception of operations) to December 31,
1993.
(3) For the period July 1, 1994 (inception of operations) to December 31, 1994.
(4) For the period December 5, 1990 (inception of operations) to December 31,
1990.
(5) For the period April 30, 1996 (effective date of registration) to December
31, 1996.
(6) Total returns assume purchase at net asset value (without sales charge) at
the beginning of each period. Returns for periods less than a full year are
aggregate (non-annualized) returns.
(7) Effective January 10, 1990, the Distributor and Adviser for the Atlas Funds
agreed to temporarily cap (or waive) their management and 12b-1 fees and to
absorb other operating expenses. Had such action not been taken, the ratio
of expenses to average net assets (annualized) would have been as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED 1996 1995 1994 1993 1992 1991 1990 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income Fund........ 1.16% 1.24% 1.28% 1.36% 1.45% 1.66% 3.41% 1.83% 2.39% 3.25%
Strategic Growth Fund......... 1.31% 1.65% 1.74% 2.23% NA NA NA 2.12% 3.25% 3.25%
Global Growth Fund............ 2.36% NA NA NA NA NA NA 3.25% NA NA
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GROWTH
STRATEGIC GROWTH FUND FUND
CLASS B CLASS A CLASS B CLASS A CLASS B
1996(1) 1995(1) 1994(3) 1996(1) 1995(1) 1994(1) 1993(2) 1996(1) 1995(1) 1994(3) 1996(5) 1996(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 15.89 $ 13.52 $ 13.04 $ 12.69 $ 10.00 $ 10.14 $ 10.00 $ 12.63 $ 9.98 $ 9.92 $ 10.14 $ 10.14
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.06 0.10 0.02 0.13 0.10 0.11 0.05 0.07 0.03 (0.05) 0.01 (0.03)
3.05 4.26 0.67 2.88 2.82 (0.14) 0.14 2.85 2.82 0.21 1.10 1.08
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
3.11 4.36 0.69 3.01 2.92 (0.03) 0.19 2.92 2.85 0.16 1.11 1.05
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.07) (0.12) (0.06) (0.13) (0.09) (0.11) (0.05) (0.07) (0.06) (0.10) (0.01) 0.00
(1.15) (1.87) (0.12) (1.56) (0.14) 0.00 0.00 (1.56) (0.14) 0.00 (0.27) (0.27)
0.00 0.00 (0.03) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01) (0.01)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(1.22) (1.99) (0.21) (1.69) (0.23) (0.11) (0.05) (1.63) (0.20) (0.10) (0.29) (0.28)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 17.78 $ 15.89 $ 13.52 $ 14.01 $ 12.69 $ 10.00 $ 10.14 $ 13.92 $ 12.63 $ 9.98 $ 10.96 $ 10.91
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
19.60% 32.32% 5.32% 23.72% 29.14% (0.28)% 1.94% 23.13% 28.58% 1.57% 10.89% 10.34%
$12,427 $ 4,292 $ 1,460 $22,253 $12,223 $ 6,471 $ 4,168 $ 5,689 $ 2,332 $ 327 $13,552 $ 2,210
1.66% 1.75% 1.66% 1.31% 1.62% 1.17% 0.00% 1.81% 2.14% 1.80% 1.51% 2.24%
0.29% 0.84% 0.71% 1.08% 1.03% 1.25% 2.66% 0.59% 0.56% 0.82% 0.13% (0.75)%
86.66% 125.28% 123.64% 119.87% 73.32% 54.01% 6.41% 119.87% 73.32% 54.01% 64.89% 64.89%
$0.0602 -- -- $0.0597 -- -- -- $0.0597 -- -- $0.0052 $0.0052
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The table below is designed to help you choose a Fund with investment
objectives that best match your own. Once you decide which Fund(s) best
match your investment objectives, you then need to determine which sales
charge option is most beneficial to you (see "What is the Class A sales
charge option?" and "What is the Class B sales charge alternative?").
<TABLE>
<CAPTION>
U.S. TREASURY NATIONAL MUNICIPAL CALIFORNIA MUNICIPAL
MONEY FUND(1) MONEY FUND(1) MONEY FUND(1)
<S> <C> <C> <C>
SUITABILITY For investors seeking For investors seeking liquidity, higher after
yield combined with tax yield and preservation of principal through
maximum safety, a stable price
liquidity, and
preservation of
principal through a
stable price
INVESTMENT A high level of current A high level of current A high level of current
OBJECTIVES(2) income consistent with income consistent with income consistent with
maximum safety, liquidity and stability liquidity and stability
liquidity and stability of principal, exclud- of principal, exclud-
of principal, exempt able from gross income able from gross income
from state income tax for federal income tax for federal and
in most states purposes California income tax
purposes
PORTFOLIO SECURITIES(3) Short-term obligations Short-term municipal Short-term municipal
directly issued by the securities of various securities of
U.S. Treasury issuers California issuers
QUALITY OF DEBT Highest Quality High Quality
SECURITIES(4) -- supported by the -- two highest rating quality grades, such as
full faith and credit Moody's (Aaa, Aa) or S&P (AAA,AA)
of the U.S. Government
</TABLE>
(1) There can be no assurance that a stable net asset value will always be
achieved.
(2) These investment objectives are fundamental and cannot be changed without
shareholder approval.
(3) Please read the Appendix for a more detailed description of securities and
strategies.
(4) Based on ratings of nationally recognized credit rating agencies such as
Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") or, if not rated, of comparable quality in the opinion
of the Adviser, or Subadviser if applicable. Applies only to debt
securities. Rating agencies do not rate equity securities. Please read the
Appendix for a more detailed description of quality standards.
18
<PAGE>
<TABLE>
<CAPTION>
NATIONAL INSURED CALIFORNIA INSURED
U.S. GOVERNMENT INTERMEDIATE INTERMEDIATE NATIONAL MUNICIPAL
INTERMEDIATE FUND MUNICIPAL FUND MUNICIPAL FUND BOND FUND
<S> <C> <C> <C> <C>
For long-term investors For long-term investors seeking liquidity and For long-term investors
seeking liquidity and higher after-tax yield than comparable seeking liquidity and
higher pre-tax yield investments producing taxable income may higher after-tax yield
than short-term provide, minimal credit risk, and who can accept than compar-
investments may provide price fluctuations that should be more moderate able investments
and who can accept than long-term bond funds producing taxable
price fluctua- income may
tions that should be provide, and who can
more moderate than accept price
long-term bond funds fluctuations
A high level of current A high level of current A high level of current A high level of current
income consistent with income consistent with income consistent with income consistent with
prudent investment prudent investment prudent investment prudent investment
management, minimizing management, minimizing management, minimizing management and
credit risk and credit risk and credit risk and preservation of
preservation of capital preservation of preservation of capital, excludable
capital, excludable capital, excludable from gross income for
from gross income for from gross income for federal income tax pur-
federal income tax pur- federal and California poses
poses income tax purposes
Intermediate and Intermediate term Intermediate term Intermediate and
long-term U.S. municipal securities of municipal securities of long-term municipal
Government obligations various issuers, that California issuers that securities of various
and mortgage related are insured as to the are insured as to the issuers
securities issued by timely payment of timely payment of
U.S. Goverment agencies principal and interest principal and interest
or
instrumentalities or
private issuers
Quality Quality Investment Grade
-- three highest rating -- three highest rating quality grades, such as -- four highest rating
quality grades, such as Moody's (Aaa, Aa, A) or S&P (AAA, AA, A) quality grades such as
Moody's (Aaa, Aa, A) or Moody's (Aaa, Aa, A,
S&P (AAA, AA, A); Baa) or S&P (AAA, AA,
primarily highest A, BBB)
quality
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES? (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND
CALIFORNIA MUNICIPAL MORTGAGE SECURITIES
BOND FUND FUND STRATEGIC INCOME FUND
<S> <C> <C> <C>
SUITABILITY For long-term investors For long-term investors For long-term investors
seeking liquidity and seeking liquidity and seeking high current
higher after-tax yield higher pre-tax yield income who can accept
than compar- than short- price fluctuations and
able investments term investments may the special risks
producing taxable provide, and who can involved with foreign
income may accept investing, use of
provide, and who can price fluctuations derivatives and
accept price high-yield, lower-rated
fluctuations securities
INVESTMENT A high level of current A high level of current A high level of current
OBJECTIVES(2) income consistent with income consistent with income consistent with
prudent investment prudent investment prudent risk management
management and management and and preservation of
preservation of preservation of capital capital
capital, excludable
from gross income for
federal and California
income tax purposes
PORTFOLIO SECURITIES(3) Intermediate and Intermediate and U.S. Government
long-term municipal long-term U.S. securities, debt
securities of Cali- Government obligations securities of foreign
fornia issuers and mortgage related governments and
securities issued by companies,
U.S. Government and lower-rated,
agencies or high-yield
instrumentalities or debt securities of
private issuers U.S. companies
QUALITY OF DEBT Investment Grade Quality Full Range
SECURITIES(4) -- four highest rating -- three highest rating -- all rating quality
quality grades such as quality grades, such as grades, such as Moody's
Moody's (Aaa, Aa, A, Moody's (Aaa, Aa, A) or (Aaa, Aa, A, Baa, Ba,
Baa) or S&P (AAA, AA, S&P (AAA, AA, A); B, Caa, Ca, C, D) or
A, BBB) primarily highest S&P (AAA, AA, A, BBB,
quality BB, B, CCC, CC, C, D)
</TABLE>
See Footnotes (2) through (4) on page 18.
20
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STRATEGIC GROWTH EMERGING GROWTH
BALANCED FUND FUND FUND GLOBAL GROWTH FUND FUND
<S> <C> <C> <C> <C> <C>
For long-term For long-term For long-term For long-term For long-term
investors seeking investors investors seeking investors seeking investors seeking
a balance of primarily seeking growth of capital growth of capital growth of capital
capital growth and growth of capital, only, and who can only, and who can only, and who can
high current with some current accept price accept price accept greater
income, and who income, and who fluctuations fluctuations and price fluctuations
can accept price can accept price the special risks and the special
fluctuations fluctuations involved with risks involved
substan- with investing in
tial foreign small companies
investing
Long-term capital Long-term capital Long-term capital Long-term capital Long-term capital
growth and a high growth and some growth, without growth, without growth, without
level of current current income consideration of consideration of consideration of
income consistent consistent with current income, current income, current income,
with prudent prudent investment consistent with consistent with consistent with
investment management prudent investment prudent investment prudent investment
management and management management management
preservation of
capital
Common and Common and Common and Common and Common stocks,
preferred stocks, preferred stocks preferred stocks preferred stocks preferred stocks,
convertible and convertible and convertible and convertible convertible
securities and securities securities securities of U.S. securities,
bonds selected primarily selected solely and foreign rights, warrants
for their for their companies and options of
appreciation appreciation "growth- type"
potential and, in potential companies, with
many instances, emphasis on small
for their dividend or emerging growth
paying ability companies
Investment Grade Full Range
-- four highest rating quality grades such as Moody's -- all rating quality grades, such as
(Aaa, Aa, A, Baa) or S&P (AAA, AA, A, BBB) Moody's (Aaa, Aa, A, Baa, Ba, B, Caa,
Ca, C, D) or S&P (AAA, AA, A, BBB, BB,
B, CCC, CC, C, D)
</TABLE>
21
<PAGE>
- ----------------------------------------------
WHAT COMPANIES ARE AFFILIATED WITH THE FUNDS?
Atlas Assets, Inc. (the "Company") was organized by Golden West Financial
Corporation ("Golden West Financial") and is owned by the Atlas Funds'
shareholders. Golden West Financial is a New York Stock Exchange listed
savings and loan holding company, headquartered in Oakland, California, with
assets at December 31, 1996 in excess of $37 billion. The Company has
engaged Atlas Advisers, Inc. (the "Adviser") and Atlas Securities, Inc. (the
"Distributor"), two wholly owned subsidiaries of Golden West Financial, to
provide investment advice and distribution services to the Atlas Funds.
The Adviser is a registered investment adviser. The Adviser has overall
responsibility for the investment advisory services provided to the Atlas
Funds, including formulating the Funds' investment policies, analyzing
market conditions, providing portfolio management services to certain of the
Atlas Funds directly, and monitoring and evaluating the portfolio management
services provided to selected Atlas Funds by others (the "Subadviser" or
"Subadvisers").
The Distributor is a broker-dealer registered with the Securities and
Exchange Commission ("SEC") and maintains membership with the National
Association of Securities Dealers. It is the principal underwriter and sole
distributor of the Company's shares. The Adviser and the Distributor have
contracted with World Savings and Loan Association ("World Savings" or
"World"), Golden West Financial's principal operating subsidiary, for
certain services and facilities to be used in the conduct of mutual fund
operations. The Distributor has established Atlas Investment Centers in
Arizona, California, Colorado, Florida, Kansas, New Jersey and Texas
branches of World Savings, a federally chartered institution with 244
branches in 7 states, as of December 31, 1996. NEITHER THE COMPANY, THE
ADVISER NOR THE DISTRIBUTOR IS A SAVINGS AND LOAN ASSOCIATION OR A BANK, AND
ATLAS FUND SHARES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL OR
PRIVATE INSURANCE FUND.
- ----------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT LIMITATIONS?
All of the Atlas Funds operate under the following fundamental limitations:
Each Atlas Fund will limit its investment in illi-
quid assets, such as restricted securities or repurchase agreements and time
deposits with more than seven days to maturity, to no more than 10% of total
assets. The Atlas Balanced, Global Growth, Strategic Growth, Emerging Growth
and Strategic Income Funds have adopted this restriction as a
non-fundamental operating policy.
Each Atlas Fund will limit its investments in the securities of issuers in
any one industry (except for investments in obligations of the U.S.
Government, its agencies or instrumentalities and municipal obligations) to
no more than 25% of net assets.
Each Atlas Fund, except the California Funds, is "diversified." With respect
to at least 75% of a Fund's total assets, each diversified Fund will limit
its purchases of the securities of a single issuer (except securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities) to
no more than 5% of the Fund's total assets and no more than 10% of the
issuer's outstanding voting securities.
The California Funds, due to the limited number of securities available to
meet their investment objectives, are classified as "non-diversified" under
the Investment Company Act of 1940, as amended (the "1940 Act"). This means
they are not limited in the proportion of their respective assets that may
be invested in the obligations of a single issue or issuer. Each California
Fund will, however, comply with diversification requirements imposed by the
Internal Revenue Code of 1986 (the "Code"), in order to pass on the maximum
tax benefits associated with the income earned by each Fund to each
investor. The Atlas California Municipal Bond Fund and the Atlas California
Insured Intermediate Municipal Fund may assume large positions in the
obligations of a small number of issuers
22
<PAGE>
which may cause the Fund's share price to fluctuate to a greater extent than
share prices of funds holding more diversified portfolios.
- ----------------------------------------------
WHAT ARE THE FUNDS' INVESTMENT POLICIES?
The TREASURY MONEY FUND maximizes safety by investing in debt securities
issued by the U.S. Treasury. These securities, the only securities in which
this Fund will invest, are guaranteed as to principal and interest by the
full faith and credit of the U.S. Government and are of the highest possible
credit quality. Though such securities involve little risk of loss of
principal, if held to maturity, like any debt obligation they are subject to
variations in market value due to fluctuations in interest rates. The
Treasury Money Fund reduces this market risk by investing only in securities
maturing in 13 months or less and by maintaining an average weighted
maturity of 90 days or less.
The NATIONAL FUNDS will, under normal market conditions, each invest at
least 80% of its assets in, or derive at least 80% of its income from,
municipal securities which distribute interest that is excludable from gross
income for federal income tax purposes. The Atlas National Municipal Money
Fund reduces its market risk by investing 100% of its assets in securities
maturing in 13 months or less. The Atlas National Insured Intermediate
Municipal Fund seeks to reduce its market risk by maintaining a dollar
weighted average portfolio maturity between three and ten years.
The CALIFORNIA FUNDS will, under normal market conditions, each invest at
least 80% of its assets in, or derive at least 80% of its income from,
municipal securities which in the opinion of bond counsel bear interest that
is excludable from gross income for federal income tax purposes, and is
exempt from California state personal income tax. These may include
securities issued by the Commonwealth of Puerto Rico, U.S Virgin Islands and
Guam. The Atlas California Municipal Money Fund reduces its market risk by
investing 100% of its assets in securities maturing in 13 months or less.
The Atlas California Insured Intermediate Municipal Fund seeks to reduce its
market risk by maintaining a dollar weighted average portfolio maturity
between three and ten years. Factors which affect California municipal
issuers, such as regional economic downturns, voter initiatives limiting
government taxing or spending powers, or legal or regulatory changes, will
have a greater impact on the California Funds than they would on more
geographically diversified tax-free funds.
All six of the MUNICIPAL FUNDS may invest up to 20% of their assets in
taxable securities. The Municipal Funds are not limited with respect to
investments in municipal obligations classified as "private activity bonds"
by the Code. Private activity bonds are subject to federal alternative
minimum tax. For a complete discussion of private activity bonds and their
potential tax effect, please see the Appendix -- "Portfolio Strategies --
Money Funds" and "How can taxes affect my investment?". When, in the opinion
of the Adviser or Subadviser, abnormal market conditions require a temporary
defensive position, each of the Municipal Funds may invest more than 20% of
its assets in taxable obligations of the same quality and maturity standards
as the tax exempt securities in which it normally invests. Please see the
Appendix for additional discussion of the Municipal Money Funds' quality and
maturity standards.
The INSURED FUNDS will, under normal market conditions, each invest at least
65% of its assets in insured municipal securities rated AAA by S&P or Aaa by
Moody's. Such insured municipal securities will be: (i) insured under a
new-issue insurance policy obtained by the issuer of the security at the
time of original issuance ("new-issue insurance"); (ii) insured under a
secondary market insurance policy purchased by the Fund or a previous holder
of the security ("secondary market insurance"); or (iii) insured under an
insurance policy purchased by the Fund ("portfolio insurance"). Insurance
minimizes the risks to a Fund and its shareholders associated with defaults
of the insured portfolio securities
23
<PAGE>
owned by a Fund. Insurance provides for the timely payment of interest and
repayment of principal; it neither guarantees the market value of the
securities in the Insured Funds' portfolios nor the value of the shares of a
Fund.
The ATLAS U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND will, under normal
market conditions, invest at least 80% of its assets in U.S. Government
securities, mortgage securities, and in repurchase agreements collateralized
by mortgage securities. U.S. Government securities are issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, and include
mortgage-backed securities issued by the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC") (please see the Appendix).
At least 50% of this Fund's assets will be invested in U.S. Government
securities (including GNMA government securities, and FNMA and FHLMC
government agency mortgage securities) and at least 25% of its assets will
be invested in mortgage securities (including U.S. Government and government
agency mortgage securities, and privately issued mortgage related and
mortgage-backed securities).
The ATLAS U.S. GOVERNMENT INTERMEDIATE FUND will, under normal market
conditions, invest at least 65% of its assets in U.S. Government securities
(including GNMA, FNMA and FHLMC obligations). This Fund seeks to reduce its
market risk by maintaining a dollar weighted average portfolio maturity
between three and ten years.
The GOVERNMENT FUNDS may engage in reverse repurchase and dollar reverse
repurchase agreements, when-issued and firm commitment transactions and in
futures and options transactions (please see the Appendix "Investment
Guidelines -- Bond and Stock Funds" for more about these transactions). The
Funds may also anticipate interest rate movements by purchasing
interest-only or principal-only stripped bonds, though there is no assurance
that its predictions will prove accurate.
The ATLAS STRATEGIC INCOME FUND will, under normal market conditions, invest
in each of three market sectors: (1) U.S. Government securities, (2) debt
securities of foreign governments and companies, and (3) lower-rated,
high-yield debt securities of U.S. companies. From time to time the manager
will adjust the amounts the Fund invests in each sector.
By investing in all three sectors, the Fund seeks to reduce the volatility
of fluctuations in its net asset value per share, because the overall
securities price and interest rate movements in each of the different
sectors are not necessarily correlated with each other. Changes in one
sector may be offset by changes in another sector that moves in a different
direction. Therefore, this strategy may help reduce some of the risks from
negative market movements and interest rate changes in any one sector.
However, the Fund may invest up to 100% of its assets in any one sector if
its Subadviser believes that in doing so the Fund can achieve its objective
without undue risk to the Fund's assets.
When investing the Fund's assets, the Subadviser considers many factors,
including general economic conditions in the U.S. and abroad, prevailing
interest rates, and the relative yields of U.S. and foreign securities.
While the Fund may seek to earn income by writing covered call options,
market price movements may make it disadvantageous to do so. The Fund may
also try to hedge against losses by using hedging strategies described
below. When market conditions are unstable, the Fund may invest substantial
amounts of its assets in money market instruments for defensive purposes.
These strategies are described in greater detail in the Appendix and also in
the Statement of Additional Information.
The amount of income the Fund may earn to distribute to shareholders will
fluctuate depending on the securities the Fund owns and the sectors in which
it invests. The Fund is not a complete investment program and is designed
for investors willing to assume a higher degree of risk. There is no
assurance that the Fund will be able to achieve its investment objective.
The
24
<PAGE>
high-yield, lower-rated securities in which the Fund invests, are considered
speculative investments. See Investment guidelines -- Bond and Stock Funds,
"Special Risks of Lower Rated Securities," in Appendix I for a discussion of
these risks.
The ATLAS BALANCED FUND will, under normal market conditions, invest
primarily in a combination of income-producing equity securities (defined as
common stocks, preferred stocks, and securities having the investment
characteristics of common stock, such as securities convertible into common
stock). To achieve its additional objective of conserving principal while
seeking moderate capital appreciation, the Fund will invest in securities of
the type described above thought by the Fund's Subadviser to provide
opportunities for growth without undue risk. The proportion of this Fund's
assets invested in the particular types of securities described above will
vary from time to time, with emphasis on income producing equity securities
but with at least 25% of assets invested in fixed income senior debt.
The ATLAS GROWTH AND INCOME FUND will, under normal market conditions,
invest at least 65% of its assets in equity securities (as previously
defined) expected to grow at a rate that outperforms the general market over
the long-term. Many of these securities will pay dividends. Companies will
be evaluated by the Fund's Subadviser based on a variety of factors
including: quality of management, undervalued assets, or higher projected
earnings growth relative to recognized market benchmark indicators such as
the Standard & Poor's 500 composite index of companies.
The ATLAS STRATEGIC GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) considered by the
Fund's Subadviser to have better-than-expected earnings prospects and
below-normal valuations. Current income will not be a consideration in
selecting portfolio securities.
The ATLAS GLOBAL GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) of growth-oriented
companies that are traded in markets of at least three different countries
(which may include the United States). These securities tend to be issued by
companies that may be developing new products or services, or expanding into
new markets for their products. The Fund may invest in securities of
smaller, less well-known companies as well as those of large, well-known
companies. Current income is not a consideration in selecting
portfolio securities.
The Fund's Subadviser currently employs an investment strategy in selecting
foreign and domestic securities that considers the effects of worldwide
trends on the growth of various business sectors. These trends or "global
themes" currently include telecommunications expansion, emerging consumer
markets, infrastructure development, natural resource use and development,
corporate restructuring, capital market development in foreign countries,
health care expansion, and global integration. These trends, which may
affect the growth of companies having business in these sectors, may suggest
opportunities for investing the Fund's assets. The Subadviser does not
invest a fixed or specific amount of the Fund's assets in any one sector,
and these themes or this approach may change over time.
The Fund may also seek to take advantage of changes in the business cycle by
investing in companies that are sensitive to those changes as well as in
"special situations" the Subadviser believes present opportunities for
capital growth. For example, when a country's economy is expanding,
companies in the financial services and consumer products industries may be
in a position to benefit from changes in the business cycle and may present
long-term growth opportunities.
When investing the Fund's assets, the Subadviser considers many factors,
including the global themes discussed above, general economic conditions
abroad relative to the U.S. and
25
<PAGE>
the trends in foreign and domestic stock markets. The Fund is not a complete
investment program and is designed for investors willing to assume a higher
degree of risk. There is no assurance that the Fund will be able to achieve
its investment objective. See Investment guidelines -- Bond and Stock Funds,
"Risks of foreign securities," in Appendix I for a discussion of these
special risks.
The ATLAS EMERGING GROWTH FUND will, under normal market conditions, invest
primarily in equity securities (as previously defined) of growth-type
issuers with market capitalization less than $1 billion, including emerging
growth companies. The Fund's Subadviser considers growth-type issuers to be
those companies whose goods or services have relatively favorable long-term
prospects for increasing demand, or companies that develop new products,
services, or markets and normally retain a relatively large part of their
earnings for research, development and investment in capital assets. It is
expected that a substantial portion of the Fund's assets will be invested in
over-the-counter securities, which will often be smaller, less well-known
companies. Emerging growth companies in which the Fund may invest are
typically beyond their initial start-up periods but have not yet reached a
state of established growth or maturity. The rate of growth of such
companies at times may be dramatic. However, investments of this type
generally involve greater risk than is customarily associated with large,
more seasoned companies. Current income will not be a consideration in
selecting portfolio securities.
Each Stock Fund may seek investment opportunities among securities of
smaller, less well known ("unseasoned") companies as well as securities of
large, well known companies. The Bond Funds and the Stock Funds may, for
hedging purposes, engage in certain futures, options on futures and options
on securities transactions and the Stock Funds and the Strategic Income Fund
may enter into foreign securities transactions and currency exchange
contracts. For a detailed discussion of these strategies, please see the
Appendix.
The investment objectives listed in "What are the Funds' investment
objectives?" and the investment limitations listed in "What are the Funds'
investment limitations?" are fundamental and cannot be changed without
shareholder approval. All other investment policies and practices described
in this Prospectus and in the Statement of Additional Information (the
"SAI"), unless specifically designated as fundamental, are not fundamental
and can be changed by the Company's Board of Directors without shareholder
approval.
Any investment involves risk and there can be no assurance that a Fund will
achieve its investment objectives. The market value of fixed-income
securities (which constitute the primary investments of the Money and Bond
Funds) can be expected to vary inversely in response to changes in
prevailing interest rates. Generally, the effect of these changes is not
significant on money market instruments, but for longer term securities the
effect is greater. Because of this, the Bond Funds (including the
Intermediate Funds) should be considered as long-term investments.
Shareholders of the Municipal Funds, if they are subject to a federal
alternative minimum tax, may pay an increased alternative minimum income tax
depending on the amount and type of dividends received from those Funds.
Potential investors in the California Funds should consider the possibly
greater risk arising from the geographic concentration and non-diversified
structure of their investments, as well as the current and past financial
condition of California municipal issuers.
The market value of equity securities (which constitute the primary
investments of each of the Stock Funds) may fluctuate over shorter or longer
periods with changing market and economic conditions. Therefore, the Stock
Funds are not suitable investments for anticipating
26
<PAGE>
short-term market swings or for short-term financial needs, and should not
be considered a substitute for a fixed-income investment. Additional
information about investment strategies and policies that one or more of the
Funds may employ appears in the Appendix to this Prospectus and in the SAI.
- ----------------------------------------------
HOW ARE THE FUNDS ADMINISTERED?
The Board of Directors supervises the business activities of the Company,
which include the hiring and supervision of professionals to administer the
Atlas Funds, approval of contracts, election of officers, and approval of
auditor selection and reports. The Directors bring to the Funds extensive
experience in investments, financial services management, economics, and
accounting. Their primary responsibility in overseeing the Atlas Funds is to
serve the investors' best interests. You will find information about each
Director's background in the SAI.
THE ADVISER
The Adviser provides portfolio management services to the Treasury Money
Fund and the Government Funds, and supervises the provision of similar
services to the Municipal Funds by Boston Safe Advisors, Inc. ("Boston
Safe") located at One Boston Place, Boston, Massachusetts 02108, and to the
Stock Funds by Oppenheimer Funds, Inc. ("OppenheimerFunds") located at Two
World Trade Center, New York, New York 10048. The Adviser, established by
Golden West Financial to provide investment advisory and portfolio
management services to the Atlas Funds, began operations at the Company's
January 10, 1990 inception. To provide services to its sole client, the
Adviser has retained investment professionals with substantial experience in
managing institutional and individual investments.
Marion O. Sandler, Chairman and Chief Executive Officer of Golden West
Financial and World Savings, is Chairman of the Board, Chief Executive
Officer and President of the Adviser, the Distributor and the Company.
Roberta A. Conger, Senior Vice President and Treasurer for World Savings,
and Tim Stare, Vice President of World Savings, are the persons primarily
responsible for the day-to-day management of the portfolios of the
Government Funds and the Treasury Money Fund. Ms. Conger has more than 26
years experience as a trader and portfolio manager of fixed-income
securities, including the last 12 years involved in managing the investments
of World Savings and Golden West Financial's over $2 billion portfolio of
mortgage-backed and mortgage related securities, money market instruments,
bonds, other debt obligations, and U.S. Government securities. Mr. Stare has
over 20 years experience as a trader and portfolio manager of fixed-income
securities, including the last six years managing investment portfolios for
World Savings and Golden West Financial.
Boston Safe is a wholly owned subsidiary of The Boston Company, Inc., an
indirect wholly owned subsidiary of Mellon Bank Corporation, a publicly
owned multibank holding company ("Mellon"). As of December 31, 1996, Mellon,
through its subsidiaries, including the Municipal Funds' Subadviser,
provided investment advisory services to investment company portfolios with
aggregate assets in excess of $87 billion, of which over $5 billion was in
fixed-income assets and over $24 billion was in tax-exempt assets. John F.
Flahive, a Vice President with Boston Safe, has been the person primarily
responsible for the day-to-day management of the Municipal Funds since
November 1, 1994. Prior to joining Mellon in October, 1994, Mr. Flahive was
a Senior Portfolio Manager at Neuberger & Berman for approximately one year.
Prior to that, Mr. Flahive was in the municipal bond departments of T. Rowe
Price and Dean Witter for approximately 8 years.
OppenheimerFunds is owned by Oppenheimer Acquisition Corp., a holding
company owned in part by senior management of OppenheimerFunds and
ultimately controlled by
27
<PAGE>
Massachusetts Mutual Life Insurance Company, a mutual life insurance company
which also advises pension plans and investment companies. As of December
31, 1996, OppenheimerFunds and its affiliates advised U.S. investment
companies with aggregate assets in excess of $62 billion, of which
approximately $29 billion was invested in equity funds.
The Portfolio Managers of the Atlas Growth and Income Fund are Bruce
Bartlett and Diane L. Sobin. They have been the persons principally
responsible for the day-to-day management of that Fund since July 5, 1995.
During the past five years, Mr. Bartlett, a Vice President and Portfolio
Manager of OppenheimerFunds, was previously a Vice President and Senior
Portfolio Manager with First of America Investment Corporation. During the
past five years, Ms. Sobin, a Vice President and Portfolio Manager of
OppenheimerFunds, was previously a Vice President and Senior Portfolio
Manager with Dean Witter InterCapital, Inc.
John P. Doney, Vice President and Portfolio Manager of OppenheimerFunds, has
been the person primarily responsible for the day-to-day management of the
Atlas Balanced Fund, since the Fund's inception of operations on October 1,
1993.
Robert C. Doll, Jr., Executive Vice President, Director of Equity
Investments, and Portfolio Manager of OppenheimerFunds, has been the person
primarily responsible for the day-to-day management of the Atlas Strategic
Growth Fund since the Fund's inception of operations on October 1, 1993.
During the past five years, Mr. Doll has served as an officer and portfolio
manager of various funds managed by OppenheimerFunds.
William L. Wilby has been the person primarily responsible for the
day-to-day management of the Atlas Global Growth Fund since that Fund's
inception of operations on April 15, 1996. During the past five years, Mr.
Wilby, a Senior Vice President and Portfolio Manager of OppenheimerFunds,
has served as an officer and portfolio manager for various funds managed by
OppenheimerFunds, prior to which he was an international investment
strategist at Brown Brothers, Harriman & Co. and a Managing Director and
Portfolio Manager at AIG Global Investors.
Jay W. Tracey, III, Vice President and Portfolio Manager of
OppenheimerFunds, has been the person primarily responsible for the
day-to-day management of the Atlas Emerging Growth Fund since that Fund's
inception of operations on April 30, 1997. During the past five years, Mr.
Tracey has served as an officer and portfolio manager for other funds
managed by OppenheimerFunds, including the Oppenheimer Discovery Fund, after
which the Atlas Emerging Growth Fund is patterned. Mr. Tracey also served as
a managing director of Buckingham Capital Management. Prior to joining
OppenheimerFunds, Mr. Tracey was a Senior Vice President of Founders Asset
Management, Inc., prior to which he was a securities analyst and portfolio
manager for Berger Associates, Inc.
Arthur P. Steinmetz and David P. Negri have been the individuals primarily
responsible for the day-to-day management of the Atlas Strategic Income Fund
since that Fund's inception of operations on May 20, 1996. During the past
five years, Mr. Steinmetz, a Senior Vice President and Portfolio Manager of
OppenheimerFunds, and Mr. Negri, a Vice President and Portfolio Manager of
OppenheimerFunds, have each served as officers and portfolio managers of
various funds managed by OppenheimerFunds.
A Subadviser may be removed by the Adviser or by the Company at any time, in
which event the Adviser would directly manage the Fund or another Subadviser
would be engaged for that purpose.
Each Fund pays the Adviser a management fee for investment management
services. The Adviser, in turn, pays a Subadviser for its portfolio
management services. The management fee is
28
<PAGE>
an annual rate, equal to a percentage of each Fund's average net assets and
paid monthly as follows:
ANNUAL MANAGEMENT FEES
<TABLE>
<CAPTION>
Assets Assets over Assets
up to $100 million over
$100 and up to $500
Funds million $500 million million
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Money Funds .50% .50% .475%
Bond Funds
(other than the Strategic
Income Fund) .55% .55% .50%
Strategic Income Fund .75% .70% .65%
Stock Funds (other than
the Global Growth and
Emerging Growth Funds) .70% .60% .50%
Global Growth and Emerging
Growth Funds .80% .75% .70%
</TABLE>
Additionally, the Adviser oversees the transfer agent services provided to
the Funds by State Street Bank and Trust Company ("SSB&T"), and by SSB&T's
designated Shareholder Services Agent, National Financial Data Services
("NFDS"), and the custodial and accounting services provided by Investors
Bank and Trust Company ("IBT").
In addition to the management fee, each Fund will pay directly or reimburse
the Adviser for expenses incurred on a Fund's behalf. These expenses
include, but are not limited to: fees for custody, transfer agency, dividend
disbursement, accounting, pricing, legal and auditing services; filing and
registration fees; shareholder reports; printing and postage; office
facilities, stationery and supplies; the clerical, executive and
administrative costs incurred by the Adviser in overseeing or administering
all of the above; and other direct administrative and service costs. Common
expenses will be allocated to each Fund on a basis the Company's Directors
deem fair and equitable.
THE DISTRIBUTOR AND DISTRIBUTION PLANS
The shares of each Atlas Fund are distributed by Atlas Securities, Inc. (the
"Distributor"), which serves as the principal underwriter of each Fund's
shares, pursuant to a Principal Underwriting Agreement which provides for a
commission to be paid at the time of purchase of Class A shares of the Bond
and Stock Funds and on a contingent deferred basis upon the redemption of
Class B shares of those Funds and the Atlas U.S. Treasury Money Fund (please
see "What price will I pay?" for more information). The Distributor may also
receive payments under separate Distribution Plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act"), approved by the Company's Board of Directors,
which are subject to annual renewal. The combination of CDSC and
distribution fees retained by the Distributor (as described under "Class B
Distribution Plan") facilitate the sale of Class B shares without a sales
charge being deducted at the time of purchase.
Under the Class A Distribution Plan, the Company may reimburse the
Distributor up to a maximum of .25% per year of average daily net assets of
all Class A shares outstanding for each Fund, payable on a quarterly basis,
for actual costs expended on behalf of that Fund for advertising, marketing,
distribution, shareholder services and the printing and distributing of the
Company's Prospectus, Statement of Additional Information and sales
literature. Reimbursements from one Atlas Fund will not be expended for
expenses of another Atlas Fund. The Distributor may, in turn, make payments
up to a maximum of .25% per year to securities dealers for distribution
services, though shares are currently offered only through the Distributor.
