ATLAS ASSETS INC, 485APOS, 1999-02-10

ATLAS ASSETS INC
485APOS, 1999-02-10

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<PAGE>

File Nos. 33-20318
811-5485

As filed with the Securities and Exchange Commission on February 9, 1999
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 23 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 26

ATLAS ASSETS, INC.
(Exact Name of Registrant as Specified in Charter)

794 Davis Street
San Leandro, California 94577
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (510) 297-7444

Larry E. LaCasse
Atlas Assets, Inc.
794 Davis Street
San Leandro, California 94577
(Name and Address of Agent for Service)

Copy to:
Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071

It is proposed that this filing will become effective (check appropriate box)

immediately upon filing pursuant to paragraph (b)
-----
on (date) pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(1)
-----
X on May 1, 1999 pursuant to paragraph (a)(1)
-----
75 days after filing pursuant to paragraph (a)(2)
-----
on pursuant to paragraph (a)(2)
----- -----------

- --------------------------------------------------------------------------------

Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940 and
the Rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
on or about March 31, 1999.

<PAGE>

- --------------------

ATLAS FUNDS PROSPECTUS
May 1, 1999

STOCK FUNDS

Balanced

Emerging Growth

Global Growth

Growth and Income

Strategic Growth

BOND FUNDS

California Municipal Bond

National Municipal Bond

Strategic Income

U.S. Government and Mortgage Securities

MONEY FUNDS

California Municipal Money

National Municipal Money

U.S. Treasury Money

Not FDIC Insured

[ATLAS FUNDS LOGO]

Atlas Funds, like all mutual funds, are registered with the Securities and
Exchange Commission (SEC). However, the SEC does not guarantee that the
information in this prospectus is accurate or complete, nor has it endorsed the
funds. It is against the law for anyone to state otherwise.

<PAGE>

TABLE OF CONTENTS

PAGE
----

STOCK FUNDS
Balanced Fund
Emerging Growth Fund
Global Fund
Growth and Income Fund
Strategic Growth Fund

BOND FUNDS
California Municipal Bond Fund
National Municipal Bond Fund
Strategic Income Fund
U.S. Government and Mortgage Securities Fund

MONEY FUNDS
California Municipal Money Fund
National Municipal Money Fund
U.S. Treasury Money Fund

OTHER INVESTMENT STRATEGIES AND RISKS

FUND MANAGEMENT

ACCOUNT INFORMATION
Becoming an Atlas Shareholder
Buying Shares
Selling Shares
Other Account Information

FINANCIAL HIGHLIGHTS

APPENDIX: DESCRIPTION OF RATINGS

HOW TO OBTAIN MORE INFORMATION ABOUT ATLAS FUNDS Back Cover

This prospectus contains information that you should know about Class A shares
of the Atlas Funds before you invest in them. Please read it carefully and keep
it on hand for future reference.

(Pinbug: 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
<PAGE>

BALANCED FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks long-term growth and high current income. Capital preservation
is an additional goal.

STRATEGY:

The fund invests primarily in a diversified portfolio of dividend-paying stocks,
U.S. Government and investment grade corporate bonds, and convertible
securities. It seeks income that is greater than the average yield of the stocks
in the Standard & Poor's 500 Index (S&P 500).

The fund's conservative stock selection strategy focuses on well-known companies
with attractive prices and earnings that are expected to be consistent in both
strong and weak economies. The fund's value-oriented equity strategy often
results in an overweighting of utility, energy, and financial stocks, compared
to the S&P 500. The fund does not invest in companies that manufacture tobacco
products.

Fund managers adjust the mix of stocks, bonds, convertibles, and cash to take
advantage of "up markets" and conserve capital in "down markets," while
maintaining a stream of income. At least 25% of the assets will be invested in
bonds at all times.

RISKS:

Like any stock fund, the value of your investment will fluctuate in response to
conditions affecting the economy, the stock market, and individual companies.

Because the fund also invests in bonds, the value of your shares may fluctuate
along with interest rates. When interest rates rise, bond prices usually
decline. When rates fall, prices generally increase. Bond investments in the
portfolio will behave largely the same way.

Since the fund's price will vary, you could lose money on your investment. Over
the long term, share price is expected to fluctuate less than funds that invest
only in stocks.

The fund's income varies, as does the dividend paid to investors.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

BALANCED FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - - - - (1.9)% 26.8% 15.8% 22.7% 8.6%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q3 '97 8.13%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (4.51)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (9/30/93)

FUND 8.63% 13.93% 13.09%
S & P 500 INDEX XX.X% XX.X% XX.X%
LEHMAN BROTHERS
AGGREGATE BOND INDEX XX.X% XX.X% XX.X%

- ----------------------------------------------------------------------------------------------
* CALL 1-800-933-ATLAS for current performance
- ----------------------------------------------------------------------------------------------
</TABLE>

Inception: 9/30/93
Box: Call 1-800-933-ATLAS for current performance.

3
<PAGE>

EXPENSES:

These are the fees and expenses you may pay as a fund investor.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TRANSACTION FEES (paid from your investment)
- --------------------------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases none
Maximum deferred sales charge none
Redemption fee none
Exchange fee none

- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (deducted from fund assets)
- --------------------------------------------------------------------------------
<S> <C>
Management fee 0.xx %
Distribution (12b-1) fee 0.xx %
Other expenses 0.xx %
------
TOTAL ANNUAL OPERATING EXPENSES 0.xx %

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000
investment and 5% return each year. Your actual costs may be higher or lower.

- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $ $ $
</TABLE>

4
<PAGE>

EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks long-term growth exclusively, with no intent to provide current
income.

STRATEGY:

The fund invests primarily in the stocks of small, growth-oriented U.S.
companies with a total stock market value (market capitalization) of less than
$1 billion. It focuses on "emerging growth" companies that are considered to be
beyond their start-up periods, but are not yet established or mature. The fund
does not invest in companies that manufacture tobacco products.

Fund managers look for companies that are developing new products or entering
new markets. They seek companies with favorable prospects for increasing demand
and leadership potential in their market sectors. They favor businesses that
offer earnings growth that is sustainable and internally generated, rather than
by acquisition.

The fund invests in companies that frequently retain a large part of their
earnings for research, development and investment in capital assets, rather than
paying out dividends.

RISKS:

Like any stock fund, the value of your investment will fluctuate in response to
conditions affecting the economy, the stock market, or individual companies.
Since the fund's price will vary, you could lose money on your investment.

Smaller companies usually have more limited product lines, markets, and
financial resources than larger companies. Their stocks may trade less
frequently and in more limited volume. As a result, the fund's share price may
fluctuate more than funds that invest in larger companies.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

EMERGING GROWTH FUND

PAST PERFORMANCE

- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - - - - - - - - 5.8%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '98 14.11%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (14.60)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR (4/30/97)

FUND 5.77% 20.99%
RUSSELL 2000 INDEX XX.X% XX.X%

Inception: 4/30/97
Box: Call 1-800-933-ATLAS for current performance.

5
<PAGE>

EXPENSES:

These are the fees and expenses you may pay as a fund investor.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
TRANSACTION FEES (paid from your investment)
- ----------------------------------------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases none
Maximum deferred sales charge none
Redemption fee none
Exchange fee none

- ----------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (deducted from fund assets)
- ----------------------------------------------------------------------------------------------
<S> <C>
Management fee 0.xx %
Distribution (12b-1) fee 0.xx %
Other expenses 0.xx %
------
TOTAL ANNUAL OPERATING EXPENSES 0.xx %

- ----------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $ $ $
</TABLE>

6
<PAGE>

GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks long-term growth exclusively, with no intent to provide current
income.

STRATEGY:

The fund invests primarily in the stocks of growth-oriented companies throughout
the world. These companies may be of any size, and often they are developing
new products or expanding into new markets. The fund does not invest in
companies that manufacture tobacco products.

Fund managers usually invest a substantial portion of the assets in the United
States and developed markets in western Europe, particularly the United Kingdom,
France, and Germany.

The fund uses a "global theme" approach to selecting investments. Currently,
fund managers believe the following key trends offer the most promise for
long-term growth:

- telecommunications expansion
- emerging consumer markets
- infrastructure development
- natural resource development
- corporate restructuring
- capital market development
- health care expansion
- global integration

RISKS:

Like any stock fund, the value of your investment will fluctuate in response to
conditions affecting the economy, the stock market, and individual companies.

Foreign securities markets, especially those in emerging countries, can be more
volatile than the U.S. market, exposing investors to greater risk of loss.
Stocks issued abroad are usually denominated in foreign currencies which may
fluctuate against the U.S. dollar, causing the value of your shares to
fluctuate.

Since the fund's price will vary, you could lose money on your investment. Over
the long term, share price is expected to fluctuate less than funds that invest
only in foreign securities.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

GLOBAL GROWTH FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - - - - - - - 24.4% 16.2%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '98 23.39%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (17.93)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR (4/30/96)

FUND 16.19% 19.30%
MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD INDEX XX.X% XX.X%

Inception: 4/30/96
Box: Call 1-800-933-ATLAS for current performance.

7
<PAGE>

EXPENSES:

These are the fees and expenses you may pay as a fund investor.

8
<PAGE>

GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks long-term growth and some current income.

STRATEGY:

The fund invests primarily in stocks, with at least 65% of assets in
growth-oriented and dividend-paying securities of large, well-known U.S.
companies. Unlike many funds that follow a single investment style, the fund
selects a combination of growth stocks, believed to have superior earnings
potential, and value stocks that trade at attractive prices. The fund does not
invest in companies that manufacture tobacco products.

The fund also invests in convertible securities for current income and some
protection against fluctuating stock prices. In addition, it may purchase
government and corporate bonds. Current income paid by the fund is expected to
be modest, usually below the average yield of the Standard & Poor's 500 Index.

RISKS:

Like any stock fund, the value of your investment will fluctuate in response to
conditions affecting the economy, the stock market, and individual companies.

The fund also invests in securities that fluctuate along with interest rates.
When interest rates rise, bonds prices usually decline. Convertible bond prices
are likely to decline as well, but to a lesser degree. When rates fall, prices
generally increase. Interest-sensitive securities in the portfolio will behave
largely the same way.