Under the Class B Distribution Plan, the Distributor is compensated for its
services and costs incurred in connection with the distribution of and
distribution-related services for the Funds' Class B shares. Pursuant to the
Class B Plan, each Fund that has sold Class B shares will, on a monthly
basis, pay the Distributor a distribution fee of 1/12 of the annual fee
computed on the average net asset value of all Class B shares outstanding
for the month. The Plan limits the distribution fee to 0.75% per annum.
Distribution fee payments attributable to
29
<PAGE>
Class B shares are designed to permit an investor to purchase shares of a
Fund without the assessment of a front-end sales charge and at the same time
permit the Distributor to compensate its investment representatives in
connection with the sale of Class B shares of a Fund. The Distributor's
actual distribution expenses for any given year may exceed the aggregate of
payments received pursuant to the Class B Plan, and such expenses may be
carried forward and paid in future years. The Class B Plan has the effect of
increasing annual expenses of Class B shares of a Fund from what its
expenses would otherwise be and thereby decreasing income dividends, if any.
THE FUNDS
The Company was organized as a Maryland corporation on November 19, 1987.
The Company's shares are currently issued in fourteen series and, except as
otherwise indicated below, have equal rights and privileges. Each share
represents an interest only in one particular Atlas Fund. When issued,
shares are fully-paid and nonassessable, and have no preemptive,
subscription, or cumulative voting rights. The Company's Articles of
Incorporation, as amended, allow the Board of Directors to issue one billion
shares, to increase this amount and to establish additional Atlas Funds.
Each shareholder of a Fund is entitled to a proportionate share of that
Fund's dividends and distributions and net distributable assets upon
liquidation.
The Company's Board of Directors has author-
ized two classes of stock (Class A and Class B) for each Fund, which
constitute the Company's shares of capital stock. As of April 19, 1994, all
of the previously outstanding shares of each Fund were redesignated as Class
A shares without any other changes. As described in this Prospectus, each
class has different dividends, distributions and expenses and may have
different net asset values. Class B shares will automatically convert to
Class A shares sixty months after an investor's purchase order for Class B
shares is accepted. See "What is the Class B sales charge alternative?".
The Company does not normally hold annual shareholders meetings. Meetings of
shareholders will be held as determined by the Board of Directors or as
required by the 1940 Act or other applicable law. The Board of Directors is
committed to keeping you well informed about your Fund investments through
regular reports. Shareholder meetings may be called for such matters as
electing Directors, approving investment advisory agreements or making a
change to a Fund's fundamental policies. Each shareholder is entitled to one
vote per share on matters affecting that Fund and on general matters.
Shareholders of a particular Class have the exclusive right to vote by Class
on matters determined by the Board to affect only that Class. On all other
matters submitted to a vote of the stockholders, the holders of separate
Classes of shares of a Fund vote together as a single Class. A meeting must
be held within 60 days in the event that, at any time, less than a majority
of the Directors holding office were elected by shareholders. Holders of 10%
of the shares of a Fund may require a shareholder meeting for any reason,
including removal of a Director.
30
<PAGE>
INVESTOR'S MANUAL
- --------------------------------
HOW CAN I COMMUNICATE WITH
THE FUNDS?
An Atlas Investment Representative will always be happy to help you and
answer any questions you may have. To talk to an Atlas Investment
Representative, please call 1-800-933-ATLAS (1-800-933-2852). Atlas
Securities, Inc. is headquartered at:
794 Davis Street
San Leandro, California 94577
You can deliver your payment and any related documents to Atlas headquarters
or to the World branch nearest you. The Distributor will forward those
payments and documents to the Shareholder Services Agent (the "Agent") for
pricing and investment purposes. Normally, your forwarded documents will
reach the Agent within three business days, although this cannot be
guaranteed. Of course, you can always send New Account Forms, checks,
written requests, instructions or inquiries by regular mail or by special
overnight, certified or registered delivery, directly to the Agent at the
following addresses:
REGULAR MAIL
Atlas Funds
P.O. Box 419056
Kansas City, MO 64141-6056
SPECIAL DELIVERY
Atlas Funds
c/o NFDS
1004 Baltimore
Kansas City, MO 64105-1807
The New Account Form is an important way for you to communicate with a Fund.
For IRAs, the IRA Adoption Agreement & Transfer Form serves the same
purpose. The New Account Form is enclosed with this Prospectus and serves
several purposes:
/ /The New Account Form tells the Agent how you
want the account registered. The account registration is the name, mailing
address, and type of account, such as individual, joint or corporate. This
identifies the legal owner of the shares and tells the Agent how to
communicate with the owner.
/ /The New Account Form tells the Agent what
your social security or taxpayer identification number is and provides the
tax status information and certification required by the Internal Revenue
Service.
/ /The New Account Form tells the Agent which
service features you wish to select, such as Telephone Exchange, Expedited
Payment and Checkwriting, if available (please see "What services are
available?").
/ /The New Account Form provides the Agent with
the signatures and authorizations required to carry out your instructions.
31
<PAGE>
- --------------------------------------------------------------------------------
HOW CAN I INVEST?
There are several options available to you for investing in an Atlas Fund.
If you are purchasing an Atlas Bond or Stock Fund, you will need to decide
whether Class A shares, which are subject to a front-end sales charge, or
Class B shares, which are subject to a contingent deferred sales charge, are
best for you.
Additional information is contained in "What price will I pay?", "What is
the Class A sales charge option?", "What is the Class B sales charge
alternative?", "What else should I know about purchases?" and "What services
are available?". If you have any questions or
wish to schedule an appointment with an Atlas Investment Representative at a
World branch, just call 1-800-933-ATLAS (1-800-933-2852) for assistance.
OPENING YOUR ACCOUNT -- You can deliver your check and New Account Form in
person to your World branch for forwarding to the Agent or mail your check,
New Account Form and any other related documents to the address listed on
the Information and Instructions to the New Account Form. The minimum
initial investment is $2,500 ($250 for IRAs and accounts of officers,
directors, current regular full-time employees and regular part-time
employees, or retired employees of Golden West Financial companies "employee
accounts").
SUBSEQUENT PURCHASES -- The minimum subsequent investment is $250 ($50 for
employee accounts). You can deliver your check in person or mail it to the
address printed on your last confirmation statement. Please indicate the
name of the Fund, Class of shares and account number on your check, or in
your written request, or include a stub from a prior statement.
TELEPHONE ORDERS -- FOR WORLD'S INSURED MONEY MARKET ACCOUNT BANK
WIRES: call 1-800-933-ATLAS and an Atlas Investment Representative will help
you set up your Fund account and complete the wire transfer for $2,500 or
more ($1,000 or more for subsequent purchases). FOR ALL OTHER BANK WIRES:
call 1-800-933-2852 for an account number and to notify us of the wire, then
instruct your bank to wire $2,500 or more ($1,000 or more for subsequent
purchases) to:
INVESTORS BANK & TRUST COMPANY
ABA#011001438
ACCOUNT #188888888
FUND NAME:
CLASS OF SHARES: (PLEASE SPECIFY A OR B)
CUSTOMER NAME:
FUND ACCOUNT #:
Your bank may charge you a fee for this service.
Please see "What services are available? -- Telephone transactions" for
information on World's Insured Money Market Account one-call wire feature.
All other wires from any bank or savings institution, including those from
other World accounts, will require you to contact Atlas and also coordinate
with your bank or savings institution to have the money wired.
ORDER PROCESSING -- All payments received in good order by the Agent by 4:00
pm Eastern time (1:00 pm Pacific time) on any day the New York Stock
Exchange is open for normal trading will be invested at the next determined
price.
- ----------------------------------------------
WHAT PRICE WILL I PAY?
The value of each share you own is referred to as its net asset value, which
is determined by deducting portfolio liabilities from portfolio assets and
dividing the net amount by the number of shares outstanding. Net asset value
per share is calculated at the close of regular trading, normally 4:00 pm
Eastern time (1:00 pm Pacific time), each business day the New York Stock
Exchange is open for normal trading. The net asset values of Class A shares
and Class B shares may diverge due to the different distribution and other
expenses of each class of shares. Each Fund, other than the Atlas Municipal
Money Funds, which only offer Class A shares, offers both Class A and Class
B shares.
MONEY FUND PRICES -- You can buy Class A shares of each of the three Money
Funds at net
32
<PAGE>
asset value without a sales charge. The Municipal Money Funds are only
available in Class A. Class B shares of the Atlas U.S. Treasury Money Fund
are sold without an initial sales charge, but are subject to the same
contingent deferred sales charge and distribution fee as described below for
Class B shares of Bond and Stock Funds. As a result, DIRECT PURCHASES OF
CLASS B SHARES OF THE ATLAS U.S. TREASURY MONEY FUND ARE DISCOURAGED BECAUSE
IT GENERALLY WILL BE MORE ADVANTAGEOUS FOR YOU TO PURCHASE CLASS A SHARES.
Each Money Fund attempts to maintain a constant net asset value of $1.00 per
share, though there can be no assurance that this will always be achieved.
The Money Funds value portfolio holdings by the amortized cost method which
is based on the cost of the security and assumes a constant amortization to
maturity of any discount or premium.
BOND AND STOCK FUND PRICES -- If you purchase Class A shares you will pay a
sales charge at the time of purchase of up to 3.00% of the public "offering
price" per share. As a result, Class A shares are not subject to any charges
when they are redeemed. Purchases of Class A shares may also qualify for
reduced sales charges (see "What is the Class A sales charge option?").
Class A shares have lower expenses than Class B shares because they pay a
lower distribution fee. Therefore, Class A shares pay correspondingly higher
dividends per share than Class B shares, to the extent any dividends are
paid. However, because a sales charge is deducted from your Class A share
investment at the time of purchase, you would initially own fewer shares of
Class A than if you purchased Class B shares, which under certain
circumstances could mean that Class B share purchases might be more
advantageous than Class A.
Class B shares are sold without an initial sales charge, but are subject to
a contingent deferred sales charge, payable at the time of redemption and
adjustable based on your holding period. This "adjustable load" starts at
3.00% for shares redeemed within two years of purchase, and gradually
reduces to 0% for shares held over five years. Class B shares are subject to
a distribution fee at the annual rate of up to 0.75% of the average net
assets attributable to the Class B shares. Class B shares will automatically
convert into Class A shares, based on relative net asset values, at the end
of the fifth year after purchase (see "What is the Class B sales charge
alternative?"). Class B shares provide the benefit of putting all of the
investor's dollars to work from the time the investment is made but, until
conversion into Class A shares, will have higher expenses and, therefore,
lower dividends than Class A shares due to the higher Class B distribution
fee. If Class B shares are not held for a full five years after purchase,
the contingent deferred sales charge, or adjustable load, applied at the
time of redemption could result in a Class B purchase being less
advantageous for an investor than Class A.
CLASS A OR CLASS B? -- The decision as to which Class of shares provides a
more suitable investment for you depends on a number of factors, including
the Fund being purchased and the amount and intended length of the
investment. DUE TO THE LOWER DISTRIBUTION FEE, CLASS A SHARE INCOME
DIVIDENDS WILL BE HIGHER THAN THOSE FOR CLASS B SHARES. HOWEVER, BECAUSE NO
FRONT-END SALES CHARGE IS PAID ON CLASS B SHARES AT THE TIME OF PURCHASE,
THE SAME INITIAL INVESTMENT WILL PURCHASE MORE CLASS B SHARES THAN CLASS A
SHARES. If you are making an investment that qualifies for a significantly
reduced sales charge or do not intend to leave your principal investment in
the Fund for a minimum of five years, you should consider purchasing Class A
shares. If you prefer not to pay an initial sales charge and plan to hold
your investment for more than five years, you should consider Class B
shares. WHEN PURCHASING SHARES OF A FUND, YOU MUST SPECIFY WHETHER YOU WISH
TO PURCHASE CLASS A OR CLASS B SHARES. ORDERS FOR CLASS B SHARES OF THE
ATLAS BOND AND STOCK FUNDS THAT WOULD QUALIFY FOR A CLASS A BREAKPOINT SALES
CHARGE REDUCTION AT THE $100,000 LEVEL OR ABOVE WILL BE DISCOURAGED. IT
GENERALLY WILL BE MORE ADVANTAGEOUS FOR SUCH PURCHASES TO
33
<PAGE>
BE MADE IN CLASS A SHARES. Your Atlas Investment Representative will be
happy to assist you in determining whether a Class A or Class B purchase is
best for you. You can visit your Atlas Investment Representative in a World
branch near you or call 1-800-933-ATLAS (1-800-933-2852) to make an
appointment with an Atlas Investment Representative or have one of our
Representatives help you over the telephone.
- ----------------------------------------------
WHAT IS THE CLASS A SALES CHARGE OPTION?
Class A shares of the Bond and Stock Funds are sold at their net asset value
plus a front-end sales charge imposed at the time of purchase.
SALES CHARGE DISCOUNTS -- Volume purchases of Class A Bond and Stock Fund
shares qualify you for a sales charge reduction if you reach one of the
"breakpoints" shown in the following table. The table shows the sales charge
for Class A shares as a percentage of the offering price, which is the total
amount you pay, including the sales charge, and as a percentage of the net
amount invested, which is what remains after the sales charge is deducted.
<TABLE>
<CAPTION>
Breakpoint Sales charge -- Class A
based on Shares
amount of Class A (as a % of)
shares purchase Offering Net amount
(at offering price) price invested
<S> <C> <C>
Less than $25,000 3.00% 3.09%
$25,000 to $49,999 2.75% 2.83%
$50,000 to $99,999 2.50% 2.56%
$100,000 to $249,999 2.00% 2.04%
$250,000 to $499,999 1.50% 1.52%
$500,000 to $999,999 0.75% 0.76%
$1,000,000 and over 0.50% 0.50%
</TABLE>
You can combine all of your Atlas Fund purchases of Class A shares and the
balances of your other Class A and Class B share Atlas Funds' accounts with
accounts of your spouse, your children under the age of 21, your employee
benefit plan, and any trust or custodial accounts for which you, your spouse
or your children under the age of 21 are beneficiaries (collectively
referred to as "related purchases" or "related accounts") in order to
qualify for a sales charge reduction.
RIGHT OF ACCUMULATION -- You can qualify for a breakpoint sales charge
reduction by combining all Class A Bond and Stock Fund related purchases
with the current net asset value of all Class A and Class B share Bond,
Stock and Money Fund related accounts.
WORLDLINK -- If your Class A Atlas Fund purchase is made with a check or
bank wire from a financial institution other than World Savings ("World"),
you can include the balances in your World and Atlas Annuity Accounts, with
the related accounts described in "Right of accumulation" above to qualify
for an even greater breakpoint sales charge reduction. Besides investing
with money from an institution other than World, you must submit a completed
WorldLink Form with each Class A share purchase to qualify for the discount.
The WorldLink Form, your check, and New Account Form if applicable, must be
dropped off at your World Branch. They will be forwarded to Atlas'
Headquarters where your World and Atlas Annuity account balances will be
verified as of the business day before the Agent processes your investment.
Because balances must be verified at Atlas' Headquarters, Class A share
purchases mailed directly to the Agent will not qualify for a WorldLink
sales charge reduction. A WorldLink Form can be found in the
back of this prospectus and is available at
your World Branch or from your Atlas Investment Representative.
LETTER OF INTENT -- You can qualify for additional breakpoint sales charge
reductions if you plan to spread your Class A Bond or Stock Fund investments
over a period of time by agreeing to a nonbinding Letter of Intent ("LOI").
You may combine the amount of all intended Bond or Stock Fund related Class
A purchases over a 13-month period with the net asset value of all
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<PAGE>
Class A and Class B share Bond, Stock and Money Fund related accounts (but
not World Savings Accounts), as of the starting date of the LOI, to
determine the sales charge applicable to each of the intended Class A Bond
or Stock Fund purchases. You may choose to start a LOI on the date your LOI
is received by the Agent or you may choose a starting date within 90 days
preceding receipt of your LOI to make earlier Class A Bond and Stock Fund
purchases eligible for the breakpoint sales charge level you expect to
reach.
The Agent will hold in escrow sufficient shares to equal 5% of the expected
LOI amount (the "escrowed shares"), for subsequent payment of a higher sales
charge if you do not reach the expected LOI amount within the 13 months. The
escrowed shares will be released for your use after you have completed the
LOI. The SAI provides more detailed information on the LOI.
NET ASSET VALUE PURCHASES -- Class A shares of any Bond or Stock Fund may
also be purchased at net asset value (without a sales charge): by companies
affiliated with Golden West Financial; by investment accounts or portfolios
managed by the affiliated companies; by affiliated company officers,
directors, current regular full-time and regular part-time employees
(including certain members of their families and certain of their trusts and
employee benefit plans); by any state, county, or city (including its
agencies, instrumentalities or authorities) which is prohibited by law from
paying a sales charge in connection with the purchase of shares of a mutual
fund; on purchases for individual retirement accounts, simplified employee
pension plans or other qualified retirement plans; and by individuals who
pay with the proceeds from a redemption, dividend, or distribution of shares
of a non-affiliated, non-money market mutual fund issued within the
preceding 30 days and accompanied by a confirmation or other satisfactory
evidence of the transaction from the non-affiliated, non-money market mutual
fund. Use of a non-affiliated money market fund as a conduit is permissible
as long as it can be shown that the proceeds previously resided in a non-
affiliated, non-money market mutual fund no more than 30 days prior to the
Atlas Class A Bond or Stock Fund share purchase. In all cases you must
inform Atlas at the time you invest of your eligibility for the sales charge
waiver. The categories of net asset value purchases are subject to change or
elimination by the Distributor at its sole discretion.
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WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?
You can buy Class B shares of Bond and Stock Funds at the net asset value
per share, without the imposition of a sales charge at the time of purchase.
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge (the
"CDSC") will be deducted from the redemption proceeds of Class B shares
redeemed within five years of their purchase, excluding shares purchased by
reinvestment of dividends or distributions. The CDSC will be charged on the
lesser of the net asset value per share on the redemption date or the
original purchase price per share of the shares being redeemed. No CDSC will
be imposed on increases in the principal value of your shares or on shares
acquired through the reinvestment of dividends and distributions. In order
to minimize the amount of CDSC to be paid, Class B shares will be redeemed
by first taking all shares acquired through the reinvestment of dividends or
distributions, which are never subject to a CDSC, followed by those shares
held the longest and therefore subject to the lowest CDSC.
The contingent deferred sales charge you pay will vary depending on the
number of years that elapse between the time you pay for Class B shares and
the time those shares are redeemed. That is why we refer to the CDSC as an
adjustable load. Solely for purposes of determining the number of years that
have elapsed since a purchase was made, all payments made during a month
will be aggregated and treated as made
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<PAGE>
on the first day of the month. Any CDSC imposed on Class B share redemptions
will be assessed according to the following schedule:
<TABLE>
<CAPTION>
Contingent
deferred
sales charge on
redemption in
that year
(as % of
Year(s) since purchase applicable
order was accepted proceeds)
<S> <C>
One 3%
Two 3%
Three 2%
Four 2%
Five 1%
After five years None
</TABLE>
An ongoing distribution fee at an annual rate of up to 0.75% of average
daily net assets will be paid on all Class B shares. This fee will cause
Class B shares to have higher expenses and pay lower dividends than Class A
shares of the same Fund.
The following example may help you to understand how the CDSC works.
CDSC EXAMPLE -- Assume you purchased 100 Class B shares at $10 apiece and,
two years later, another 100 shares at $9 each. Three years after your
initial purchase, you have earned 15 shares through dividend reinvestment
and your shares are now valued at $12 a share. If you want to redeem 50
shares, the first 15 would be your dividend shares, since they are not
subject to a CDSC. The remaining 35 shares would come from your initial
purchase because those shares have been held the longest, three years, and
would only be subject to a 2% CDSC. Since your purchase price was lower than
the current value of $12 a share, the CDSC would be based on the purchase
price. For a redemption of 150 shares, the 15 dividend shares would still be
used first, free of CDSC. The 100 shares, which are three years old and have
been held the longest, would be used next, subject to a 2% CDSC. The
remaining 35 shares would come from your second purchase, subject to a 3%
CDSC for shares held two years or less. Since both purchase prices were
below the current value of $12 a share, the CDSC would be based on the
purchase prices. Your Atlas Investment Representative can provide additional
information for you or answer any further questions you may have on the
CDSC.
CLASS B AUTOMATIC CONVERSION FEATURE -- Sixty months after a purchase order
for Class B shares is accepted, such Class B shares will automatically
convert to Class A shares, on the basis of the relative net asset values of
the two classes, without the imposition of any sales charge or other fee.
Each time Class B shares convert to Class A, a pro rata portion of the Class
B shares acquired by the reinvestment of dividends or distributions that are
still held in your account will also convert to Class A shares, on the same
basis. The conversion feature is intended to relieve holders of Class B
shares of the higher distribution fee as soon as those shares are over five
years old and no longer subject to a CDSC.
WAIVERS OF CONTINGENT DEFERRED SALES CHARGE -- The CDSC will be waived on
redemptions made within one year of the death or total disability (as
evidenced by a determination of total disability by the U.S. Social Security
Administration) of all shareholders on the account, on the portion of
redemptions that represent the minimum required distribution from an
individual retirement account or other qualified retirement plan for a
shareholder who has attained the age of 70 1/2, and for involuntary
redemptions as a result of an account's balance remaining below $1,250 after
sixty days written notice.
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WHAT ELSE SHOULD I KNOW ABOUT PURCHASES?
GOOD ORDER -- means that you have provided the Shareholder Services Agent
(the "Agent") all the correct and complete information, documents, and
signatures required to process your purchase, and that your check or bank
wire payment is properly drawn on a U.S. bank and collectable in U.S.
dollars. YOU MUST SPECIFY AT THE TIME OF INVESTMENT WHETHER YOU ARE
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<PAGE>
PURCHASING CLASS A OR CLASS B SHARES. Corporations, trusts or other entities
need to provide a Securities Transactions Form to verify the persons
authorized to give instructions on the account. You can find a Securities
Transactions Form in the back of this Prospectus. If you have any questions,
please call 1-800-933-2852 and an Atlas Investment Representative will be
happy to help you. To protect a Fund and its shareholders, Atlas Funds or
its agents may refuse any specific purchase or exchange order.
EXCHANGE -- is a switch of all or part of your investment from one Atlas
Fund into another Atlas Fund. An exchange consists of a simultaneous
redemption of one Fund's shares and a purchase of shares of another Fund
with the redemption proceeds. CLASS A SHARES CAN ONLY BE EXCHANGED FOR CLASS
A SHARES OF ANOTHER FUND AND CLASS B SHARES CAN ONLY BE EXCHANGED FOR CLASS
B SHARES OF ANOTHER FUND. Shares of one Fund may not be exchanged for shares
of another Fund unless the amount exchanged satisfies the minimum investment
requirement of the other Fund.
You will never have to pay a sales charge more than once on Class A shares
you exchange, no matter how many times you exchange them, and you will never
pay a sales charge on Class A shares representing reinvested dividends and
distributions or on Class A Bond or Stock Fund shares purchased at net asset
value. However, if you exchange Class A Money Fund shares, on which a sales
charge has never been paid, for Class A shares in a Bond or Stock Fund, you
will pay the appropriate sales charge at the time of the exchange (please
see "What price will I pay?").
An exchange of Class B shares from one Fund to another has no effect on the
age of the Class B shares being exchanged and, therefore, does not cause the
remaining portion of the five year holding period to be modified in any way.
The age of all Class B shares is measured from the date they were originally
acquired in the first Class B Atlas Fund. The contingent deferred sales
charge is not imposed on an exchange of Class B shares.
To protect Fund performance and to minimize costs, a Fund may modify,
suspend or discontinue the exchange feature or a shareholder's use of it at
any time. During periods of market volatility or unusual redemption demand,
the Fund may delay processing the redemption portion of an exchange for up
to seven calendar days, which would delay the processing of the purchase
portion as well, or the Fund may process the purchase portion of the
exchange at a later date than the related redemption. For more about
exchanges, please see "What services are available?". Before you decide to
make an exchange, please read about the Fund you want to purchase in the
current Prospectus. You may only exchange to a Fund that has qualified its
shares for sale in the state in which you reside.
MINIMUM BALANCE -- is needed in order to keep your account open. If your
account balance is reduced below $1,250 as a result of redemptions or
exchanges, your Fund may close your account and mail the proceeds to you.
Before taking action, however, the Fund will give you 60 days' written
notice and the opportunity to make an additional investment at net asset
value to increase your account balance to the $2,500 minimum investment
amount.
REVERSING UNCOLLECTED PURCHASES -- may cause a Fund or its agent to incur a
bank charge and a loss in reversing your purchase if your check doesn't
clear. Since bank charges or losses would harm a Fund's other investors,
each Fund reserves the right to recover such charges or losses by selling
shares in your account, and by holding you responsible for any remaining
amount required for full recovery.
SIGNATURE GUARANTEES -- protect you and the Funds by providing verification
that the signature on instructions involving your account is yours.
Signature guarantees are necessary when you:
/ /Make any change to your account ownership
more than 30 days after you open your account.
/ /Make any change to Telephone Transaction,
Automatic Redemption or Expedited Payment
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<PAGE>
service features (please see "What services are available?") more than 30
days after you have elected the feature.
Please see "What else should I know about redemptions? -- Signature
guarantees" for more information on signature guarantees.
- ----------------------------------------------
WHAT SERVICES ARE AVAILABLE?
The Funds offer a number of convenient service features making investing in
an Atlas Fund easy and flexible. The New Account Form is designed to make it
convenient for you to designate the service features you wish to select at
the time you establish your account. You can terminate or modify service
features at any time by sending the Shareholder Services Agent a written
request. Please remember that it can take up to ten days' prior notice to
the Shareholder Services Agent before changes to the "Automatic
transactions" described below can take effect.
TELEPHONE TRANSACTIONS
BANK WIRE PURCHASE -- enables you to buy shares of any Atlas Fund without
worrying about mail or check clearing delays. World offers the Insured Money
Market Account, which earns interest at a competitive money market rate and
is insured by the Federal Deposit Insurance Corporation ("FDIC") to the
extent provided by law. You can quickly and easily buy Atlas Fund shares
with a wire transfer of $2,500 or more for your initial investment, or
$1,000 or more for subsequent investments, from this account to your Atlas
Fund account (WHICH IS NOT A BANK OR SAVINGS AND LOAN ACCOUNT OR INSURED BY
THE FDIC) with one call to an Atlas Investment Representative (please see
"How can I communicate with the Funds?"). In order to take advantage of this
one-call feature, you must have elected the bank wire option on your World
Insured Money Market Account.
Wire transfers from other bank and savings institution accounts, including
other World accounts, will require you to coordinate directly with Atlas and
your bank or savings institution in order to complete the wire transfer.
Please remember that, regardless of what account a bank wire purchase comes
from, it must be $2,500 or more for initial investments, or $1,000 or more
for subsequent investments, and your bank or savings institution must be a
member of the Federal Reserve System or have a correspondent bank that is a
member. The Funds do not charge you for this service, but your bank or
savings institution might require you to pay a wire fee.
TELEPHONE REDEMPTION -- enables your redemption of $1,000 or more to be
processed on the business day you call, as long as you meet the requirements
discussed in the "How can I redeem shares?". There is no charge for this
service. However, PLEASE REMEMBER THAT ANY CLASS B SHARES REDEEMED OVER THE
TELEPHONE MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE (PLEASE SEE
"WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?"). You may also use this
feature with the "Expedited Payment" feature described later to speed
delivery of your redemption proceeds. For your protection, telephone
redemptions can not be requested for four months after a change of address.
During that time, requests to redeem must be submitted in writing with a
signature guarantee (please see "What else should I know about redemptions?
-- Signature guarantees"). You will not be able to use this feature to
redeem shares for which certificates have been issued. Those shares can be
redeemed with a written request accompanied by the certificate(s) (please
see "What else should I know about redemptions? -- Certificates").
TELEPHONE EXCHANGE -- enables you to exchange some or all of the shares in
your account with a telephone call. If you are only exchanging a portion of
your account, please be sure you leave the minimum balance of $1,250. Each
exchange purchase should meet the appropriate initial or additional minimum
investment requirements as well. SHARES OF A SPECIFIC CLASS OF ONE FUND MAY
ONLY BE EXCHANGED FOR SHARES OF THAT SAME CLASS OF ANOTHER FUND. Shares for
which certificates have been issued cannot be exchanged by telephone.
38
<PAGE>
They can be exchanged with a written request, accompanied by the
Certificate(s) (please see "What else should I know about redemptions? --
Certificates").
ABNORMAL MARKET CONDITIONS -- may make it difficult for you to implement a
telephone transaction because the telephone lines may be operating at
capacity. Under these circumstances you should consider mailing your
transaction request or, perhaps, sending the request by overnight delivery
to the Shareholder Services Agent. Of course, you can always drop off your
transaction request at your World branch to be forwarded through the
Distributor to the Shareholder Services Agent (please see "How can I
communicate with the Funds?").
EXPEDITED PAYMENT
Redemption checks are normally mailed to you, but you can request to speed
delivery, if your redemption proceeds are $1,000 or more, with an Expedited
Payment which will avoid mail and check clearing delays. You may use this
bank wire feature to quickly and easily transfer proceeds to your World
Insured Money Market Account or any other pre-designated bank or savings
institution account you choose. You will need to contact the Shareholder
Services Agent at 1-800-872-5368 and also coordinate with your bank or
savings institution for proper receipt and disposition of the proceeds. Your
bank or savings institution, or its correspondent, must be a member of the
Federal Reserve System. THERE IS A $10 BANK WIRE CHARGE FOR THIS SERVICE,
WHICH WILL BE DEDUCTED FROM YOUR REDEMPTION PROCEEDS BEFORE WIRING.
If you elect Expedited Payment when you open your account, you will not have
to provide signature guarantees. However, if you make the election more than
30 days after you open your account, or make any change or addition to your
bank account designation, you will need to provide signature guarantees on
your written request to make this feature effective.
AUTOMATIC TRANSACTIONS
REINVESTMENT -- of your dividends and distributions will be automatic, in
additional full and fractional shares credited to your account, unless you
elect on the New Account Form, or later in writing, to receive dividends and
distributions in cash. There is no charge for this service. Dividends and
distributions, regardless of share Class, are reinvested at net asset value,
without a sales charge of any kind.
DIRECTED DIVIDENDS/DISTRIBUTIONS -- your dividends and distributions paid by
an Atlas Fund can be used to purchase the same class of shares of another
Atlas Fund in one of your other existing Atlas Fund accounts, at net asset
value without a sales charge. There is no charge for this service. To elect
this option simply complete the appropriate section on your New Account
Form, requesting that your income dividends and/or capital gains
distributions be paid in cash and indicating which account you would like
those dividends and distributions directed to. You cannot direct dividends
or distributions between a non-IRA account and an Atlas Funds IRA account.
AUTOMATIC PURCHASE PLAN -- a plan for periodic purchases of more shares, can
be elected when you open your account after you have made your initial
minimum investment. If you elect the automatic purchase plan feature, a
fixed amount of $250 or more will be automatically deducted from your bank
or savings institution account, to purchase shares for your Atlas Fund
account on any day of any months you choose (or the next business day if the
date you select falls on a weekend or holiday). All you need do is select
the purchase date, the months and the amount of your periodic investment
when you complete your New Account Form and attach a voided check or deposit
slip that indicates your bank or savings institution's name, address, and
routing number and your bank account number. Your purchase payment will be
automatically transferred from your bank account to your Atlas Fund account
to buy additional shares. The Atlas Funds do not charge for this service.
However, your bank or savings institution may charge you a fee.
39
<PAGE>
Officers, directors, current regular full-time and regular part-time
employees, and retired employees of Golden West Financial companies can open
an automatic purchase plan for fixed amounts of $50 or more.
AUTOMATIC EXCHANGE PLAN -- a plan for periodic exchanges can be elected to
automatically exchange a specified dollar amount (at least $250 per
exchange) of shares of one of your Atlas Fund accounts for investment in the
same class of shares of another Atlas Fund in one or more of your other
existing Atlas Funds accounts. The automatic exchange plan provides for an
exchange to be made on the 15th of each month you choose (or the next
business day if the 15th falls on a weekend or holiday). There is no charge
for this service. However, exchanges of shares from Atlas Class A Money
Funds to Atlas Class A Bond and Stock Funds will be subject to the
applicable sales charge, unless the shares being exchanged have previously
paid the sales charge. You cannot make automatic exchanges between non-IRA
and IRA Atlas Fund accounts.
AUTOMATIC REDEMPTION PLAN -- a plan for periodic redemptions can be elected
to automatically redeem fixed amounts of $100 or more from your Atlas Fund
account at monthly, quarterly or yearly intervals. To elect the automatic
redemption plan feature, your initial account balance must be at least
$10,000. All you need to do is select the amount you wish to receive when
you complete your New Account Form. Sufficient full and fractional shares
from your account will be liquidated to meet your requested redemption
amount on the 20th of each month you want payments to be made, or the
previous business day in the case of weekends or holidays. Atlas Funds does
not charge for this service. Of course, no payment can be made if there are
insufficient shares on deposit in your Fund account on the scheduled
withdrawal date.
Depending on the balance in your Fund account and the amount of your
periodic redemption, systematic withdrawals may deplete your investment.
Because of sales charges, it is normally not advisable to elect the
automatic redemption plan in a Bond or Stock Fund account if you also intend
to add regular purchases to the account. Use of the automatic redemption
plan would generally be disadvantageous for Class B shares due to the
imposition of the contingent deferred sales charge. For this reason,
AUTOMATIC REDEMPTIONS OF CLASS B SHARES ARE PERMITTED ONLY FOR MINIMUM
REQUIRED DISTRIBUTIONS FROM A RETIREMENT PLAN ACCOUNT FOR A SHAREHOLDER WHO
HAS ATTAINED THE AGE OF 70 1/2. An automatic redemption plan can only be
established for accounts that do not have any certificates issued.
CHECKWRITING
Unlimited checkwriting is available to Class A Money and Bond Fund
shareholders. The Class A Stock Funds do not offer the Checkwriting feature.
CHECKWRITING IS NOT AVAILABLE FOR CLASS B SHARES OF ANY FUND. If you elect
Checkwriting, your Money or Bond Fund will furnish you with a free book of
redemption drafts ("checks") for your Fund account, drawn on the Fund's
bank. Use these drafts as you would normal checks, but remember that each
check must be written for $500 or more. Atlas Funds do not charge for this
service. When a check is presented for payment by the Fund's bank, the
Shareholder Services Agent will redeem a sufficient number of full and
fractional shares to cover the amount of the check. You earn dividends on
your shares through the day the redemption is processed.
Checkwriting is not available for accounts with any shares in certificate
form or for retirement plan accounts. You should not try to close your
account in a Money or Bond Fund by writing an Atlas Fund check, since you
cannot predict the exact value of the account on the day the check clears.
You also should not write an Atlas Fund check for an amount close to the
total value of a Bond Fund account, since the fluctuating prices of this
Fund can cause your check to be returned unprocessed. Checks will not be
honored for redemption of shares held less
than fifteen (15) days, unless such shares were
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<PAGE>
paid for by bank wire. THE CHECKWRITING FEATURE IS NOT AVAILABLE TO BOND
FUND SHAREHOLDERS WHO ARE SUBJECT TO INTERNAL REVENUE SERVICE BACK-UP
WITHHOLDING.
REINSTATEMENT
For up to 30 days after you redeem Class A shares in a Bond or Stock Fund,
you may choose to reinstate all or part of your proceeds in Class A shares
of any Bond or Stock Fund. Similarly, for up to 30 days after you redeem
Class B shares in a Fund, you may reinstate all or part of your proceeds in
Class B shares of any Fund. A reinstatement will be done at net asset value,
without payment of a sales charge or any service charge, but will be subject
to the applicable minimum investment requirements. In the case of a
reinstatement of your investment in Class B shares, the Distributor will
refund the applicable CDSC imposed at the time of redemption by crediting
your account with additional shares in an amount equal to the CDSC. Upon the
reinstatement of Class B shares, your account will be subject to the same
CDSC it was prior to the redemption, and the time remaining on your five
year holding period will be exactly as it was prior to the redemption of
those shares.
Simply send back the original redemption check, or your own check if the
original is not available, with a written reinstatement request (please see
"How can I communicate with the Funds?"). Your reinstatement will be
processed at the net asset value next determined after the Shareholder
Services Agent's receipt in good order of your request. You may exercise
this Reinstatement feature once for each account you own. However, the
reinstatement of mandatory IRA or SEP account distributions are not subject
to the "one time per account" limitation. All such mandatory distributions
may be reinstated in a non-IRA or -SEP account, subject to the minimum
investment requirement, for up to 30 days after such distribution, at net
asset value.
RETIREMENT PLANS
Individual Retirement Accounts (IRAs) and Simplified Employee Pension Plans
(SEPs) are available. Simply call 1-800-933-2852 and an Atlas Investment
Representative will provide you with information about agreements,
applications and annual fees. Some Atlas Funds may not be appropriate
investments for a qualified retirement plan. If you have any questions about
your tax situation, you should consult with your tax adviser.
GENERAL INFORMATION ABOUT SERVICE FEATURES
To protect Fund performance and to minimize transaction costs, each Fund
may, at any time, change, suspend or discontinue any of these service
features, charges, or terms and conditions; or deny the use of any feature
to any shareholder who uses it to the detriment of the Fund or other
shareholders.
Should a Fund choose to discontinue or modify a service feature affecting
all shareholders, it will provide 30 days' prior written notice. If you wish
to add, change or discontinue any service feature, you can easily accomplish
this by sending a written request to the Shareholder Services Agent. If it
has been more than 30 days since you established the feature, you will need
to provide a signature guarantee on your written request to effect changes
to Telephone Transaction, Automatic Redemption Plan, and Expedited Payment
features. A signature guarantee is required to protect you, since it
verifies to the Fund that the signature on the written request is yours
(please see "What else should I know about purchases?" and "What else should
I know about redemptions?" for more information about signature guarantees).
If you have any questions, call an Atlas Investment Representative at
1-800-933-ATLAS (1-800-933-2852).
THE FUNDS WILL NOT BE LIABLE FOR ANY LOSSES THAT MAY RESULT FROM FOLLOWING
INSTRUCTIONS COMMUNICATED BY TELEPHONE THAT THEY REASONABLY BELIEVE TO BE
GENUINE AS A CONSEQUENCE OF YOUR ELECTION OF TELEPHONE OR AUTOMATIC
TRANSACTIONS OR CHECKWRITING, FROM YOUR REQUEST TO ALLOW TRANSACTIONS
AUTHORIZED BY LESS THAN ALL REGISTERED OWNERS, OR FROM TRANSACTIONS
PROCESSED WITHOUT SIGNATURE GUARANTEES. AS A RESULT OF THIS POLICY,
SHAREHOLDERS WHO ELECT THESE SERVICES BEAR
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THE RISK OF LOSS FOR UNAUTHORIZED TRANSACTIONS. FOR YOUR PROTECTION AND TO
REVIEW OR CLARIFY TELEPHONE REQUESTS, THE FUNDS AND THEIR AGENT(S) RESERVE
THE RIGHT TO RECORD ALL CALLS. THE FUNDS MAY EMPLOY ADDITIONAL PROCEDURES,
SUCH AS REQUIRING THE CALLER TO PROVIDE A FORM OF PERSONAL IDENTIFICATION
PRIOR TO ACTING ON TELEPHONE INSTRUCTIONS, IN ORDER TO CONFIRM THAT SUCH
INSTRUCTIONS ARE GENUINE AND, IF THEY DO NOT EMPLOY REASONABLE PROCEDURES,
THEY MAY BE LIABLE FOR ANY LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT
INSTRUCTIONS.
- ----------------------------------------------
HOW CAN I REDEEM SHARES?
Unexpected circumstances or changing investment goals may require you to
sell a portion or all of your investment or to modify your investment mix.
The Funds offer you several ways to redeem shares. The following information
should be read in conjunction with "What else should I know about
redemptions?" and "What services are available?". PLEASE REMEMBER CLASS B
SHARES ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE UPON REDEMPTION
(SEE "WHAT IS THE CLASS B SALES CHARGE ALTERNATIVE?"). If you have any
questions, just call an Atlas Investment Representative at l-800-933-ATLAS
(1-800-933-2852) for assistance.
BY MAIL -- Send a letter of instructions to the Shareholder Services Agent
(the "Agent") specifying the Atlas Fund, share or dollar amount, and account
name and number to be redeemed. The letter should be signed by all persons
authorized to redeem the account, exactly as their names appear on the
account. Redemptions of $25,000 or more and redemptions being sent to an
address or a predesignated payee that has been changed within the last four
months or one that is not recorded on your account will need a signature
guarantee (please see "How can I communicate with the Funds?" for mailing
address).
BY TELEPHONE -- To redeem $1,000 or more
call 1-800-933-2852. Redemption requests within four months of a change in
address
must be in writing with a signature guarantee (please see "What services are
available? -- Telephone redemptions").
BY CHECK -- CHECKWRITING IS AVAILABLE ONLY FOR CLASS A MONEY AND BOND FUNDS.
With your free Class A Fund checkbook, you can write a check, payable to
anyone you choose, for $500 or more. There is no charge for this service.
PROCESSING -- Redemption requests received in good order by the Agent, prior
to 4:00 pm Eastern time (1:00 pm Pacific time) on a day the New York Stock
Exchange is open for normal trading, will be processed that day. Otherwise
processing will occur on the next business day.
Redemption amounts of $1,000 or more can be wired to a predesignated bank
account on the business day following processing. To activate this feature,
please specify in your instructions to the Agent that you want the money
wired to your predesignated bank account. THERE IS A $10 CHARGE FOR THIS
SERVICE.
Unless instructed to expedite, the Agent will mail a check, normally the
business day after processing the redemption to the name(s) and address
recorded on the account for receipt of redemption proceeds.
- ----------------------------------------------
WHAT ELSE SHOULD I KNOW ABOUT REDEMPTIONS?
GOOD ORDER -- means that you have provided the Shareholder Services Agent
all the correct and complete information, documents, signatures, signature
guarantees, Certificates, and Certificate endorsements required to process
the redemption. YOU MUST SPECIFY WHETHER YOU ARE REDEEMING CLASS A OR CLASS
B SHARES. IF YOU ARE REDEEMING CLASS B SHARES, THOSE SHARES WILL BE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE WHICH WILL BE DEDUCTED FROM THE
PROCEEDS OF YOUR REDEMPTION. Written redemption requests should be signed by
all owners exactly as their
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<PAGE>
names appear on the account. Money and Bond Fund checks may be signed by
fewer owners than appear on the account, if you elected that option on your
New Account Form. A corporation, trust or other entity may need to update
its Securities Transactions Form or provide other documents before redeeming
shares. If you have any questions call 1-800-933-2852 and an Atlas
Investment Representative will be happy to help you.
EXCHANGES -- are taxable transactions. The Internal Revenue Service ("IRS")
treats all shareholder initiated and automatic exchanges, whether of Class A
or Class B shares, as a redemption and subsequent purchase of shares.
Therefore, an exchange is subject to taxation on capital gains. However, the
IRS has indicated that Class B automatic conversions are not considered
shareholder initiated exchanges and, therefore, are not taxable. A change in
the IRS's position is possible in the future, although the Adviser believes
such a change unlikely (please see "Taxes" in the Statement of Additional
Information for more information).
PROCESSING DELAYS -- are possible. Each Fund normally sends your redemption
proceeds to you on the next business day after processing your request, if
received in good order. Redemption processing or payment may be postponed up
to seven days if making immediate payment could adversely affect a Fund.
When regular trading on the New York Stock Exchange is closed or restricted
for any reason other than its customary weekend or holiday closings, or
there is any emergency as determined by the SEC, redemptions may be
suspended or payment dates may be further postponed.
SHARES PAID FOR BY CHECK OR BANK WIRE -- redemptions of shares recently
purchased by check will not be processed until a Fund is reasonably
satisfied that your purchase check for those shares has cleared, normally
not more than 15 days. Shares paid for by bank wire may not be redeemed
until the New Account Form has been received for the account.
SIGNATURE GUARANTEES -- protect you and the Funds by providing verification
that the signature on your written redemption request and Certificate
endorsement (please see "Certificates" below) is yours. Signature guarantees
are necessary when you:
/ /Redeem within four months of making an
address change
/ /Redeem $25,000 or more
/ /Want payment made to a name or address not
designated on your account.
The following institutions should be able to provide you with a signature
guarantee:
/ /Federal or state commercial banks
/ /Federal or state savings and loan associations
/ /Trust companies
/ /Credit unions
/ /Member firms of domestic securities exchanges.
Since a Notary Public certification is not equivalent to a signature
guarantee, the Funds are unable to accept such certification (please see
"What else should I know about purchases? -- Signature guarantees" for more
information).
CERTIFICATES -- represent your ownership of Class A shares and, upon your
written request, are issued at no charge in the name(s) in which your
account is registered. CERTIFICATES WILL NOT BE ISSUED FOR CLASS B SHARES.
Certificates are not necessary to evidence your ownership of shares since
they are registered on the Shareholder Services Agent's books in the name of
the legal owner and the confirmation statement provided after each
transaction confirms your ownership of the shares. Please note that when you
redeem or exchange certificated shares, you must accompany the redemption
request with the Certificate endorsed as specified on the back of the
Certificate. It should be signed by all owner(s) exactly as reflected on the
face of the certificate(s), with all signatures guaranteed. You may not use
the Telephone Redemption and Telephone Exchange service features for shares
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issued in certificate form. Accounts with Checkwriting and Automatic
Redemption Plan service features, as well as retirement plan accounts, are
not permitted to have any shares issued in certificate form.
CONDITIONAL REDEMPTIONS -- are redemptions that are requested on the
condition of a specified price, date or event. Conditional redemptions
cannot be accepted by the Funds.
CHECKWRITING -- or the election of the Checkwriting feature does not create
a bank or savings and loan checking account or any banking relationship
between you and a Money or Bond Fund or any bank or savings and loan
association. THE CHECKWRITING FEATURE IS NOT AVAILABLE FOR THE STOCK FUNDS
AND IS NOT AVAILABLE FOR CLASS B SHARE ACCOUNTS. A "check" is simply a draft
instructing the Shareholder Services Agent to process a redemption. Since
the Shareholder Services Agent is not a depository institution, it can give
no assurance that a stop payment order may be effective. If you want copies
of specific cancelled checks, you may request them by calling your Atlas
Investment Representative at 1-800-933-2852. Redemptions by Checkwriting
will not generate confirmation statements, but are recorded and will appear
on the next normal statement you receive for activity other than
Checkwriting. If the shares being redeemed were purchased by check and have
been in your account for less than 15 days, or if the amount of your
Checkwriting draft is greater than the value of your account, the draft will
not be honored. It will be returned to you and you may be subject to extra
charges by the payee's bank.
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WHAT DIVIDENDS AND DISTRIBUTIONS CAN I RECEIVE?
DIVIDENDS -- represent the payment of net investment income, after all
expenses. The Money Funds ordinarily declare and reinvest dividends daily
and distribute them monthly. The Bond Funds ordinarily declare dividends
daily and reinvest and distribute them monthly. The Atlas Balanced and the
Atlas Growth and Income Funds normally declare, reinvest and distribute
dividends quarterly. The Atlas Strategic Growth, Global Growth and Emerging
Growth Funds do not intend to seek net investment income but, should they
earn income, they would declare a dividend annually (please see "What
services are available? -- Automatic transactions"). Money and Bond Fund
dividends will commence on the next business day following the date shares
are posted to your account and will continue through the day shares are
redeemed. Dividends paid by a Fund, if any, with respect to Class A and
Class B shares, will be calculated in the same manner at the same time on
the same day, except that distribution fees will be different for each Class
and paid separately by the appropriate Class. THE PER SHARE INCOME
DIVIDENDS, IF ANY, ON CLASS B SHARES WILL BE LOWER THAN THE PER SHARE INCOME
DIVIDENDS, IF ANY, ON CLASS A SHARES AS A RESULT OF THE HIGHER DISTRIBUTION
FEE APPLICABLE TO
CLASS B SHARES.
DISTRIBUTIONS -- of capital gains represent the payment of net realized
profits on portfolio securities that are sold. If any such distributions are
made, they are normally declared and paid once a year. All such
distributions paid by a Fund with respect to Class A and Class B shares will
be calculated in the same manner at the same time on the same day. A Fund
may make more frequent distributions to avoid taxation under the Internal
Revenue Code (the "Code") and in a manner consistent with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act") (please see
"What services are available? -- Automatic transactions").
If you buy shares just before a Fund deducts a capital gain distribution
from its net asset value, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
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HOW CAN TAXES AFFECT MY INVESTMENT?
HOW ARE THE FUNDS TAXED?
It is the intention of the Company that each Atlas Fund will qualify and
elect to be treated as a "regulated investment company" under Sub-Chapter M
of the Code, which sets requirements for mutual funds on timing of dividends
and distributions, sources of income and diversification of assets. If a
Fund meets these requirements, it will not be liable for federal corporate
income tax with respect to dividends and distributions paid to shareholders.
The Company also intends to have each Fund make any distribution necessary
to avoid the application of federal excise taxes, if such payments are
deemed to be in the best interests of a Fund's shareholders.
HOW ARE SHAREHOLDERS TAXED?
TAX-EXEMPT DIVIDENDS -- by seeking to meet certain Code requirements, the
Municipal Funds intend to pay dividends which, to the extent they are
derived from income excludable from federal gross income, will not have to
be included in your gross income for federal income tax purposes. Dividends
paid to you by the California Funds, to the extent derived from interest
income exempt from California income tax and to the extent the Funds meet
certain State of California requirements, will be exempt from California
personal income tax as well. Certain Municipal Fund individual and corporate
shareholders may be required to include dividends, normally excluded from
gross income, as a component in determining their federal alternative
minimum taxable income.
The Treasury Money Fund intends to pay dividends that are exempt from state
income tax in most states because the dividends consist of interest on U.S.
Treasury securities passed directly through to the investor. Most states
with an income tax recognize this "pass-through" of interest, including
Arizona, California, Colorado, Kansas, Missouri, and New Jersey. As of
December 31, 1996, certain states, including Florida and Texas, did not
impose a state income tax. Because state laws can change, you should consult
your tax adviser regarding the tax status of the dividends paid by the
Treasury Money Fund.
TAXABLE DIVIDENDS -- which are derived from income earned from a Fund's
taxable investments, are taxable to you as ordinary income, regardless of
whether received in cash, re-
invested in additional Fund shares or directed to purchase shares of another
Fund. These dividends may not be included by a corporate shareholder for
purposes of the corporate dividend deduction. The Municipal Funds may invest
to some degree in taxable securities. The income from a Municipal Fund's
investment in certain private activity bonds, such as those used to finance
airports and industrial facilities, is a tax preference item which may
subject a shareholder to increased individual and corporate alternative
minimum tax ("AMT"), depending on the amount and type of dividends received.
The Treasury Money Fund's income dividends are subject to federal income
tax.
CAPITAL GAINS DISTRIBUTIONS -- which are derived from net short-term capital
gains are taxable to you as ordinary income. Distributions from net
long-term capital gains are treated as such for the purpose of calculating
your total gains and losses each year. Such gains are currently taxable at
ordinary income tax rates not to exceed 28%. It is possible, because of
Internal Revenue Code requirements, that certain distributions may not be
paid to you until shortly after year-end but will be treated, for tax
purposes, as though you received them before the end of December. If a Fund
has a current capital loss or capital loss carryover, the Fund may offset
any capital gains against that loss. Capital gains, if any, will be
distributed at least once a year and can be distributed more frequently.
BACK-UP WITHHOLDING -- which is required by the Internal Revenue Service,
obligates a Fund to withhold 31%, subject to certain exemptions, of taxable
dividends or distributions paid to shareholders who fail to provide a Fund
with a
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correct tax-payer identification number (social security number) or certify
to the Fund that they are not subject to back-up withholding.
HOW CAN I DETERMINE THE TAX IMPACT OF
MY INVESTMENT?
The tax consequences of your investment will vary with your state of
residence, the Fund you invest in and your particular tax status. In some
states shareholders are subject to state and local taxes with respect to
ownership of Fund shares as well as distributions from a Fund. We urge you
to consult your tax adviser about the applicability of various state and
federal tax laws governing dividends, distributions, exchanges, proceeds
from the redemption of shares, and ownership of shares.
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HOW WILL THE FUNDS COMMUNICATE WITH ME?
The Company is committed to keeping you advised of the status of the Atlas
Funds and your investment and will do so in the following ways:
CONFIRMATION STATEMENTS
The Shareholder Services Agent will send you a confirmation statement
whenever you purchase, redeem (except via Checkwriting) or exchange Atlas
Fund shares; change account information; or receive an income dividend or
capital gains distribution, either paid to you in cash or re-
invested to your account. The statement will show all recent transactions,
along with a summary of the status of your account, as of the most recent
transaction date.
FINANCIAL STATEMENTS
Twice a year you will receive financial statements with a summary of your
Fund's portfolio holdings and performance. One of those statements will be
sent to you in the form of the Company's Annual Report. To reduce expenses,
only one copy of most reports, such as the Annual Report, may be mailed to
your household. To order additional copies, simply call an Atlas Investment
Representative at 1-800-933-2852.
TAX FORMS
If you have received taxable income or income subject to the alternative
minimum tax calculation, your Fund will send you (shortly after the close of
each calendar year) one or more tax forms or notices, depending upon the
number of accounts you own and your transactions that tax year. The Form
1099-DIV will let you know the federal income tax status of your dividends
and distributions, and Form 1099-B will inform you of any redemption or
exchange transactions you are required to report to the Internal Revenue
Service. Retirement accounts will receive a year-end valuation statement
shortly after the close of the calendar year.
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HOW CAN I INTERPRET A FUND'S PERFORMANCE?
From time to time you may see Atlas Fund performance figures quoted in
reports to shareholders, advertising and sales literature. Each Atlas Fund
calculates its performance in terms of yield and total return. Performance
information is computed separately for each class of shares of each Fund. A
Fund's performance will vary as a function of investment results, operating
expenses, and market conditions. You should be aware that performance
figures reflect past results. Future results may vary from past performance.
Following are summary descriptions of what the various performance figures
represent. You will find a more detailed description of how performance is
calculated in the current Statement of Additional Information. Each Fund
will include performance data for its Class A and Class B shares in any
advertisement or information including performance data of the Fund. Further
information about the Funds' performance is contained in the Company's
Annual Report, which may be obtained without charge.
YIELD CALCULATIONS
YIELD -- the net investment income per share earned on a hypothetical
investment made at the full offering price (including the maximum sales
charge), over a recent seven-day period (for the Money Funds) or a 30-day
period (for the Bond
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and Stock Funds), projected over one
year and expressed as a percentage of a hypothetical investment.
EFFECTIVE YIELD -- calculated in the same way as yield, but with the
additional assumption that dividends and distributions are reinvested. The
effective yield will be slightly higher than yield because of the
compounding effect of the re-
invested income.
TAX EQUIVALENT YIELD -- the amount of yield an investment in a fully taxable
Fund would have to produce to achieve the same results as an investment in a
fully or partially tax-exempt Fund. Tax equivalent yield is calculated by
dividing the tax exempt portion of a Fund's yield by one minus a stated
income tax rate and adding the result to the taxable portion, if any, of the
Fund's yield.
TAX EQUIVALENT EFFECTIVE YIELD -- a Fund's tax equivalent effective yield is
calculated in the same way as tax equivalent yield, with the additional
assumption that dividends and distributions are reinvested.
TOTAL RETURN CALCULATION
An Atlas Fund's total return and its average annual total return are the
investment results produced by changes in share price and reinvestment of
dividends and distributions on a hypothetical investment over one, three,
five or ten years or the life of the Fund. Unless otherwise specified, the
return figures are calculated on the assumptions that the current maximum
sales charge applicable to Class A shares, or the Class B CDSC applicable to
the period for which the Class B shares were held, was paid on the shares
and that all dividends and distributions were reinvested at net asset value.
A Fund may also use aggregate total return figures for various periods
representing the cumulative change in value of an investment in a class of
the Fund's shares for the specified period.
DISTRIBUTION RATE CALCULATIONS
DISTRIBUTION RATE -- is calculated by annualizing the aggregate per share
dollar amount of actual distributions made over a 30 day period by a Bond or
Stock Fund divided by the net asset value or public offering price per share
at the end of the period.
TAX-EQUIVALENT DISTRIBUTION RATE -- will be computed by dividing the tax
exempt portion of the distribution rate by one minus a stated income tax
rate and adding the result to the taxable portion, if any, of the related
distribution rate.
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APPENDIX I:
INVESTMENT STRATEGIES
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The Funds' investment strategies will encompass the following securities,
techniques and considerations:
PORTFOLIO STRATEGIES -- ALL FUNDS
All Atlas Funds may, to varying degrees, invest in U.S. dollar denominated,
highly liquid, short-term (13 months or less) money market instruments
issued by the U.S. Government, its agencies or instrumentalities; U.S.
corporations and their foreign affiliates; U.S. banks and thrifts and their
foreign branches; and foreign banks (collectively referred to as "money
market securities"). However, the Treasury Money Fund will only invest in
those money market securities that are directly issued by the U.S. Treasury
and backed by the full faith and credit of the U.S. Government. Money market
securities include the following:
U.S. GOVERNMENT SECURITIES -- short-term securities guaranteed by the U.S.
Government including (1) direct obligations of the U.S. Treasury such as
Treasury bills and (2) federal agency obligations guaranteed as to principal
and interest such as Government National Mortgage Association ("GNMA")
certificates (described in "Portfolio strategies -- Bond Funds: Atlas
Government Funds") and Federal Housing Administration debentures. In these
securities, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality.
U.S. Government securities also include short-term securities issued by U.S.
Government instrumentalities and certain federal agencies which are neither
direct obligations of, nor guaranteed by, the Treasury. However, they
generally involve federal sponsorship in one way or another: some are backed
by specific types of collateral; some are supported by the issuer's right to
borrow from the Treasury; some are supported by the discretionary authority
of the Treasury to purchase certain obligations of the issuer; others are
supported only by the credit of the issuing government agency or
instrumentality. These agencies and instrumentalities include, but are not
limited to, the Federal
National Mortgage Association ("FNMA")
and the Federal Home Loan Mortgage
Corporation ("FHLMC").
BANK AND THRIFT OBLIGATIONS -- short-term obligations which include
certificates of deposit, time deposits, letters of credit, and bankers'
acceptances, or instruments secured by such obligations. Only obligations of
commercial banks and thrift with $1 billion or more in assets will normally
be considered. Obligations of smaller institutions will only be acquired in
amounts not exceeding the federal insurance coverage as to principal.
CORPORATE OBLIGATIONS -- short-term corporate notes, bonds, debentures and
commercial paper.
INVESTMENT GUIDELINES -- ALL FUNDS
BROKERAGE ALLOCATION -- which involves the selection of brokers and dealers
who will effect portfolio transactions in each Fund, is the responsibility
of the Adviser, or Subadviser if applicable. Each Fund's policy is to seek
the best price and execution for each transaction. If more than one broker
is able to provide the best price and execution, the Adviser, or Subadviser
if applicable, may consider the receipt of quotations, market research and
other market services as factors in selecting a broker.
PORTFOLIO TURNOVER -- measures the percentage of a portfolio's securities
that are replaced
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within one year. The regulatory definition of turnover excludes securities
with a remaining maturity at the time of purchase of one year or less. Under
this definition, the Money Funds have a zero turnover rate. In taking
advantage of investment opportunities consistent with their respective
investment objectives and policies, the Bond and Stock Funds will not
consider portfolio turnover rates a limiting factor. A turnover rate in
excess of 100% is generally considered high. A high turnover rate will
increase transaction costs. Portfolio turnover may result in net long-term
or short-term capital gains taxable to shareholders and could affect a
Fund's ability to qualify as a "regulated
investment company" under the Internal
Revenue Code.
For the years or periods ended December 31, 1995 and 1996, respectively, the
portfolio turnover rate was 59.28% and 44.43% for the Atlas California
Insured Intermediate Municipal Fund; 84.85% and 46.95% for the Atlas
National Insured Intermediate Municipal Fund; 82.88% and 46.51% for the
Atlas U.S. Government Intermediate Fund; 25.90% and 29.28% for the Atlas
California Municipal Bond Fund; 53.43% and 44.76% for the Atlas National
Municipal Bond Fund; and 48.39% and 27.45% for the Atlas U.S. Government and
Mortgage Securities Fund. For the fiscal period ended December 31, 1996, the
portfolio turnover rate for the Atlas Strategic Income Fund was 187.15%.
The Stock Funds will not trade in securities for short-term profits, but
when the Stock Funds' Subadviser believes doing so will further a Fund's
objectives it may trade securities regardless of how long they have been
held. Therefore, the portfolio turnover for each Stock Fund may vary widely
from year to year. For the years or periods ended December 31, 1995 and
1996, respectively, the portfolio turnover rate for the Atlas Growth and
Income Fund was 125.28% and 86.66%; 25.84% and 41.41% for the Atlas Balanced
Fund; and 73.32% and 119.87% for the Atlas Strategic Growth Fund. For the
fiscal period ended December 31, 1996, the portfolio turnover rate for the
Atlas Global Growth Fund was 64.89%. The annual portfolio turnover rate for
the Atlas Emerging Growth Fund is expected to be less than 100%.
REPURCHASE AGREEMENTS (ALL ATLAS FUNDS, EXCEPT THE TREASURY MONEY FUND, CAN
UTILIZE REPURCHASE AGREEMENTS) -- a purchase and simultaneous collateralized
contract to resell securities to the vendor typically within one to five
days and at a price which reflects interest on what is in effect a loan. The
value of the collateral will at all times equal or exceed the repurchase
price, and the Funds will obtain effective custody of the collateral.
Repurchase agreements will only be entered into with broker-dealers with
excess net capital of at least $100 million and selected commercial banks
and thrift institutions with at least $1 billion in capital, or with
broker-dealers, banks and thrift institutions with outstanding commercial
paper rated in the top rating quality grade or outstanding debt obligations
rated in the top two rating quality grades. If a vendor fails to fulfill its
obligations, a Fund may incur costs and delays in foreclosing upon and
disposing of the collateral. The Adviser, or Subadviser if applicable, will
monitor the creditworthiness of firms with which it engages in these
transactions.
PORTFOLIO SECURITIES LOANS -- have to meet certain criteria. The Funds can
lend portfolio securities to qualified broker-dealers or other institutional
investors, if the loan is collateralized in accordance with then current
regulatory requirements and if, after any loan, the value of the securities
loaned does not exceed 25% of the total assets of the Fund lending the
securities. Such loans involve risks of delay in receiving additional
collateral if the value of the collateral declines, or in recovering the
securities loaned or losing rights in the collateral if the borrower fails
financially. The Adviser, or Subadviser if applicable, will monitor the
creditworthiness of firms with which they engage in these transactions.
WHEN-ISSUED OR FIRM COMMITMENT TRANSACTIONS -- are a purchase or a sale of
securities at a fixed price with settlement at a later date. There is a risk
in these transactions that the
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value of the securities at settlement may be more or less than the agreed
upon price, or that the party with whom a Fund enters into such a
transaction may not perform its commitment. Such a failure to perform could
result in a gain or loss to a Fund. The Funds will normally enter into these
transactions with the intention of actually receiving or delivering the
securities. A Fund may sell the securities before the settlement date. A
Fund may also enter into a new commitment to extend the delivery date,
sometimes referred to as a "roll" transaction. Cash, U.S. Government
securities or other high quality, liquid debt securities will be segregated
to meet these obligations when due. A Fund will limit these transactions to
a value of no more than one-third of its assets.
PORTFOLIO STRATEGIES -- MONEY FUNDS
ATLAS U.S. TREASURY MONEY FUND -- will invest in securities issued by the
U.S. Treasury, including Treasury Bills, Treasury Notes and Treasury Bonds,
which are protected by the "full faith and credit" pledge of the U.S.
Government. These are the only types of securities the Fund will purchase.
The Fund will not participate in repurchase agreements. Interest on Treasury
securities is subject to federal income tax but exempt from most states'
income tax (please see "How can taxes affect my investment? -- Tax-exempt
dividends"). The dollar weighted average portfolio maturity of the Fund will
not exceed 90 days and 100% of the assets will be invested in short-term
(maturing in 13 months or less) securities.
ATLAS NATIONAL MUNICIPAL MONEY FUND -- will, as determined at the time of
purchase, normally invest at least 80% of its assets in high quality
municipal obligations, the interest on which is excluded from gross income
for federal income tax purposes. The dollar weighted average portfolio
maturity will not exceed 90 days and 100% of the assets will be invested in
short-term (maturing in 13 months or less) securities. Such obligations are
issued by or on behalf of states and their political subdivisions; agencies
and instrumentalities of the state or its political subdivisions;
territories and possessions of the United States; and the District of
Columbia. Municipal securities include general obligation issues, for which
the payment of principal and interest is secured by the issuer's taxing
power; revenue issues, for which payment of principal and interest depends
upon a specific public or private revenue source; tax-exempt commercial
paper; tax-exempt variable or floating rate securities; and participation
interests (collectively referred to as "municipal securities").
The Code classifies certain municipal obligations as private activity bonds.
Payments of principal and interest on private activity bonds are supported
by the revenues of a private issuer (for example, airport authority bonds
supported by airport user fee revenues), rather than the taxing powers of a
government subdivision or authority. The interest received on certain
private activity bonds is a tax preference item subject to the federal
alternative minimum tax on corporations and individuals. The Fund is not
limited in the amount of its assets it may invest in such bonds.
ATLAS CALIFORNIA MUNICIPAL MONEY FUND -- will, as determined at the time of
purchase, normally invest at least 80% of its assets in high quality
municipal securities of the same type as the Atlas National Municipal Money
Fund, including private activity bonds, but issued by or on behalf of the
State of California, its agencies, instrumentalities or political
subdivisions. The maximum and dollar weighted average portfolio maturities
are the same as the Atlas National Municipal Money Fund. The interest on
these securities is excluded from California state personal income tax, in
addition to the federal tax treatment noted in the preceding paragraph.
INVESTMENT GUIDELINES -- MONEY FUNDS
QUALITY -- of municipal and other securities in the Municipal Money Fund
portfolios will be rated, at the time of purchase, in the two highest
quality rating grades by two nationally recognized statistical rating
organizations ("NRSRO"), such as Moody's Investor Services, Inc. ("Moody's")
or Standard & Poor's Corporation ("S&P"), or by one NRSRO if only rated by
one, or of comparable quality in the opinion of
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the Adviser, or Subadviser if applicable. This includes Prime 1 or Prime 2
by Moody's or A-1 or A-2 by S&P for commercial paper, MIG-1 or MIG-2 by
Moody's or SP-1 or SP-2 by S&P for notes, VMIG-1 or VMIG-2 by Moody's for
variable or floating rate securities, Aaa or Aa by Moody's or AAA or AA by
S&P for bonds. Of course, the securities in the Atlas U.S. Treasury Money
Fund portfolio are of the highest quality, backed by the full faith and
credit of the U.S. Government.
PORTFOLIO STRATEGIES -- BOND FUNDS
GOVERNMENT FUNDS -- will, as determined at the time of purchase, normally
invest primarily in a combination of intermediate-term (3-10 years) and
long-term (over 10 years) U.S. Government securities, including direct
obligations of the U.S. Treasury and mortgage-backed securities that are
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (please see "U.S. Government securities" in "Portfolio
strategies -- All Funds"); privately issued mortgage related securities,
including securities issued by commercial banks, savings and loan
institutions, securities broker-dealers, and mortgage bankers; and
repurchase agreements collateralized by mortgage securities. The dollar
weighted average portfolio maturity of the Atlas U.S. Government
Intermediate Fund will normally be between three and ten years. Under normal
conditions, the Atlas U.S. Government and Mortgage Securities Fund and the
Atlas U.S. Government Intermediate Fund will invest at least 50% and 65% of
their respective assets in U.S. Government securities, including GNMA
securities and government agency mortgage securities such as FNMA and FHLMC
securities. At least 25% of the assets of the U.S. Government and Mortgage
Securities Fund will be invested in mortgage securities, including U.S.
Government mortgage securities, such as GNMA, FNMA, and FHLMC securities,
and privately issued mortgage securities.
The Government Funds may invest substantially in mortgage-backed securities
issued by GNMA, FNMA and FHLMC. Mortgage-backed securities are backed by a
pool of mortgage loans and provide a monthly payment of principal and
interest, which is passed through as payments are made on the underlying
mortgages. Additional payments may be made from unscheduled repayments of
principal due to refinancing, sale or foreclosure of the underlying
property.
If interest rates decline, these prepayments tend to increase due to
refinancing of mortgages. Therefore, the average life, or effective maturity
of mortgage-backed securities is normally shorter than the typical 30-year
maturity of the underlying mortgages. Since the prepayment rate varies with
market conditions, it is not possible to accurately anticipate what the
average maturity of the portfolio will be. The yield of the Funds will be
affected by reinvestment of prepayments at higher or lower rates than the
original investment. Also, to the extent the Funds purchase mortgage
securities at a premium, prepayments will result in some loss to the extent
of the premium. Like other debt securities, mortgage related securities'
values, including government related mortgage securities, fluctuate
inversely in response to interest rates.
Prompt payment of principal and interest on GNMA certificates is backed by
the full faith and credit of the United States. FNMA guaranteed pass-through
certificates and FHLMC participation certificates are supported by the
credit of the issuing agency. The U.S. Government is not legally obligated
to provide financial support to FNMA and FHLMC, but may do so in its
discretion.
Privately issued mortgage related bonds and mortgage-backed securities are
issued by financial institutions such as commercial banks, thrift
institutions, mortgage bankers and securities broker-dealers. Mortgage
related bonds are general obligation, fixed-income securities collateralized
by mortgages. These securities include collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") as
authorized under the Internal Revenue Code.
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CMOs are a type of bond secured by an underlying pool of mortgages or
mortgage pass-through certificates that are structured to direct payments on
underlying collateral to different series or classes of the obligations.
CMO's may be issued by a U.S. Government agency such as FHLMC and
collateralized by U.S. Government or government agency mortgage securities,
or by private issuers and collateralized by U.S. Government and/or
government agency mortgage securities or by privately issued mortgage
securities. The Government Funds will not invest more than 15% of their
total assets in CMOs.
The Government Funds may invest in other mortgage related debt obligations
secured by mortgages on commercial or residential properties and may
purchase securities known as "strips." Strips are securities from which the
unmatured interest coupons have been "stripped" from the principal portion
and sold separately. The Funds may invest in the principal portion or in the
interest coupons of U.S. Government and mortgage securities or in receipts
or certificates representing interests in stripped securities or interest
coupons. The principal portion of a stripped security pays no interest to
its holder during its life, and its value consists of the difference between
its face value at maturity and its acquisition price. Mortgage-backed
securities strips are subject to increased volatility in price due to
interest rate changes, the risk that the security will be less liquid during
demand or supply imbalances, and the risk that, due to unscheduled
prepayments, the maturity date will be shorter than anticipated and
reinvestment of the proceeds may only be possible at a lower yield. The
Funds will not purchase strips on mortgage securities in excess of 15% of
assets. As with any debt obligation, the value of U.S. Government and
mortgage securities will fluctuate with changes in interest rates or market
perceptions of the creditworthiness of the issuer.