Since the fund's price will vary, you could lose money on your investment. Over
the long term, share price is expected to fluctuate more than funds that balance
investments between stocks and bonds, but less than funds that invest primarily
in small companies or foreign securities.

The fund's income varies, as does the dividend paid to investors.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

GROWTH AND INCOME FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- ----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - 38.2% 1.4% 10.4% (1.2)% 33.1% 20.2% 26.3% 25.8%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '98 20.37%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (9.50)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (12/5/90)

FUND 25.83% 20.19% 18.39%
S & P 500 INDEX XX.X% XX.X% XX.X%*

Inception: 12/5/90
Box: Call 1-800-933-ATLAS for current performance.

9
<PAGE>

EXPENSES:

These are the fees and expenses you may pay as a fund investor.

10
<PAGE>

STRATEGIC GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks long-term growth exclusively, with no intent to provide current
income.

STRATEGY:

The fund invests primarily in stocks, with at least 65% of assets in equities of
medium to large, growth-oriented U.S. companies. The fund's managers seek
companies they believe have above-average appreciation potential.

The fund's stock selection strategy focuses on businesses that appear to have a
combination of superior earnings prospects and reasonable stock prices. Fund
managers look for companies with favorable earnings momentum and those that have
reported financial results that are above expectations. They conduct a rigorous
valuation analysis and select only those businesses that exhibit strong
fundamentals. The fund does not invest in companies that manufacture tobacco
products.

The fund is moderately aggressive and does not normally use income-oriented
investments for protection against market volatility. It may, however, maintain
an above-average cash position in periods of market uncertainty. Fund managers
attempt to reduce exposure to market risk by limiting the amount invested in any
one company or industry.

RISKS:

Like any stock fund, the value of your investment will fluctuate in response to
conditions affecting the general economy, the stock market, and individual
companies.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

STRATEGIC GROWTH FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - - - - (0.3)% 29.1% 23.7% 26.9% 11.2%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '98 16.49%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (16.16)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (9/30/93)

FUND 11.22% 17.58% 17.10%
S & P 500 INDEX XX.X% XX.X% XX.X%

Inception: 9/30/93
Box: Call 1-800-933-ATLAS for current performance.

11
<PAGE>

EXPENSES:

These are the fees and expenses you may pay as a fund investor.

- ----------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (deducted from fund assets)
- ----------------------------------------------------------------------------------------------
Management fee 0.xx %
Distribution (12b-1) fee 0.xx %
Other expenses 0.xx %
------
TOTAL ANNUAL OPERATING EXPENSES 0.xx %

12
<PAGE>

CALIFORNIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE:

The fund seeks high current income which is exempt from federal and California
income tax. Capital preservation is an additional goal.

STRATEGY:

The fund invests primarily in intermediate and long-term California municipal
bonds, with at least 80% of assets in these instruments at all times. It
invests exclusively in investment grade securities, rated AAA, AA, A, BBB, or
the equivalent. In addition, an independent credit analysis is completed for
each bond purchased.

The fund emphasizes essential services securities, such as water and sewer
bonds, general obligation and pre-refunded bonds, all of which are backed by
highly reliable revenue sources.

Fund managers select bonds that offer attractive yields relative to expected
credit and interest rate risks. They purchase issues with varying maturities,
based on the outlook for interest rates. Generally, the portfolio's
dollar-weighted average maturity will exceed 10 years.

RISKS:

The fund's income varies, as does the dividend paid to investors.

The value of your shares will fluctuate along with interest rates. When interest
rates rise, bond prices usually decline. When rates fall, prices generally
increase. Since the fund invests primarily in bonds, it will behave largely the
same way. The portfolio contains long-term bonds, which are impacted more by
interest rate changes than short-term issues.

Since the fund's price will vary, you could lose money on your investment.
Changes in California's economy or legal and regulatory environment may affect
the ability of bond issuers to pay interest and principal on their debt. As a
result, the share price may fluctuate more than funds that invest in municipal
bonds from many different states.

Some income from the fund may be taxable or subject to the alternative minimum
tax. The fund may also distribute taxable capital gains.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

CALIFORNIA MUNICIPAL BOND FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - 11.0% 7.9% 13.5% (5.8)% 14.8% 3.9% 8.0% 5.9%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '90 6.82%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q1 '94 (5.22)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (1/24/90)

FUND 5.94% 5.13% 7.66%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX XX.X% XX.X% XX.X%*

Inception: 1/24/90
Box: Call 1-800-933-ATLAS for current performance.

Expenses:

These are the fees and expenses you may pay as a fund investor.

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000
investment and 5% return each. Your actual costs may be higher or lower.

ATLAS NATIONAL MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income which is exempt from federal income tax.
Capital preservation is an additional goal.

STRATEGY:

The fund invests primarily in intermediate and long-term municipal bonds, with
at least 80% of assets in these instruments at all times. It invests
exclusively in investment grade securities, rated AAA, AA, A, BBB, or the
equivalent. In addition, an independent credit analysis is completed for each
bond purchased.

The fund emphasizes essential services securities, such as water and sewer
bonds, general obligation and pre-refunded bonds, all of which are backed by
highly reliable revenue sources.

RISKS:

The fund's income varies, as does the dividend paid to shareholders.

The value of your shares will fluctuate along with interest rates. When
interest rates rise, bond prices usually decline. When rates fall, prices
generally increase. Since the fund invests primarily in bonds, it will behave
largely the same way. The portfolio contains long-term bonds, which are
impacted more by interest rate changes than short-term issues.

Since the fund's price will vary, you could lose money on your investment. Over
the long-term, share price is expected to fluctuate less than funds that invest
in municipal securities from a single state.

Some income from the fund may be taxable or subject to the alternative minimum
tax. The fund may also distribute taxable capital gains.

14
<PAGE>

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

NATIONAL MUNICIPAL BOND FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - 13.2% 9.0% 13.4% (5.4)% 14.8% 3.6% 8.6% 5.7%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '90 6.34%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q1 '94 (5.45)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (1/26/90)

FUND 5.70% 5.23% 7.81%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX XX.X% XX.X% XX.X%*

Inception: 1/26/90
Box: Call 1-800-933-ATLAS for current performance.

EXPENSES:

<TABLE>
<CAPTION>
These are the fees and expenses you may pay as a fund investor.
- --------------------------------------------------------------------------------
TRANSACTION FEES (paid from your investment)
- --------------------------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases none
Maximum deferred sales charge none
Redemption fee none
Exchange fee none

<CAPTION>
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (deducted from fund assets)
- --------------------------------------------------------------------------------
<S> <C>
Management fee 0.xx %
Distribution (12b-1) fee 0.xx %
Other expenses 0.xx %
------
TOTAL ANNUAL OPERATING EXPENSES 0.xx %

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

<CAPTION>
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $ $ $
</TABLE>

15
<PAGE>

STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income. Capital preservation is an additional goal.

STRATEGY:

The fund looks for income opportunities among three broad sectors of the bond
market:

- U.S. Government securities
- Foreign fixed income debt
- High-yield, lower-rated debt of U.S. companies ("junk bonds")

The fund seeks to manage risk by investing in all three sectors and by varying
the amount in each in order to take advantage of changing market conditions.
Assets within each sector are also broadly diversified. The fund does not
invest in securities of companies that manufacture tobacco products.

Fund managers select bonds that offer attractive yields relative to expected
credit and interest rate risks. They may purchase issues of any maturity, based
on the outlook for interest rates. The fund's duration, a measure of
sensitivity to interest rates, generally ranges between three and eight years.

RISKS:

The fund's income varies, as does the dividend paid to shareholders.

The value of your shares will fluctuate along with interest rates. When
interest rates rise, bond prices usually decline. When rates fall, prices
generally increase. Since the fund invests primarily in bonds, it will behave
largely the same way. The portfolio contains long-term bonds, which are
impacted more by interest rate changes than short-term issues.

Since the fund's price will vary, you could lose money on your investment.
There are special risks associated with this fund, which may expose investors to
greater risk of loss.

- - Foreign securities markets, especially those in emerging countries, can be
more volatile than the U.S. market. Bonds issued abroad may be denominated
in foreign currencies, which can fluctuate against the U.S. dollar.

- - There is no restriction on investments in junk bonds, which have a greater
chance of default on interest and principal payments. Their prices
fluctuate more than those of higher-rated securities.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

STRATEGIC INCOME FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - - - - - - - 9.6% 4.0%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q4 '96 4.44%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q3 '98 (1.28)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR (5/20/96)

FUND 4.03% 8.60%

LEHMAN BROTHERS
MUNICIPAL BOND INDEX XX.X% XX.X%*

SALOMAN BROTHERS WORLD
GOVERNMENT BOND INDEX XX.X% XX.X%*
- ----------------------------------------------------------------------------------------------
* CALL 1-800-933-ATLAS for current performance
- ----------------------------------------------------------------------------------------------
</TABLE>

Inception: 5/20/96
Box: Call 1-800-933-ATLAS for current performance.

16
<PAGE>

EXPENSES:

<TABLE>
<CAPTION>
These are the fees and expenses you may pay as a fund investor. Atlas Advisers
guarantees net operating expenses through xx/xx/xx.
- --------------------------------------------------------------------------------
TRANSACTION FEES (paid from your investment)
- --------------------------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases none
Maximum deferred sales charge none
Redemption fee none
Exchange fee none

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

17
<PAGE>

U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income. Capital preservation is an additional goal.

STRATEGY:

The fund invests primarily in mortgage-backed securities with the highest
quality rating (AAA), issued by:

- Government National Mortgage Association ("GNMA")
- Federal National Mortgage Association ("FNMA")
- Federal Home Loan Mortgage Corporation ("FHLMC")

The fund may purchase bonds of any maturity, based on the outlook for interest
rates. The fund's duration, a measure of sensitivity to interest rates,
generally ranges between three and eight years. In attempting to maintain a
consistently high yield, fund managers select securities they believe are less
likely than others to be paid off ahead of schedule.