ATLAS STRATEGIC INCOME FUND -- will normally invest principally in three
market sectors: (1) U.S. Government securities, (2) debt securities of
foreign governments and companies, and (3) lower-rated, high-yield debt
securities of U.S. companies. The Fund will normally invest in each of these
three sectors, but from time to time the Subadviser will adjust the amounts
the Fund invests in each sector and may invest up to 100% in any one sector.
The Fund may without limitation invest in U.S. Government securities,
mortgage-backed securities issued by GNMA, FNMA, and FHLMC, CMOs and strips,
all as described above under "Portfolio strategies -- Bond Funds, Government
Funds." The Fund may invest in debt securities and dividend-paying common
stocks issued by U.S. companies, including bonds, debentures, notes,
preferred stocks, zero coupon securities, participation interests,
asset-backed securities and sinking fund and callable bonds. The Fund may
purchase these securities in public offerings or through private placements.
The Fund has no limitations on the maturity, market capitalization of the
issuer or credit rating of the domestic debt securities in which it invests,
although it is expected that most issuers will
have total assets or capitalization in excess of $100 million.
ATLAS NATIONAL MUNICIPAL BOND FUND -- will normally invest at least 80% of
its assets in the same types of municipal securities as Atlas National
Municipal Money Fund, including private activity bonds, but within the four
highest quality rating grades for municipal bonds with intermediate (3-10
years) and long-term (over 10 years) maturities, as determined at the time
of purchase.
ATLAS CALIFORNIA MUNICIPAL BOND FUND -- will normally invest at least 80% of
its assets in the same type of municipal securities as the Atlas California
Municipal Money Fund, including private activity bonds, but within the four
highest quality rating grades for municipal bonds with intermediate (3-10
years) and long-term (over 10 years) maturities, as determined at the time
of purchase.
ATLAS NATIONAL INSURED INTERMEDIATE MUNICIPAL FUND -- will normally invest
at least 80% of its assets in the same types of municipal securities as the
other National Funds, including
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private activity bonds. This Fund will invest primarily in insured municipal
securities of the highest quality, as determined at the time of purchase,
and maintain a dollar weighted average portfolio maturity between three and
ten years.
ATLAS CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND -- will normally invest
at least 80% of its assets in the same types of municipal securities as the
other California Funds, including private activity bonds. This Fund will
invest primarily in insured municipal securities of the highest quality, as
determined at the time of purchase, and maintain a dollar weighted average
portfolio maturity between three and ten years.
As a temporary defensive strategy, each Bond Fund may also invest up to 100%
of its Assets in short-term debt securities or money market instruments when
market conditions make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders.
PORTFOLIO STRATEGIES -- STOCK FUNDS
ATLAS BALANCED FUND -- will normally invest primarily in income-producing
equity securities (defined as common stocks, preferred stocks, and
securities convertible into common stocks). The Fund will utilize a
conservative investment selection process focusing on companies in basic
industries. The Fund will maintain at least 25% of its assets in fixed
income senior debt securities.
ATLAS GROWTH AND INCOME FUND -- will normally invest at least 65% of its
assets in a combination of growth-oriented and dividend-paying equity
securities. Besides dividend paying equity securities, the Fund will also
utilize convertible securities to generate some current income.
ATLAS STRATEGIC GROWTH FUND -- will normally invest at least 65% of its
assets in a diversified portfolio of growth-oriented equity securities. Many
of these companies will, in the opinion of the Fund's Subadviser, have
better-
than-expected earnings prospects and be considered undervalued.
ATLAS GLOBAL GROWTH FUND -- will normally invest primarily in a diversified
portfolio of growth oriented equity securities (defined as common stocks and
securities convertible to common stocks) of issues traded in at least three
different countries (which may include the United States).
ATLAS EMERGING GROWTH FUND -- will normally invest primarily in equity
securities (defined as common stocks and securities having investment
characteristics of common stocks, such as, securities convertible into
common stocks) of growth-oriented companies with market capitalization less
than $1 billion.
Each of the Stock Funds may invest in corporate and taxable government debt
securities and money market instruments. As a temporary defensive strategy,
each Stock Fund may also invest up to 100% of its assets in debt securities
or money market instruments when market conditions make pursuing the Fund's
basic investment strategy inconsistent with the best interests of its
shareholders. Except for the Global and Emerging Growth Funds, debt
obligations purchased will be investment grade or better, or of comparable
quality in the opinion of the Adviser or Subadviser. However, the Global
Growth Fund may invest up to 5% of its assets in below investment grade debt
obligations. Please see "Investment guidelines -- Bond and Stock Funds".
INVESTMENT GUIDELINES -- BOND AND STOCK FUNDS
QUALITY -- of senior debt obligations in the portfolios of the Bond Funds
(except the Strategic Income and the National and California Municipal Bond
Funds) will, as determined at the time of purchase, be rated in the upper
medium grade, that is, the three highest quality rating grades by a
nationally recognized statistical rating organization ("NRSRO"), such as
Moody's or S&P -- Aaa, Aa, or A by Moody's or AAA, AA, or A by S&P -- or of
comparable quality in the opinion of the Adviser, or Subadvisers if
applicable. The Strategic Income Fund is not limited by a minimum rating
grade. In addition to upper medium grade debt obligations, the National and
California Municipal Bond Funds, as
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well as each of the Stock Funds, may invest without limit in senior debt
obligations rated, at the time of purchase, in the fourth highest quality
rating grade by a NRSRO -- such as Baa by Moody's or BBB by S&P -- or of
comparable quality in the opinion of the applicable Subadviser. Debt rated
in the fourth highest quality rating grade, referred to as investment grade,
may have speculative characteristics and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade bonds.
Fixed-income securities, including U.S. Government securities, corporate
debt obligations and municipal securities, fluctuate in value inversely with
changes in interest rates, and also change with market perceptions of the
creditworthiness of the issuer. If a debt obligation's credit rating falls
below the applicable minimum rating grade, the Bond or Stock Fund may retain
or dispose of it, depending on the circumstances. The Global Growth Fund is
not limited by a minimum rating grade.
Such ratings generally do not apply to investments in convertible
securities. In making its investments in convertible securities on behalf of
the Funds, the Subadviser looks primarily to the conversion feature and
treats convertible securities as equity securities. For details, see
"Description of Certain Securities and Investment Policies -- Convertible
Securities" in
the SAI.
SPECIAL RISKS OF LOWER-RATED SECURITIES -- In seeking high current income,
the Strategic Income Fund may invest in higher-yielding, lower-rated debt
securities. There is no restriction on the amount of the Fund's assets that
could be invested in these types of securities. The Global and Emerging
Growth Funds may also invest in lower-rated securities, but to a much more
limited extent. Lower-rated debt securities are those rated below
"investment grade," such as debt securities that have a rating lower than
"Baa" by Moody's Investors Services, Inc. ("Moody's") or "BBB" by Standard &
Poor's Corporation ("S&P"). These securities may be rated as low as "C" or
"D" or may be in default at the time of purchase.
The Subadvisers do not rely solely on ratings of securities by rating
agencies when selecting investments for a Fund, but evaluate other economic
and business factors as well. The Funds may invest in unrated securities
that the Subadviser believes offer yields and risks comparable to rated
securities. High yield, lower-grade securities, whether rated or unrated,
have speculative characteristics. Lower-grade securities have special risks
that make them riskier investments than investment grade securities. They
may be subject to greater market fluctuations and risk of loss of income and
principal than lower yielding, investment grade securities. There may be
less of a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest due
on the bonds. The issuer's low creditworthiness may increase the potential
for its insolvency ("credit risk"). All corporate debt securities (whether
foreign or domestic) are subject to some degree of credit risk.
These risks mean that a Fund may not achieve the expected income from
lower-grade securities, and that a Funds' net asset value per share may be
affected by declines in value of these securities. The Funds are not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. These risks are discussed in more detail
in the Statement of Additional Information.
INSURANCE -- the principal and interest payments on the insured municipal
securities in the portfolios of the Insured Funds will generally be insured
by new-issue, secondary market, or portfolio insurance. All of the insurance
policies used by the Insured Funds will be obtained only from insurance
companies whose claims-paying ability is rated Aaa by Moody's or AAA by
Standard & Poor's, resulting in Aaa or AAA ratings for such insured
municipal securities.
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New-issue insurance is purchased by a bond issuer seeking to enhance the
credit quality of a security. By paying a premium and meeting the insurer's
underwriting standards, the bond issuer can obtain a credit rating for its
bonds comparable to the rating assigned to the insurer's claims-paying
ability. New issue insurance policies cannot be cancelled and continue in
force as long as the bonds are outstanding.
A secondary market insurance policy is purchased by an investor subsequent
to a security's original issuance and generally insures a particular bond
for the remainder of its term. The Insured Funds may purchase securities
which have already been insured under a secondary market insurance policy by
a prior investor, or an Insured Fund may itself purchase such a policy for
securities which are currently uninsured.
A portfolio insurance policy may be used to guarantee specific securities
only while owned by an Insured Fund. Insurance premiums, if any, paid by a
Fund for portfolio insurance will be treated as a Fund expense, reducing the
Fund's net investment income and, therefore, its yield.
An insured municipal security in an Insured Fund's portfolio will typically
be covered by only one of the three types of policies. For instance, if a
bond is already covered by a new issue insurance policy or a secondary
market insurance policy, then that security will not be insured under the
Insured Fund's portfolio insurance policy. Each Insured Fund may invest more
than 25% of its assets in municipal securities insured by the same insurance
company.
ILLIQUID AND RESTRICTED SECURITIES -- each Stock Fund and the Strategic
Income Fund have a policy limiting investment in illiquid assets as set
forth under "What are the Funds' investment limitations?" That policy does
not limit a Fund's acquisition of restricted securities eligible for resale
to qualified institutional purchasers pursuant to Rule 144A under the
Securities Act of 1933 provided such securities are determined to be liquid
by the Company's Board of Directors, or by the Adviser or a Subadviser under
Board-approved guidelines. Such guidelines take into account trading
activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in
particular Rule 144A securities, a Fund's holdings of those securities may
be illiquid. The Strategic Growth, Global Growth, Emerging Growth and
Strategic Income Funds each will conform as a matter of operating policy to
the policy of the other Atlas Funds of not investing more than 10% of its
net assets in illiquid securities. If, due to changes in relative values,
more than 10% of the value of a Fund's net assets consisted of illiquid
securities, the Subadviser together with the Adviser would consider
appropriate steps to protect the Fund's flexibility. There may be
undesirable delays in selling such securities at a price representing their
fair value. See "Illiquid and Restricted Securities" in the SAI for further
details.
REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS -- may be engaged in by the
Government and Strategic Income Funds. These Funds may purchase
mortgage-backed securities together with an agreement to sell similar
securities at a future date. Such reverse dollar reverse repurchase
agreements are subject to the same risks and restrictions as repurchase
agreements. Cash, U.S. Government securities or other high quality, liquid
debt securities will be segregated to meet these obligations when due. The
Funds will not engage in these transactions in an amount that exceeds
one-third of each of their assets.
CONVERTIBLE SECURITIES -- Each Stock Fund and the Strategic Income Fund may
invest in convertible securities, including both corporate bonds and
preferred stocks. These securities are generally convertible into shares of
common stock at a stated price or rate. The price of a convertible security
varies inversely with interest rates and, because of the conversion feature,
also normally varies with changes in price of the underlying common stock.
FOREIGN SECURITIES -- Each Stock Fund and the Strategic Income Fund may
purchase "foreign securities," which are equity or debt securities
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issued by companies organized under the laws of countries other than the
United States. These securities are listed on one or more foreign securities
exchanges or are traded in the foreign over-the-counter markets. Securities
of foreign issuers represented by American Depository Receipts, traded in
the U.S. over-the-counter markets, or listed on a U.S. securities exchange
are not considered to be "foreign securities" because they are not subject
to many of the special considerations and risks that apply to investments in
foreign securities traded and held abroad. If a Fund's securities are held
abroad, the countries in which such securities may be held and the
sub-custodians holding them must be approved by the Fund's Board of
Directors under applicable SEC Rules. Foreign securities that a Fund may
purchase include securities issued by issuers in developed or underdeveloped
countries. The Stock Funds have no restriction on the amount of assets that
may be invested in foreign securities, although it is currently anticipated
that no Stock Fund, other than the Global Growth and Emerging Growth Funds,
will invest in excess of 15% of its assets in foreign securities. The Global
Growth Fund normally invests a substantial portion of its assets in foreign
securities. The Emerging Growth Fund may invest up to 25% of its assets in
foreign securities.
The Strategic Income Fund may invest in debt securities issued or guaranteed
by foreign companies, "supranational" entities such as the World Bank, and
foreign governments or their agencies. These foreign securities may include
debt obligations such as government bonds, debentures issued by companies,
as well as notes. Some of these debt securities may have variable interest
rates or "floating" interest rates that change in different market
conditions. Those changes will affect the income the Fund receives. The Fund
will not invest more than 25% of its total assets in government securities
of any one foreign country. Otherwise, the Fund is not restricted in the
amount of its assets it may invest in foreign countries or in any single
country and has no limitations on the maturity or capitalization of the
issuer of the foreign debt securities in which it invests, although it is
expected that most issuers will have total assets or market capitalization
in excess of $100 million. The Fund may also invest in U.S.
dollar-denominated foreign securities commonly known as "Brady Bonds." Such
securiites are generally collaterized in full as to the payment of principal
at maturity by U.S. Treasury zero coupon obligations. Because, among other
factors, the issuer's obligation to make interest payments is not
collateralized and the existence of a history of defaults on bank loans by
entities of countries issuing Brady Bonds, investments in Brady Bonds are
viewed as speculative.
RISKS OF FOREIGN SECURITIES -- Investing in foreign securities, especially
those issued in underdeveloped countries, generally involves special risks.
The risks of investing in foreign securities may include foreign taxation,
changes in currency rates or currency blockage, currency exchange costs,
possibilities in some countries of expropriation or nationalization of
assets, political, financial or social instability or adverse diplomatic
developments and differences between domestic and foreign legal, auditing,
brokerage and economic standards. Investment in emerging markets involves
added risks, including less-developed legal and economic structures, less
stable political systems, illiquid securities markets, and greater
volatility of prices. See "Foreign Securities" in the SAI for further
discussion of the possible rewards and risks of investing in foreign
securities.
ZERO COUPON SECURITIES -- Each Stock and Bond Fund may invest in zero coupon
securities issued by the U.S. Treasury, municipalities or private issuers.
The Strategic Income Fund may also invest zero coupon securities issued by
foreign governments and companies. Because a zero coupon security pays no
interest to its holder during its life or for a substantial period of time,
it usually trades at a discount from its face or par value, does not pay
current cash income, and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of
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interest. In addition, corporate zero coupon securities are subject to the
risk of the issuer's failure to pay interest and repay principal in
accordance with the terms of the obligation. See
"Zero Coupon Securities" in the SAI for further information.
ASSET-BACKED SECURITIES -- The Strategic Income Fund can invest in
asset-backed securities which are fractional interests in pools of consumer
loans and other trade receivables, similar to mortgage-backed securities.
They are issued by trusts and special purpose corporations. They are backed
by a pool of assets, such as credit card or auto loan receivables, which are
the obligations of a number of different parties. The income from the
underlying pool is passed through to holders, such as the Fund. These
securities are frequently supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the extent of
the credit enhancement may be different for different securities and
generally applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in the
related collateral. Thus, corporate asset-backed securities are ultimately
dependent upon payment of consumer loans by the individual borrowers.
PARTICIPATION INTERESTS -- The Strategic Income Fund may acquire
participation interests in loans that are made to U.S. or foreign companies
(each a "borrower"). They may be interests in, or assignments of, the loan
and are acquired from banks or brokers that have made the loan or are
members of the lending syndicate. No more than 5% of the Fund's net assets
can be invested in participation interests of the same borrower. The
Subadviser has set certain creditworthiness standards for issuers of loan
participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers may have
difficulty making payments. If a borrower fails to make scheduled interest
or principal payments, the Fund could experience a decline in the net asset
value of its shares. Some borrowers may have senior securities rated as low
as "C" by Moody's or "D" by Standard & Poor's, but may be deemed acceptable
credit risks. Participation interests are subject to the Fund's limitations
on investments in illiquid securities.
DERIVATIVE INVESTMENTS -- The Strategic Income and Emerging Growth Funds can
invest in a number of different kinds of "derivative investments." The Funds
may use some types of derivatives for hedging purposes, and may invest in
others because they offer the potential for increased income and principal
value. In general, a "derivative investment" is a specially-designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index or currency. In the
broadest sense, derivative investments include exchange-traded options and
futures contracts. See "Investment guidelines -- Bond and Stock Funds,
options and futures strategies" for a discussion of conventional derivative
securities.
One risk of investing in derivative investments is that the company issuing
the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the Subadviser expected it to perform.
The performance of derivative investments may also be influenced by interest
rate changes in the U.S. and abroad. All of these risks can mean that a Fund
will realize less income than expected from its investments, which will
affect the Fund's share price. Certain derivative investments held by a Fund
may trade in the over-the-counter markets and may be illiquid. If that is
the case, the Fund's investment in them will be limited.
Another type of derivative a Fund may invest in is an "index-linked" or
"commodity-linked" note. Principal and/or interest payments on such a note
depend on the performance of one or more market indices, such as the S&P 500
Index or a weighted index of commodity futures, such as crude oil, gasoline
and natural gas. On the
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maturity of this type of debt security, payment is made based on the
performance of an underlying index, rather than based on a set principal
amount for a typical note. Another derivative investment a Fund may invest
in is a currency-indexed security. These are typically short-term or
intermediate-term debt securities. Their value at maturity or the interest
rates at which they pay income are determined by the change in value of the
U.S. dollar against one or more foreign currencies or an index. In some
cases, these securities may pay an amount at maturity based on a multiple of
the amount of the relative currency movements. This variety of index
security offers the potential for greater income but at a greater risk of
loss.
Other derivative investments a Fund may invest in include "debt exchangeable
for common stock" of an issuer or "equity-linked debt securities" of an
issuer. At maturity, such debt security is exchanged for common stock of the
issuer or is payable in an amount based on the price of the issuer's common
stock at the time of maturity. In either case there is a risk that the
amount payable at maturity will be less than the principal amount of the
debt (because the price of the issuer's common stock is not as high as was
expected).
WARRANTS -- Each Stock Fund and the Strategic Income Fund may invest up to
5% of its total assets in warrants, other than those that have been acquired
in units or attached to other securities. Each Stock Fund may invest up to
2% of its assets in warrants that are not listed on the New York or American
Stock Exchanges. Warrants are options to purchase equity securities at
specific prices valid for a specific period of time. Those prices do not
necessarily move in a manner parallel to the prices of the underlying
securities. The price paid for a warrant will be foregone unless the warrant
is exercised prior to its expiration. Warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
SMALL, UNSEASONED COMPANIES -- Each Stock Fund may invest in securities of
small, unseasoned companies as well as those of large, well-known companies.
In view of the limited liquidity and price volatility of the former, each
Stock Fund, other then the Emerging Growth Fund, will not invest more than
5% of its assets at the time of purchase in securities of companies,
including predecessors that have operated less than three years. The
Emerging Growth Fund currently intends to invest no more than 10% of its
assets in securities of such issuers, while reserving the right to so invest
up to 20% of its assets. The securities of small, unseasoned companies may
have a limited trading market, which might adversely affect a Fund's ability
to dispose of such securities and can result in lower prices for such
securities than might otherwise be the case. If other investors holding the
same securities as a Fund sell them when the Fund attempts to dispose of its
holdings, the Fund might receive lower prices than might otherwise be
obtained, because of the thinner market for such securities.
SPECIAL SITUATIONS -- Each Stock Fund may invest in securities of companies
that are in "special situations" that the Subadviser believes may present
opportunities for capital growth. A "special situation" may be an event such
as a proposed merger, reorganization, or other unusual development that is
expected to occur and which may result in an increase in the value of a
company's securities, regardless of general business conditions or the
movement of prices in the securities market as a whole. There is a risk that
the price of the security may decline if the anticipated development fails
to occur.
BORROWING -- From time to time, the Atlas Strategic Growth, Strategic
Income, and Global Growth Funds may increase each of their ownership of
securities by borrowing from banks on an unsecured basis and investing the
borrowed funds (on which the Fund will pay interest), subject to the
requirement of the Investment Company Act of 1940 (the "1940 Act") that
borrowings not exceed 50% of a Fund's net assets. Purchasing securities with
borrowed funds is a speculative investment method known as leverage. There
are risks associated with leveraging purchases of portfolio securities by
borrowing,
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including possible reduction of income and increased fluctuation of net
asset value per share. A Fund may be subject to relatively greater risks and
costs than a fund that does not use leverage. For further discussion of
risks and other details, see "Borrowing" in "Description of Certain
Securities Investment Policies" in the SAI.
SHORT SALES AGAINST-THE-BOX -- The Atlas Money and Bond Funds may not sell
securities short. The Atlas Stock Funds may each enter into transactions
referred to as "short sales-against-the-box." No more than 15% of a Fund's
net assets will be held as collateral for such short sales at any one time.
See "Short Sales Against-the-Box" in "Investment Objective and Policies" in
the SAI for further details.
The Stock Funds and the Atlas Strategic Income Fund will not, as a matter of
operating policy, which may be changed without the approval of a majority of
the outstanding shares, invest in an issuer engaged in the manufacture of
tobacco products.
REVERSE REPURCHASE AND DOLLAR REVERSE REPURCHASE AGREEMENTS -- may be
entered into by the Bond and Stock Funds. A reverse repurchase agreement is
the sale of a security by a Fund and its agreement to repurchase the
security at a specified time and price. In addition, the Government Funds
may enter into similar transactions, known as dollar reverse repurchase
agreements, with respect to mortgage-backed securities. Dollar reverse
repurchase agreements differ from reverse repurchase agreements only with
respect to the securities repurchased by a Fund, which are substantially
similar but not identical to the securities the Fund sold. Each Bond or
Stock Fund will maintain in a segregated account with the Custodian cash,
U.S. Government securities or other appropriate liquid, high grade debt
obligations in an amount sufficient to cover its obligations under these
agreements with broker-dealers (but no collateral is required on such
agreements with banks). Under the 1940 Act, these agreements are considered
borrowings by a Fund. Accordingly, each Bond or Stock Fund will limit its
investments in such agreements, together with any bank borrowings, to no
more than one-third of each Bond or Stock Fund's total assets. Reverse
repurchase and dollar reverse repurchase agreements create leverage, which
is speculative, and increase a Fund's investment risk. If the income and
gains on securities purchased with the proceeds of these agreements exceed
the costs of the agreements, a Bond or Stock Fund's earnings or net asset
value will increase faster than otherwise would be the case; conversely if
the income and gains fail to exceed the costs, earnings or net asset value
would decline faster than otherwise would be the case. The Adviser, or
Subadviser if applicable, will monitor the creditworthiness of firms with
which they engage in these transactions.
OPTIONS AND FUTURES STRATEGIES -- the Bond and Stock Funds may engage in
options on securities, options on futures and futures contract strategies to
hedge their investments against changes in value, to manage cash flow, to
attempt to enhance income, or as a temporary substitute for purchases or
sales of actual securities. They will not engage in such transactions for
speculation. Their ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations, and there can be no
assurance that any of these strategies will succeed.
These strategies involve risks and transaction costs to which the Bond and
Stock Funds would otherwise not be subject. If the Adviser's or a
Subadviser's prediction of the direction of market movements in the
underlying instruments or indices is inaccurate, the Fund involved may be
left in a worse position than if such strategies were not used. Inherent
risks include (1) dependence upon the Adviser's or Subadviser's knowledge
and ability to correctly predict the direction of the market and/or rates;
(2) imperfect correlation between the price of the futures contract or
option and the price of the securities or indices being hedged; (3) the fact
that the skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument
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at any time; and (5) the possible need to defer closing out certain hedged
positions to avoid adverse tax consequences.
A more thorough description of these investment practices and their
associated risks is contained below and in the current SAI. The Bond and
Stock Funds will not use leverage in futures, options on futures and options
on securities transactions, and are not commodity pools. When required by
SEC guidelines, each Fund will maintain a segregated account with the
Custodian with sufficient cash, U.S. Government securities or other highly
liquid, high grade debt securities to cover its potential futures and
options obligations.
OPTIONS ON SECURITIES, INDICES AND CURRENCIES -- the Bond and Stock Funds
may purchase and sell covered exchange listed put and call options on
securities, indices and currencies. These options may be on debt securities,
financial indices and foreign currencies (Bond Funds) and on stocks, stock
and financial indices, foreign government securities or foreign currencies
(Stock Funds). The Bond and Stock Funds may also buy and sell covered
over-the-counter puts and calls on securities that they may invest in
directly consistent with their respective investment policies. Under
applicable regulatory guidelines over-the-counter options may be treated in
whole or in part as
illiquid investments.
A Fund will only sell covered options. An option is covered if the seller
owns an offsetting position in the security or maintains cash, securities of
the U.S. Government its agencies or instrumentalities or other liquid high
grade debt obligations with a value sufficient at all times to meet its
obligations. There is no limit on the amount of covered call options a Bond
and Stock Fund may sell, but it may sell covered put options only to the
extent that the cover does not exceed 25% of a Fund's net assets.
A Fund may sell covered put and call options for additional premium income,
buy put options in an effort to protect the value of a security in its
portfolio against decline in value and buy call options in an effort to
protect against a price increase of securities or currencies it intends to
purchase. The Bond and Stock Funds may also make offsetting transactions to
close open positions.
For a premium paid, a call option buyer obtains the right to purchase
securities for a specified time at a specified price. For a premium
received, a call option seller is obliged, when a buyer exercises the
option, to deliver securities upon receipt of the specified price. While the
option is open, a call seller gives up potential gain on the securities in
excess of the
exercise price.
For a premium paid, a put option buyer obtains the right for a specified
time to sell the securities to the put option seller at the specified price.
For a premium received, a put option seller is obliged, when the buyer
exercises the option, to pay the specified price for the securities. While
the option is open, the put option seller may have to pay more than the
current market price for the securities.
Put and call options on financial indices and foreign currencies are similar
to options on securities, except that settlement is in cash in an amount
equal to the difference between the closing price of the index or currency
and the exercise price of the option.
FUTURES CONTRACTS AND RELATED OPTIONS -- the Bond and Stock Funds may
purchase and sell financial futures contracts and options on futures which
are traded on a commodities exchange or board of trade for hedging, return
enhancement and risk management purposes in accordance with regulations of
the Commodity Futures Trading Commission. These futures contracts and
related options may be on debt securities, debt financial indices, and U.S.
Government securities (Bond Funds) and stock and financial indices, foreign
securities and foreign currencies (Stock Funds and the Strategic Income
Fund). A financial futures contract is an agreement to purchase or sell an
agreed amount of securities or currencies at a set price for delivery in the
future, or in the case of currency and index contracts, to take or make
delivery of an amount
60
<PAGE>
of cash equal to the difference between the closing price of the index or
currency and the contract price. A Fund may not enter into a futures
contract or option on a futures contract if immediately thereafter the
aggregate initial margin deposits related to such positions, plus premiums
paid by a Fund for open options on futures positions, less the amount by
which such options are "in-the-money", would exceed 5% of the market value
of a Fund's total assets. In addition, the value of all futures contracts
sold by a Fund will not exceed 25% (50% in the case of the Strategic Income
Fund) of its net
asset value.
A Bond or Stock Fund's successful use of futures contracts and related
options depends upon the Adviser's or Subadviser's ability to predict the
direction of the market, and is subject to various additional risks. Most
futures exchanges or boards of trade have established daily limits on the
amount that the price of a futures contract or related options may vary,
either up or down, from the previous day's settlement price. These daily
limits may restrict a Fund's ability to buy or sell futures contracts or
related options on any particular day.
INTEREST RATE SWAPS -- For hedging purposes, the Bond Funds may enter into
interest rate swap transactions and purchase or sell interest rate caps and
floors. An interest rate swap involves an agreement between the Fund and
another party to exchange payments calculated as if they were interest on a
fictitious ("notional") principal amount (e.g., an exchange of floating rate
payments by one party for fixed rate payments by the other). An interest
rate cap or floor entitles the purchaser, in exchange for a premium, to
receive payments of interest on a notional principal amount from the seller
of the cap or floor, to the extent that a specified reference rate exceeds
or falls below a predetermined level.
A Fund will usually enter into such transactions on a "net" basis, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payment streams. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each swap will be accrued
on a daily basis, and an amount of cash or high-quality liquid securities
having an aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's Custodian. If a
Fund enters into a swap on other than a net basis, or sells caps or floors,
the Fund will maintain a segregated account in the full amount, accrued on a
daily basis, of the Fund's obligations with respect to the transaction. Such
segregated accounts will be maintained in accordance with applicable
regulations of the Securities and Exchange Commission.
A Fund will not enter into any swap, cap or floor transaction unless the
unsecured senior debt or the claims paying ability of the other party to the
transaction is consistent with its credit quality standards for debt
obligations set forth above. The swap market has grown substantially in
recent years, with a large number of banks and investment banking firms
acting both as principals and agents utilizing standard swap documentation,
and the Adviser and the Subadvisers have determined that the swap market has
become relatively liquid. Swap transactions do not involve the delivery of
securities or other underlying assets or principal, and the risk of loss
with respect to such transactions is limited to the net amount of payments
that a Fund is contractually obligated to make or receive. Caps and floors
are more recent innovations for which standardized documentation has not yet
been developed and, accordingly, they are less liquid than swaps. A Fund
will not enter into an interest rate swap transaction at any time that the
aggregate amount of its obligations under such transactions (based on
notional amounts) exceeds 10% of its total assets. The aggregate purchase
price of caps and floors held by a Fund may not exceed 5% of its total
assets at the time of purchase, and they will be considered by the Fund to
be illiquid assets. A Fund may sell caps and floors without limitation other
than the segregated account requirement described above.
The use of swaps, caps and floors is a highly specialized activity which
involves investment
61
<PAGE>
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Adviser's or a Subadviser's forecast of
market values, interest rates, and other factors is incorrect, a Fund's
investment performance will diminish compared with the performance that
could have been achieved if these investment techniques were not used.
Moreover, even if the forecasts are correct, a Fund's swap position may
correlate imperfectly with the asset or liability being hedged. In addition,
in the event of a default by the other party to the transaction, a Fund
might incur a loss.
FORWARD CURRENCY EXCHANGE CONTRACTS -- the Stock Funds and the Strategic
Income Fund may enter into foreign currency exchange contracts to hedge
specific transactions or portfolio positions and to protect the value of the
portfolio against future changes in currency exchange rates. A forward
contract is an obligation to purchase or sell a specific currency at an
agreed upon future date at a price set on the date of the contract.
Transaction hedging is the purchase or sale of a forward contract with
respect to specific receivables or payables for the purchase or sale of
portfolio securities. A position hedge is the sale of a foreign currency
with respect to portfolio security positions denominated or quoted in that
currency. A Fund may not position hedge with respect to a particular
currency for an amount greater than the aggregate market value at the time
of any sale of forward currency of its portfolio securities denominated or
quoted in such currency. Forward currency exchange contracts are subject to
the same types of risks and transaction costs as options and futures
transactions.
- ----------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
COMPANY'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE
COMPANY'S SHARES AND, IF GIVEN, OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
62
<PAGE>
APPENDIX II:
DESCRIPTION OF RATINGS
- --------------------------------
In general, the ratings of Moody's Investors Services, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"), and the other nationally recognized
statistical rating organizations, represent the opinions of these agencies
as to the quality of securities which they rate. It should be emphasized,
however, that such ratings are relative and subjective and are not absolute
standards of quality. Consequently, debt securities with the same maturity,
coupon and rating may have different yields, while debt securities of the
same maturity and coupon with different ratings may have the same yield.
These ratings will be used by the Funds as initial criteria for the
selection of portfolio securities, but the Funds will also rely upon the
independent advice of the Adviser and their respective Subadvisers (if any)
to evaluate potential investments. The Appendix to this Statement of
Additional Information contains further information concerning the ratings
of Moody's and S&P and their significance. Subsequent to its purchase by a
Fund, an issue of securities may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event
will require sale of such securities by the Fund, but the Adviser will
consider such event in its determination of whether the Fund should continue
to hold the securities. To the extent that the rating given by Moody's or
S&P for securities may change as a result of changes in such organizations
or their rating systems, the Funds will attempt to use comparable ratings as
standards for its investments in accordance with the investment policies
contained in this Prospectus and in the Statement of Additional Information.
MOODY'S INVESTORS SERVICE, INC. describes its ratings for debt securities as
follows:
BONDS --
AAA. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as 'gilt edge'. Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are not likely to impair the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater magnitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment some time in the
future.
BAA. Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time.
63
<PAGE>
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be overly moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
CA. Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
NOTES AND VARIABLE RATE OBLIGATIONS --
MIG 1/VMIG 1. The MIG 1 (or VMIG 1 for an issue with a variable rate demand
feature) designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancings.
MIG 2/VMIG 2. The MIG 2 (or VMIG 1 for an issue with a variable rate demand
feature) designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group.
COMMERCIAL PAPER --
PRIME-1. Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2. Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above but to
a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
STANDARD & POOR'S CORPORATION describes its ratings for debt securities as
follows:
BONDS --
AAA. Bonds which are rated AAA have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.
AA. Bonds which are rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small
degree.
A. Bonds which are rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB. Bonds which are rated BBB are regarded as having an adequate capacity
to pay interest
64
<PAGE>
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
BB, B, CCC AND CC. Bonds which are rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
C AND D. The rating C is reserved for income bonds on which no interest is
being paid. Bonds rated D are in default and payment of interest and/or
repayment of principal is in arrears.
NOTES --
SP-1. The SP-1 rating denotes a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
SP-2. The SP-2 rating denotes a satisfactory capacity to pay principal and
interest.
COMMERCIAL PAPER --
A-1. The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with a
plus (+) designation.
A-2. The A-2 designation indicates a capacity for timely payment on issues
so designated is strong; however, the relative degree of safety is not as
high as for issues designated A-1.
65
<PAGE>
ATLAS ASSETS, INC., 794 Davis Street, San Leandro, CA 94577
- --------------------------------------------------------------------------------
PAYABLE ON DEATH ACCOUNT BENEFICIARY DESIGNATION FORM
<TABLE>
<C> <S> <C> <C> <C>
Owner's Name
Joint Owner's Name
Street Address City State Zip
Telephone Number -
Telephone Number - Residence Business
Atlas Fund Account
Taxpayer ID Number Number
</TABLE>
PAYABLE ON DEATH PAYEES
<TABLE>
<C> <S> <C> <C> <C>
1.
Name (please print)
Street Address City State Zip
2.
Name (please print)
Street Address City State Zip
</TABLE>
I/We understand that, as authorized by statute of the
state in which I/we reside, funds in this account are
payable upon request only to me/us as Original Payee(s)
during my/our lifetime(s) and, upon my death/the death
of the last of us to die, to the Payable On Death
Payee(s) named above who survive(s) me/us.
I/We understand that upon presentation to you of proof
of my death/the death of the last of us to die, funds
remaining in the account will be payable only to the
Payable On Death Payee(s) who survive(s) me/us, in equal
shares if more than one survives me/us. (Payable on
Death accounts are not authorized under the laws of the
States of Arizona, Florida, New Jersey and Texas.)
We Want You To Know...Atlas Funds are not FDIC-insured and are not deposits or
obligations of, or guaranteed by World Savings. Mutual fund returns and
principal value will vary and you may have a gain or loss when you sell.
<TABLE>
<C> <S> <C> <C> <C>
X
Original Payee Signature Date
X
Original Payee Signature Date
</TABLE>
<PAGE>
ATLAS ASSETS, INC., 794 Davis Street, San Leandro, CA 94577
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS FORM
FOR TRUSTS, CORPORATIONS, PARTNERSHIPS AND OTHER ENTITIES
Corporations, please complete sections 1 through 3.
Trusts, partnerships and other entities, complete sections 1 and 3.
If any information on this Form changes, you will need to file an amended
Form with the Atlas Funds' Shareholder Services Agent ("Agent"). Please call
1-800-933-ATLAS (1-800-933-2852) for additional Forms.
1. ACCOUNT REGISTRATION
____________________________________________________________________________
Name of Trust, Corporation, Partnership or Other Entity
___________________________________________________________________________
Atlas Funds Account Number (If this is an existing account)
THE REGISTERED OWNER IS A:
/ / Trust / / Partnership / / Corporation/Incorporated / / Other (please
specify):
Association
<TABLE>
<S> <C> <C>
Date of Previous Securities Transactions Form,
Today's Date if this Form is an amendment
</TABLE>
2. CORPORATIONS AND INCORPORATED ASSOCIATIONS ONLY
CORPORATE SECRETARY, PLEASE COMPLETE THIS SECTION, SIGN IT, AND AFFIX YOUR
CORPORATE SEAL. BY SIGNING THIS FORM I CERTIFY THAT:
<TABLE>
<C> <S>
/ / On ------------------------ , 19 --------- , a quorum of the Board of Directors of the
Registered Owner named above empowered the person(s) named in section 3 to carry out
securities transactions on the Registered Owner's behalf.
/ / I am authorized to certify as needed the names and titles of officers of the Registered Owner
and notify the Agent of any changes.
/ / A resolution authorizing all of these powers has been duly adopted by the Registered Owner's
Board of Directors, is in full force and effect in accordance with the Registered Owner's
charter and by-laws, and will remain in effect until the Atlas Funds' Agent receives a duly
executed amended Securities Transactions Form.
Affix Corporate
Seal Here
Secretary's name (please print) Date
X
Signature
</TABLE>
<PAGE>
3. AUTHORIZED PERSONS
The persons named in this section are currently authorized
under the applicable governing document to purchase,
redeem, withdraw, exchange, or assign shares of Atlas
Funds ("securities transactions") for the Registered Owner
named in section 1, and to execute and deliver any
instruments necessary to complete these transactions. The
Agent may act only upon the instructions of person(s)
authorized in the most recent Securities Transactions Form
received by
the Agent. The Atlas Funds and its Agent will not be
liable for any loss or
expense resulting from acting on instructions they
believe to be genuine. This Securities Transactions Form
will remain in effect until the Agent receives an amended
Form.
We Want You To Know...Atlas Funds are not FDIC-insured and are not deposits or
obligations of, or guaranteed by World Savings. Mutual fund returns and
principal value will vary and you may have a gain or loss when you sell.
PLEASE SIGN THIS SECTION.
By signing this Form, I agree to all the terms and conditions outlined above.
I have full authority to sign on behalf of the Registered Owner.
<TABLE>
<S> <C>
Name (please print)
X
Signature
Name (please print)
X
Signature
Name (please print)
X
Signature
Name (please print)
X
Signature
<CAPTION>
<S> <C>
Date
Title
Date
Title
Date
Title
Date
</TABLE>
HOW MANY SIGNATURES ARE REQUIRED
FOR ATLAS FUNDS TRANSACTIONS: / / 1 / / 2 / / 3 / / All
<PAGE>
ATLAS ASSETS, INC., 794 Davis Street, San Leandro, CA 94577
- --------------------------------------------------------------------------------
WORLDLINK FORM
If your Atlas Fund Class A share purchase is made with a check or bank wire
from a financial institution other than World Savings, you can combine the
balances of your World Savings account(s), Atlas Annuity policy(s) and the
value of your Atlas Fund account(s) to qualify for a breakpoint sales charge
reduction. To qualify for the reduced sales charge, today's Atlas Fund
purchase plus your World Savings, Atlas Annuity and Atlas Fund account
balances must total $25,000 or more (See "What is the Class A sales charge
option?" in the Prospectus).
TO QUALIFY FOR WORLDLINK, COMPLETE THESE STEPS:
<TABLE>
<C> <S>
1. Make an investment in Atlas with a check or bank wire from a financial institution OTHER THAN
World Savings, and meet the minimum WorldLink account balance total of $25,000.
2. Complete this form.
3. Drop off your check, the Worldlink Form and New Account Form (for initial investments only),
at your World Savings Branch to be forwarded to Atlas Headquarters for verification of
account balance(s). BECAUSE BALANCES MUST BE VERIFIED AT ATLAS HEADQUARTERS, PURCHASES SENT
DIRECTLY TO THE AGENT WILL NOT QUALIFY FOR THE SALES CHARGE REDUCTION.
</TABLE>
WE WANT YOU TO KNOW...ATLAS FUNDS ARE NOT FDIC-INSURED
AND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY WORLD SAVINGS. MUTUAL FUND RETURNS AND PRINCIPAL
VALUE WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN
YOU SELL.
IN ORDER TO PROVIDE ATLAS WITH YOUR WORLDLINK ACCOUNT
BALANCE(S),
THE FOLLOWING MUST BE PROVIDED:
Types of WorldLink accounts: / / World
Savings / / Atlas Annuity
<TABLE>
<C> <S>
/ / All Social Security number(s) ("SSN") or Taxpayer Identification
number(s) ("TIN") that are assigned to your World account(s).
/ / Signature(s) for each SSN provided or the authorized signature(s)
for the TIN.
I (we) authorize World Savings to verify the balances in the accounts
assigned to the following SSN(s) and/or TIN(s), and to provide this
information to Atlas. Please note there must be a signature for each
SSN and/or TIN provided.
</TABLE>
<TABLE>
<CAPTION>
SSN/TIN Print Name
<S> <C> <C>
SSN/TIN Print Name
SSN/TIN Print Name
SSN/TIN Print Name
<CAPTION>
X
<S> <C>
X
Signature
X
Signature
X
Signature
Date
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
- ---------------------------------------------------------------
NOTES
<PAGE>
THE ATLAS FUNDS
U.S. Treasury Money Fund
National Municipal Money Fund
California Municipal Money Fund
U.S. Government Intermediate Fund
National Insured Intermediate
Municipal Fund
California Insured Intermediate
Municipal Fund
National Municipal Bond Fund
California Municipal Bond Fund
U.S. Government and
Mortgage Securities Fund
Strategic Income Fund
Balanced Fund
Growth and Income Fund
Strategic Growth Fund
Global Growth Fund
Emerging Growth Fund
DISTRIBUTOR
Atlas Securities, Inc.
794 Davis Street
San Leandro, CA 94577
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, MA 02205-1537
ADVISER
Atlas Advisers, Inc.
794 Davis Street
San Leandro, CA 94577
SHAREHOLDER SERVICES AGENT
National Financial Data Services
P.O. Box 419056
Kansas City, MO 64141
AUDITOR
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105
<PAGE>
PROSPECTUS
April 30, 1997
<PAGE>
PART B
ATLAS FUNDS
-----------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------
<PAGE>
ATLAS ASSETS, INC.
794 Davis Street
San Leandro, California 94577
1-800-933-ATLAS (1-800-933-2852)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("Statement"), which may be
amended from time to time, concerning Atlas Assets, Inc. (the "Company") is not
a Prospectus for the Company. This Statement supplements the Prospectus dated
April 30, 1997 and investors should read it in conjunction with that
Prospectus. A copy of the Prospectus, which may be amended from time to time,
is available without charge by writing or calling the Company at the address or
telephone number printed above.
The date of this Statement of Additional Information is April 30, 1997.
<PAGE>
TABLE OF CONTENTS
PAGE
Description of Certain Securities and
Investment Policies.............................................. B-2
Fundamental Investment Restrictions ................................ B-37
Portfolio Turnover ................................................. B-41
Management of the Company .......................................... B-42
Investment Advisory and Other Services ............................. B-45
Execution of Portfolio Transactions ................................ B-49
How to Invest ...................................................... B-50
Other Investment and Redemption Services ........................... B-55
Taxes .............................................................. B-57
Additional Information ............................................. B-65
Investment Results ................................................. B-65
Financial Statements ............................................... B-80
Appendix -- Industry Classifications ............................... B-81
<PAGE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT POLICIES
The investment objectives and policies of each of the Funds are described
in the Prospectus. Supplemental information about those policies is set forth
below. Certain capitalized terms used in this Statement are defined in the
Prospectus.
INVESTMENT RISKS.
With the exception of U.S. Government Securities, the debt securities the
Strategic Income Fund invests in will have one or more types of investment risk:
credit risk, interest rate risk or foreign exchange risk. Credit risk relates
to the ability of the issuer to meet interest or principal payments or both as
they become due. Generally, higher yielding bonds are subject to credit risk to
a greater extent than higher quality bonds. Interest rate risk refers to the
fluctuations in value of debt securities resulting solely from the inverse
relationship between price and yield of outstanding debt securities. An
increase in prevailing interest rates will generally reduce the market value of
debt securities, and a decline in interest rates will tend to increase their
value. In addition, debt securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation than obligations with shorter maturities. Fluctuations in the
market value of debt securities subsequent to their acquisition will not affect
the interest payable on those securities, and thus the cash income from such
securities, but will be reflected in the valuations of these securities used to
compute the Fund's net asset values. Foreign exchange rate risk refers to the
change in value of the currency in which a foreign security the Fund holds is
denominated against the U.S. dollar.
SPECIAL RISKS - HIGH YIELD SECURITIES.
As stated in the Prospectus, the corporate debt securities, in which the
Strategic Income Fund will principally invest may be in the lower rating
categories. The Fund may invest in securities rated as low as "C" by Moody's or
"D" by Standard & Poor's. The Fund's Subadviser will not rely solely on the
ratings assigned by rating services and may invest, without limitation in
unrated securities which offer, in the opinion of the Subadviser, comparable
yields and risks as those rated securities in which the Fund may invest.
Risks of high yield securities may include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting
from changes in prevailing interest rates, (iii) subordination to the prior
claims of banks and other
B-2
<PAGE>
senior lenders, (iv) the operation of mandatory sinking fund or call/redemption
provisions during periods of declining interest rates that could cause the Fund
to be able to reinvest premature redemption proceeds only in lower yielding
portfolio securities, (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising interest
rates and economic downturn. As a result of the limited liquidity of high yield
securities, their prices have at times experienced significant and rapid decline
when a substantial number of holders decided to sell. A decline is also likely
in the high yield bond market during an economic downturn. An economic downturn
or an increase in interest rates could severely disrupt the market for high
yield bonds and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest.
REPURCHASE AGREEMENTS.
Each Atlas Fund, except the U.S. Treasury Money Fund, may engage in
repurchase agreement transactions on portfolio securities with member banks of
the Federal Reserve System or with certain dealers listed on the Federal Reserve
Bank of New York's list of reporting dealers. Under the terms of a typical
repurchase agreement, a Fund would acquire an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the obligation
at an agreed upon price and time, thereby determining the yield during the
Funds' holding period. This arrangement results in a fixed rate of return that
is not subject to market fluctuations during the Fund's holding period. The
value of the underlying securities will be monitored by the Adviser or by a
Fund's Subadviser to ensure that it at least equals at all times the total
amount of the repurchase obligation, including interest.
A Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert these rights. The
Adviser, or the Subadviser if applicable, acting under the supervision of the
Board of Directors, reviews, on an ongoing basis, the creditworthiness and the
values of the collateral of those banks and dealers with which a Fund enters
into repurchase agreements to evaluate potential risks.
A repurchase agreement is considered to be a loan collateralized by the
underlying securities under the 1940 Act. Investments by the Municipal Funds in
repurchase agreements, if
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any, are limited by the restrictions on those Funds' investment in taxable
instruments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.
In order to secure yields or prices deemed advantageous at the time, all
Funds may purchase or sell securities on a "when-issued" or "delayed delivery"
basis. The Funds will not enter into such a transaction for the purpose of
leverage. In such transactions delivery of the securities occurs beyond the
normal settlement periods (generally within two months but not more than 120
days), but no payment or delivery is made by, and no interest accrues to, the
Fund prior to the actual delivery or payment by the other party to the
transaction. To the extent that assets of a Fund are not invested prior to the
settlement of a purchase of securities, the Fund will earn no income; however,
it is intended that each Fund will be fully invested to the extent practicable.
While when-issued or delayed delivery securities may be sold prior to the
settlement date, a Fund will purchase such securities for the purpose of
actually acquiring them unless a sale appears desirable for investment reasons.
At the time a Fund makes the commitment to purchase a security on a
when-issued or delayed delivery basis, it will record the transaction and
reflect the value of the security in determining its net asset value. The Funds
do not believe that the net asset value or income of their portfolios will be
adversely affected by their purchase of securities on a when-issued or delayed
delivery basis.
Due to fluctuations in the value of securities purchased on a when-issued
or delayed delivery basis, the yields obtained on such securities may be higher
or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers. Similarly, the sale of
securities on a firm commitment basis can involve the risk that the prices
available in the market when delivery is made may actually be higher than those
obtained in the transaction itself.
When the Fund engages in when-issued or delayed transactions, it relies on
the buyer or seller, as the case may be, to consummate the transaction. Failure
of the buyer or seller to do so may result in the Fund losing the opportunity to
obtain a price and yield considered to be advantageous. A Fund will establish a
segregated account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount equal to the amount of its when-issued
or firm commitment obligation. Such segregated securities either will mature
or, if necessary, be sold on or before the settlement date.
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When-issued transactions and forward commitments allow a Fund a technique
to use against anticipated changes in interest rates and prices. For instance,
in periods of rising interest rates and falling prices, a Fund might sell
securities in its portfolio on a forward commitment basis to attempt to limit
its exposure to anticipated falling prices. In periods of falling interest
rates and rising prices, a Fund might sell portfolio securities and purchase the
same or similar securities on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields.
DOLLAR REVERSE REPURCHASE AND REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS.
The Government Funds and the Strategic Income Fund may engage in dollar
reverse repurchase and reverse dollar reverse repurchase agreements with respect
to mortgage-backed securities. These agreements involve the purchase or sale by
the Fund of securities that are substantially similar to those sold or purchased
by the Fund upon the initiation of the transaction, as the case may be. For
this purpose, "substantially similar" means that the securities are issued by
the same U.S. Government agency or instrumentality, have the same original term
to maturity, and have the same original rate of interest, but may be backed by
different pools of mortgage obligations. Dollar reverse repurchase agreements
are subject to the same risks and restrictions as described in the Prospectus
with respect to reverse repurchase agreements. Reverse dollar reverse
repurchase agreements are subject to the same risks and restrictions as
described in "Repurchase Agreements" above with respect to repurchase
agreements.
OPTIONS ON SECURITIES, INDICES AND CURRENCIES (ALL BOND AND STOCK FUNDS ARE
ELIGIBLE TO USE THE FOLLOWING OPTIONS).
1. Purchasing Put and Call Options on Securities.
By purchasing a put option, a Fund obtains the right (but not the
obligation) to sell the option's underlying security to the writer of the option
at a fixed strike price. The option may give the Fund the right to sell only on
the option's expiration date, or may be exercisable at any time up to and
including that date. In return for this right, the Fund pays the writer the
current market price for the option (known as an option premium).
A Fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Fund exercises
the option, it completes the sale of the underlying security at the strike
price. The
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Fund may also terminate a put option position by effecting a "closing
transaction" (i.e. selling an option of the same series as the option previously
purchased) in the secondary market at its current price, if a liquid secondary
market exists.
Put options may be used by a Fund to hedge against losses on sales of
securities. If securities prices fall, the value of the put option would be
expected to rise and offset all or a portion of the Fund's resulting losses in
its securities holdings. However, option premiums tend to decrease over time as
the expiration date nears. Therefore, because of the cost of the option premium
and transaction costs, the Fund would expect to suffer a loss in the put option
if prices do not decline sufficiently to offset the deterioration in the value
of the option premium. At the same time, because the maximum the Fund has at
risk is option premium, purchasing put options offers potential profit from an
increase in the value of the securities hedged.
A Fund may also purchase options whether or not it holds such securities in
its portfolio. Buying a put option on an investment it does not own permits a
Fund either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event of a decline
in the securities market, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio securities.
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying security at the option's strike
price. By purchasing a call option, a Fund would attempt to participate in
potential price increases of the underlying security, but with risk limited to
the cost of the option if securities prices fell. At the same time, the Fund
can expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option. The value of debt securities underlying calls
purchased by the Strategic Income Fund will not exceed the value of the portion
of the Fund's portfolio invested in cash or cash equivalents (i.e., securities
with maturities of less than one year).
2. Writing Put and Call Options on Securities.
When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Fund assumes the obligation to pay
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the strike price for the option's underlying security if the other party to the
option chooses to exercise it. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of the
underlying security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. Prior to exercise, the Fund may seek
to terminate its position in a put option by effecting a closing purchase
transaction with respect to the option in the secondary market (i.e. buying an
option of the same series as the option previously written) at its current
price. If the secondary market is not liquid for an option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes, and must continue
to set aside assets to cover its obligation.
A Fund may write a put option as an alternative to purchasing a security.
If the security's price rises, the Fund would expect the put to lapse
unexercised and to profit from a written put option, although its gain would be
limited to the amount of the premium it received. If the security's price
remains the same over time, it is likely that the Fund will also profit, because
it should be able to close out the option at a lower price. If the security's
price falls, the Fund would expect to suffer a loss. If the put is exercised,
the Fund must fulfill its obligation to purchase the underlying investment at
the exercise price, which will usually exceed the market value of the investment
at that time. This loss should be less than the loss the Fund would have
experienced from purchasing the underlying security directly (assuming the
secondary market for the put option and the underlying security are equally
liquid) because the premium received for writing the option should mitigate the
effect of the price decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing covered call options generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, the Fund would seek to mitigate the effects of a price decline.
At the same time, the Fund would give up some ability to participate in security
price increases when writing call options.
3. Securities Index Option Transactions.
A Fund may buy or sell a securities index option at a fixed price. No
securities actually change hands in these
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transactions. Instead, changes in the underlying index's value are settled in
cash. The cash settlement amounts are based on the difference between the
index's current value and the value contemplated by the contract. Most
securities index options are based on broad-based indices reflecting the prices
of a broad variety of securities, such as the Standard & Poor's 500 Composite
Stock Price Index. Some index options are based on narrower industry averages
or market segments.
The Company expects that a Fund's options transactions will normally
involve broad-based indices, though it is not limited to these indices. Since
the value of index options depends primarily on the value of their underlying
indexes, the performance of broad-based indices will generally reflect broad
changes in securities prices. A Fund, however, can invest in many different
types of securities, including securities that are not included in the
underlying indices of the options available to the Fund. In addition, a Fund's
investments may be more or less heavily weighted in securities of particular
types of issuers, or securities of issuers in particular industries, than the
indexes underlying its index options positions. Therefore, while a Fund's index
options should provide exposure to changes in value of its portfolio securities
(or protection against declines in their value in the case of hedging
transactions), it is likely that the price changes of the Fund's index options
positions will not match the price changes of the Fund's other investments.
4. Combined Option Positions.
A Fund may purchase and write options in combination to adjust the risk and
return characteristics of the overall position. For example, a Fund may
purchase a put option and write a call option on the same underlying security,
in order to construct a combined position with risk and return characteristics
similar to those of selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and buying a
call option at a lower price, in order to reduce the risk of the written call
option in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close than single options transactions.
Combined option positions will be subject to the same overall percentage
limitation as other option strategies.
5. Risks of Transactions in Options.
An option position may be closed out only on an exchange or market which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market will exist at any particular time for
options purchased or
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written by a Fund. For some options no secondary market on an exchange may
exist at all. In such event, it might not be possible to effect closing
transactions in particular options, with the result that a Fund would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of call options and upon the subsequent
disposition of underlying securities acquired through the exercise of call
options or upon the purchase of underlying securities for the exercise of put
options. If a Fund as a covered call option writer is unable to effect a
closing purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or the Fund delivered the
underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volumes; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no
assurance that higher than anticipated trading activity or other unforeseen
events might not, at times, render certain of the facilities of any of the
clearing corporations inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.
In addition, options on indices are subject to certain risks that are not
present with other options. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
instrument, whether a Fund will realize a gain or loss on the purchase or sale
of an option on an index depends upon movements in the level of prices in the
market generally or in an industry or market segment rather than movements in
the price of a particular instrument. In addition, index prices may be
distorted or interrupted if trading of certain instruments included in the index
is interrupted. If this occurred, a Fund would not be able to close out options
which had been purchased or written by it and, if restrictions on exercise were
imposed, may be unable to exercise an option
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being held, which could result in substantial losses to a Fund. However, it is
the Funds' policy to purchase or write options only on indices which include a
sufficient number of securities so that the likelihood of a trading halt in the
index is minimized.
The eligible Funds may buy and sell over-the-counter puts and calls on
securities and as well as listed options. Unlike listed option positions,
positions in over-the-counter options may be closed out only with the other
party to the options transaction. Such options transactions are subject to the
additional risks that a Fund may be unable to close out a transaction with the
other party when it wishes to do so, and that the other party to the transaction
may default without the protection against default afforded by exchange clearing
corporations with respect to listed options. The eligible Funds will enter into
unlisted option transactions only with securities dealers which the Adviser or a
Subadviser believes to be of high credit standing and to maintain a liquid
market for such options. Under certain conditions, the premiums a Fund pays for
unlisted options and the value of securities used to cover such options written
by the Fund are considered to be invested in illiquid assets for purposes of the
investment restriction applicable to illiquid investments.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
1. Interest Rate Futures Transactions (all Bond and Stock Funds are eligible
to use these transactions).
The Bond and Stock Funds may purchase or sell interest rate futures
contracts in hedging transactions. When a Fund purchases a futures contract, it
agrees to purchase the underlying instrument at a specified future date and
price. When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date and price.
No consideration is paid or received by a Fund upon the purchase or sale of
a futures contract. Initially, a Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 5% of the
contract amount (this amount is subject to change by the board of trade on which
the contract is traded and members of such board of trade may charge a higher
amount). This amount is known as "initial margin" and is returned to a Fund
upon termination of the futures contract, assuming all contractual obligations
have been satisfied by the Fund.
Subsequent payments, known as "variation margin," to and from the Fund or
the broker, as the case may be, must be made daily as the price of securities
underlying the futures contract
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fluctuates, making the long and short positions in the futures contract
more or less valuable. These daily payments to account for valuation changes
are a process known as "marking-to-market." If a Fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. The party that has a gain may be
entitled to receive all or a part of this amount. At any time prior to the
expiration of a futures contract, a Fund may elect to close the position by
taking an opposite position, which will operate to terminate the Fund's existing
position in the contract.
Initial and variation margin payments are similar to good faith deposits or
performance bonds, unlike margin extended by a securities broker, and do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitation. In the event of the bankruptcy of a futures commission merchant
("FCM") that holds margin on behalf of the Fund, the Fund may be entitled to
return of margin owed to it only in proportion to the amount received by the
FCM's other customers. The Adviser, or Subadviser if applicable, will attempt
to minimize this risk by careful monitoring of the creditworthiness of the FCMs
with which the Fund does business.
The purpose of the acquisition or sale of a futures contract by an eligible
Bond Fund is to protect that Fund from fluctuations in rates on securities
without actually buying or selling the securities. The value of portfolio
securities will exceed the value of the futures contracts sold by the Fund, and
an increase in the value of the futures contracts could only mitigate -- but not
totally offset -- the decline in the value of the portfolio. Interest rate
futures contracts are currently traded on the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange (CME) and the
New York Futures Exchange. Among the securities on which interest rate futures
contracts are currently based are long-term U.S. Treasury bonds, U.S. Treasury
notes, GNMA pass-through securities, three-month U.S. Treasury bills, municipal
bond futures and ninety-day commercial paper.
2. Securities Index Futures Contracts (all Bond and Stock Funds are eligible
to participate in these contracts).
When a Fund purchases a securities index futures contract, it agrees to
purchase the underlying index at a specified future date and price. When a Fund
sells a securities index futures contract, it agrees to sell the underlying
index at a specified future date and price.
The majority of index futures are closed out by entering into an offsetting
purchase or sale transaction in the same contract on the exchange where they are
traded, rather than being
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held for the life of the contract. Futures contracts are closed out at their
current prices, which may result in a gain or loss. If a Fund holds an index
futures contract until the delivery date, it will pay or receive a cash
settlement amount based on the difference between the index's closing price and
the settlement price agreed upon when the contract was initiated.
A Fund may purchase securities index futures contracts in an attempt to
remain fully invested in the securities market. For example, if a Fund had cash
and short-term securities on hand that it wished to invest in common stocks, but
at the same time it wished to maintain a highly liquid position in order to be
prepared to meet redemption requests or other obligations, it could purchase a
stock index futures contract in order to participate in changes in stock prices.
A Fund may also purchase futures contracts as an alternative to purchasing
actual securities. For example, if a Fund intended to purchase stocks but had
not yet done so, it could purchase a stock index futures contract in order to
lock in current stock prices while deciding on particular investments. This
strategy is sometimes known as an anticipatory hedge. In these strategies the
Fund would use futures contracts to attempt to achieve an overall return similar
to the return from the stocks included in the underlying index, while taking
advantage of potentially greater liquidity that futures contracts may offer.
Although the Fund would hold cash and liquid debt securities in a segregated
account with a value sufficient to cover its open futures obligations, the
segregated assets would be available to the Fund immediately upon closing out
the futures position, while settlement of securities transactions can take
several days.
When a Fund wishes to sell securities, it may sell securities index futures
contracts to hedge against securities market declines until the sale can be
completed. For example, if a Fund anticipated a decline in common stock prices
at a time when it anticipated selling common stocks, it could sell a futures
index contract in order to lock in current market prices. If stock prices
subsequently fell, the futures contract's value would be expected to rise and
offset all or a portion of the anticipated loss in the common stocks the Fund
had hedged in anticipation of selling them. The success of this type of
strategy depends to a great extent on the degree of correlation between the
index futures contract and the securities hedged. Of course, if prices
subsequently rose, the futures contract's value could be expected to fall and
offset all or a portion of the benefit to the Fund.
3. Options on Futures Contracts (all Bond and Stock Funds are eligible to
participate in these contracts).
An option on a futures contract is an agreement to buy or sell the futures
contract. Exercise of the option results in
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ownership of a position in the futures contract. Options on futures contracts
may be purchased and sold by a Fund in the same manner as options on securities.
Options on futures contracts may also be written by a Fund in the same manner as
securities options, except that the writer must make margin payments to a
futures commission merchant ("FCM") as described above with respect to futures
contracts. The holder or writer of an option may terminate his position by
selling or purchasing an option of the same series. There is no guarantee that
such closing transactions can be effected.
4. Risks of Transactions in Futures Contracts and Options on Futures.
There are risks in connection with the use of futures contracts as a
hedging device. Successful use of futures contracts by a Fund is subject to the
ability of the Adviser, or Subadviser if applicable, to forecast movements in
the direction of interest rates. These forecasts may involve skills and
techniques that may be different from those involved in the management of the
Funds. In addition, even a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected trends in interest rates.
As noted above, price changes of the Fund's futures and options on futures
positions may not be well correlated with price changes of its other investments
because of differences between the underlying indices and the types of
securities the Fund invests in. For example, if the Fund sold a broad-based
index futures contract to hedge against a stock market decline while the Fund
completed a sale of specific securities in its portfolio, it is possible that
the price of the securities could move differently from the broad market average
represented by the index futures contract, resulting in an imperfect hedge and
potentially in losses to the Fund.
Index futures prices can also diverge from the prices of their underlying
indexes, even if the underlying instruments match the Fund's investments well.
Futures prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying index, and
the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation between the Fund's
investments and its futures positions may also result from differing levels of
demand in the futures markets and the securities markets, from structural
differences in how futures and securities are traded, or from imposition of
daily price fluctuation limits for futures contracts. The Fund may purchase or
sell futures contracts with a greater or lesser value than the securities it
wishes to hedge or intends to purchase in order to attempt to compensate for
differences in historical volatility between the futures contract and the
securities,
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although this may not be successful in all cases. If price changes in the
Fund's futures positions are poorly correlated with its other investments, its
futures positions may fail to produce anticipated gains or result in losses that
are not offset by the gains in the Fund's other investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of up to seven days for
some types of securities, the futures markets can provide liquidity superior to
that of the securities markets in many cases. Nevertheless, there is no
assurance a liquid secondary market will exist for any particular futures
contract at any particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day.
On volatile trading days when the price fluctuation limit is reached, it may be
impossible for the Fund to enter into new positions or close out existing
positions. Trading in index futures can also be halted if trading in the
underlying index stocks is halted. If the secondary market for a futures
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable futures positions, and
potentially could require the Fund to continue to hold a futures position until
the delivery date, regardless of potential losses. If the Fund must continue to
hold a futures position, its access to other assets held to cover the position
could also be impaired.
Options on futures are subject to risks similar to those described above
with respect to futures contracts, including the risk of imperfect correlation
between the option and a Fund's other investments and the risk that there might
not be a liquid secondary market for the option. In the case of options on
futures contracts, there is also a risk of imperfect correlation between the
option and the underlying futures contract. Options on futures are also subject
to the risks of an illiquid secondary market, particularly in strategies
involving writing options which the Fund cannot terminate by exercise. In
general, options with strike prices close to their underlying securities'
current value will have the highest trading volume, while options with strike
prices further away may be less liquid. The liquidity of options on futures may
also be affected if exchanges impose trading halts, particularly when markets
are volatile.
5. Limitations on Transactions in Futures and Options on Futures.
The Company has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission ("CFTC"), which regulates trading in the futures markets, on
behalf of each Fund
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that may engage in any purchases or sales of futures contracts or options on
futures contracts. Pursuant to Section 4.5 of the regulations under the
Commodity Exchange Act, the eligible Funds are subject to the following
limitations:
(a) The Company will use futures contracts and related options solely for
bona fide hedging purposes within the meaning of CFTC regulations; provided that
a Fund may hold long positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions in an amount
not in excess of the limitation in paragraph (b); and
(b) The Company will not enter into any futures contract or option on a
futures contract if, as a result, the sum of initial margin deposits on futures
contracts and related options and premiums paid for options on futures contracts
a portfolio has purchased, after taking into account unrealized profits and
losses on such contracts, would exceed 5% of the portfolio's total assets.
In addition, the Company does not intend to enter into futures contracts or
options on a futures contract that are not traded on exchanges or boards of
trade.
These limitations on the Company's investments in futures contracts and
options, and the Company's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as permitted by the appropriate
regulatory agencies. The Company will not modify the above limitations to
increase its permissible futures and options activities without supplying
additional information in a current Prospectus or Statement of Additional
Information that has been distributed or made available to the Company's
shareholders.
Various exchanges and regulatory authorities have undertaken reviews of
options and futures trading in light of market volatility. Among the possible
actions that have been presented are proposals to adopt new or more stringent
daily price fluctuation limits for futures or options transactions, and
proposals to increase the margin requirements for various types of strategies.
It is impossible to predict what actions, if any, will result from these reviews
at this time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS.
A Fund eligible to participate in futures and options will not use
leverage in its options and futures strategies. In the case of strategies
entered into as a hedge, the Fund will hold securities or other options or
futures positions whose values are expected to offset its obligations under the
hedge strategies. A
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Fund will not enter into an option or futures position that exposes the Fund to
an obligation to another party unless it owns either (i) an offsetting position
in securities or other options or futures contracts or (ii) cash, receivables
and short-term debt securities with a value sufficient to cover its potential
obligations.
A Fund will comply with guidelines established by the Securities and
Exchange Commission with respect to coverage of options and futures strategies
by mutual funds and, if the guidelines so require, will set aside cash and high
grade liquid debt securities in a segregated account with its custodian bank in
the amount prescribed. Securities held in a segregated account cannot be sold
while the futures or option strategy is open, unless they are replaced with
similar securities. As a result, there is a possibility that segregation of a
large percentage of the Fund's assets could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations.
INTEREST RATE SWAPS.
Each Bond Fund may engage in interest rate swaps. As indicated in the
Prospectus, an interest rate swap is a contract between two entities
("counterparties") to exchange interest payments (of the same currency) between
the parties. In the most common interest rate swap structure, one counterparty
agrees to make floating rate payments to the other counterparty, which in turn
makes fixed rate payments to the first counterparty. Interest payments are
determined by applying the respective interest rates to an agreed upon amount,
referred to as the "notional principal amount." In many such transactions, the
floating rate payments are tied to the London Interbank Offered Rate ("LIBOR"),
which is the offered rate for short-term eurodollar deposits between major
international banks. As there is no exchange of principal amounts, an interest
rate swap is not an investment or a borrowing.
SWAP OPTIONS.
Each Bond Fund may invest in swap options. A swap option is a contract
that gives a counterparty the right (but not the obligation) to enter into a new
swap agreement or to shorten, extend, cancel or otherwise change an existing
swap agreement, at some designated future time on specified terms. It is
different from a forward swap, which is a commitment to enter into a swap that
starts at some future date with specified rates. A swap option may be
structured European-style (exercisable on the prespecified date) or
American-style (exercisable during a designated period). The buyer of the right
to pay fixed rate
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payments pursuant to a swap option is said to own a put. The buyer of the right
to receive fixed rate payments pursuant to a swap option is said to own a call.
CAPS AND FLOORS.
Each Bond Fund may also purchase or sell interest rate caps and floors. An
interest rate cap is a right to receive periodic cash payments over the life of
the cap equal to the difference between any higher actual level of interest
rates in the future and a specified strike (or "cap") level. The cap buyer
purchases protection for a floating rate move above the strike. An interest
rate floor is the right to receive periodic cash payments over the life of the
floor equal to the difference between any lower actual level of interest rates
in the future and a specified strike (or "floor") level. The floor buyer
purchases protection for a floating rate move below the strike. The strikes are
typically based on the three-month LIBOR (although other indices are available)
and are measured quarterly.
RISKS ASSOCIATED WITH SWAPS.
The risks associated with interest rate swaps and interest rate caps and
floors are similar to those described previously with respect to
over-the-counter options. In connection with such transactions, the Fund
involved relies on the other party to the transaction to perform its obligations
pursuant to the underlying agreement. If there were a default by the other
party to the transaction, the Fund would have contractual remedies pursuant to
the agreement, but could incur delays in obtaining the expected benefit of the
transaction or loss of such benefit. In the event of insolvency of the other
party, the Fund might be unable to obtain its expected benefit. In addition,
while a Fund will seek to enter into such transactions only with parties which
are capable of entering into closing transactions with the Fund, there can be no
assurance that a Fund will be able to close out such a transaction with the
other party, or obtain an offsetting position with any other party, at any time
prior to the end of the term of the underlying agreement. This may impair a
Fund's ability to enter into other transactions at a time when doing so might be
advantageous.
FOREIGN SECURITIES.
Each Stock Fund and the Atlas Strategic Income Fund may invest in foreign
securities which offer potential benefits not available from investing solely in
securities of domestic issuers, such as the opportunity to invest in the
securities of
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foreign issuers that appear to offer growth potential, or to invest in foreign
countries with economic policies or business cycles different from those of the
U.S., or to reduce fluctuations in portfolio value by investing in securities in
foreign stock markets that do not move in a manner parallel to U.S. markets. In
buying foreign securities, each Fund may convert U.S. dollars into foreign
currency, but only in connection with currency futures and forward contracts and
to effect securities transactions on foreign securities exchanges and not to
hold such currency as an investment.
Because a Fund may purchase securities denominated in foreign currencies, a
change in the value of any such currency against the U.S. dollar will result in
a change in the U.S. dollar value of the Fund's assets and its income available
for distribution. In addition, although a portion of a Fund's investment income
may be received or realized in foreign currencies, the Fund will be required to
compute and distribute its income in U.S. dollars, and absorb the cost of
currency fluctuations. Subsequent foreign currency losses may result in a Fund
having previously distributed more income in a particular period than was
available from investment income, which could result in a return of capital to
shareholders. A Fund's portfolio of foreign securities may include those of a
number of foreign countries or, depending upon market conditions, those of a
single country.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in domestic securities of
issuers traded in the U.S.: reduction of income by foreign taxes; fluctuation in
value of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for currency
exchange; lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to U.S. issuers; less volume on foreign exchanges than on U.S.
exchanges; greater volatility and less liquidity on foreign markets than in the
U.S.; less regulation of foreign issuers, stock exchange and brokers than in the
U.S.; greater difficulties in commencing lawsuits against foreign issuers;
higher brokerage commission rates and custodial costs than in the U.S.;
increased risks of delays in settlement of portfolio transactions or loss of
certificates of portfolio securities; possibilities in some countries of
expropriation or nationalization of assets, confiscatory taxation, political,
financial or social instability or adverse diplomatic developments; and
differences between the U.S. economy and foreign economies. In the past, U.S.