RISKS:

The fund's income varies, as does the dividend paid to investors.

The value of your shares will fluctuate along with interest rates. When
interest rates rise, bond prices usually decline. When rates fall, prices
generally increase. Since the fund invests primarily in bonds, it will behave
largely the same way. The portfolio contains long-term bonds, which are impacted
more by interest rate changes than short-term issues. The fund invests in
mortgage-backed securities, which are less sensitive to interest rate changes
than other bonds with the same average maturity.

Since the fund's price will vary, you could lose money on your investment. Over
the long term, share price is expected to fluctuate more than funds that invest
in short-term bonds.

Mortgage-backed securities are subject to prepayments of principal, because the
underlying mortgages may be paid off earlier than expected. The yield may be
adversely impacted if the fund has to reinvest at lower rates than the original
investments.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

US GOVERNMENT AND MORTGAGE SECURITIES FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - 15.5% 7.9% 7.5% (3.3)% 15.5% 4.5% 8.3% 6.1%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: Q1 '95 5.00%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: Q1 '94 (3.33)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (1/19/90)

FUND 6.06% 6.03% 7.94%

LEHMAN BROTHERS
U.S. MORTGAGE-BACKED
SECURITIES INDEX X.XX% X.XX% X.XX%*
- ----------------------------------------------------------------------------------------------
* CALL 1-800-933-ATLAS for current performance
- ----------------------------------------------------------------------------------------------
</TABLE>

Inception: 1/19/90
Box: Call 1-800-933-ATLAS for current performance.

18
<PAGE>

EXPENSES:

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

19
<PAGE>

CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income which is exempt from federal and California
income tax. Liquidity and stability of principal are additional goals.

STRATEGY:

The fund invests in short-term California municipal securities, with at least
80% of assets in these instruments at all times. It invests exclusively in
securities with the two highest quality ratings, AAA, AA, or the equivalent,
with no less than 95% in the highest grade.

Fund managers select issues with varying maturities, based on the outlook for
interest rates. The portfolio's dollar-weighted average maturity will not
exceed 90 days, and the fund will hold no securities with a remaining term
greater than 13 months.

RISKS:

The fund's yield will vary daily, based on market rates of interest.

Although the fund seeks to maintain a constant $1 per share price, it is
possible to lose money on your investment. The fund is not insured or
guaranteed by the FDIC or any other government agency.

Changes in California's economy may affect the ability of issuers to pay
interest and principal on their debt. As a result, the concentration of
investments in California may involve more risk than funds that invest in
municipal securities from many different states.

Some income from the fund may be taxable or subject to the alternative minimum
tax.

PERFORMANCE INFORMATION:

Total returns have varied from year-to-year. Past performance is no guarantee
of future results.

CALIFORNIA MUNICIPAL MONEY FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - X.X% X.X% X.X% X.X% X.X% X.X% X.X% X.X%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: QX 'XX X.XX%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: QX 'XX X.XX%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (1/10/90)

FUND XX.X% XX.X% XX.X%

- ----------------------------------------------------------------------------------------------
* CALL 1-800-933-ATLAS for the current 7-day yield
- ----------------------------------------------------------------------------------------------
</TABLE>

Inception: 1/10/90
Box: Call 1-800-933-ATLAS for the current 7-day yield.

20
<PAGE>

EXPENSES:

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

21
<PAGE>

NATIONAL MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income which is exempt from federal income tax.
Liquidity and stability of principal are additional goals.

STRATEGY:

The fund invests in short-term municipal securities, with at least 80% of assets
in these instruments at all times. It invests exclusively in securities with the
two highest quality ratings, AAA, AA, or the equivalent, with no less than 95%
in the highest grade.

Fund managers select issues with varying maturities, based on the outlook for
interest rates. The portfolio's dollar-weighted average maturity will not exceed
90 days, and the fund will hold no securities with a remaining term greater than
13 months. The portfolio is diversified, since it invests in municipal
securities from many different states.

RISKS:

The fund's yield will vary daily, based on market rates of interest.

Although the fund seeks to maintain a constant $1 per share price, it is
possible to lose money on your investment. The fund is not insured or
guaranteed by the FDIC or any other government agency.

Some income from the fund may be taxable or subject to the alternative minimum
tax.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

NATIONAL MUNICIPAL MONEY FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - X.X% X.X% X.X% X.X% X.X% X.X% X.X% X.X%

INCEPTION
1 YEAR 5 YEARS (1/10/90)

FUND XX.X% XX.X% XX.X%

Inception: 1/10/90
Box: Call 1-800-933-ATLAS for the current 7-day yield.

22
<PAGE>

EXPENSES:

EXPENSE EXAMPLE: Designed to help you compare expenses, this example use the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

23
<PAGE>

U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE:

The fund seeks high current income which is exempt from state income tax.
Maximum safety, liquidity, and stability of principal are additional goals.

STRATEGY:

The fund invests exclusively in short-term Treasury securities that are of the
highest possible quality, since they are guaranteed by the full faith and credit
of the U.S. Government for the timely payment of principal and interest.

RISKS:

The fund's yield will vary daily, based on market rates of interest.

Although the fund seeks to maintain a constant $1 share price, it is possible to
lose money on your investment. The fund is not insured or guaranteed by the
FDIC or any other government agency.

PERFORMANCE INFORMATION:

Total return has varied from year-to-year. Past performance is no guarantee of
future results.

U.S. TREASURY MONEY FUND

PAST PERFORMANCE

<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN - AS OF 12/31 EACH YEAR (%)

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98

- - X.X% X.X% X.X% X.X% X.X% X.X% X.X% X.X%

- -----------------------------------------------------------------------------------------------
BEST QUARTER: QX 'XX X.XX%
- -----------------------------------------------------------------------------------------------
WORST QUARTER: QX 'XX (X.XX)%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN - AS OF 12/31/98

INCEPTION
1 YEAR 5 YEARS (5/1/92)

FUND XX.X% XX.X% XX.X%

Inception: 5/1/92
Box: Call 1-800-933-ATLAS for the current 7-day yield.

24
<PAGE>

EXPENSES:

EXPENSE EXAMPLE: Designed to help you compare expenses, this example uses the
same assumptions that all funds use in their prospectuses: a $10,000 investment
and 5% return each year. Your actual costs may be higher or lower.

25
<PAGE>
- --------------------------------------------------------------------------------

OTHER INVESTMENT STRATEGIES AND RISKS

MORTGAGE-BACKED SECURITIES: The U.S. Government and Mortgage Securities
Fund invests primarily in mortgage-backed securities, which are secured by a
pool of mortgage loans. To a lesser degree, the Strategic Income Fund also
invests in mortgage-backed securities.

Principal and interest on the underlying mortgages are passed through as
monthly payments. In addition, there may be prepayment of principal if the
property securing the mortgages is refinanced, sold, or foreclosed.

In seeking higher returns, the funds may also invest in privately issued
mortgage-related bonds and mortgage-backed securities. Private issuers include
commercial banks, thrift institutions, mortgage bankers, and securities
broker-dealers.

Mortgage-related bonds are general obligation, fixed-income securities
collateralized by mortgages. Mortgage-related bonds include collateralized
mortgage obligations, which are secured by an underlying pool of mortgages or
mortgage pass-through certificates and are structured to direct payments of
interest and principal to different series or classes of the obligations.

To reduce risk, the funds generally invests in collateralized mortgage
obligations issued by U.S. Government agencies, such as FHLMC, and backed by
U.S. Government or government agency mortgage securities.

OPTIONS AND FUTURES: All the stock and bond funds may buy and sell options,
future contracts, and options on futures contracts. Fund managers use these
instruments to hedge investments against changes in value, to manage cash flow,
to attempt to increase income, or as a temporary substitute for purchase or sale
of actual securities. The funds will not engage in these transactions for
speculation. Use of these strategies may be limited by market conditions,
regulatory limits, and tax consideration, and there can be no assurance that
they will succeed.

Options and futures strategies involve risks and transaction costs. Any
fund using these strategies may be left in a worse position if the manager's
prediction of price changes in the underlying instruments is inaccurate.

OTHER DERIVATIVE INVESTMENTS: The Strategic Income Fund and the Emerging
Growth Fund can invest in several other types of derivatives. Some are used for
hedging purposes, and others offer the potential for increased income and
principal value. In general, the performance of a derivative is linked to the
performance of another investment, such as an equity security, an index, or one
or more currencies.

Use of derivatives may cause a fund to realize less income than expected
and to lose money. One risk is that the company issuing the derivative may not
pay the amount due upon maturity. A second is that the underlying investment
may not perform as expected. The funds will limit investment in derivatives
that trade in the over-the-counter markets and may be illiquid.

26
<PAGE>

JUNK BONDS: The Strategic Income Fund may invest in junk bonds, which are
below investment grade and may have higher yields than investment grade issues.
These securities are rated Ba and below by Moody's Investors Services, Inc., or
BB and below by Standard and Poor's. They may be rated as low as C or D and may
be in default at the time of purchase.

Junk bonds are riskier than investment grade bonds. There is a greater
possibility that earnings may not be sufficient to make timely interest
payments, and there is increased potential for insolvency. There may be less of
a market for junk bonds, and they may be harder to sell at an acceptable price.
The fund may not achieve the expected income from lower-rated securities, and
its net asset value may be affected by declines in their value.

DEFENSIVE INVESTMENTS: At times, pursuing a fund's basic investment
strategy may not be in the best interests of its shareholders because of market
conditions. All of the funds may invest up to 100% of their assets in
short-term debt securities or money market instruments as a temporary defensive
strategy.

PORTFOLIO TURNOVER: All the funds will sell securities when the managers
believe it is appropriate, regardless of how long the securities were owned.
Buying and selling securities involves expenses, such as commissions paid to
brokers and other transaction costs. By selling a security, a fund may realize
taxable capital gains that will later be distributed to shareholders.