Government policies have discouraged certain investments abroad by U.S.
investors, through taxation or other restrictions, and it is possible that such
restrictions may be re-imposed.
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The Funds may invest in foreign securities that impose restrictions on
transfer within the United States or to United States persons. Although
securities subject to such transfer restrictions may be marketable abroad, they
may be less liquid than foreign securities of the same class that are not
subject to such restrictions. Each Fund accordingly treats these foreign
securities as subject to the 10% overall limitation on investment in illiquid
securities.
DEBT SECURITIES OF FOREIGN GOVERNMENTS AND COMPANIES.
As stated in the Prospectus, the Strategic Income Fund may invest in debt
obligations and other securities (which may be denominated in U.S. dollars or
non-U.S. currencies) issued or guaranteed by foreign corporations, certain
"supranational entities" (described below) and foreign governments or their
agencies or instrumentalities, and in debt obligations and other securities
issued by U.S. corporations denominated in non-U.S. currencies. The types of
foreign debt obligations and other securities in which the Fund may invest are
the same types of debt obligations identified under "Debt Securities of U.S.
Companies," below.
The percentage of the Strategic Income Fund's assets that will be allocated
to foreign securities will vary depending on the relative yields of foreign and
U.S. securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries and
the relationship of such countries' currency to the U.S. dollar. These factors
are judged on the basis of fundamental economic criteria (e.g., relative
inflation levels and trends, growth rate forecasts, balance of payments status,
and economic policies) as well as technical and political data.
The Strategic Income Fund may invest in U.S. dollar-denominated foreign
securities referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount bonds and
are generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations that have the same maturity as the Brady Bonds.
However, the Fund may also invest in uncollateralized Brady Bonds. Brady Bonds
are generally viewed as having three or four valuation components: (i) any
collateralized repayment of principal at final maturity; (ii) the collateralized
interest payments; (iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute what is referred to as the "residual risk" of such bonds).
In the event of a default with respect to collateralized Brady Bonds as a result
of which the payment obligations of the issuer are accelerated, the zero coupon
U.S. Treasury securities held as
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collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The collateral
will be held by the collateral agent to the scheduled maturity of the defaulted
Brady Bonds, which will continue to be outstanding, at which time the face
amount of the collateral will equal the principal payments which would have then
been due on the Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as
speculative.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government. Obligations of
"supranational entities" include those of international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and of international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the "World Bank"), the European Coal and Steel Community, the Asian
Development Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional capital
contributions if the supranational entity is unable to repay its borrowings.
Each supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at the
entity's call), reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS.
Since investments in companies whose principal business activities are
located outside of the United States will frequently involve currencies of
foreign countries, and since assets of each Stock Fund and the Strategic Income
Fund may temporarily be held in bank deposits in foreign currencies during the
completion of investment programs, the value of the assets of a Fund as measured
in U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Although each Fund
values its assets daily in terms of U.S. dollars, it does not intend to convert
its holdings of foreign currencies into U.S. dollars on a daily basis. A Fund
may conduct its foreign currency exchange transactions on a spot (i.e. cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into contracts to purchase or sell foreign currencies at a
future date (i.e., a "forward foreign currency" contract or
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"forward" contract). It will convert currency on a spot basis from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer. The
Funds do not intend to speculate in foreign currency exchange rates or forward
contracts.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders, usually large commercial banks, and their customers.
A forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of foreign currency
involved in the underlying security transaction, the Fund will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
When the Adviser, or a Fund's Subadviser, believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of foreign currency approximating the value of some or all
of a Fund's securities denominated in such foreign currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term hedging
strategy is highly uncertain. A Fund will not enter into such forward contracts
or maintain a net exposure to such contracts where the consummation of the
contracts would obligate such Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets denominated in that
currency. Under normal circumstances, consideration of the
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prospect for currency parities will be incorporated in the longer term
investment decisions made with regard to overall diversification strategies.
However, the Company believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of
a Fund will be served.
A Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount of
the foreign currency.
If a Fund retains the security and engages in an offsetting transaction,
the Fund will incur a gain or loss to the extent that there has been movement in
forward contract prices. If a Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between a Fund entering into a
forward contract for the sale of the foreign currency and the date it enters
into an offsetting contract for the purchase of the foreign currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent that the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
It is impossible to forecast with precision the market value of securities
at the expiration of the contract. Accordingly, it may be necessary for a Fund
to purchase additional foreign currency on the spot market (and bear the expense
of such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency. Conversely, it may
be necessary to sell on the spot market some of the foreign currency received
upon the sale of the security if its market value exceeds the amount of foreign
currency the Fund is obligated to deliver.
Each Fund may also enter into a forward contract to sell a foreign currency
denominated in a currency other than that in which the underlying security is
denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the forward contract and the foreign
currency of the underlying investment than between the U.S. dollar and the
foreign currency of the underlying investment. This technique is referred to as
"cross hedging." The success of cross hedging is dependent on many factors,
including the ability of the
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Subadviser to correctly identify and monitor the correlation between foreign
currencies and the U.S. dollar. To the extent that the correlation is not
identical, the Fund may experience losses or gains on both the underlying
security and the cross currency hedge.
Each Fund's dealings in forward foreign currency contracts will be limited
to the transactions described herein. Of course, a Fund is not required to
enter into such transactions with regard to its foreign currency denominated
securities and will not do so unless deemed appropriate by the Adviser or
Subadviser. It also should be realized that this method of protecting the value
of the Fund's securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which one can achieve at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, they tend to limit any
potential gain which might result should the value of such currency increase.
The cost to a Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. Because
such contracts are not traded on an exchange, the Fund must evaluate the credit
and performance risk of each particular counterparty under a forward contract.
In addition, forward contracts and the value of securities used to cover such
contracts may be considered illiquid assets for purposes of the investment
restriction applicable to illiquid investments.
LOANS OF PORTFOLIO SECURITIES.
Each Fund may lend its portfolio securities, subject to the restrictions
stated in the Prospectus, to attempt to increase a Fund's income to distribute
to shareholders or for liquidity purposes. Under applicable regulatory
requirements (which are subject to change), the loan collateral must, on each
business day, at least equal the market value of the loaned securities and must
consist of cash, bank letters of credit or U.S. Government securities. To be
acceptable as collateral, letters of credit must obligate a bank to pay amounts
demanded by the Fund if the demand meets the terms of the letter. The Fund
receives an amount equal to the dividends or interest on loaned securities and
also receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral or (c) interest on short-term debt securities
purchased with such loan collateral; either type of interest may be shared with
the borrower. The Fund may also pay reasonable finder's, custodian and
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administrative fees and will not lend its portfolio securities to any officer,
director, employee or affiliate of the Company, the Adviser or the Stock Funds'
Subadviser. The terms of each Fund's loans must meet applicable tests under the
Internal Revenue Code and permit the Fund to reacquire loaned securities on five
business days' notice or in time to vote on any important matter.
BORROWING.
From time to time, the Atlas Global Growth Fund, Atlas Strategic Income
Fund and the Atlas Strategic Growth Fund may each increase its ownership of
securities by borrowing from banks on an unsecured basis and investing the
borrowed funds, subject to the restrictions stated in the Prospectus. Any such
borrowing will be made only from banks, and pursuant to the requirements of the
1940 Act, will be made only to the extent that the value of the Fund's assets,
less its liabilities other than borrowings, is equal to at least 300% of all
borrowings including the proposed borrowing. If the value of the Fund's assets
so computed should fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent necessary to
meet such requirements and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such sale. Interest
on money borrowed is an expense the Fund would not otherwise incur, so that it
may have little or no net investment income during periods of substantial
borrowings. Borrowing for investment increases both investment opportunity and
risk. Since substantially all of a Fund's assets fluctuate in value whereas
borrowing obligations are fixed, when the Fund has outstanding borrowings, its
net asset value per share will tend to increase and decrease more when its
portfolio assets fluctuate in value than would otherwise be the case.
ILLIQUID AND RESTRICTED SECURITIES.
The expenses of registration of restricted securities that are illiquid
(excluding securities that may be resold by a Fund pursuant to Rule 144A as
explained in the Prospectus) may be negotiated by a Fund at the time such
securities are purchased by the Fund. When such registration is required before
such securities may be sold, a considerable period may elapse between a decision
to sell the securities and the time when the Fund would be permitted to sell
them. Thus, the Fund would bear the risks of any downward price fluctuation
during that period. A Stock Fund also may acquire securities through private
placements. Such securities may have contractual restrictions on their resale,
which might prevent their resale by the Fund at a time when such sale would be
desirable and might lower the amount realizable upon the sale of such
securities.
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ZERO COUPON SECURITIES.
The Atlas Bond and Stock Funds may invest in zero coupon securities issued
by the U.S. Treasury or by corporations. The Municipal Bond Funds may invest in
zero coupon securities issued by municipalities. Zero coupon Treasury
securities are: (i) U.S. Treasury notes and bonds which have been stripped of
their unmatured interest coupons and receipts; or (ii) certificates representing
interests in such stripped debt obligations or coupons. Corporate and municipal
zero coupon securities are: (i) notes or debentures that do not pay current
interest and are issued at substantial discounts from par value, or (ii) notes
or debenture that pay no current interest until a stated date one or more years
in the future, after which the issuer is obligated to pay interest until
maturity, usually at a higher rate than if interest were payable from the date
of issuance. Such zero coupon securities, in addition to being subject to the
risks identified below are subject to the risk of the issuer's failure to pay
interest and repay principal in accordance with the terms of the obligation.
Because a zero coupon security pays no interest to its holder during its
life or for a substantial period of time, it usually trades at a deep discount
from its face or par value and will be subject to a greater fluctuations in
market value in response to changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. Because a
Fund accrues taxable income from these securities without receiving cash, such
Fund may be required to sell portfolio securities in order to pay a dividend
depending upon the proportion of shareholders who elect to receive dividends in
cash rather than reinvesting dividends in additional shares of the Fund. A Fund
might also sell portfolio securities to maintain portfolio liquidity. In either
case, cash distributed or held by a Fund and not reinvested in Fund shares will
hinder the Fund in seeking current income.
DEBT SECURITIES OF U.S. COMPANIES.
The Strategic Income Fund's investments in fixed-income securities issued
by domestic companies and other issuers may include debt obligations (bonds,
debentures, notes, mortgage-backed and asset-backed securities and CMOs)
together with preferred stocks.
The risks attendant to investing in high-yielding, lower-rated bonds are
described above. If a sinking fund or callable bond held by the Fund is selling
at a premium (or discount) and the issuer exercises the call or makes a
mandatory sinking fund payment, the Fund would realize a loss (or gain) in
market value;
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the income from the reinvestment of the proceeds would be determined by current
market conditions, and investment of that income may occur at times when rates
are generally lower than those on the called bond.
PREFERRED STOCKS.
Preferred stock, unlike common stock, offers a stated dividend rate payable
from the corporation's earnings. Such preferred stock dividends may be
cumulative or non-cumulative, participating, or auction rate. If interest rates
rise, the fixed dividend on preferred stocks may be less attractive, causing the
price of preferred stocks to decline. Preferred stock may have mandatory
sinking fund provisions, as well as call/redemption provisions prior to
maturity, a negative feature when interest rates decline. Dividends on some
preferred stock may be "cumulative," requiring all or a portion of prior unpaid
dividends to be paid. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases.
The rights of preferred stocks on distribution of a corporation's assets in the
event of a liquidation are generally subordinate to the rights associated with a
corporation's debt securities.
PARTICIPATION INTERESTS.
The Strategic Income Fund may invest in participation interests, subject to
the limitation, described in "Illiquid and Restricted Securities" in the
Prospectus, on investments by the Fund in illiquid investments. Participation
interests represent an undivided interest in or assignment of a loan made by the
issuing financial institution. No more than 5% of the Fund's net assets can be
invested in participation interests of the same issuing bank. Participation
interests are primarily dependent upon the financial strength of the borrowing
corporation, which is obligated to make payments of principal and interest on
the loan, and there is a risk that such borrowers may have difficulty making
payments. Such borrowers may have senior securities as low as "C" by Moody's or
"D" by Standard & Poor's. In the event the borrower fails to pay scheduled
interest or principal payments, the Fund could experience a reduction in its
income and might experience a decline in the net asset value of its shares. In
the event of a failure by the financial institution to perform its obligation in
connection with the participation agreement, the Fund might incur certain costs
and delays in realizing payment or may suffer a loss of principal and/or
interest. The Fund's Subadviser has set certain creditworthiness standards for
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issuers of loan participation and monitors their creditworthiness. These same
standards apply to participation interests in loans to foreign companies.
ASSET-BACKED SECURITIES.
These securities, issued by trusts and special purpose corporations, are
backed by pools of assets, primarily automobile and credit-card receivables and
home equity loans, which pass through the payments on the underlying obligations
to the security holders (less servicing fees paid to the originator or fees for
any credit enhancement). The value of an asset-backed security is affected by
changes in the market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing any credit enhancement, and is
also affected if any credit enhancement has been exhausted. Payments of
principal and interest passed through to holders of asset-backed securities are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other securities. The degree of credit enhancement
varies, and generally applies to only a fraction of the asset-backed security's
par value until exhausted. If the credit enhancement of an asset-backed
security held by the Fund has been exhausted, and if any required payments of
principal and interest are not made with respect to the underlying loans, the
Fund may experience losses or delays in receiving payment. The risks of
investing in asset-backed securities are ultimately dependent upon payment of
consumer loans by the individual borrowers. As a purchaser of an asset-backed
security, the Fund would generally have no recourse to the entity that
originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner as
described above for prepayments of a pool of mortgage loans and underlying
mortgage-backed securities. However, asset-backed securities do not have the
benefit of the same security interest in the underlying collateral as do
mortgage-backed securities.
SHORT SALES AGAINST-THE-BOX.
In such short sales, while the short position is open, the Atlas Stock
Funds must own an equal amount of such securities, or by virtue of ownership of
securities have the right, without payment of further consideration, to obtain
an equal amount of the securities sold short. Short sales against-the-box may
be
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made to defer, for Federal income tax purposes, recognition of gain or loss on
the sale of securities "in the box" until the short position is closed out.
MUNICIPAL OBLIGATIONS.
Municipal securities will be purchased by the Municipal Funds. Such
obligations are issued by or on behalf of states, territories, and possessions
of the United States and the District of Columbia and by their political
subdivisions, agencies, and instrumentalities. The interest on these
obligations is generally not includable in gross income of most investors for
federal income tax purposes. Issuers of municipal obligations do not usually
seek assurances from governmental taxing authorities with respect to the
tax-free nature of the interest payable on such obligations. Rather, issuers
seek opinions of bond counsel as to such tax status. See "Taxes" below.
Municipal issuers of securities are not usually subject to the securities
registration and public reporting requirements of the Securities and Exchange
Commission and state securities regulators. As a result, the amount of
information available about the financial condition of an issuer of municipal
obligations may not be as extensive as that which is made available by
corporations whose securities are publicly traded.
The two principal classifications of municipal obligations are general
obligation and limited obligation (or revenue) bonds. There are, in addition, a
variety of hybrid and special types of municipal obligations as well as numerous
differences in the financial backing for the payment of municipal obligations,
both within and between the two principal classifications.
Payments due on general obligation bonds are secured by the issuer's pledge
of its full faith and credit including, if available, its taxing power. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, roads and sewer systems.
The principal source of payment for a limited obligation bond or revenue
bond is generally the net revenue derived from particular facilities financed
with such bonds. In some cases, the proceeds of a special tax or other revenue
source may be committed by law for use to repay particular revenue bonds. For
example, revenue bonds have been issued to lend the proceeds to a private entity
for the acquisition or construction of facilities
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with a public purpose such as hospitals and housing. The loan payments by the
private entity provide the special revenue source from which the obligations are
to be repaid.
MUNICIPAL NOTES.
Municipal notes generally are used to provide short-term capital funding
for municipal issuers and generally have maturities of one year or less. The
portfolios of the Atlas National Municipal Money Fund and the Atlas California
Municipal Money Fund will consist primarily of these short-term obligations.
Municipal notes of municipal issuers include:
TAX ANTICIPATION NOTES are issued to raise working capital on a short-term
basis. Generally, these notes are issued in anticipation of various seasonal
tax revenues being paid to the issuer, such as income, sales, use and business
taxes, and are payable from these specific future taxes.
REVENUE ANTICIPATION NOTES are issued in anticipation of the receipt of
non-tax revenue, such as federal revenues or grants.
BOND ANTICIPATION NOTES are issued to provide interim financing until
long-term financing can be arranged. In most cases, long-term bonds are issued
to provide the money for the repayment of these notes.
MUNICIPAL COMMERCIAL PAPER.
Issues of municipal commercial paper typically represent short-term,
unsecured, negotiable promissory notes. Agencies of state and local governments
issue these obligations in addition to or in lieu of Municipal notes to finance
seasonal working capital needs or to provide interim construction financing and
are paid from general revenues of the issuer or are refinanced with long-term
debt. In most cases, municipal commercial paper is backed by letters of credit,
lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions.
FLOATING RATE AND VARIABLE RATE OBLIGATIONS AND PARTICIPATION INTERESTS.
The Funds may purchase floating rate and variable rate obligations,
including participation interests therein. Floating rate or variable rate
obligations provide that the rate of interest is set as a specific percentage of
a designated base rate (such as the prime rate at a major commercial bank) or is
reset on a regular basis by a bank or investment banking firm to
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a market rate. At specified times, the owner can demand payment of the
obligation at par plus accrued interest. Variable rate obligations provide for
a specified periodic adjustment in the interest rate, while floating rate
obligations have an interest rate which changes whenever there is a change in
the external interest rate.
Frequently banks provide letters of credit or other credit support or
liquidity arrangements to secure these obligations. The quality of the
underlying creditor or of the bank, as the case may be, must, as determined by
the Investment Adviser, be equivalent to the quality standard prescribed for the
Funds. The maturity of floating and variable rate obligations is equal to the
period during which a particular rate is in effect, or, if longer, the period
required to demand payment of the obligation.
The Funds may invest in participation interests purchased from banks in
floating rate or variable rate obligations owned by banks. A participation
interest gives the purchaser an undivided interest in the obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the obligation, and provides a demand repayment feature. Each
participation is backed by an irrevocable letter of credit or guarantee of a
bank (which may be the bank issuing the participation interest or another bank).
A Fund holding a participation interest has the right to sell the instrument
back to the issuing bank or draw on the letter of credit on demand for all or
any part of the Fund's participation interest in the underlying obligation, plus
accrued interest.
INSURANCE.
The Insured Funds will invest primarily, and the other Municipal Funds will
invest in varying amounts, in municipal securities covered by insurance
guaranteeing the scheduled payment of principal and interest thereon. A Fund
will receive payments of insurance for any installment of interest and principal
due for payment but which is unpaid by reason of nonpayment by the issuer. The
insurance feature insures the scheduled payment of interest and principal but
does not guarantee the market value of the insured municipal securities nor the
value of the shares of the Insured Funds.
As discussed in the Prospectus, the municipal securities in the portfolios
of the Insured Funds will generally be insured by new-issue, secondary market,
or portfolio insurance. The new-issue insurance policies, if any, will have
been obtained by the respective issuers of the municipal securities (or, in some
cases, a dealer) and, as is the case with secondary market insurance obtained
other than by an Insured Fund, all premiums respecting such securities will have
been paid in advance. Such
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<PAGE>
policies are non-cancelable and will continue in force so long as the municipal
securities are outstanding and the respective insurers remain in business.
Since new-issue insurance remains in effect as long as the securities insured
thereby are outstanding, the insurance may have an effect on the resale value of
securities in the Insured Funds' portfolios. This generally will be true of
secondary market insurance as well. New-issue insurance and secondary market
insurance which is non-cancelable while the insured securities are outstanding
may be considered to represent an element of market value in regard to the
municipal securities thus insured, but the exact effect, if any, of this
insurance on such market value cannot be determined.
An Insured Fund may at any time purchase a secondary market insurance
policy on any municipal security purchased by such Fund. Such policy would
likely be purchased if, in the opinion of the Investment Adviser or Subadviser,
the market value or net proceeds of a sale by an Insured Fund would exceed the
current value of the security (without insurance) plus the cost of the policy.
Any difference between the excess of a security's market value as a "AAA" rated
security over its market value without such rating, including the single premium
cost thereof, would inure to the Insured Fund in determining the net capital
gain or loss realized by such Fund upon the sale of the portfolio security. An
Insured Fund may purchase insurance under a secondary market policy in lieu of a
portfolio insurance policy at any time regardless of the effect of market value
on the underlying municipal security, if the Investment Adviser or Subadviser
believes such insurance would best serve the Fund's interests in meeting its
objectives and policies. Similarly, where a Fund purchases a security already
subject to secondary market insurance, it may be expected that the price paid by
the Fund would exceed the cost of the security without such insurance. To the
extent such secondary market insurance exists throughout the period in which the
security is outstanding, it is to be expected that upon the sale of such a
security the price obtained by the Fund would also exceed the price of the
security without the insurance.
Coverage under a portfolio insurance policy terminates upon sale of a
security from an Insured Fund's portfolio. Accordingly, such insurance does not
have an effect on the resale value of the securities. Therefore the Insured
Funds would be likely to retain any municipal securities insured under a
portfolio insurance policy which are in default or in significant risk of
default, and to place a value on the insurance which will be equal to the
difference between the market value of the defaulted security and the market
value of similar securities which are not in default. Under these circumstances
the Investment Adviser or Subadviser may be restricted in making changes to an
Insured Fund's portfolio to the extent that it holds defaulted securities, which
may limit
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<PAGE>
its ability in certain circumstances to purchase other municipal securities.
While a defaulted municipal security is held in an Insured Fund's portfolio,
the Fund continues to pay the insurance premium thereon but also collects
interest payments from the insurer and retains the right to collect the full
amount of principal from the insurer when the security comes due. Of course,
an Insured Fund may elect to purchase a secondary market policy discussed
above in lieu of a portfolio insurance policy, in order to be able to sell
such security.
Each of the municipal security insurance companies has established reserves
to cover estimated losses. Both the method of establishing these reserves and
the amount of the reserves may vary from company to company. Municipal security
insurance companies are obligated to pay a security's interest and principal
when due if the issuing entity defaults on the insured security. Although
defaults on insured municipal securities have been low to date, there is no
assurance this low rate will continue in the future. A higher than expected
default rate could deplete loss reserves and adversely affect the ability of a
municipal security insurer to pay claims to holders of insured securities, such
as an Insured Fund. The Insured Funds' policy of investing in municipal
securities insured by insurers whose claims-paying ability is rated "AAA"
applies at the time of the purchase of a security, and a Fund will not be
required to dispose of securities in the event of a downgrading of the
claims-paying ability of a particular insurance company.
PARTICULAR RISK FACTORS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS.
The following describes certain risks with respect to municipal obligations
of California issuers in which the Municipal Funds may, and the California Funds
predominately will, invest. This summarized information is based on information
drawn from official statements and prospectuses relating to securities offerings
of the State of California and various local agencies in California, available
as of the date of this Statement of Additional Information. While the
Investment Adviser has not independently verified such information, it has no
reason to believe that such information is not correct in all material respects.
California is the most populous state in the nation with a total population
at the 1990 Census of 29,976,000. Growth has been incessant since World War II,
with population gains in each decade since 1950 of between 18% and 49%. During
the last decade, population rose 20%. The State now comprises 12.3% of the
nation's population and 12.9% of its total personal income. Its economy is
broad and diversified with major concentrations in high technology research and
manufacturing, aerospace and
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<PAGE>
defense-related manufacturing, trade, real estate, and financial services.
After experiencing strong growth throughout much of the 1980's, the State was
adversely affected by both the national recession and the cutbacks in aerospace
and defense spending which had a severe impact on the economy in Southern
California. Although California is still experiencing some of the effects of
the recession and its unemployment is above the national average, the gap is
narrowing and is projected to close to within 1% of the national average in
1997. California's economic recovery from the recession is continuing at a
strong pace. Recent economic reports indicate that, while the rate of
economic growth in California is expected to moderate over the next three
years, the increases in employment and income will likely axceed those of the
nation as a whole by a significant margin.
These economic difficulties have exacerbated the structural budget
imbalance which has been evident since fiscal year 1985-86. Since that time,
budget shortfalls have become increasingly more difficult to solve and the State
has recorded General Fund operating deficits in several recent fiscal years.
Many of these problems have been attributable to the fact that the great
population influx has produced increased demand for education and social
services at a far greater pace than the growth in the State's tax revenues.
Despite substantial tax increases, expenditure reductions and the shift of some
expenditure responsibilities to local government, the budget condition has
remained problematic in recent years.
In July 1996, the Governor signed into law a new $62.6 billion budget
which, among other things, significantly increases education spending from
the previous fiscal year, reduces taxes for corporations and banks and
provides for a balanced budget at the close of the fiscal year. At the same
time the budget continues several funding reductions made in past years,
mostly to health and welfare programs. Although the state's budget provides
for a reserve of $305 million, revenue and expenditure developments have
occurred which may have the effect of reducing the reserve. The Governor's
proposed budged for fiscal year 1997-1998 indicates total spending of $66.6
billion and anticipates a $553 million reserve for economic uncertainties. As
in past years, the state's budget assumes savings which are dependent on
future federal actions, both to fund programs relating to MediCal and
incarceration costs associated with undocumented immigrants and to relieve
the state from federally mandated spending, which are not certain of
occurring. Accordingly, the anticipated reserves may be reduced unless the
economy outperforms expectations or spending falls below planned levels.
Because of the State of California's continuing budget problems, the rating
on the State's general obligation bonds was downgraded in July 1994 from Aa to
A1 by Moody's Investors Service, Inc., from A+ to A by Standard & Poor's
Corporation and from AA to A by Fitch Investors Service, Inc. All three rating
agencies expressed uncertainty about the State's ability to
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<PAGE>
balance the budget by 1996. However, in 1996, citing California's improving
economy and budget situation, both Fitch and Standard & Poor's raised their
rating from A to A+.
On December 6, 1994, Orange County (California) became the largest
municipality in the United States to file for protection under the Federal
bankruptcy laws. The filing stemmed from approximately $1.7 billion in losses
suffered by the County's investment pool due to investments in high risk
"derivative" securities. On June 12, 1996, it emerged from bankruptcy after
the successful sale of $880 million in municipal bonds allowed the county to
pay off the last of its creditors. On January 7, 1997, Orange County returned
to the municipal bond market with a $136 million bond issue maturing in 13
years at an insured yield of 7.23%.
Los Angeles County, the nation's largest county, is also experiencing
financial difficulty. In August 1995 the credit rating of the county's
long-term bonds was downgraded for the third time since 1992 as a result of,
among other things, severe operating deficits for the county's health care
system. Also, the county has not yet recovered from the ongoing loss of
revenue caused by state property tax shift initiatives in 1993 through 1995.
Entering the 1996-1997 fiscal year, the county faced a budgetary shortfall of
approximately $516 million. The county's budgetary difficulties have
continued with their effect on the 1997-1998 budget still uncertain.
In addition to this current information, future California political and
economic developments, constitutional amendments, legislative measures,
executive orders, administrative regulations, litigation and voter initiatives
could have an adverse effect on the debt obligations of California issuers.
Certain debt obligations held by the California Funds may be obligations of
issuers which rely in whole or in substantial part on California state revenues
for the continuance of their operations and the payment of their obligations.
Whether and to what extent the California Legislature will continue to
appropriate a portion of the state's general fund to counties, cities and their
various entities, is not entirely certain. To the extent local entities do not
receive money from the state to pay for their operations and services, their
ability to pay debt service on obligations held by the Funds may be impaired.
In addition, the California Constitution limits the taxing and spending
powers of the State of California and its public agencies and, therefore, the
ability of California issuers to raise revenues through taxation to repay
outstanding debt, and to spend such revenues over a predetermined limit.
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<PAGE>
Certain debt obligations held by the California Funds may be obligations of
issuers who rely in whole or in part on ad valorem real property taxes as a
source of revenue. The California Constitution limits ad valorem real property
taxes, and imposes super-majority approval requirements for additional real
property taxes, and the ability of California issuers to raise revenues through
such taxes to repay outstanding debt is limited.
Certain debt obligations in which the California Funds invest may be
payable solely from the revenues of specific institutions, or may be secured by
specific properties, which are subject to provisions of California law that
could adversely affect the holders of such obligations. The following
paragraphs describe a number of such provisions, but do not purport to be a
complete description of all of them.
Certain debt obligations held by the Funds may be obligations payable
solely from lease payments on real property or personal property leased to the
state, cities, counties or their various public entities. California law
requires that the lessee is not required to make lease payments during any
period that it is denied use and occupancy of the property lease in proportion
to such loss. Moreover, the lessee only agrees to include lease payments in its
annual budget for each fiscal year. In case of a default under the lease, the
only remedy available against the lessee is that of reletting the property; no
acceleration of lease payments is permitted. Each of these factors presents a
risk that the lease financing obligations held by the Funds would not be paid in
a timely manner.
Certain debt obligations held by the California Funds may be obligations
which are payable solely from the revenues of health care institutions. The
method of reimbursement for indigent care, California's selective contracting
with health care providers for such care and selective contracting by health
insurers for care of its beneficiaries now in effect under California and
federal law may adversely affect these revenues and, consequently, payment on
those debt obligations.
Debt obligations payable solely from revenues of health care institutions
may also be insured by the state. However, no guarantee exists that adequate
reserve funds will be appropriated for such insurance.
Certain debt obligations held by the California Funds may be obligations
which are secured in whole or in part by a mortgage or deed of trust on real
property. California has five principal statutory provisions which limit the
remedies of a creditor secured by a mortgage or deed of trust. Two limit the
creditor's right to obtain a deficiency judgment, one limitation being based on
the method of foreclosure and the other on the type of debt secured. Under the
former, a deficiency judgment is barred when
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<PAGE>
the foreclosure is accomplished by means of nonjudicial trustee's sale. Under
the latter, a deficiency judgment is barred when the foreclosed mortgage or deed
of trust secures certain purchase money obligations.
Another California statute, commonly known as the "one form of action"
rule, requires creditors secured by real property to exhaust their real property
security by foreclosure before bringing a personal action against the debtor.
The fourth statutory provision limits any deficiency judgment obtained by a
creditor secured by real property following a judicial sale of such property to
the excess of the outstanding debt over the fair value of the property at the
time of the sale, thus preventing the creditor from obtaining a large deficiency
judgment against the debtor as a result of low bids at a judicial sale. The
fifth statutory provision gives the debtor the right to redeem the real property
from any judicial foreclosure sale as to which a deficiency judgment may be
ordered against the debtor.
Upon the default of a mortgage or deed of trust with respect to California
real property, the creditor's nonjudicial foreclosure rights under the power of
sale contained in the mortgage or deed of trust are subject to the constraints
imposed by California law upon transfers of title to real property by private
power of sale. During the period beginning with the recordation of a formal
notice of default and ending five business days prior to the date of sale, the
debtor is entitled to reinstate the mortgage by making any overdue payments.
Under standard loan servicing procedures, the filing of the formal notice
of default does not occur unless at least three full monthly payments have
become due and remain unpaid. The power of sale is exercised by posting a
notice of sale for at least 20 days after expiration of the three-month period
following the recordation of the formal notice of default and by publishing a
copy once a week during that period. Therefore, the effective minimum period of
foreclosing on a mortgage could be in excess of seven months after the initial
default. Such time delays in collections could disrupt the flow of revenues
available to an issuer for the payment of debt service on the outstanding
obligations if such defaults occur with respect to a substantial number of
mortgages or deeds of trust securing an issuer's obligations.
In addition, a court could find that there is sufficient involvement of the
issuer in the nonjudicial sale of securing a mortgage for such private sale to
constitute "state action," and could hold that the private right-of-sale
proceedings violate the due process requirements of the federal or state
constitutions, consequently preventing an issuer from using the nonjudicial
foreclosure remedy described above.
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<PAGE>
Certain debt obligations held by the California Funds may be obligations
which finance the acquisition of single-family home mortgages for low and
moderate income mortgagors. These obligations may be payable solely from
revenues derived from the home mortgages, and are subject to California's
statutory limitations described above applicable to obligations secured by real
property. Under California anti-deficiency legislation, there is no personal
recourse against a mortgagor of a single family residence purchased with the
loan secured by the mortgage, regardless of whether the creditor chooses
judicial or nonjudicial foreclosure.
Under California law, mortgage loans secured by single-family
owner-occupied dwellings may be prepaid at any time. Prepayment charges on such
mortgage loans may be imposed only with respect to voluntary prepayments made
during the first five years during the term of the mortgage loan, and cannot in
any event exceed six months' advance interest on the amount prepaid in excess of
20% of the original principal amount of the mortgage loan. This limitation
could affect the flow of revenues available to an issuer for debt service on the
outstanding debt obligations which finance such home mortgages.
FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment policies and
investment restrictions in addition to the policies and restrictions discussed
in the Prospectus. With respect to each Fund, the policies and restrictions
listed below cannot be changed without approval by the holders of a "majority of
the outstanding voting securities" of that Fund (which is defined in the
Investment Company Act of 1940 ["1940 Act"]) to mean the lesser of (i) 67% or
more of the outstanding voting securities of a Fund present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
These restrictions provide that no Fund may:
(1) Purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if with
respect to 75% of the Fund's assets, as a result, more than 5% of the value of
such assets of the Fund would be invested in the securities of any one issuer or
such Fund's ownership would be more than 10% of the outstanding voting
securities of such issuer. These restrictions shall not apply to the California
Municipal Funds.
(2) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of any Fund's investments in that industry would exceed 25%
of the
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<PAGE>
current value of such Fund's total assets, provided that there is no limitation
with respect to investments in (i) municipal obligations (with respect to the
Municipal Funds); (ii) obligations of the United States Government, its agencies
or instrumentalities; and (iii) the obligations of domestic banks (with respect
to the Money Funds). For purposes of this policy, the Funds have adopted the
industry classification set forth in the Appendix to this Statement of
Additional Information which may be amended from time to time without
shareholder approval.
(3) Purchase securities subject to legal or contractual restrictions
preventing their ready disposition; or enter into repurchase agreements or
purchase time deposits maturing in more than seven days or acquire other
illiquid assets if, immediately after and as a result, the value of illiquid
assets held by a Fund would exceed, in the aggregate, 10% of the value of the
Fund's net assets (except that the Atlas Balanced Fund, the Atlas Strategic
Growth Fund, the Atlas Global Growth Fund, the Atlas Emerging Growth Fund and
the Atlas Strategic Income Fund have each adopted this restriction as a
non-fundamental operating policy which may be changed without shareholder
approval).
(4) Invest in securities of a company which, together with any
predecessor, has been in operation for less than three years if more than 5% of
the Fund's total assets would then be invested in such securities; provided that
in the case of industrial revenue bonds purchased for the Municipal Funds, this
restriction shall apply to the entity supplying the revenues from which the
issue is to be paid. The Atlas Global Growth Fund has adopted this restriction
as a non-fundamental operating policy which may be changed without shareholder
approval. The Atlas Emerging Growth Fund has adopted a 10% limit on investment
in such securities as a non-fundamental operating policy which may be changed
without shareholder approval.
(5) Invest in companies for the purpose of exercising control or
management.
(6) Purchase or sell real estate or real estate limited partnership
interests; provided that a Fund may invest in readily marketable securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein.