Generally speaking, the higher a fund's annual portfolio turnover, the
greater its brokerage costs, and the greater the likelihood that it will realize
taxable capital gains. Annual portfolio turnover of 100% or more is considered
high. The Atlas Strategic Income Fund usually has a higher annual turnover rate
because of fund managers' investment styles. The portfolio turnover rate for
each of the stock funds varies widely from year to year, and may exceed 100% in
some years. (See "Financial Highlights" for each fund's historical portfolio
turnover.)

YEAR 2000 AND THE ATLAS FUNDS: Like other funds and business organizations,
the funds could be adversely affected if computer systems used by their service
providers are unable to process date-related information for the year 2000 and
after. The funds have been assured that their key service providers are taking
steps to address this issue and that their systems will be adapted in time to
avoid serious problems. Although there are no guarantees, Atlas does not
anticipate that Year 2000 will have a material affect on its ability to continue
to provide the funds with service at current levels.

The companies in which the funds invest also may be adversely impacted by
Year 2000 issues. If so, the value of the funds' investments may be affected.

<PAGE>

FUND MANAGEMENT

THE ADVISER AND PORTFOLIO MANAGERS

Atlas Advisers, Inc., 794 Davis Street, San Leandro California 94577, is
responsible for providing or overseeing all services needed for the Atlas Funds
to operate, including portfolio management, transfer agent, and custodial and
accounting services. It has retained investment professionals with substantial
experience in managing investments.

Atlas Advisers provides portfolio management services to the U.S.
Government and Mortgage Securities Fund and the U.S. Treasury Money Fund. It
supervises provision of similar services to the municipal funds by Boston Safe
Advisors, Inc. located at One Boston Place, Boston, Massachusetts 02108, and to
the stock funds and the Strategic Income Fund by OppenheimerFunds, Inc. located
at Two World Trade Center, New York, New York 10048.

Roberta A. Conger, Group Senior Vice President and Treasurer for World
Savings, and Tim Stare, Vice President of World Savings, are portfolio managers
for the Atlas U.S. Government and Mortgage Securities Fund and the Treasury
Money Fund. During the past five years, Ms. Conger and Mr. Stare have been
involved in managing a portfolio of over $2 billion in mortgage-backed and
mortgage related securities, money market instruments, bonds, and other debt
obligations for World Savings and Golden West Financial.

John F. Flahive, a Vice President with Boston Safe, has been portfolio
manager for the municipal funds since November 1, 1994. Before joining Mellon in
October, 1994, Mr. Flahive was a Senior Portfolio Manager at Neuberger & Berman
for approximately one year. Previously, he was in the municipal bond departments
of T. Rowe Price and Dean Witter for approximately 8 years.

John P. Doney, Vice President and Portfolio Manager of OppenheimerFunds,
has been responsible for managing the Balanced Fund, since the fund began
operations on October 1, 1993. During the past five years, Mr. Doney has served
as an officer and portfolio manager of various funds managed by
OppenheimerFunds.

The Portfolio Managers of the Growth and Income Fund are Bruce Bartlett and
John P. Doney. Mr. Bartlett, a Vice President and Portfolio Manager of
OppenheimerFunds, has been responsible for managing the fund since July 5, 1995.
Mr. Doney joined Mr. Bartlett on July 28, 1997. Previously, Mr. Bartlett was a
Vice President and Senior Portfolio Manager with First of America Investment
Corporation. Messrs. Bartlett and Doney are assisted by Associate Portfolio
Manager James F. Turner, who is an Assistant Vice President of OppenheimerFunds,
Inc. During the past five years, Mr. Turner has been a securities analyst with
First American Investment Corp. and OppenheimerFunds, Inc.

Robert C. Doll, Jr., Executive Vice President, Director of Equity
Investments, and Portfolio Manager of OppenheimerFunds, has been responsible for
managing the Strategic Growth Fund since inception on October 1, 1993. During
the past five years, Mr. Doll has served as an officer and portfolio manager of
various funds managed by the company. Other members of the OppenheimerFunds
Equity Department, including Jane Putnam, provide Mr. Doll with support. Ms.
Putnam, a Vice President with OppenheimerFunds, Inc. since October, 1995, was
previously a portfolio manager and equity research analyst for Chemical Bank.

28
<PAGE>

William L. Wilby has been responsible for managing the Global Growth Fund
since inception 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 the company.
Previously, he was an international investment strategist at Brown Brothers,
Harriman & Co.

Jay W. Tracey, III, Vice President and Portfolio Manager of
OppenheimerFunds, has been responsible for managing the Emerging Growth Fund
since inception 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. Earlier, he served as a managing director of Buckingham
Capital Management. Mr. Tracy is assisted by Associate Portfolio Manager Susan
Switzer, who is an Assistant Vice President of OppenheimerFunds. Before joining
OppenheimerFunds in August 1997, Ms. Switzer was an Associate Portfolio Manager
with Neuberger and Berman, Inc. and with Mitchell Hutchins Asset Management,
Inc.

Arthur P. Steinmetz and David P. Negri have been responsible for managing
of the Strategic Income Fund since inception 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, have
each served as officers and portfolio managers of various funds managed by the
company.

Each fund pays Atlas Advisers a management fee for investment management
services. Atlas Advisers, in turn, pays a subadviser for its portfolio
management services. The management fee is an annual rate, equal to a percentage
of each fund's average net assets and paid monthly as follows:

ANNUAL MANAGEMENT FEES

<TABLE>
<CAPTION>
ANNUAL RATE FOR
FISCAL YEAR
ENDED 12/31/98
FUNDS
- --------------------------------------------------------------------------------
<S> <C>
STOCK FUNDS xx%
Balanced xx%
Emerging Growth xx%
Global Growth xx%
Growth and Income xx%
Strategic Growth xx%

BOND FUNDS
California Municipal Bond xx%
National Municipal Bond xx%
Strategic Income xx%
U.S. Government and Mortgage Securities xx%

MONEY FUNDS
California Municipal Money xx%
National Municipal Money xx%
U.S. Treasury Money xx%
</TABLE>

29
<PAGE>

ITEM 8

THE DISTRIBUTOR AND THE DISTRIBUTION PLAN

Atlas Funds are distributed by Atlas Securities, Inc. Shares are offered
at net asset value with no sales load. From time to time, Atlas Securities may
offer merchandise, monetary bonuses, or other incentives for purchasing shares
of one or more of the funds. Incentives may be offered to selected groups of
shareholders, such as first time buyers or existing account holders.

The funds have adopted a distribution plan under Rule 12b-1 to reimburse
the distributor for costs for advertising, marketing, and shareholder servicing.
Reimbursements are made on a quarterly basis up to a maximum of .25% of a fund's
average daily net assets. These fees increase the cost of your investment and,
over time, may cost you more than paying other types of sales charges, because
they are taken out of fund assets on an on-going basis. A fund will not make
reimbursements for expenses incurred by another fund

Shares are currently offered only through Atlas Securities. Atlas
Securities may make payments up to a maximum of .25% per year for distribution
services to other securities dealers, if they are used in the future.

30
<PAGE>

BECOMING AN ATLAS SHAREHOLDER
- --------------------------------------------------------------------------------

HOW TO CONTACT US

Phone: 1-800-933-ATLAS (1-800-933-2852).
Address: Atlas Securities
794 Davis Street
San Leandro, California 94577

TO BUY OR SELL SHARES:

New account applications, checks, and instructions may be sent directly to Atlas
at the following addresses:

BY REGULAR MAIL:
Atlas Funds
P.O. Box 419056
Kansas City, MO 64141-6056

BY SPECIAL DELIVERY:
Atlas Funds
c/o NFDS
330 West 9th Street
Kansas City, MO 64105-1807

OPENING AN ACCOUNT

- - You pay no sales charges to invest in any Atlas Fund.

- - Complete the new account application that accompanies this prospectus.

- - Determine how much you want to invest. The minimum initial and additional
investments for each fund are as follows:

- - Traditional, Roth, and Educational Individual Retirement Accounts (IRAs)
and Simplified Employee Pension Plans (SEPs) are available. Call us at
1-800-933-2852 and we will provide you with information about account
agreements, applications, and annual fees.

Minimums for Each Fund Initial Additional
Investment Investments
- --------------------------------------------------------------------------------
Non-Retirement Accounts $2,500 $250
- --------------------------------------------------------------------------------
Wire Purchases $2,500 $1,000
- --------------------------------------------------------------------------------
Exchanges $2,500 $250
- --------------------------------------------------------------------------------
IRA and SEP Accounts $250 $250
- --------------------------------------------------------------------------------
Custodial Accounts for $250 $250
Minors
- --------------------------------------------------------------------------------
Employee Accounts $250 $50
- --------------------------------------------------------------------------------

- - See the following pages for more information on how to buy and sell shares.

31
<PAGE>

BUYING SHARES
- --------------------------------------------------------------------------------
MAKING THE FIRST PURCHASE

- BY CHECK:

- Make out a check for the investment amount, payable to "Atlas
Funds."

- Deliver your check and completed application to your World
branch. Your check and application will be forwarded to the our
shareholder services agent in Kansas City to be processed,
usually within three business days. There may be a charge for
checks that do not clear.

- If you prefer, mail your check and application to "Atlas Funds"
at one of the addresses below.

- BY WIRE:

- Deliver your completed application to your World branch, or mail
it to "Atlas Funds" at one of the addresses below.

- Call us at 1-800-933-2852 to obtain an account number.

- Instruct your bank to wire the amount of your investment to:

Investor's Bank & Trust Company
ABA #011001438
Account #188888888
Fund Name:
Customer Name:
Fund Account #:

Your bank may charge a wire transfer fee.

- If you elected the bank wire option on your WORLD INSURED MONEY
MARKET ACCOUNT, you may wire funds with one call to
1-800-933-2852. There is no wire transfer fee from World.

- BY EXCHANGE:

- Call us at 1-800-933-2852 to request an exchange into a new fund.
You may also mail your request to the address below. Be sure all
account owners have signed the request.

- An exchange is considered a sale and may result in a gain or loss
for tax purposes.

ADDING TO AN ACCOUNT

32
<PAGE>

- BY CHECK:

- Make out a check for the investment amount payable to "Atlas
Funds."

- Fill out the investment slip at the bottom of your account
statement. If no slip is available, include a note telling us
the fund name, your account number, and the name(s) in which the
account is registered.

- Deliver your check and investment slip to your World branch.
Your check and application will be forwarded to our shareholder
services agent in Kansas City to be processed, usually within
three business days. There may be a charge for checks that do
not clear.

- BY WIRE:

- Instruct your bank to wire the amount of your investment to:

Investor's Bank & Trust Company
ABA #011001438
Account #188888888
Fund Name:
Customer Name:
Fund Account #:

Your bank may charge a wire transfer fee.

- If you elected the bank wire option on your WORLD INSURED MONEY
MARKET ACCOUNT, you may wire funds with one call to
1-800-933-2852. There is no wire transfer fee from World.

- BY EXCHANGE:

- Call us at 1-800-933-2852 to request an exchange into an existing
account. You may also mail your request to the address below.
Be sure all account owners have signed the request.

- Both fund accounts must be registered in the same name(s) and
have the same taxpayer identification number.

- An exchange is considered a sale and may result in a gain or loss
for tax purposes.

(Repeat mail addresses at bottom of page)
- --------------------------------------------------------------------------------

33
<PAGE>

SELLING SHARES
- --------------------------------------------------------------------------------

You may sell some or all of your fund shares on any day that the New York Stock
Exchange is open. All sell orders received by the close of trading on the New
York Stock Exchange (normally 4:00 PM Eastern time, or 1:00 PM Pacific time)
will be executed at that day's closing price. Unless you request wire payment,
the proceeds will be mailed to you, normally within three business days of
receiving your order.

- BY PHONE:

- You may sell shares by phone, as long as the telephone redemption
option was not declined on your account application. You can
sell $1,000 or more in shares by calling us at 1-800-933-2852.
There is no charge for this service.

- If you have had an address change within the last four months,
your request must be submitted in writing with a signature
guarantee.

- BY MAIL:

- Send us a letter including your name, account number, the fund
you would like to sell, and the dollar amount or number of shares
you want to redeem. The letter should be signed by all account
owners exactly as their names appear on the account.

- You must obtain a signature guarantee if any of the following
apply.

- You are selling $25,000 or more worth of shares
- Your address has been changed within the last four months
- You want the proceeds to go to someone other than the
account owner(s) or to an address other than the one on the
account.
- You want the proceeds wired to a bank account other than the
one pre-designated on your account.

- A signature guarantee helps protect against fraud. You can obtain
one from most banks, savings associations or securities dealers,
but not from a notary public.

- BY WIRE:

- If you elected the expedited payment option, proceeds from the
sale can be wired to your bank account. There is a $10 wire
charge, which will be deducted from the proceeds. Your bank may
also charge a wire transfer fee.

- BY CHECK:

- Checkwriting is available for Atlas bond and money funds, except
for bond fund shareholders who are subject to back-up withholding
for federal income taxes

- If you have checkwriting privileges, you may write a check for
$500 or more to redeem shares, but not to close your account.

34
<PAGE>

- You should not write a check on a bond fund for an amount close
to the total value, since the account value can vary.

- You may not write a check to redeem shares that were purchased by
check within the previous 15 days.

(Repeat mail addresses at bottom of page)

OTHER ACCOUNT INFORMATION
- --------------------------------------------------------------------------------

AUTOMATIC TRANSACTIONS

- PURCHASES:

- After you have made your initial investment, you may set up an
automatic purchase plan by indicating on your application how
much and how often you want to invest. The minimum automatic
investment is $250. There is no charge for this service.

- - EXCHANGES:

- You can automatically exchange $250 or more from one Atlas Fund
to another. Just indicate on your application how much and how
often you want to invest. There is no charge for this service.

- Both fund accounts must be registered in the same name(s) and
have the same taxpayer identification number.

- Exchanges will be made on the 15th of each month you choose. If
the 15th falls on a weekend or holiday, exchanges will be made on
the next business day.

- REDEMPTIONS:

- If your account balance is $10,000 or more, you may set up an
automatic redemption plan by indicating on your new account
application how much and how often you want redeem. You may sell
fixed amounts of $100 or more at monthly, quarterly, or yearly
intervals. There is no charge for this service.

- Automatic redemptions will be made on the 20th of each month you
choose. If the 20th falls on a weekend or holiday, redemptions
will be made on the previous day.

35
<PAGE>

HOW FUND SHARES ARE PRICED

A fund's net asset value (NAV) is the price at which you will buy or sell
shares. The net asset value is calculated by dividing a fund's total asset value
by the number of outstanding shares. The NAV is determined at the close of
regular trading on the New York Stock Exchange each day the exchange is open.

All purchases, redemptions, and exchanges will be processed at the NAV next
calculated after your order is received and accepted by the shareholder services
agent in Kansas City. All orders received by the close of trading on the NYSE
(normally 4:00 p.m. Eastern time; 1:00 p.m. Pacific time) will be executed at
that day's closing price.

TAXES

IRS rules require the funds to distribute net investment income and any capital
gains to shareholders. Capital gains may be taxable at different rates depending
upon the length of time the assets were held. Capital gains, if any, will be
distributed at least once a year and may be distributed more often.

Dividends and distributions may be taxable, whether received in cash or
reinvested. An exchange of shares for shares of another fund is considered a
sale and may result in a gain or loss for tax purposes.

DIVIDENDS AND DISTRIBUTIONS

Dividends and distributions are paid to all shareholders who maintain accounts
on a fund's "record date." If you would like to receive distributions in cash,
indicate that choice on your account application. Otherwise, distributions will
be reinvested in additional shares.

If you own more than one Atlas Fund, your distributions from one fund may be
used to purchase shares in another. You may not direct distributions between an
IRA and a non-IRA account.

Bond fund and money fund dividends will begin on the next business day after
shares are posted to your account and will continue through the day shares are
redeemed.

If you buy shares just before a capital gain distribution, you will pay the full
price and then receive back a portion of your investment in the form of a
taxable distribution.

You will be notified in January each year about the tax status of distributions
made by the funds. Because everyone's tax situation is unique, always consult
your tax adviser about federal, state and local tax consequences.

ATLAS FUND INCOME DIVIDENDS CAPITAL GAIN
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Balanced - Declared quarterly - Declared and paid at
Growth and Income - Paid at the end of the end of the fourth
each quarter quarter
- --------------------------------------------------------------------------------
Strategic Growth - Usually none - Declared and paid at
Global Growth - If earned, paid at the the end of the fourth
Emerging Growth end of the fourth quarter
quarter
- --------------------------------------------------------------------------------
Bond and Money Funds - Declared daily - Declared and paid at
- Paid at the end of the end of the fourth
each month quarter
- --------------------------------------------------------------------------------

36
<PAGE>

OTHER POLICIES

- - MINIMUM BALANCE: If your account balance falls below $1,250, we may close
your account and mail the proceeds to you. We will give you 60 days'
written notice and the opportunity to make an additional investment to
satisfy the $2,500 minimum balance requirement.

- - EXCHANGES: To protect performance and control costs, a fund may modify,
suspend, or discontinue the exchange feature or a shareholder's use of it
at any time.

- - REDEMPTIONS: In accordance with the rules of the Securities and Exchange
Commission, we reserve the right to suspend redemptions under extraordinary
circumstances. Redemption processing or payment may be postponed up to
seven days if making immediate payment could adversely affect a fund.
Shares paid for by check cannot be redeemed until the check has cleared,
normally not more than 15 days.

- - GENERAL INFORMATION ABOUT SERVICE FEATURES: To protect performance and
control costs, a fund may modify, suspend or discontinue services, charges,
or terms and conditions at any time. The use of any feature may be denied
to any shareholder who uses it to the detriment of the fund or other
shareholders. If we modify or discontinue a service affecting all
shareholders, we will provide 30 days' prior written notice.

- - You may add, change or discontinue any service, by sending us your request
in writing. If it has been more than 30 days since you established the
service, we require a signature guarantee with your request.

- - TELEPHONE TRANSACTIONS: Atlas Funds will not be liable for any losses
that result from telephone instructions, if they reasonably appear to be
genuine. Shareholders who elect the following services bear the risk of
loss for unauthorized transactions: telephone or automatic transactions,
checkwriting, requests to allow transactions authorized by less than all
registered owners, or transactions processed without signature guarantees.

For your protection, we reserve the right to record all calls. We may
employ additional precautions prior to acting on telephone instructions,
such as requiring you to provide a form of personal identification. If we
do not follow reasonable procedures, we may be liable for losses caused
by unauthorized or fraudulent instructions.

Abnormal market conditions may cause heavy call volume and make it
difficult for you to make a telephone transaction. If this happens,
please consider mailing your transaction request, or sending it by
overnight delivery.
- --------------------------------------------------------------------------------

KEEPING YOU INFORMED

During the year, Atlas will send you the following communications:

- - CONFIRMATION STATEMENTS: Mailed after every dividend and each transaction
(except checkwriting).

- - ANNUAL AND SEMIANNUAL REPORTS: Mailed approximately 60 days after June 30
and December 31.

37
<PAGE>

- - 1099 TAX FORM: If applicable, mailed by January 31 each year.

- - ANNUAL PROSPECTUS: Mailed to shareholders in May of each year.

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

This section provides further details about the funds' financial history.
"Total return" shows the percentage that an investor would have earned or lost
during a given period, assuming all dividends were reinvested. The funds'
independent accountants, Deloitte & Touche LLP, audited these figures. Their
full report is included in the funds' annual report (see back cover).