(7) Purchase or sell commodities or commodities contracts or interests in
oil, gas or other mineral exploration or development programs, provided,
however, that the Bond and Stock Funds may purchase and sell interest rate
futures contracts and related options, and the Stock Funds and the Strategic
Income Fund may purchase and sell stock index futures contracts and related
options and purchase or sell forward foreign currency contracts.
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<PAGE>
(8) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets; provided that this restriction shall not apply
to the transfer of securities in connection with a permissible borrowing. For
purposes of this restriction, (a) the deposit of assets in escrow or a
segregated account in connection with the writing of covered put or call
options, the purchase of securities on a when-issued or delayed-delivery basis,
or the undertaking of another investment technique utilizing a cover or
segregated account arrangement, and (b) collateral arrangements with respect to
(i) the purchase and sale of options on securities and options on indexes and
(ii) initial or variation margin for futures contracts will not be deemed to be
pledges of a Fund's assets.
(9) Purchase securities on margin or effect short sales, except that a
Fund may obtain such short-term credits as may be necessary for the clearance of
purchases or sales of securities, and may make margin payments in connection
with futures contracts and related options and the Atlas Stock Funds may effect
short sales against-the-box.
(10) Engage in the business of underwriting securities issued by others,
except to the extent that the purchase of municipal obligations or other
permitted investments directly from the issuer thereof or from an underwriter
for an issuer and the later disposition of such securities in accordance with
any Fund's investment program may be deemed to be an underwriting.
(11) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
Investment Adviser or a Subadviser to save brokerage costs or average prices
among them is not deemed to result in a securities trading account.)
(12) Make loans to any person or firm; provided, however, that the
acquisition for investment of a portion of an issue of publicly distributed
bonds, debentures, notes or other evidences of indebtedness of any corporation
or government shall not be construed to be the making of a loan; and provided
further that a Fund may enter into repurchase agreements and may make loans of
portfolio securities.
(13) Purchase from or sell portfolio securities to its officers, directors
or other "interested persons" (as defined in the 1940 Act) (other than otherwise
unaffiliated brokers) of the Fund or of the Company.
(14) Purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the directors or officers of the Company or the
Investment Adviser individually own beneficially more than 1/2 of 1% of the
securities of such issuer
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<PAGE>
and together own beneficially more than 5% of such securities.
(15) Borrow money, except from banks for temporary or emergency purposes
not in excess of 33-1/3% of the value of a Fund's total assets. A Fund will not
purchase securities if such borrowings are outstanding in excess of 5% of the
value of a Fund's total assets. This restriction shall not apply to the Atlas
Strategic Growth Fund, the Atlas Global Growth Fund and the Atlas Strategic
Income Fund and shall not prevent a Bond Fund from entering into reverse
repurchase agreements or "roll" transactions, provided that these transactions
and any other transactions constituting borrowing by a Fund may not exceed
one-third of the Fund's total assets. In the event that the asset coverage for
a Fund's borrowings falls below 300%, a Fund will reduce, within three days
(excluding Sundays and holidays), the amount of its borrowings in order to
provide for 300% asset coverage.
(16) Knowingly purchase securities of other registered management
investment companies, except that a Fund may acquire such securities: (i) if not
more than 10% of the Fund's assets shall be invested in such securities; or
(ii) in connection with a merger, acquisition or consolidation with such a
company.
A Fund may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Fund's investment policies and restrictions.
A Fund will include the original cost of the securities so acquired in any
subsequent determination of a Fund's compliance with the investment percentage
limitations referred to above and in the Prospectus. A Fund will not knowingly
exercise rights or otherwise acquire securities when to do so would jeopardize
the Fund's status under the 1940 Act as a "diversified" investment company. If
a percentage restriction on investment or utilization of assets in a fundamental
policy or restriction is adhered to at the time an investment is made, a later
change in percentage ownership of a security or kind of securities resulting
from changing market values will not be considered a violation of a Fund's
investment policies or restrictions.
The Company may make commitments more restrictive than the restrictions
listed above with respect to a Fund so as to permit the sale of shares of the
Fund in certain states.
The Company has adopted a non-fundamental policy that prohibits any Fund
from acquiring any securities of other open-end investment companies or
registered unit investment trusts in reliance on subparagraphs (G) or (F) of
Section 12(d)(1) of the 1940 Act.
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<PAGE>
PORTFOLIO TURNOVER
For reporting purposes, a Fund calculates its portfolio turnover rate by
dividing the lesser of purchases or sales of portfolio securities for the fiscal
year by the monthly average of the value of the portfolio securities owned by
the Fund during the fiscal year. In determining portfolio turnover, a Fund
excludes all securities whose maturities at the time of acquisition were one
year or less. A 100% portfolio turnover rate would occur, for example, if all of
the securities in the Fund's portfolio (other than short-term money market
securities) were replaced once during the fiscal year. Based on this
definition, the policy of each Money Fund in investing in securities with
remaining maturities of less than one year is expected to result in a portfolio
turnover rate of 0%.
Increased portfolio turnover will likely result in correspondingly greater
brokerage commissions and dealer markups which must be paid by the Funds. To
the extent that portfolio trading results in realization of net short-term
capital gains, shareholders will be taxed on such gains at ordinary income tax
rates (except shareholders who invest through IRAs and other tax-deferred
retirement plans which are not taxed currently on accumulations in their
accounts). To the extent that increased portfolio turnover results in sales of
securities held less than three months, a Fund's ability to qualify as a
"regulated investment company" under the Internal Revenue Code may be affected
(see "Taxes," below).
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<PAGE>
MANAGEMENT OF THE COMPANY
Directors and Officers
The Directors and officers of Atlas Assets, Inc. (the "Company"), their
business addresses and principal occupations during the past five years are:
<TABLE>
<CAPTION>
Positions Principal Occupations
Name and Address Held and Business Experience
- ---------------------------- ----------------- ------------------------------
<S> <C> <C>
Marion O. Sandler (1)(4) Director, Presi- Chairman of the Board and
1901 Harrison Street dent and Chief Chief Executive Officer of
Oakland, CA 94612 Executive Officer World Savings and Loan
Association ("World Savings"),
and Golden West Financial
Corporation ("GWFC").
President and Chief Executive
Officer of Atlas Advisers, Inc.
("Adviser") and Atlas
Securities, Inc. ("Distributor")
Barbara A. Bond (2)(3)(4) Director Certified Public Accountant/
Hood and Strong Tax Partner of Hood and Strong
101 California Street
San Francisco, CA 94111
Russell W. Kettell (1)(4) Director President of GWFC and Senior
1901 Harrison Street Executive Vice President of
Oakland, CA 94612 World Savings
Daniel L. Rubinfeld (2)(3)(4) Director Professor of Law and Economics
School of Law, Boalt Hall at the University of
University of California California, Berkeley
Berkeley, CA 94720
David J. Teece (2)(3)(4) Director Professor of Business
University of California Administration at the
IMIO #1930 University of California,
Haas School of Business S-402 Berkeley
Berkeley, CA 94720
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupations
Name and Address Held and Business Experience
- ---------------------------- ----------------- ------------------------------
<S> <C> <C>
Julius Louis Helvey (1) Group Senior Vice Group Senior Vice President
1901 Harrison Street President and of World Savings, GWFC,
Oakland, CA 94612 Chief Financial Adviser and Distributor
Officer
Larry E. LaCasse (1) Group Senior Vice 1992 to present - Group
794 Davis Street President and Senior Vice President of
San Leandro, CA 94577 Chief Operating the Adviser and the Distri-
Officer butor; 1988 to Present -
Chief Operating Officer of
the Adviser and the Distri-
butor; 1988 - 1991 Senior
Vice President of the
Adviser and the Distributor;
1988 - Vice President of
American Capital Services,
Inc.; 1986 to 1988 - Vice
President of American Capital
Marketing, Inc.; 1984 to
1986 - Vice President of
Corporate Development at
Financial Network Investments
Corp.
Edward L. Bisgaard (1) Vice President, 1989 to present - Vice
794 Davis Street Chief Accounting President, Chief Accounting
San Leandro, CA 94577 Officer and Officer and Treasurer of
Treasurer Adviser and Distributor; 1988 to
1989 - Chief Financial Officer
of Dunham & Greer Investment
Counsel; 1986 to 1988 - General
Partner of R&R Tire and Auto
Service Center; 1979 to 1986 -
Vice President and Manager of
Fund Operations at Capital
Research & Management Company
Steven J. Gray (1) Vice President, 1992 to present - Vice President,
794 Davis Street Chief Legal Chief Legal Counsel and Secretary
San Leandro, CA 94577 Counsel, and of Adviser and Distributor;
Secretary 1989 to 1992 - Associate Attorney,
Investment Management Group at the
law firms of Gaston & Snow (1989-1990),
Thelen, Marrin, Johnson & Bridges
(1990-1992), and
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupations
Name and Address Held and Business Experience
- ---------------------------- ----------------- ------------------------------
<S> <C> <C>
Heller, Ehrman, White & McAuliffe
(1992); 1986 to 1989 - Attorney for
Federal Home Loan Bank Board; 1985
to 1986 - Senior Attorney and Vice
President C.R.I., Inc.; 1982 to
1985 - Attorney, United States
Securities and Exchange Commission
</TABLE>
- ---------------
(1) Director or officer who is an "interested person" of the Company due
to his affiliation with the Company's investment manager.
(2) Member of the Contracts Committee.
(3) Member of the Audit Committee.
(4) Member of the Executive Committee.
As of December 31, 1996, Golden West Financial Corporation, 1901
Harrison Street, Oakland, CA 94612, a Delaware corporation and sole
shareholder of the Adviser and Distributor, owned beneficially and of
record an aggregate of 14.80%, 5.51%, 12.82%, 1.27%, 3.39%, 28.87% and
16.16% respectively, of the Class A shares outstanding of the Atlas U.S.
Government Intermediate Fund, the Atlas California Insured Intermediate
Municipal Fund, the Atlas National Insured Intermediate Municipal Fund, the
Atlas Balanced Fund, the Atlas Strategic Growth Fund, the Atlas Strategic
Income Fund and the Atlas Global Growth Fund and 13.85%, 5.35%, 12.54%,
1.09%, 2.70%, 24.76% and 13.89% respectively, of the total shares of those
Funds. In addition, as of such date, Golden West owned beneficial and of
record an aggregate of 2.08% of the Class B shares outstanding of the Atlas
U.S. Treasury Money Fund, and the Distributor owned beneficially and of
record an aggregate of 1.17% of the Atlas U.S. Treasury Money Fund Class A
shares outstanding. Because of these combined holdings, Golden West
Financial Corporation may be deemed to "control" those Funds under the 1940
Act.
As of December 31, 1996, officers and directors as a group owned
approximately 5.94% of the shares of the Atlas Treasury Money Fund, 6.07% of the
shares of the Atlas California Municipal Money Fund, but owned less than 1% of
each class of
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the shares of each of the other Funds. The officers and directors as a group
owned 3.54% of the Company's shares in total.
The following table sets forth the aggregate compensation paid by the
Company for the fiscal year ended December 31, 1996 to the Directors who are not
affiliated with the Investment Adviser and the aggregate compensation paid to
such Directors for service on the Company's Board and that of all other funds in
the "Company complex", (of which there currently are none, as defined in
Schedule 14A under the Securities Exchange Act of 1934):
Total
Pension or Compensation
Retirement from
Benefits Estimated Company and
Accrued as Annual Company
Aggregate Part of Benefits Complex
Compensation Company Upon Paid to
Name from Company Expenses Retirement Directors
- ---- ------------ ---------- ---------- ------------
Barbara A. Bond $14,000 None N/A $14,000(14)*
Daniel L. Rubinfeld $13,700 None N/A $13,700(14)*
David J. Teece $13,400 None N/A $13,400(14)*
Marion O. Sandler None None N/A None
Russell W. Kettell None None N/A None
* Indicates total number of funds in Company complex.
INVESTMENT ADVISORY AND OTHER SERVICES
Atlas Advisers, Inc. ("Investment Adviser"), serves as the investment
adviser to the Company pursuant to an Investment Advisory Agreement dated
January 12, 1990 (the "Advisory Agreement"), which was last approved by the
Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Company, at a meeting
held on November 25, 1996.
The Advisory Agreement with respect to each Fund is for an initial term of
two years and may be renewed from year to year afterwards, provided that any
such renewal has been specifically approved at least annually by (i) the
majority (as defined in the 1940 Act) of the outstanding voting securities of
the Fund, or (ii) the vote of a majority of directors who are not parties to the
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party, cast in person, at a meeting called
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for the purpose of voting on such approval. The Advisory Agreement also
provides that either party thereto has the right with respect to any Fund to
terminate it without penalty, upon 60 days written notice to the other party,
and that the Advisory Agreement automatically terminates in the event of its
assignment (as defined in the 1940 Act).
The directors and officers of the Investment Adviser are: Marion O.
Sandler (Director, President and Chief Executive Officer), James T. Judd
(Director), Dirk S. Adams (Director), Julius Louis Helvey (Group Senior Vice
President and Chief Financial Officer), Larry E. LaCasse (Group Senior Vice
President and Chief Operating Officer), Edward L. Bisgaard (Vice President,
Chief Accounting Officer and Treasurer), Steven J. Gray (Vice President, Chief
Legal Counsel and Secretary).
Under the Advisory Agreement, the Investment Adviser has agreed to reduce
its fees to a Fund if the Fund's annual ordinary operating expenses exceed the
most stringent limits prescribed by any state in which the Fund's shares are
offered for sale. The Investment Adviser calculates and administers this
expense limitation separately with respect to each Fund. Expenses which are not
subject to this limitation are interest, taxes, 12b-1 fees and extraordinary
expenses. Expenditures, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, including
costs incurred in connection with the purchase or sale of portfolio securities,
are accounted for as capital items and not as expenses. Reimbursement, if any,
will be on a monthly basis, subject to year-end adjustment. With the exceptions
of the Government and Mortgage Securities, Growth and Income, Balanced, National
and California Municipal Bond and Strategic Growth Funds, the Investment Adviser
voluntarily waived all or a portion of each Fund's management fees and, with the
exceptions of the California and National Money Funds, absorbed a portion of
each Fund's ordinary operating expenses during the fiscal year or period ended
December 31, 1996.
SUBADVISERS.
Boston Safe Advisors, Inc. ("Boston Advisors") serves as Subadviser to the
Company with respect to the Municipal Funds pursuant to a Subadvisory Agreement
dated May 21, 1993, which was approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company, at a meeting held on November 25, 1996, and by
shareholders of the Municipal Funds at a meeting held on March 17, 1993.
Boston Advisor's parent company, The Boston Company, Inc., is a wholly
owned subsidiary of Mellon Bank Corporation, a publicly owned multibank holding
company.
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OppenheimerFunds, Inc. ("Oppenheimer") serves as Subadviser to the Company
with respect to the Stock Funds and the Strategic Income Fund pursuant to a
Subadvisory Agreement dated October 1, 1993 (the "Oppenheimer Subadvisory
Agreement"), which was last approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company at a meeting held on November 25, 1996 with respect to
each of the Stock Funds. The shareholders of the Atlas Growth and Income Fund
approved the Oppenheimer Subadvisory Agreement at a meeting on September 29,
1993.
Each Subadvisory Agreement is for an initial term of two years and may be
renewed from year to year afterwards, provided that any such renewal has been
specifically approved at least annually by (i) the majority (as defined in the
1940 Act) of the outstanding voting securities of the appropriate Fund, or
(ii) the vote of a majority of directors who are not parties to the Subadvisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person, at a meeting called for the purpose of voting on such
approval. Each Subadvisory Agreement also provides that the Company or Atlas
Advisers, Inc. has the right with respect to any Fund to terminate it without
penalty, upon 60 days written notice to the other parties, that the Subadviser
has the right with respect to any Fund to terminate without penalty upon 120
days written notice, and that the Subadvisory Agreement automatically terminates
in the event of its assignment (as defined in the 1940 Act).
PRINCIPAL UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS.
As described in the Prospectus, the Company has adopted a Principal
Underwriting Agreement with Atlas Securities, Inc. (the "Distributor"), which
serves as the sole underwriter and distributor of each Fund's shares. Pursuant
to the Principal Underwriting Agreement, a commission is paid to the Distributor
at the time of the sale of Class A shares of the Bond and Stock Funds and on a
contingent deferred basis on the sale of Class B shares of the Bond and Stock
Funds. During the fiscal years ended December 31, 1994,1995 and 1996, the
Distributor received and retained sales commissions from the Company for the
sale of Class A and Class B shares in the amounts of $2,256,098,$475,239 and
$894,495 and $4,508,$11,527 and $28,622, respectively.
As also described in the Prospectus, the Company has adopted separate
Distribution Plans for Class A and Class B shares (the "Distribution Plans")
under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule").
Under the Distribution Plan for Class A shares, each Fund is authorized to spend
up to 0.25% of its average daily net assets on activities primarily intended to
result in the sale of its Class A shares, which activities are summarized in the
Prospectus. The Class A shares Distribution
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Plan also provides that the Investment Adviser may pay Service Agents for
servicing and distribution services out of its management fee income from the
Company, its past profits or any other source available to it. During the
fiscal year ended December 31, 1996, the Distributor received reimbursements for
distribution expenses for Class A shares in the amount $1,567,189.
Payment under the Class A shares Distribution Plan in any year will be
applied to distribution expenses incurred in that year and will not be used to
pay for distribution expenses incurred, but unreimbursed, from previous years.
Under the Distribution Plan for Class B shares, each Fund that has issued
Class B Shares is authorized to spend up to 0.75% of its average daily net
assets to compensate the Distributor for expenses incurred, and services and
facilities provided, in distributing Class B Shares , including, but not limited
to, payment of trail commissions and other payments to brokers, dealers,
financial institutions or others who sell shares and/or service shareholder
accounts; compensation to and expenses, including overhead and telephone
expenses of the Distributor; the printing of prospectuses, statements of
additional information, and reports for other than existing shareholders; and
the preparation, printing and distribution of sales literature and advertising
materials.
The distribution fees payable to the Distributor under the Class B Plan are
designed to compensate the Distributor for the expenses it incurs and the
services it renders in distributing Class B shares of the Funds. However,
because the Plan for Class B shares is a compensation plan, the distribution
fees are payable even if the amount paid exceeds the Distributor's actual
expenses, in which case the Distributor would make a profit. If in any year the
Distributor's expenses incurred in connection with the distribution of Class B
Shares of a Fund exceed the distribution fees paid by the Fund, the Distributor
will recover such excess only if the Plan with respect to the Fund continues to
be in effect in some later year when the distribution fees exceed the
Distributor's expenses. There is no limit on the periods during which
unreimbursed expenses may be carried forward, although the Company is not
obligated to repay any unreimbursed expenses for a Fund that may exist at such
time, if any, as the Class B shares Plan terminates or is not continued with
respect to the Fund. No interest, carrying or finance charge will be imposed on
any amounts carried forward. During the fiscal year ended December 31, 1996,
the Distributor received distribution fees for Class B shares in the amount of
$227,763.
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<PAGE>
The Distribution Plans are subject to annual renewal by the Directors,
including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Company and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to such Distribution Plan (the "Qualified Directors"). In approving the
Distribution Plans, the Directors determined that the Distribution Plans were in
the best interests of the shareholders of the respective class of shares of each
Fund adopting one or both of the Distribution Plans. Agreements related to the
Distribution Plans must also be approved by such vote of the Directors and the
Qualified Directors as described above.
The Distribution Plans require that, at least quarterly, the Directors must
review a written report prepared by the Chief Financial Officer of the Company
enumerating the amounts expended and purposes therefor under each Distribution
Plan. The Distribution Plans also require that, so long as they are in effect,
the Qualified Directors shall have the authority to select and nominate other
Qualified Directors on behalf of the full Board of Directors.
EXECUTION OF PORTFOLIO TRANSACTIONS
When circumstances relating to a proposed transaction indicate that a
particular broker-dealer is in a position to obtain the best price and
execution, the order is placed with that broker-dealer. This may or may not be
a broker-dealer who has provided research, statistical, or other related
services to the Investment Adviser or has sold shares of the Funds. Subject to
the requirement of seeking the best available prices and execution, the
Investment Adviser may, in circumstances in which two or more broker-dealers are
in a position to offer comparable prices and execution, give preference to
broker-dealers who have provided research, statistical, and other related
services to the Investment Adviser for the benefit of the Company. The
Investment Adviser is of the opinion that while such research and related
services are useful in varying degrees, they are of indeterminable value and do
not reduce the expenses of the Investment Adviser. Total brokerage commissions
paid by the Atlas Growth and Income Fund during the fiscal years ended December
31, 1994, 1995 and 1996 were $220,872, $214,402 and $243,144, respectively.
Total brokerage commissions for the Atlas Balanced Fund and the Atlas Strategic
Growth Fund for the fiscal years ended December 31, 1994,1995 and 1996 were
$3,005, $10,517, $10,248 and $4,945,$15,948, and $63,883, respectively. Total
brokerage commissions paid by the Atlas Global Growth Fund for the period
April 30, 1996 (effective date of registration) to December 31, 1996 was
$52,719. Broker-dealers used by the Stock Funds' Subadviser to execute portfolio
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<PAGE>
transactions for the Funds provide research services to the Subadviser.
Transactions in the other Funds were on a principal basis.
The Bond Funds will effect transactions in financial and interest rate
futures contracts on the Chicago Mercantile Exchange and other boards of trade
through futures commissions merchants and at negotiated commissions. The Stock
Fund will effect transactions in stock index futures on boards of trade through
futures commissions merchants and at negotiated commissions and transactions in
forward foreign currency contracts on exchanges or in the spot market.
There are occasions on which the Investment Adviser or a Subadviser, on
behalf of the Company may execute portfolio transactions concurrently with
portfolio transactions in the same securities by other clients of the Investment
Adviser or a Subadviser, or for trusts or other accounts served by affiliated
companies of the Investment Adviser or a Subadviser. Although such concurrent
trading potentially could be either advantageous or disadvantageous to the
Company, they will be effected only when the Investment Adviser or a Subadviser
believes that to do so is in the best interests of the Company. When such
concurrent trading occurs, the Investment Adviser or a Subadviser will seek to
average prices or otherwise allocate the executions in an equitable manner among
the Company and the other parties involved.
HOW TO INVEST
PRICES OF SHARES.
The price to be paid by an investor for shares of a Fund (the "public
offering price") is based on the net asset value per share of Class A and Class
B shares which the Company calculates once daily as of the close of regular
trading (normally 4:00 p.m., New York time) each business day the New York Stock
Exchange ("NYSE") is open for unrestricted trading. The NYSE is currently
scheduled to be closed on New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day, and on the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday.
BOND FUNDS:
1. The Company values portfolio securities including U.S. Treasury
obligations, and other obligations issued or guaranteed by the U.S. Government,
its agencies or
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instrumentalities, certificates of deposit issued by banks or savings and loan
associations, commercial paper, corporate short-term notes and other short term
investments with original or remaining maturities in excess of 60 days at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, for securities of comparable maturity, quality
and type. In circumstances where the Investment Adviser deems it appropriate to
do so, prices obtained for the day of valuation from a bond pricing service will
be used. The Company amortizes to maturity all securities with 60 days or less
to maturity based on their cost to a Fund if acquired within 60 days of maturity
or, if already held by a Fund on the 60th day, based on the value determined on
the 61st day.
2. The Company values long-term fixed-income obligations at the mean of
representative quoted bid or asked prices for such securities or, if such prices
are not available, at prices for securities of comparable maturity, quality and
type. In circumstances where the Investment Adviser deems it appropriate to do
so, prices obtained for the day of valuation from a bond pricing service will be
used.
3. The Company deems the maturities of variable or floating rate
instruments, or instruments which a Fund has the right to sell at par to the
issuer or dealer, to be the time remaining until the next interest rate
adjustment date or until they can be resold or redeemed at par.
4. Where market quotations are not readily available, the Company values
securities (including restricted securities which are subject to limitations as
to their sale) at fair value pursuant to methods approved by the Board of
Directors.
5. The fair value of any other assets is added to the value of securities,
as described above to arrive at total assets.
6. Each Fund's liabilities, including proper accruals of taxes and other
expense items, are deducted from total assets and a net asset figure is
obtained.
7. The net asset figure obtained as described above is then divided by the
total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
MONEY MARKET FUNDS:
It is the Company's policy to use its best efforts to maintain a constant
per share price for the Money Funds equal to $1.00.
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The portfolio instruments of the Money Funds are valued on the basis of
amortized cost. This involves valuing an instrument at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which the value, as determined by amortized cost,
is higher or lower than the price a Fund would receive if it sold the
instrument.
The valuation of each Fund's portfolio instruments based upon their
amortized cost and simultaneous maintenance of each Fund's per share net asset
value at $1.00 are permitted by Rule 2a-7 under the 1940 Act.
Under this rule, each Money Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of one year or less, and invest only in securities
determined by the Board of Directors, and as required by the rule, to be of high
quality with minimal credit risks. High quality is defined as the top two
quality rating grades as rated by any two national statistical rating
organizations ("NRSRO"), or by one NRSRO if rated by only one, or if not rated
by an NRSRO, of comparable quality as determined by the Subadviser. The U.S.
Treasury Money Fund invests only in securities guaranteed by the full faith and
credit of the U.S. Government, that is, of the highest quality. In accordance
with the rule the Board of Directors has established procedures designed to
stabilize, to the extent reasonably practicable, each Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of each Fund's portfolio holdings by the Board of Directors, at
such intervals as they may deem appropriate, to determine whether the net asset
value of a Fund calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. The rule
also provides that the extent of any deviation between a Fund's net asset value
based upon available market quotations or market equivalents and $1.00 per share
net asset value based on amortized cost must be examined by the Directors. In
the event the Board of Directors determines that a deviation exists which may
result in material dilution or is otherwise unfair to investors or existing
shareholders, they must cause a Fund to take such corrective action as they
regard as necessary and appropriate, including: selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or paying distributions from capital
or capital gains; redeeming shares in kind; or establishing a net asset value
per share by using available market quotations.
B-52
<PAGE>
THE STOCK FUNDS:
The Company values portfolio securities of the Stock Funds listed or traded
on an exchange, at their last sales price on the exchange where the security is
principally traded. Lacking any sales on a particular day, the security is
valued at the mean between the closing bid and asked prices on that day. Each
security traded in the over-the-counter market (but not including securities
reported on the NASDAQ National Market System) is valued at the mean between the
last bid and asked prices, based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. These procedures need not
be used to determine the value of debt securities owned by the Fund if, in the
opinion of the Board of Directors some other method (e.g. the mean between
closing over-the-counter bid and asked prices in the case of debt instruments
traded on an exchange) would more accurately reflect their fair value. A
security which is listed or traded on more than one exchange is valued at the
quotation of the exchange determined by the Board of Directors to be the primary
market for such security. Short-term obligations are valued at amortized cost,
which constitutes fair value as determined by the Board. All other securities
and other assets of the Fund are appraised at their fair value as determined in
good faith under consistently applied procedures established by and under the
general supervision of the Board.
For purposes of determining the net asset value per share of each Stock
Fund, all assets and liabilities initially expressed in foreign currencies are
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars last quoted by any major bank and any changes in
the value of forward contracts are included in the determination of net asset
value.
DUAL CLASS METHODOLOGY.
The methodology for calculating the net asset value, dividends and distributions
of Funds' Class A and Class B shares recognizes two types of expenses. General
expenses that do not pertain specifically to either class are allocated pro rata
to the shares of each class, based on the ratio of the net assets of such class
to the Fund's total net assets, and then equally to each outstanding share
within a given class. Such general expenses include (i) management fees, (ii)
legal, bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Additional Statements and other materials for
current shareholders, (iv) fees to unaffiliated Directors, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up costs,
(viii) interest, taxes and brokerage commissions, and (ix) nonrecurring
expenses, such as litigation costs. Other expenses that are directly
attributable
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to a class are allocated equally to each outstanding share within that class.
Such expenses include (a) Distribution Plan fees, (b) incremental transfer and
shareholder servicing agent fees and expenses, (c) registration fees and (d)
shareholder meeting expenses, to the extent that such expenses pertain to a
specific class rather than to the Fund as a whole.
PAYMENT AND TERMS OF OFFERING.
Payment of shares purchased must accompany the purchase order either by
check or by wire made payable to the Fund or to Atlas Assets, Inc. and sent to
the Shareholder Services Agent as described in the Prospectus under "How Can I
Invest?" As a condition of this offering, if the Company cancels an order to
purchase shares due to nonpayment (for example, on account of a check returned
for "not sufficient funds"), the person who made the order will be responsible
for any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Company shall have the authority as agent of the
shareholder to redeem shares in his account for their then-current net asset
value per share to reimburse the Company for the loss incurred. The Company may
prohibit future orders from investors whose purchase orders have been cancelled
due to nonpayment. The Distributor or the Investment Adviser will reimburse the
Fund for any such losses not recovered from the shareholder.
The Company reserves the right to change the generally applicable minimum
initial or subsequent investment amounts at any time upon disclosure of such
change in the prospectus or a supplement. The Company may waive or reduce the
minimum initial or subsequent investment amount without prior prospectus
disclosure for types of accounts involving scheduled continuous investments such
as automatic purchase plans and employee benefit plan investment programs. An
order to purchase shares is not binding on the Company until the Shareholder
Services Agent confirms it in writing (or by other arrangements made with the
Company, in the case of orders utilizing wire transfer of funds) and the Company
receives payment. Any purchase order or exchange may be rejected by the Company
or the Distributor prior to confirmation, and the Company reserves the right,
upon prior written notice to a shareholder, to refuse to accept any additional
purchase or exchange requests from the shareholder. With respect to purchase
orders or exchanges for shareholders with Atlas Funds account(s) balances as of
and since March 31, 1993 of $1 million or more and shareholders with an
outstanding letter of intent to purchase $1 million or more in shares of one or
more Atlas Funds as of that date, the Company reserves the right to impose the
lower sales charge in effect prior to March 31, 1993 applicable to sales of $1
million or more.
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THE SHAREHOLDER ACCOUNT.
When an investor makes an initial investment in a Fund, a shareholder
account is opened in accordance with the investor's instructions on the account
application. A shareholder will receive from the Shareholder Services Agent
("Agent") a confirmation statement showing the current transaction and a summary
of the status of the account as of the transaction date after each investment,
redemption (except for a redemption by Checkwriting), exchange of Atlas Fund
shares or any payment or reinvestment of dividends or distributions. The
minimum redemption amounts and minimum account balances described in the
Prospectus do not apply to mandatory periodic payments under an IRA or SEP Plan
or other qualified benefit plan.
OTHER INVESTMENT AND REDEMPTION SERVICES
PURCHASES UNDER A LETTER OF INTENT.
The reduced sales charges and public offering prices for Class A shares set
forth in the Prospectus are available on purchases of $100,000 or more made
within a 13-month period pursuant to the terms of a "Letter of Intent" elected
and agreed to by the shareholder on the New Account Form on the terms described
in the Prospectus and herein. The Letter of Intent is a non-binding statement
of an investor's intention to purchase a stated aggregate dollar amount of
shares of the Company. The investor may pay the sales charge applicable to the
amount of the intended aggregate purchase.
After 13 months, if you purchased less than the amount intended, the Agent
will request you to remit the difference between the lower sales charge you paid
(based on your higher intended LOI amount) and the sales charge applicable to
the purchases actually made under the LOI. If the Agent doesn't receive your
remittance within 20 days of the request, it will redeem sufficient escrowed
shares from your account to equal the sales charge difference. Your escrowed
shares earn dividends, which will continue to be credited to your account during
the LOI period.
REINSTATEMENT.
When a shareholder has redeemed shares in a Bond or Stock Fund, the
shareholder may, by returning the redemption check, or another check in an
amount no greater than the redemption payment, to the Shareholder Services
Agent, have that check applied to the purchase of shares of any Bond or Stock
Fund at the net asset value (without sales charge) next determined after
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receipt by the Shareholder Services Agent. The reinstatement will be subject to
the applicable minimum investment requirements. In the case of a reinstatement
of Class B shares, the Distributor will refund the CDSC imposed at the time of
redemption by crediting the shareholder's account with additional shares in an
amount equal to the CDSC. A shareholder may exercise this privilege only once
for each Bond or Stock Fund. The Shareholder Services Agent must receive such
checks no later than the close of business on the 30th calendar day following
the redemption payment date.
TELEPHONE REDEMPTIONS.
When utilizing the telephone redemption service, the shareholder must give
the full registration name, address, number of shares to be redeemed, account
number and name of the Fund in order for the redemption request to be processed.
A corporation, partnership or other entity wishing to utilize the telephone
redemption services must have on file with the Company a Securities Transaction
Form indicating the names, titles and the required number of signatures
authorized to act on its behalf. For a corporation, the authorization form must
be signed by a duly authorized officer(s) and the signature guaranteed or the
corporate seal affixed.
Any changes or exceptions (made more than 30 days from the election of the
feature) to the original instructions of a shareholder with respect to telephone
redemption must be made in writing, with signature(s) guaranteed, and will be
effective upon receipt by the Shareholder Services Agent. The Shareholder
Services Agent and the Company reserve the right to refuse any telephone
instructions and may discontinue the aforementioned redemption option upon
30 days' written notice.
REDEMPTIONS IN KIND.
It is possible that unusual conditions may arise in the future which would,
in the opinion of the Board of Directors of the Company, make it undesirable for
a Fund to pay for all redemptions in cash. In such cases, the Board may
authorize payment to be made in readily marketable portfolio securities or other
property of a Fund. The Company would value securities delivered in payment of
redemptions at the same value assigned to such securities in computing the net
asset value per share. Shareholders receiving such securities would incur
brokerage costs when they sell these securities. If the Company so elects,
however, it must pay in cash all redemptions with respect to any shareholder
during any 90-day period in an amount equal to the lesser of (i) $250,000 or
(ii) 1% of the net asset value of a Fund at the beginning of such period.
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TAXES
Each Fund intends to continue to meet all the requirements and to elect the
tax status of a "regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986 (the "Code"). If a Fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To so qualify under Subchapter M, a Fund must derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock or securities or
foreign currencies, or other income derived with respect to its business of
investing in stock, securities or currencies. To qualify, a Fund must also (a)
derive less than 30% of its gross income (irrespective of losses) from the sale
or other disposition of stock or securities held less than three months, and (b)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the Fund's assets is represented by cash, cash items,
U.S. Government securities, securities of other regulated investment companies,
and other securities, limited, in respect of any one issuer, to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies) or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses or related trades or businesses. The requirements
for qualification may cause a Fund to restrict the extent of its short-term
trading or its transactions in options or futures contracts.
Even though a Fund qualifies as a "regulated investment company," it may be
subject to certain federal excise taxes unless the Fund meets certain additional
distribution requirements. Under the Code, a nondeductible excise tax of 4% is
imposed on the excess of a regulated investment company's "required
distribution" for the calendar year ending within the regulated investment
company's taxable year over the "distributed amount" for such calendar year.
The term "required distribution" means the sum of (i) 98% of ordinary income
(generally net investment income) for the calendar year, (ii) 98% of capital
gain net income (both long-term and short-term) for the one-year period ending
on October 31 (as though the one-year period ending on October 31 were the
regulated investment company's taxable year), and (iii) the sum of any untaxed,
undistributed taxable net investment income and net capital gains of the
regulated investment company for prior periods. The term "distributed
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amount" generally means the sum of (i) ordinary income and capital gain net
income actually distributed by a Fund in the current year and (ii) any amount on
which a Fund pays income tax for the year. Each Fund intends to continue to
meet these distribution requirements to avoid the excise tax liability.
To the extent that dividends received by a Fund would qualify for the 70%
dividends received deduction available to corporations, a Fund must designate in
a written notice to shareholders, mailed not later than 60 days after the close
of its taxable year, the amount of the Fund's dividends that would be eligible
for this treatment.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the Fund pays the dividend during
January of the following year.
If a shareholder exchanges or otherwise disposes of Class A shares of a
Fund within 90 days of having acquired such shares, and if as a result of
having acquired those shares the shareholder subsequently pays a reduced
sales charge for shares of the same or a different Fund, then the sales
charges previously incurred in acquiring the Fund's Class A shares shall not
be taken into account (to the extent such previous sales charges do not
exceed the reduction in sales charges) for purposes of determining the amount
of gain or loss on the exchange, but will be treated as having been incurred
in the acquisition of such other Fund shares.
LONG-TERM CAPITAL GAINS.
Each Fund also intends to distribute to shareholders all of the excess of
net long-term capital gain over net short-term capital loss realized on sales of
portfolio securities. Any dividend or capital gain distribution paid by a Fund
has the effect of reducing the net asset value per share on the record date by
the amount of the distribution. Therefore, such a distribution paid shortly
after a purchase of shares would represent, in substance, a return of capital to
the shareholder, to the extent that it is paid on the shares so purchased, even
though subject to income taxes. A sale of shares by a shareholder at net asset
value at that time would establish a capital loss for federal tax purposes.
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<PAGE>
CLASS B AUTOMATIC CONVERSION FEATURE
The conversion of Class B shares to Class A shares is based on the
continuing availability of a private letter ruling from the Internal Revenue
Service, or an opinion of counsel to the effect that the conversion of Class B
shares does not constitute a taxable event for the holder under federal income
tax law. In the unlikely event that such a private letter ruling or opinion is
no longer available, the automatic conversion feature may have to be suspended.
In that case, Class B shares could then be exchanged for Class A shares on the
basis of the relative net asset values of the two classes, without the
imposition of a sales charge or fee. However, such exchange would constitute a
taxable event.
FOREIGN SHAREHOLDERS.
Under the Code, distributions of net investment income by a Fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by a Fund to a foreign shareholder is "effectively connected" with
a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
Distributions of net long-term capital gains are not subject to tax withholding,
but in the case of a foreign shareholder who is a nonresident alien individual,
such distributions ordinarily will be subject to U.S. income tax at a rate of
30% if the individual is physically present in the U.S. for more than 182 days
during the taxable year. Each Fund may be required to pay withholding and other
taxes imposed by foreign countries which would reduce a Fund's investment
income, generally at rates from 10% to 40%. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. To the
extent a Fund does pay foreign withholding or other foreign taxes on certain of
its investments, investors will not be able to deduct their pro rata shares of
the such taxes in computing their taxable income and will not be able to take
their share of such taxes as a credit against their United States income taxes.
OTHER MATTERS.
Investors should be aware that the investments to be made by the Bond Funds
may involve sophisticated tax rules such as the original issue discount and mark
to market rules that would result in income or gain recognition without
corresponding current cash receipts. Although these Funds will seek to avoid
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significant noncash income, such noncash income could occur. Investors should
be aware that the Stock Funds and the Strategic Income Fund may invest in
securities issued by foreign companies or governments and traded in foreign
markets.
TAX ASPECTS OF COVERED CALLS AND HEDGING TRANSACTIONS.
As noted above, each Fund intends to qualify as a "regulated investment
company" under the Code. One of the tests for such qualification is that less
than 30% of its gross income (irrespective of losses) must be derived from gains
realized on the sale of securities held for less than three months. Due to this
limitation, a Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including futures contracts, held for less than three months, whether or not
they were purchased on the exercise of a call held by the Fund; (ii) purchasing
calls or puts which expire in less than three months; (iii) effecting closing
transactions with respect to calls or puts purchased less than three months
previously; (iv) exercising puts or calls held by the Fund for less than three
months; and (v) writing calls on investments held for less than three months.
Certain foreign currency exchange contracts in which a Fund may invest are
treated as "section 1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts generally are treated as ordinary
income or loss. In addition, section 1256 contracts held by a Fund at the end
of each taxable year are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized. These contracts also
may be marked-to-market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed pursuant to
the Code. An election can be made by a Fund to exempt these transactions from
this mark-to-market treatment.
Certain forward contracts entered into by a Fund may result in "straddles"
for federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund on straddle positions. Generally, a loss
sustained on the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the offsetting
positions making up the straddle. Disallowed loss is generally allowed at the
point where there is no unrecognized gain in the offsetting positions making up
the straddle, or the offsetting position is disposed of.
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Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time a Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays
such liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign
currency and on disposition of foreign currency forward contracts, gains or
losses attributable to fluctuations in the value of a foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. Currency gains and
losses may be offset against market gains and losses before determining a net
"Section 988" gain or loss under the Code, which may increase or decrease the
amount of a Fund's investment company income available for distribution to
its shareholders.
SPECIAL TAX CONSIDERATIONS FOR THE MUNICIPAL FUNDS.
GENERAL.
The percentage of total dividends paid by the Municipal Funds with respect
to any taxable year and qualified for exclusion from gross income
("exempt-interest dividends") will be the same for all shareholders receiving
dividends during such year. In order for the Municipal Funds to pay
exempt-interest dividends during any taxable year, at the close of each fiscal
quarter at least 50% of the aggregate value of the Municipal Funds' assets must
consist of tax-exempt securities. In addition, each of the Municipal Funds must
distribute 90% of the aggregate interest excludable from gross income and 90% of
the investment company taxable income earned by the Municipal Fund during the
taxable year. Not later than 60 days after the close of its taxable year, each
Municipal Fund will notify each shareholder of the portion of the dividends paid
by the Municipal Fund to the shareholder with respect to such taxable year which
constitutes exempt-interest dividends. The aggregate amount of dividends so
designated cannot, however, exceed the excess of the amount of interest
excludable from gross income from tax under Section 103 of the Code received by
the Municipal Fund during the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code.
The Code treats interest on private activity bonds, as defined therein, as
an item of tax preference subject to an alternative minimum tax on individuals
at a rate of up to 28% and on corporations at a rate of 20%. The Municipal
Funds are not restricted in the percentage of securities subject to the
alternative minimum tax they may hold or the amount of income subject to the
alternative minimum tax they may distribute.
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Further, under the Code corporate shareholders must include federal
exempt-interest dividends in their adjusted current earnings for calculation of
corporate alternative minimum taxable income.
Substantially all "investment company taxable income" earned by the
Municipal Funds will be distributed to shareholders. In general, a Municipal
Fund's investment company taxable income will be its taxable income (for
example, its short-term capital gains) subject to certain adjustments and
excluding the excess of any net long-term capital gain for the taxable year over
the net short-term capital loss, if any, for such year. The Municipal Funds
would be taxed on any undistributed investment company taxable income. Since it
is intended that any such taxable income will be distributed, it will be taxable
to shareholders as ordinary income. Similarly, distributions of capital gains,
if any, will be taxable to shareholders. Market discount earned on tax-exempt
obligations will not qualify as tax-exempt income.
CALIFORNIA.
Like the Municipal Funds, the California Funds are
subject to federal tax under Subchapter M of the Code (as described above).
With respect to taxation by California, in general, California has adopted
federal law with respect to the taxation of regulated investment companies
and their shareholders. In any year in which a California Fund qualifies as
a regulated investment company under the Internal Revenue Code and, at the
close of each quarter of its taxable year, at least 50% of the value of the
total assets of that California Fund consists of bonds the interest on which
(when held by an individual) is exempt from personal income taxation under
California law ("California Exempt Securities"), then that California Fund
will be qualified to pay dividends exempt from California personal income tax
(hereinafter referred to as "California exempt-interest dividends"). The
California Funds intend to qualify under the above requirement so that they
may pay California exempt-interest dividends. If a California Fund fails to
so qualify, no part of that California Fund's dividends will be exempt from
California personal income tax. Even if a California Fund qualifies under
the above requirement, any dividends paid to corporate shareholders subject
to the California franchise tax will be taxed as ordinary dividends to such
shareholders.
Not later than 60 days after the close of its taxable year, each California
Fund will notify each of its shareholders of the portion of the dividends exempt
from California personal income tax paid by such fund to the shareholder with
respect to such taxable year. The total amount of California exempt-interest
dividends paid by a California Fund to all of its shareholders
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with respect to any taxable year cannot exceed the amount of interest received
by the California Fund during such year on California-Exempt Securities less any
expenses or expenditures (including any expenditures attributable to the
acquisition of securities of another California tax-exempt fund and dividends
paid to the California Fund's corporate shareholders) that are deemed to have
been paid from such interest. Dividends paid to individual shareholders by the
California Fund in excess of this limitation will be treated as ordinary
dividends subject to California personal income tax at ordinary rates. For
purposes of the limitation, expenses or other expenditures paid during any year
generally will be deemed to have been paid with funds attributable to interest
received by the California Fund from California-Exempt Securities for such year
in the same ratio as such interest from California-Exempt Securities bears to
the total gross income earned by the Fund for the year. The effect of this
accounting convention is that amounts of interest from California-Exempt
Securities received by the California Fund that would otherwise be available for
distribution as California exempt-interest dividends will be reduced by the
expenses and expenditures deemed to have been paid from such amounts.
In cases where shareholders are "substantial users" or "related persons"
with respect to California-Exempt Securities held by a California Fund, such
shareholders should consult their tax advisers to determine whether California
exempt-interest dividends paid by the California Fund with respect to such
obligations retain their California corporate or personal income tax exclusion.
In this connection, rules similar to those regarding the possible unavailability
of federal exempt-interest dividend treatment to "substantial users" are
applicable for California state tax purposes.
Long-term and/or short-term capital gain distributions will not constitute
California exempt-interest dividends and will be subject to California tax.
Moreover, interest on indebtedness incurred by a shareholder to purchase or
carry California Funds shares is not deductible for California corporate or
personal income tax purposes if the California Fund distributes California
exempt-interest dividends during the shareholder's taxable year.
OTHER MATTERS.
Shares of the Municipal Funds would not be suitable for tax-exempt
institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and individual retirement accounts since
such plans and accounts are generally tax-exempt and, therefore, would not gain
any additional benefit from the tax-exempt nature of Municipal Funds' dividends,
and such dividends would be ultimately taxable to the beneficiaries when
distributed to them. In addition, the
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Municipal Funds may not be an appropriate investment for entities which are
"substantial users" of facilities financed by industrial development bonds or
"related persons" thereof. "Substantial user" is defined under U.S. Treasury
Regulations to include a non-exempt person who regularly uses a part of such
facilities in his trade or business and whose gross revenues derived with
respect to the facilities financed by the issuance of bonds are more than 5% of
the total revenues derived by all users of such facilities, or who occupies more
than 5% of the usable area of such facilities or for whom such facilities or a
part thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S Corporation and its shareholders.
Interest on indebtedness incurred by a shareholder to purchase or carry
Municipal Fund shares is not deductible for federal income tax purposes if the
Municipal Fund distributes exempt-interest dividends during the shareholder's
taxable year. If a shareholder receives an exempt-interest dividend with
respect to any share and such share is held for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend.
SPECIAL TAX CONSIDERATIONS FOR THE TREASURY MONEY FUND.
Income dividends on shares of the U.S. Treasury Money Fund are subject to
federal income tax, but in most states are exempt from state personal income
tax. This is the case in each state in which shares of the Funds are currently
sold.
* * *
The foregoing is a general abbreviated summary of present United States
federal income taxes; as to the Treasury Money Fund, of Arizona, California,
Colorado, Kansas, Missouri and New Jersey income taxes; and, as to the
California Funds, of California franchise and income taxes on dividends and
distributions by each Fund. Investors are urged to consult their own tax
advisers for more detailed information and for information regarding any
foreign, state and local taxes applicable to dividends and distributions
received.
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ADDITIONAL INFORMATION
TRANSFER AGENT AND CUSTODIAN.
State Street Bank and Trust Company acts as Transfer Agent for the
Company's shares. Investors Bank & Trust Company acts as Custodian for
securities and other assets of the Company.
INDEPENDENT AUDITORS.
The Company's Board of Directors has appointed Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31, 1997.
Deloitte & Touche LLP will conduct the annual audit of the Company, and will
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company as to matters of accounting and federal and state
income taxation.
LEGAL OPINIONS.
The validity of the shares offered by the Prospectus has been passed upon
by Paul, Hastings, Janofsky & Walker LLP located at 555 South Flower Street, Los
Angeles, California 90071. Paul, Hastings, Janofsky & Walker LLP also acts as
legal counsel for the Company's Adviser and Distributor.
INVESTMENT RESULTS
The Company may from time to time include information on the investment
results (current yield, effective yield, tax-equivalent yield, tax-equivalent
effective yield, distribution rate, tax-equivalent distribution rate and total
return) of a Fund in advertisements or in reports furnished to current or
prospective shareholders.
TOTAL RETURN.
The average annual compound rate of return ("T") of each class is computed
by using the value at the end of the period ("EV") of a hypothetical initial
investment of $1,000 ("P") over a period of years ("n") according to the
following formula as required by the Securities and Exchange Commission:
P(1+T)n = EV
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The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) for Class A shares, deduction of
the maximum applicable sales charge from the $1,000 initial investment, and (2)
for Class B shares, the payment of the contingent deferred sales charge of 3.0%
for the first and second years, 2.0% for the third and fourth years, 1.0% in the
fifth year and none thereafter, applied as described in the Prospectus. The
formula also assumes reinvestment of all dividends and distributions at net
asset value on the reinvestment date determined by the Board and a complete
redemption at the end of any period illustrated. Each Fund will calculate total
return for one, five and ten-year periods for each class of shares after such a
period has elapsed. In addition, a Fund may provide lifetime average total
return figures for each class of shares.
In addition to average annual returns, a Fund may quote unaveraged or
cumulative total returns for each class reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, and/or a series of redemptions, over
any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted for each class with or without taking a
Fund's sales charge into account. Excluding the Fund's sales charge from a
total return calculation produces a higher total return figure. Total returns,
yields, and other performance information for Class A or Class B shares of a
Fund may be quoted numerically or in a table, graph, or similar illustration.
Performance information may be compared to the record of the Standard & Poor's
Daily Stock Price Index of 500 Common Stocks (S&P 500), the Dow Jones Industrial
Average (DJIA), the cost of living (measured by the Consumer Price Index, or
CPI), and other widely recognized benchmark indicators over the same period.
Tabular comparisons, hypothetical examples and explanatory illustrations may be
used from recognized sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds
and Inflation", which instead of comparing actual Fund performance, demonstrate
performance of stocks, bonds, indices, averages, government or other securities,
and other recognized benchmark economic and market indicators such as the rate
of inflation. A Fund may have the ability to invest in securities not included
in the S&P, DJIA or other indices and its investment portfolio may or may not be
similar in composition to the indices. These indices and averages are based on
the prices of unmanaged groups of stocks, and, unlike fund total returns, their
returns do not include the effect of paying brokerage commissions and other
costs of investing.
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YIELDS.
Current yield ("YIELD") is computed by dividing the difference between
dividends and interest earned during a one-month period ("a") and expenses
accrued for the period (net of reimbursements) ("b") by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends ("c") and the maximum offering price per share on the last
day of the period ("d") according to the following formula as required by the
Securities and Exchange Commission:
A-B 6
YIELD = 2[(----- + 1) - 1]
cd
Current yield may also be calculated on the basis of the net asset value per
share rather than the public offering price.
Income from "roll" transactions (the sale of mortgage backed or other
securities together with an agreement, for which a Fund receives a fee, to
purchase similar securities at a future date) is recorded for accounting
purposes as interest income ratably over the term of each roll transaction and
is included in net investment income for purposes of determining a Fund's yield.
MONEY FUNDS YIELDS.
Current yield for the Money Funds will be calculated based on the net
change, exclusive of capital charges, over a seven-day period, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent.
TAX-EQUIVALENT YIELDS.
Tax-equivalent yield for the Municipal Funds and the Treasury Money Fund
will be computed by dividing that portion of the yield of the class of shares
of the Fund which is tax-exempt by one minus a stated income tax rate and
adding the quotient to that portion, if any, of the yield of such class of
shares of the Fund that is not tax-exempt.
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TAX-EQUIVALENT EFFECTIVE YIELD.
Tax-equivalent effective yield for the Municipal Funds and the Treasury
Money Fund is calculated in the same way as tax equivalent yield, with the
additional assumption that dividends and distributions are reinvested.
EFFECTIVE YIELDS.
Effective yield and tax-equivalent effective yield will be calculated by
determining the net change, or tax-equivalent assumed net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding one, raising the sum to a power equal to 365 divided by seven, and
subtracting one from the result.
DISTRIBUTION RATES.
Distribution rates for the Bond and Stock Funds will be calculated by
annualizing the aggregate per share dollar amount of actual distributions
made over a 30 day period divided by the net asset value or public offering
price per share at the end of the period.
TAX-EQUIVALENT DISTRIBUTION RATES.
Tax-equivalent distribution rates for the Municipal Bond Funds will be
computed by dividing that portion of the distribution rate of the class of
shares of the Fund which is tax-exempt by one minus a stated income tax rate and
adding the quotient to that portion, if any, of the distribution rate of such
class of shares of the Fund that is not tax-exempt.
COMPARISONS.
The Company may, from time to time, compare specific features of the Funds
and/or each class of shares and their portfolios, including credit quality and
maturity, to those available from comparable mutual funds. Advertisements or
sales literature of the Company may refer to the Atlas California Insured
Intermediate Municipal Fund as the first California municipal bond fund that
seeks the credit safety of insurance plus the high income potential of
intermediate-term securities. Advertisements or sales literature may refer to
the Class B
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contingent deferred sales charge alternative as the "Atlas Alternative", and may
refer to Class B shares as "Atlas Alternative Shares." The Company also may,
from time to time, compare the results of an investment in Class A or Class B
shares of one or more of the Funds with averages, rankings and indices,
including, but not limited to the following:
(1) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury (excluding
flower bonds and foreign targeted issues), all publicly issued debt of agencies
of the U.S. Government (excluding mortgage backed securities), and all public,
fixed rate, non-convertible investment grade domestic corporate debt rated at
least Baa by Moody's Investors Service or BBB by Standard and Poor's
Corporation, or, in the case of nonrated bonds, BBB by Fitch Investors Service
(excluding collateralized mortgage obligations).
(2) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures supplied
by the U.S. League of Savings Institutions). Savings accounts offer a
guaranteed rate of return on principal, but no opportunity for capital growth.
During a portion of the averaging period, the maximum rates paid on some savings
deposits were fixed by law.
(3) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (E.G., food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
(4) Lipper Analytical Services, Inc., which ranks mutual funds by overall
performance, investment objectives and assets, and publishes averages on broad
based categories of mutual funds and indexes of cumulative total returns for
various periods.
(5) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back fixed
income securities.
The yields of the Money Funds may also be compared to the Donoghue's Money
Fund Averages, which are averages compiled by IBC/Donoghue's Organization, Inc.,
a widely recognized independent monitor of the performance of money market
mutual funds, to other Donoghue's rankings, to the average yield reported by the
Bank Rate Monitor for money market deposit accounts and certificates of deposit
offered by leading banks and thrift institutions in top standard metropolitan
statistical areas, or to other widely recognized independent monitoring and
ranking services and publications.
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The performance of a Fund's Class A or Class B shares may be compared to
those of other mutual funds having similar objectives, expressed as an average
or as a rating or ranking prepared by IBC/Donoghue Organization, Wiesenberger
Investment Company Service, Lipper Analytical Services, Inc., CDA Investment
Technologies, other recognized independent services which monitor the
performance of mutual funds or other economic or market indicators from
published sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds, Bills and
Inflation". Similar comparisons may be made with respect to various benchmark
securities, indices and averages which illustrate general market or economic
performance. These comparisons may be illustrated by means of tables or of bar,
pie, or mountain charts or other type of graphic illustration, numerically, or
by means of hypothetical examples and illustrations from recognized sources.
Performance will be calculated for each class of shares of a Fund by relating
net asset value per share at the beginning of a period, assuming reinvestment of
all gains, distributions and dividends paid during the period, to the net asset
value at the end of the period.
Indices, averages and rankings prepared by the research departments of such
financial organizations as Salomon Brothers, Inc., Merrill Lynch, Pierce,
Fenner & Smith, Inc., Bear Stearns & Co., Inc., Ibbotson Associates and other
similar providers of financial research data, may be used, as well as
information provided by the Board of Governors of the Federal Reserve System.
Performance rankings, ratings, averages, indices and excerpts of comments,
descriptions and other references or reviews of the Funds, their investment
managers, policies, strategies, rankings, or other comparisons appearing in
magazines, newspapers, investment newsletters, and other periodicals, including
MONEY MAGAZINE, FORBES, FORTUNE, BUSINESS WEEK, WALL STREET JOURNAL, NEW YORK
TIMES, LOS ANGELES TIMES, DALLAS MORNING NEWS, BARRONS, INVESTORS DAILY, MUTUAL
FUND VALUES, FACTS, CHANGING TIMES, IBBOTSON ASSOCIATES, AND OTHERS may also be
used.
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The performance of the Municipal Funds may also be compared to the
following charts illustrating tax free and tax equivalent investment yields,
which may be updated each year to reflect that year's current brackets and
rates:
1997 Federal Tax Brackets*
<TABLE>
<CAPTION>
15.00% 28.00% 31.00% 36.00% 39.60%
<S> <C> <C> <C> <C> <C>
Single Return Up to $24,650 24,651-59,750 59,751-124,650 124,651-271,050 Over 271,050
Joint Return Up to $41,200 41,201-99,600 99,601-151,750 151,751-271,050 Over 271,050
<CAPTION>
To Match a Tax
Free Yield of ** A taxable investment would have to pay:
2.0% 2.35% 2.78% 2.90% 3.13% 3.31%
3.0% 3.53% 4.17% 4.35% 4.69% 4.97%
4.0% 4.71% 5.56% 5.80% 6.25% 6.62%
5.0% 5.88% 6.94% 7.25% 7.81% 8.28%
6.0% 7.06% 8.33% 8.70% 9.38% 9.93%
7.0% 8.24% 9.72% 10.14% 10.94% 11.59%
8.0% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
B-71
<PAGE>
1997 FEDERAL AND CALIFORNIA COMBINED TAX BRACKETS*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Federal Rate 15.00% 15.00% 15.00% 15.00% 28.00% 28.00% 28.00%
California Rate 1.00% 2.00% 4.00% 6.00% 6.00% 8.00% 9.30%
15.85% 16.70% 18.40% 20.10% 32.32% 33.76% 34.70%
------ ------ ------ ------ ------ ------ ------
Single Return 0-4,908 4,909-11,632 11,633-18,357 18,358-24,650 24,651-25,484 25,485-32,207 32,208-59,750
Joint Return 0-9,816 9,817-23,264 23,265-36,714 36,715-41,200 41,201-50,968 50,969-64,414 64,415-99,600
To Match a Tax
Free Yield of** A taxable investment would have to pay:
2.0% 2.38% 2.40% 2.45% 2.50% 2.96% 3.02% 3.06%
3.0% 3.57% 3.60% 3.68% 3.75% 4.43% 4.53% 4.59%
4.0% 4.75% 4.80% 4.90% 5.01% 5.91% 6.04% 6.13%
5.0% 5.94% 6.00% 6.13% 6.26% 7.39% 7.55% 7.66%
6.0% 7.13% 7.20% 7.35% 7.51% 8.87% 9.06% 9.19%
7.0% 8.32% 8.40% 8.58% 8.76% 10.34% 10.57% 10.72%
8.0% 9.51% 9.60% 9.80% 10.01% 11.82% 12.08% 12.25%
</TABLE>
*Net amount subject to income tax after deductions and exemptions. Based on
1996 California tax brackets.
**Tax Free yields and their taxable equivalents are shown as illustrations only.
Actual yield will vary with market conditions. Some income may be subject to
federal alternative minimum tax.
B-72
<PAGE>
1997 FEDERAL AND CALIFORNIA COMBINED TAX BRACKETS* (CONTINUED)
Federal Rate 31.00% 36.00% 39.60%
California Rate 9.30% 9.30% 9.30%
37.42% 41.95% 45.22%***
------ ------ ---------
Single Return 59,751-124,650 124,651-271,050 Over 271,050
Joint Return 99,601-151,750 151,751-271,050 Over 271,050
To Match a Tax
Free Yield of** A taxable investment would have to pay:
2.0% 3.20% 3.45% 3.65%
3.0% 4.79% 5.17% 5.48%
4.0% 6.39% 6.89% 7.30%
5.0% 7.99% 8.61% 9.13%
6.0% 9.59% 10.34% 10.95%
7.0% 11.19% 12.06% 12.78%
8.0% 12.78% 13.78% 14.60%
*Net amount subject to income tax after deductions and exemptions.
**Tax Free yields and their taxable equivalents are shown as illustrations only.
Actual yield will vary with market conditions. Some income may be subject to
federal alternative minimum tax.
***Adjustments resulting from the personal exemption phaseout and reduction of
itemized deductions for high income individuals, described on the following
page, may result in an effective top combined marginal rate greater than 45.22%.
B-73
<PAGE>
INCREASE IN MARGINAL TAX RATE
Based on adjusted gross income.
Reduction in Itemized Deductions: (See note 1 below.)
AGI AGI
$121,200 Above
and below $121,200
--------- -------------------------
Rate Bracket 31.0% 36.0% 39.6%
----- ----- -----
Joint Return 0% .93% 1.08% 1.19%
Single Return 0% .93% 1.08% 1.19%
Personal Exemption Phaseout: (See note 2 below.)
Adjusted Gross
Income Rate Bracket
-------------- -------------------------
31.00% 36.00% 39.6%
------ ------ -----
Joint Return $181,800-304,300 N/A 1.53% 0***
Single Return $121,200-243,700 0.66% 0.76% 0**
NOTE 1: ITEMIZED DEDUCTIONS REDUCED
For 1997, a taxpayer (single or married filing jointly) whose AGI exceeds
$121,200 must reduce his itemized deductions by 3% of this excess adjusted
gross income (AGI-$121,200). This reduction is limited to 80% of his
itemized deductions. Medical expenses, investment interest, casualty losses,
and wagering losses to the extent of wagering gains are exempted from the 3%
reduction. This reduction in the deductibility of itemized deductions causes
a taxpayer's marginal tax rate to increase as shown above.
Note 2: PERSONAL EXEMPTION PHASEOUT
For 1997, the deduction for personal exemptions is reduced for high-income
taxpayers. This reduction affects taxpayers whose adjusted gross income (AGI)
exceeds $181,800 for those who file joint returns and $121,200 for single
taxpayers. This phaseout increases the marginal tax rate as shown above.
** Single taxpayers with taxable incomes of more than $271,050, who are
therefore in the 39.6% bracket, will have AGIs above the $243,700 level at
which personal exemptions are fully phased out.
*** Married taxpayers with taxable incomes of more than $271,050, who are
therefore in the 39.6% bracket, will typically have AGIs above the $304,300
level at which personal exemptions are fully phased out.
B-74
<PAGE>
The performance of the Treasury Money Fund may be compared to the following Tax
Equivalent Performance Chart for State and Local Tax-Exempt Investments.
<TABLE>
<CAPTION>
TO MATCH
A STATE
AND LOCAL
TAX-FREE AN INVESTMENT, TAXABLE AT THE MAXIMUM TAX RATE
YIELD OF: FOR EACH STATE, WOULD HAVE TO PAY:
AZ CA CO FL KS MO NJ TX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.12% 2.21% 2.11% 2.00% 2.17% 2.13% 2.14% 2.00%
3.00% 3.18% 3.31% 3.16% 3.00% 3.25% 3.19% 3.20% 3.00%
4.00% 4.24% 4.41% 4.21% 4.00% 4.34% 4.26% 4.27% 4.00%
5.00% 5.30% 5.51% 5.26% 5.00% 5.42% 5.32% 5.34% 5.00%
6.00% 6.36% 6.62% 6.32% 6.00% 6.50% 6.38% 6.41% 6.00%
7.00% 7.42% 7.72% 7.37% 7.00% 7.59% 7.45% 7.48% 7.00%
8.00% 8.47% 8.82% 8.42% 8.00% 8.67% 8.51% 8.54% 8.00%
</TABLE>
B-75
<PAGE>
1997 STATE TAX BRACKETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ARIZONA RATE 3.00% 3.50% 4.20% 5.20% 5.60%
Single Return 0-10,000 10,001-25,000 25,001-50,000 50,001-150,000 Over 150,000
Joint Return 0-20,000 20,001-50,000 50,001-100,000 100,001-300,000 Over 300,000
CALIFORNIA RATE 1.000% 2.000% 4.000% 6.000% 8.000% 9.300%
Single Return 0-4,908 4,909-11,632 11,633-18,357 18,358-25,484 25,484-32,207 Over 32,207
Joint Return 0-9,816 9,817-23,264 23,265-36,714 36,715-50,968 50,969-64,414 Over 64,414
COLORADO RATE 5.000%
FLORIDA RATE 0.000%
KANSAS RATE 3.500% 4.400% 6.250% 6.450% 7.500% 7.750%
Single Return N/A 0-20,000 N/A N/A 20,001-30,000 Over 30,000
Joint Return 0-30,000 N/A 30,001-60,000 Over 60,000 N/A N/A
MISSOURI RATE 1.500% 2.000% 2.500% 3.000% 3.500% 4.000%
For Each Person 0-1,000 1,001-2,000 2,001-3,000 3,001-4,000 4,001-5,000 5,001-6,000
4.500% 5.000% 5.500% 6.000%
6,001-7,000 7,001-8,000 8,001-9,000 Over 9,000
NEW JERSEY RATE 1.400% 1.750% 2.450% 3.500% 5.525% 6.370%
Single Return 0-20,000 20,001-35,000 N/A 35,001-40,000 40,001-75,000 Over 75,000
Joint Return 0-20,000 20,001-50,000 50,001-70,000 70,001-80,000 80,001-150,000 Over 150,000
TEXAS RATE 0.000%
</TABLE>
B-76
<PAGE>
INVESTMENT RESULTS
The Investment results for each class of shares of a Fund will vary from time to
time depending upon market conditions, the composition of a Fund's portfolio and
operating expenses of the class or the Fund, so that any total return figure
should not be considered representative of what an investment in a class of
shares of a Fund may earn in any future period. An investor should consider
these factors and possible differences in calculation methods when comparing a
class of shares of the Fund's investment results with those published for other
investment companies, other investment vehicles and unmanaged indices. An
investor should also consider a Fund's results relative to the risks associated
with a Fund's investment objective and policies.
YIELDS (7 DAYS ENDING DECEMBER 31, 1996)
Atlas Atlas
Atlas Atlas U.S. U.S.
California National Treasury Treasury
Municipal Municipal Money Money
Money Money Fund Fund
Fund Fund Class A Class B
---- ---- ------- -------
7-day Yield 3.22% 3.19% 4.46% 3.72%
7-day Effective 3.27% 3.24% 4.56% 3.79%
7-day Tax Equivalent 5.97% 5.37% * **
*AZ = 4.83%; CA = 5.03%; CO = 4.80%; KS = 4.94%; MO = 4.85%; NJ = 4.88%
**AZ = 4.01%; CA = 4.18%; CO = 3.99%; KS = 4.11%; MO = 4.03%; NJ = 4.06%
B-77
<PAGE>
INVESTMENT RESULTS (CONTINUED)
YIELDS (30 DAYS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Atlas Atlas
California National Atlas
Atlas Insured Atlas Insured U.S. Gov. & Atlas Atlas Atlas
California Intermediate National Intermediate Mortgage U.S. Gov. Strategic Atlas Growth &
Municipal Municipal Municipal Municipal Securities Intermediate Income Balanced Income
Class A Bond Fund Fund Bond Fund Fund Fund Fund Fund Fund Fund
------- --------- ---- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30-day Yield 4.16% 3.65% 4.19% 3.73% 6.55% 5.15% 7.97% 3.34% 0.46%
30-day Tax
Equivalent 7.59% 6.66% 6.94% 6.18% N/A N/A N/A N/A N/A
</TABLE>
YIELDS (30 DAYS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Atlas Atlas
California National Atlas
Atlas Insured Atlas Insured U.S. Gov. & Atlas Atlas Atlas
California Intermediate National Intermediate Mortgage U.S. Gov. Strategic Atlas Growth &
Municipal Municipal Municipal Municipal Securities Intermediate Income Balanced Income
Class B Bond Fund Fund Bond Fund Fund Fund Fund Fund Fund Fund
------- --------- ---- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30-day Yield 3.79% 3.02% 3.82% 3.10% 6.25% 4.56% 7.47% 2.93% N/A
30-day Tax
Equivalent 6.92% 5.51% 6.32% 5.13% N/A N/A N/A N/A N/A
</TABLE>
B-78
<PAGE>
INVESTMENT RESULTS (CONTINUED)
TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Atlas Atlas
California National Atlas
Atlas Insured Atlas Insured U.S. Gov. & Atlas
California Intermediate National Intermediate Mortgage U.S. Gov.
Municipal Municipal Municipal Municipal Securities Intermediate
Class A Bond Fund Fund Bond Fund Fund Fund Fund
------- --------- ---- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
One Year 0.78% 0.81% 0.47% 0.57% 1.37% 0.69%
Five Years 5.92% N/A 6.14% N/A 5.58% N/A
Since Inception 7.40% 4.23% 7.54% 4.20% 7.70% 3.63%
<CAPTION>
Atlas Atlas Atlas Atlas
Strategic Growth & Atlas Strategic Global
Income Income Balanced Growth Growth
Class A Fund Fund Fund Fund Fund
------- --------- ---- --------- ---- ----
<S> <C> <C> <C> <C> <C>
One Year 5.62%## 16.56% 12.33% 20.01% 7.56%#
Five Years N/A 11.37% N/A N/A N/A
Since Inception N/A 15.39% 10.61% 14.99% N/A
</TABLE>
# Aggregate return since effective date of registration, April 30, 1996.
## Aggregate return since inception, May 20, 1996.
B-79
<PAGE>
INVESTMENT RESULTS (CONTINUED)
TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Atlas Atlas
California National Atlas
Atlas Insured Atlas Insured U.S. Gov. & Atlas
California Intermediate National Intermediate Mortgage U.S. Gov.
Municipal Municipal Municipal Municipal Securities Intermediate
Class B Bond Fund Fund Bond Fund Fund Fund Fund
------- --------- ---- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
One Year 0.42% 0.15% 0.11% 0.01% 1.05% 0.17%
Since Inception ### 5.39% 4.48% 5.59% 4.50% 7.09% 4.39%
<CAPTION>
Atlas Atlas Atlas Atlas
Strategic Growth & Atlas Strategic Global
Income Income Balanced Growth Growth
Class B Fund Fund Fund Fund Fund
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
One Year 5.25%## 16.60% 12.25% 20.13% 7.34%#
Since Inception ### N/A 21.96% 15.47% 20.09% N/A
</TABLE>
# Aggregate return since effective date of registration, April 30, 1996.
## Aggregate return since inception, May 20, 1996.
### Aggregate return for July 1, 1994 through June 30, 1995.
B-80
<PAGE>
FINANCIAL STATEMENTS
The Company's audited financial statements for its fiscal year ended
December 31, 1996, as contained in the Annual Report to Shareholders for the
fiscal year ended December 31, 1996 (the "Annual Report"), are incorporated
herein by reference to the Annual Report which has been filed with the
Securities and Exchange Commission. Any person not receiving the Annual Report
previously or with this Statement should call or write the Company to obtain a
free copy.
B-81
<PAGE>
APPENDIX
INDUSTRY CLASSIFICATIONS
Aerospace/Defense Food
Air Transportation Gas Utilities*
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Insurance
Building Materials Leasing & Factoring
Cable Television Leisure
Chemicals Manufacturing
Commercial Finance Metals/Mining
Computer Hardware Nondurable Household Goods
Computer Software Oil - Integrated
Conglomerates Paper
Consumer Finance Publishing/Printing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Stores Specialty Retailing
Drug Wholesalers Steel
Durable Household Goods Supermarkets
Education Telecommunications - Technology
Electric Utilities Telephone - Utility
Electrical Equipment Textile/Apparel
Electronics Tobacco
Energy Services & Producers Toys
Entertainment/Film Trucking
Environmental
- ---------------------------
*For purposes of the Fund's investment policy not to concentrate in securities
of issuers in the same industry, gas utilities and gas transmission utilities
each will be considered a separate industry.
B-82