38
<PAGE>

FINANCIAL HIGHLIGHTS

MONEY FUNDS

<TABLE>
<CAPTION>
U.S Treasury Money Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.000 0.046 0.046 0.050 0.036
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.000 0.000 0.000 0.000
Total from investment operations . . . . . . . 0.000 0.046 0.046 0.050 0.036

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . 0.000 (0.046) (0.046) (0.050) (0.036)
Distributions (from realized capital gains). . 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000

Total distributions. . . . . . . . . . . . . . 0.000 (0.046) (0.046) (0.050) (0.036)

Net Asset value, end of period . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

Total return(5). . . . . . . . . . . . . . . . . 0.00% 4.73% 4.74% 5.13% 3.67%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . 0.00 $60,033 $65,479 $51,385 $33,448
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 0.62% 0.52% 0.64% 0.46%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 4.63% 4.63% 4.99% 3.75%

<CAPTION>
California Municipal Money Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset value, beginning of period . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.000 0.029 0.028 0.032 0.024
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.000 0.000 0.000 0.000
Total from investment operations . . . . . . . 0.000 0.029 0.028 0.032 0.024

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.029) (0.028) (0.032) (0.024)
Distributions (from realized capital gains). . 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000

Total distributions. . . . . . . . . . . . . . (0.00) (0.029) (0.028) (0.032) (0.024)

Net Asset value, end of period . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

Total return(5). . . . . . . . . . . . . . . . . 0.00% 2.97% 2.82% 3.22% 2.47%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . $00,000 $44,751 $37,335 $39,439 $42,979
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 0.64% 0.63% 0.67% 0.46%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 2.94% 2.78% 3.18% 2.44%

<CAPTION>
National Municipal Money Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset value, beginning of period . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.000 0.030 0.029 0.032 0.026
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.000 0.000 0.000 0.000
Total from investment operations . . . . . . . 0.000 0.030 0.029 0.032 0.026

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.030) (0.029) (0.032) (0.026)
Distributions (from realized capital gains). . 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000

Total distributions. . . . . . . . . . . . . . (0.00) (0.030) (0.029) (0.032) (0.026)

Net Asset value, end of period . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00

Total return(5). . . . . . . . . . . . . . . . . 0.00% 3.09% 2.96% 3.26% 2.60%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . $00,000 $6,579 $7,514 $7,860 $10,110
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 0.68% 0.68% 0.75% 0.49%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 3.04% 2.92% 3.21% 2.57%
</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 at the beginnning of each
period. Returns for periods less than a full year are aggregate
(non-annualized) returns.
(6) Effective January 10, 1990, the distributor and Advisor 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
---------------------------------------------------
PERIOD ENDED 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Money Fund . . . . . . . . . . . . 0.00% 1.02% 1.02% 1.05% 1.08%
California Municipal Money Fund. . . . . . . . . 0.00% 0.97% 1.00% 1.00% 1.00%
National Municipal Money Fund. . . . . . . . . . 0.00% 1.13% 1.32% 1.29% 1.25%
</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS

BOND FUNDS

<TABLE>
<CAPTION>
California Municipal Bond Fund
1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $0.00 $11.15 $11.26 $10.31 $11.56

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.53 0.53 0.54 0.59
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.00 0.33 (0.11) 0.95 (1.25)

Total from investment operations . . . . . . . 0.00 0.86 0.42 1.49 (0.66)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . 0.000 (0.53) (0.53) (0.54) (0.59)
Distributions (from realized capital gains). . 0.000 (0.04) 0.000 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000
Total distributions. . . . . . . . . . . . . . 0.000 (0.53) (0.53) (0.54) (0.59)
Net Asset value, end of period . . . . . . . . $0.00 $11.44 $11.15 $11.26 $10.31

Total return(5). . . . . . . . . . . . . . . . . 0.00% 7.97% 3.90% 14.76% (5.83)%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . 0.00 $195,292 $177,593 $184,283 $171,768
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 0.95% 0.96% 0.93% 0.57%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 4.76% 4.82% 4.98% 5.43%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 15.95% 29.28% 25.90% 30.32%

<CAPTION>
National Municipal Bond Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $1.00 $11.21 $11.39 $10.41 $11.61

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.53 0.52 0.53 0.58
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.40 (0.12) 0.98 (1.20)

Total from investment operations . . . . . . . 0.000 0.93 0.40 1.51 (0.62)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.53) (0.52) (0.53) (0.58)
Distributions (from realized capital gains). . 0.000 (0.07) (0.06) 0.000 0.00
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000
Total distributions. . . . . . . . . . . . . . (0.00) (0.60) (0.58) (0.53) (0.58)
Net Asset value, end of period . . . . . . . . $0.00 $11.54 $11.21 $11.39 $10.41

Total return(5). . . . . . . . . . . . . . . . . 0.00% 8.56% 3.58% 14.76% (5.41)%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . $00,000 $58,740 $49,597 $53,387 $50,037
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 1.00% 1.01% 0.91% 0.57%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 4.72% 4.63% 4.79% 5.35%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 21.80% 44.76% 53.43% 37.52%

</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
BOND FUNDS STOCK FUNDS

U.S. Government and
Mortgage Securities Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $1.00 $10.07 $10.30 $9.55 $10.60

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.000 0.67 0.67 0.69 0.70
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.13 (0.23) 0.75 (1.05)
Total from investment operations . . . . . . . 0.000 0.80 0.44 1.44 (0.35)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . 0.000 (0.67) (0.67) (0.69) (0.70)
Distributions (from realized capital gains). . 0.000 0.000 0.000 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000
Total distributions. . . . . . . . . . . . . . 0.000 (0.046) (0.046) (0.050) (0.036)

Net Asset value, end of period . . . . . . . . . $1.00 $10.20 $10.07 $10.30 $9.55

Total return(5). . . . . . . . . . . . . . . . . 0.00% 8.25% 4.50% 15.50% (3.30)%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . 0.00 $202,573 $224,301 $255,614 $245,715
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 1.03% 1.03% 1.02% 0.80%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 6.67% 6.67% 6.90% 7.05%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 3.73% 27.45% 48.39% 16.33%
Average commission rate paid . . . . . . . . . - - - - -

<CAPTION>
Strategic Income Fund

1998(1) 1997(1) 1996(1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset value, beginning of period . . . . . . $1.00 $5.16 $5.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.000 0.42 0.25
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.000 0.06 0.18
Total from investment operations . . . . . . . 0.000 0.48 0.43

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.42) (0.25)
Distributions (from realized capital gains). . 0.000 (0.05) (0.01)
Distributions (in excess of capital gains) . . 0.000 (0.01) (0.01)
Total distributions. . . . . . . . . . . . . . (0.00) (0.029) (0.028)

Net Asset value, end of period . . . . . . . . . $1.00 $5.16 $5.16

Total return(5). . . . . . . . . . . . . . . . . 0.00% 9.57% 8.89%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . $00,000 $37,831 $17,863
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 0.41% 0.02%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 8.04% 8.19%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 221.42% 187.15%
Average commission rate paid . . . . . . . . . - - -

<CAPTION>
National Municipal Money Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1) 1993(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset value, beginning of period . . . . . . $1.00 $12.18 $11.19 $9.23 $9.85 $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.46 0.42 0.42 0.44 0.09
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.00 2.27 1.32 2.02 (0.62) (0.15)
Total from investment operations . . . . . . . 0.00 2.73 1.74 2.44 (0.18) (0.06)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.46) (0.42) (0.42) (0.44) (0.09)
Distributions (from realized capital gains). . 0.000 (0.31) (0.33) (0.06) 0.000 0.000
Distributions (in excess of capital gains) . . 0.000 0.000 0.000 0.000 0.000 0.000
Total distributions. . . . . . . . . . . . . . (0.032) (0.024) (0.00) (0.030) (0.029) (0.032)

Net Asset value, end of period . . . . . . . . . $1.00 $14.14 $12.18 $11.19 $9.23 $9.85

Total return(5). . . . . . . . . . . . . . . . . 0.00% 22.72% 15.81% 26.76% (1.87)% (0.62)%

RATIOS/SUPPLIMENTAL DATA:

Net assets, end of period (000's). . . . . . . $00,000 $49,456 $29,289 $13,547 $9,654 $5,638
Ratio of expenses to average net assets
(annualzed)(6) . . . . . . . . . . . . . . . . 0.00% 1.20% 1.28% 1.48% 0.80% 0.00%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 3.58% 3.86% 4.15% 4.85% 5.02%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 14.71% 41.41% 25.84% 29.19% 0.00%
Average commission rate paid . . . . . . . . . 0000 $0.0591 $0.0591 - - -
</TABLE>

<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
PERIOD ENDED 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S.Government and Mortgage Securities Fund. . . 0.00% 1.03% 1.03% 1.04% 1.05%
Strategic Income Fund. . . . . . . . . . . . . . 0.00% 1.51% 1.85% NA NA
Balanced Fund. . . . . . . . . . . . . . . . . . 0.00% 1.20% 1.28% 1.53% 1.56%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS

STOCK FUNDS

<TABLE>
<CAPTION>
Growth and Income Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $0.00 $17.82 $15.91 $13.52 $14.01

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.10 0.14 0.20 0.16
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.00 4.85 3.06 4.26 (0.34)

Total from investment operations . . . . . . . 0.00 4.68 3.20 4.46 (0.18)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . 0.00 (0.10) (0.14) (0.20) (0.16)
Distributions (from realized capital gains). . 0.00 (3.53) (1.15) (1.87) (0.12)
Distributions (in excess of capital gains) . . 0.00 (0.01) 0.00 0.00 (0.03)

Total distributions. . . . . . . . . . . . . . . 0.00 (3.64) (1.29) (2.07) (0.31)

Net Asset value, end of period . . . . . . . . . $0.00 $18.86 $17.82 $15.91 $13.52

Total return(7). . . . . . . . . . . . . . . . . 0.00% 26.32% 20.16% 33.06% (1.24)%

RATIOS/SUPPLIMENTAL DATA:
Net assets, end of period (000's). . . . . . . 0.00 $173,796 $138,604 $93,061 $69,590
Ratio of expenses to average net assets
(annualzed)(8) . . . . . . . . . . . . . . . . 0.00% 1.10% 1.16% 1.24% 1.04%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 0.51% 0.82% 1.26% 1.21%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 118.26% 86.66% 125.28% 123.64%
Average commission rate paid . . . . . . . . . $0.00 $0.0601 $0.0602 - -

<CAPTION>
Strategic Growth Fund

1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $0.00 $14.01 $12.69 $10.00 $10.14

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.11 0.13 0.10 0.11
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.00 3.65 2.88 2.82 (0.14)

Total from investment operations . . . . . . . 0.00 3.76 3.01 2.92 (0.03)

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . (0.00) (0.11) (0.13) (0.09) (0.11)
Distributions (from realized capital gains). . 0.00 (1.30) (1.56) (0.14) 0.00
Distributions (in excess of capital gains) . . 0.00 0.00 0.00 0.00 0.00

Total distributions. . . . . . . . . . . . . . . 0.00 (1.41) (1.69) (0.23) (0.11)

Net Asset value, end of period . . . . . . . . . $0.00 $16.36 $14.01 $12.69 $10.00

Total return(7). . . . . . . . . . . . . . . . . 0.00% 26.89% 23.72% 29.14% (0.28)%

RATIOS/SUPPLIMENTAL DATA:
Net assets, end of period (000's). . . . . . . $00,000 $54,310 $22,253 $12,223 $6,471
Ratio of expenses to average net assets
(annualzed)(8) . . . . . . . . . . . . . . . . 0.00% 1.21% 1.31% 1.62% 1.17%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 0.86% 1.08% 1.03% 1.25%
Portfolio turnover rate. . . . . . . . . . . . 0.00% 85.55% 119.87% 73.32% 54.01%
Average commission rate paid . . . . . . . . . $0.00 $0.0582 $0.0597 - -

<CAPTION>
Global Growth Fund

1998(1) 1997(1) 1996(1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>

Net Asset value, beginning of period . . . . . . $0.00 $10.96 $10.14

INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . 0.00 0.02 0.01
Net gain or loss on securities
(both realized and unrealized) . . . . . . . . 0.00 2.65 1.10

Total from investment operations . . . . . . . 0.00 2.67 1.11

LESS DISTRIBUTIONS:
Dividends (from net investment income) . . . . 0.00 (0.01) 0.00
Distributions (from realized capital gains). . 0.00 (0.84) (0.27)
Distributions (in excess of capital gains) . . 0.00 (0.10) (0.01)

Total distributions. . . . . . . . . . . . . . . 0.00 (0.94) (0.029)

Net Asset value, end of period . . . . . . . . . $0.00 $12.69 $10.96

Total return(7). . . . . . . . . . . . . . . . . 0.00% 24.35% 10.89%

RATIOS/SUPPLIMENTAL DATA:
Net assets, end of period (000's). . . . . . . $00,000 $29,468 $13,552
Ratio of expenses to average net assets
(annualzed)(8) . . . . . . . . . . . . . . . . 0.00% 1.62% 1.51%
Ratio of net investment income to average
net assets (annualzed) . . . . . . . . . . . . 0.00% 0.14% 0.13%
Portfolio turnover rate. . . . . . . . . . . . 0000% 63.62% 64.89%
Average commission rate paid . . . . . . . . . $0.00 $0.0029 $0.0052
</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) For the period April 30, 1997 (inception of operations) to December 31,
1997.
(7) Total returns assume purchase at net asset value at the beginnning of each
period. Returns for periods less than a full year are aggregate
(non-annualized) returns.
(8) Effective January 10, 1990, the distributor and Advisor 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
-------------------------------------------------------------
PERIOD ENDED 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth and Income Fund . . . . . . . . . . . . . 0.00% 1.10% 1.16% 1.24% 1.28%
Strategic Growth Fund. . . . . . . . . . . . . . 0.00% 1.21% 1.31% 1.65% 1.74%
Global Growth Fund . . . . . . . . . . . . . . . 0.00% 1.66% 2.36% NA NA
Emerging Growth Fund . . . . . . . . . . . . . . 0.00% 1.88% NA NA NA
</TABLE>

<PAGE>

[Atlas Funds Logo] HOW TO OBTAIN MORE INFORMATION ABOUT
ATLAS FUNDS

You can find more information about
the Atlas Funds' investment policies
in the Statement of Additional
Information (SAI), which is
incorporated by reference in this
prospectus (legally considered part of
this prospectus). The SAI is
available free of charge.

To request a copy of the Atlas Funds'
SAI , please call us at
1-800-933-ATLAS (1-800-933-2852). If
you have access to the Internet, you
can find the SAI at the Securities and
Exchange Commission's Web site at
www.sec.gov. You may also request a
copy by writing to the Public
Reference Section of the SEC,
Washington, D.C. 20549-6009. The SEC
charges a duplicating fee for this
service.

You can find further information about
the Atlas Funds in our annual and
semiannual shareholder reports. These
reports discuss the market conditions
and investment strategies that
significantly affected each fund's
performance during the previous fiscal
period. To request a copy of the most
recent annual or semiannual report,
please call us at
1-800-933-ATLAS (1-800-933-2852).

ATLAS ASSETS, INC.
794 Davis Street
San Leandro, CA 94577

SEC File No. Atlas Assets, Inc.
811-05485

t:\prospectus\BackCover.doc

<PAGE>
ATLAS FUNDS
Atlas Assets, Inc. Supplement
dated May 1, 1999
to Prospectus dated May 1, 1999

The following information should be read in conjunction with the Prospectus for
the Atlas Funds. This supplement contains information about the Funds' Class B
shares.

Class B shares are currently available only for additional investment into
previously established Class B share accounts and to accommodate exchanges
between Class B share accounts.

<TABLE>
<CAPTION>
-------------------------------------------------------------------
U.S. GOV.
U.S. CALIFORNIA NATIONAL AND
TREASURY MUNICIPAL MUNICIPAL MORTGAGE STRATEGIC
MONEY BOND BOND SECURITIES INCOME
EXPENSE SUMMARY: FUND FUND FUND FUND FUND
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

SHAREHOLDER TRANSACTION FEES
(fees paid directly from your investment)
Maximum sales charge (load) on purchases None None None None None
Maximum deferred sales charge (load) 3.0% 3.0% 3.0% 3.0% 3.0%
Redemption fee None None None None None
Exchange fee None None None None None

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management fee 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%
Distribution (12b-1) fee 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%
Other expenses 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%
---- ---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES* 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%
Fee waiver and/or expense reimbursement 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%
---- ---- ---- ---- ----
NET EXPENSES 0.xx% 0.xx% 0.xx% 0.xx% 0.xx%

EXPENSE EXAMPLE:**
Redeemed end of year 1 $xxx $xxx $xxx $xxx $xxx
Redeemed end of year 3 $xxx $xxx $xxx $xxx $xxx
Redeemed end of year 5 $xxx $xxx $xxx $xxx $xxx
Redeemed end of year 10 $xxx $xxx $xxx $xxx $xxx
No redemptions end of year 1 $xxx $xxx $xxx $xxx $xxx
No redemptions end of year 3 $xxx $xxx $xxx $xxx $xxx
No redemptions end of year 5 $xxx $xxx $xxx $xxx $xxx
No redemptions end of year 10 $xxx $xxx $xxx $xxx $xxx
</TABLE>

*Atlas Advisers has agreed to limit operating expenses of certain of the Funds
to the percentage of average net assets presented above as "Net Expenses". This
agreement is renewable annually at the end of each fiscal year.

**The example above shows what you would pay in expenses over time. It assumes a
$10,000 initial investment, 5% total return each year and no changes in
expenses. This example is for comparison purposes only. It does not necessarily
represent the Fund's actual returns or expenses.

1
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------
GROWTH
AND STRATEGIC GLOBAL EMERGING
BALANCED INCOME GROWTH GROWTH GROWTH
EXPENSE SUMMARY: FUND FUND FUND FUND FUND
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES
(fees paid directly from your investment)
Maximum sales charge (load) on purchases None None None None None
Maximum deferred sales charge (load) 3.0% 3.0% 3.0% 3.0% 3.0%
Redemption fee None None None None None
Exchange fee None None None None None

2
<PAGE>
CLASS B CONTINGENT DEFERRED SALES CHARGE

You will pay a contingent deferred sales charge (the "CDSC") from the redemption
proceeds of your Class B shares redeemed within five years of their purchase.
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. There is no CDSC 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 between the time you pay for Class B shares and the time you redeemed
those shares. That is why we refer to the CDSC as an adjustable load. To measure
the number of years since a purchase was made, we aggregate all payments made
during a month and treat them as made on the first day of the month. The CDSC
schedule is as follows:

<TABLE>
<CAPTION>
Contingent deferred sales charge
Year(s) since purchase order on redemption in that year.
was accepted. (as % of applicable proceeds)
---------------------------- --------------------------------
<S> <C>

One 3%

Two 3%

Three 2%

Four 2%

Five 1%

After five years None
</TABLE>

Because Class B shares pay an ongoing distribution fee at an annual rate of up
to 0.75% of average daily net assets, Class B shares will 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.

3
<PAGE>

CLASS B AUTOMATIC CONVERSION FEATURE - Sixty months after we accept a purchase
order for Class B shares, such Class B shares will automatically convert to
Class A shares, based on the relative net asset values of the two classes,
without 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 - We will waive the CDSC 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 701/2, and for involuntary redemptions as a result of an
account's balance remaining below $1,250 after sixty days written notice.

OTHER CLASS B INFORMATION

CLASS B SHARES CAN ONLY BE EXCHANGED FOR CLASS B SHARES OF ANOTHER FUND. 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 prior
to any exchanges. There is no CDSC on an exchange of Class B shares.

It generally would not be advantageous to use the automatic redemption plan
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.

CHECKWRITING IS NOT AVAILABLE FOR CLASS B SHARES OF ANY FUND.

CERTIFICATES WILL NOT BE ISSUED FOR CLASS B SHARES.

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. Any per share income dividends, if any, on Class B shares
will be lower than the per share income dividends on Class A shares as a result
of the higher distribution fee applicable to Class B shares.

EXCHANGES - 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 automatic
conversions of Class B shares to Class A shares 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).

4
<PAGE>

FINANCIAL HIGHLIGHTS

The following tables present Class B per share financial information for the
Funds' fiscal years or periods ended December 31, 1994, 1995, 1996, 1997 and
1998, which information has been audited and reported on by Deloitte & Touche
LLP, the Funds' independent auditors, whose report dated February ___, 1999,
appears in the Funds' Annual Report to Shareholders for the year ended December
31, 1998 which is incorporated by reference into the Funds' Statement of
Additional Information.

MONEY FUNDS

U.S. TREASURY MONEY FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
--------- ---------- ---------- --------- ---------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.0xx 0.039 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
--------- ---------- ---------- --------- ---------
Total from investment operations 0.xxx 0.039 0.040 0.044 0.018
--------- ---------- ---------- --------- ---------
LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xxx) (0.039) (0.040) (0.044) (0.018)
Distributions (from realized capital gains) 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
--------- ---------- ---------- --------- ---------
Total distributions (0.xxx) (0.039) (0.040) (0.044) (0.018)
--------- ---------- ---------- --------- ---------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
--------- ---------- ---------- --------- ---------
Total return(3) x.xx% 3.95% 4.07% 4.45% 3.53%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $xxx $165 $120 $113 $28
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.37% 1.18% 1.24% 1.13%
Ratio of net investment income to average net
assets (annualized) x.xx% 3.90% 3.95% 4.34% 3.71%
Portfolio turnover rate -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
PERIOD ENDED 1998 1997 1996 1995 1994
- ------------ ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>

U.S. Treasury Money Fund x.xx% 3.25% 3.25% 3.25% 3.25%
</TABLE>

5
<PAGE>

BOND FUNDS

CALIFORNIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $xx.xx $11.15 $11.26 $10.32 $10.74
---------- ----------- ----------- ---------- ----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx 0.48 0.48 0.48 0.25
Net gain or loss on securities (both realized
and unrealized) 0.xx 0.34 (0.11) 0.94 (0.42)
---------- ----------- ----------- ---------- ----------
Total from investment operations 0.xx 0.82 0.37 1.42 (0.17)
---------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.48) (0.48) (0.48) (0.25)
Distributions (from realized capital gains) x.xx (0.04) 0.00 0.00 0.00
Distributions (in excess of realized gains) 0.00 0.00 0.00 0.00 0.00
---------- ----------- ----------- ---------- ----------
Total distributions (0.xx) (0.52) (0.48) (0.48) (0.25)
---------- ----------- ----------- ---------- ----------
Net asset value, end of period $xx.xx $11.45 $11.15 $11.26 $10.32
---------- ----------- ----------- ---------- ----------
Total return(3) x.xx% 7.53% 3.39% 14.05% (1.59%)

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $x,xxx $8,025 $5,360 $3,162 $1,416
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.45% 1.46% 1.46% 1.28%
Ratio of net investment income to average net
assets (annualized) x.xx% 4.24% 4.33% 4.42% 4.91%
Portfolio turnover rate xx.xx% 15.95% 29.28% 25.90% 30.32%
</TABLE>

(1) For the year ended December 31.
(2) For the period July 1, 1994 (inception of operations) to December 31,
1994.
(3) Total returns assume purchase at net asset value at the beginning of
each period. Returns for periods less than a full year are aggregate
(non-annualized) returns.
(4) Effective July 1, 1994, 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>
PERIOD ENDED 1998 1997 1996 1995 1994
- ------------ ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
California Municipal Bond Fund x.xx% 1.70% 1.83% 2.24% 3.25%
National Municipal Bond Fund x.xx% 2.13% 2.29% 3.25% 3.25%
</TABLE>

6
<PAGE>

BOND FUNDS

NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $xx.xx $11.21 $11.39 $10.41 $10.76
---------- ----------- ----------- ---------- ----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.0xx 0.48 0.46 0.47 0.24
Net gain or loss on securities (both realized
and unrealized) 0.xx 0.41 (0.12) 0.98 (0.35)
---------- ----------- ----------- ---------- ----------
Total from investment operations 0.xx 0.89 0.34 1.45 (0.11)
---------- ----------- ----------- ---------- ----------

LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.48) (0.46) (0.47) (0.24)
Distributions (from realized capital gains) x.xx (0.07) (0.06) 0.00 0.00
Distributions (in excess of realized gains) 0.00 0.00 0.00 0.00 0.00
---------- ----------- ----------- ---------- ----------
Total distributions (0.xx) (0.55) (0.52) (0.47) (0.24)
---------- ----------- ----------- ---------- ----------
Net asset value, end of period $xx.xx $11.55 $11.21 $11.39 $10.41
---------- ----------- ----------- ---------- ----------
Total return(3) x.xx% 8.11% 3.07% 14.16% (0.99%)

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $x,xxx $3,162 $1,952 $1,051 $342
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.50% 1.51% 1.44% 1.28%
Ratio of net investment income to average net
assets (annualized) x.xx% 4.21% 4.14% 4.22% 4.72%
Portfolio turnover rate x.xx% 21.80% 44.76% 54.30% 37.52%
</TABLE>

7
<PAGE>

BOND FUNDS

U.S. GOVERNMENT AND MORTGAGE SECURITIES FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $x.xx $10.07 $10.30 $9.55 $9.80
---------- ----------- ----------- ---------- ----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx 0.62 0.62 0.64 0.32
Net gain or loss on securities (both realized
and unrealized) x.xx 0.13 (0.23) 0.75 (0.25)
---------- ----------- ----------- ---------- ----------
Total from investment operations 0.xx 0.75 0.39 1.39 0.07
---------- ----------- ----------- ---------- ----------

LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.62) (0.62) (0.64) (0.32)
Distributions (from realized capital gains) 0.00 0.00 0.00 0.00 0.00
Distributions (in excess of realized gains) 0.00 0.00 0.00 0.00 0.00
---------- ----------- ----------- ---------- ----------
Total distributions (0.xx) (0.62) (0.62) (0.64) (0.32)
---------- ----------- ----------- ---------- ----------
Net asset value, end of period $x.xx $10.20 $10.07 $10.30 $9.55
---------- ----------- ----------- ---------- ----------
Total return(3) x.xx% 7.72% 3.98% 14.93% 0.69%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $x,xxx $7,228 $5,888 $3,799 $1,451
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.53% 1.53% 1.53% 1.43%
Ratio of net investment income to average net
assets (annualized) x.xx% 6.16% 6.19% 6.34% 6.82%
Portfolio turnover rate x.xx% 3.73% 27.45% 48.39% 16.33%
</TABLE>

<TABLE>
<CAPTION>
PERIOD ENDED 1998 1997 1996 1995 1994
- ------------ ---------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>

U.S. Government and Mortgage Securities Fund x.xx% 1.76% 1.82% 2.27% 3.25%
Strategic Income Fund x.xx% 2.27% 3.25% NA NA
Balanced Fund x.xx% 1.91% 2.21% 3.25% 3.25%
</TABLE>

8
<PAGE>

BOND FUNDS

STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996[*]
---------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $x.xx $5.15 $5.00
---------- ------------ ------------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx 0.38 0.23
Net gain or loss on securities (both realized
and unrealized) x.xx 0.06 0.17
---------- ------------ ------------
Total from investment operations 0.xx 0.44 0.40
---------- ------------ ------------

LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.38) (0.23)
Distributions (from realized capital gains) (0.xx) (0.05) (0.01)
Distributions (in excess of realized gains) (0.xx) (0.01) (0.01)
---------- ------------ ------------
Total distributions (0.xx) (0.44) (0.25)
---------- ------------ ------------
Net asset value, end of period $x.xx $5.15 $5.15
---------- ------------ ------------
Total return(3) x.xx% 8.77% 8.25%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $x,xxx $8,048 $2,964
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.16% 0.74%
Ratio of net investment income to average net
assets (annualized) x.xx% 7.29% 7.47%
Portfolio turnover rate x.xx% 221.41% 187.15%
</TABLE>

[*] For the period May 20, 1996 (inception of operations) to December 31, 1996.

9
<PAGE>

STOCK FUNDS

BALANCED FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $x.xx $12.15 $11.17 $9.22 $9.41
---------- ----------- ----------- ---------- ----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx 0.39 0.36 0.35 0.10
Net gain or loss on securities (both realized
and unrealized) x.xx 2.26 1.32 2.03 (0.07)
---------- ----------- ----------- ---------- ----------
Total from investment operations x.xx 2.65 1.68 2.38 0.03
---------- ----------- ----------- ---------- ----------

LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.40) (0.37) (0.37) (0.22)
Distributions (from realized capital gains) x.xx (0.31) (0.33) (0.06) 0.00
Distributions (in excess of realized gains) 0.00 0.00 0.00 0.00 0.00
---------- ----------- ----------- ---------- ----------
Total distributions (0.xx) (0.71) (0.70) (0.43) (0.22)
---------- ----------- ----------- ---------- ----------
Net asset value, end of period $x.xx $14.09 $12.15 $11.17 $9.22
---------- ----------- ----------- ---------- ----------
Total return(3) x.xx% 22.05% 15.25% 26.08% 0.25%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $x,xxx $9,552 $4,802 $1,632 $586
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.69% 1.77% 1.99% 1.48%
Ratio of net investment income to average net
assets (annualized) x.xx% 3.07% 3.37% 3.66% 4.43%
Portfolio turnover rate x.xx% 14.71% 41.41% 25.84% 29.19%
</TABLE>

10
<PAGE>

STOCK FUNDS

GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
---------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>

Net asset value, beginning of period $xx.xx $17.78 $15.89 $13.52 $13.04
---------- ------------ ----------- ----------- ------------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) 0.0x 0.03 0.06 0.10 0.02
Net gain or loss on securities (both realized
and unrealized) 0.xx 4.56 3.05 4.26 0.67
---------- ------------ ----------- ----------- ------------
Total from investment operations 0.xx 4.59 3.11 4.36 0.69
---------- ------------ ----------- ----------- ------------
LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.03) (0.07) (0.12) (0.06)
Distributions (from realized capital gains) (x.xx) (3.53) (1.15) (1.87) (0.12)
Distributions (in excess of realized gains) x.xx (0.01) 0.00 0.00 (0.03)
---------- ------------ ----------- ----------- ------------
Total distributions (0.xx) (3.57) (1.22) (1.99) (0.21)
---------- ------------ ----------- ----------- ------------
Net asset value, end of period $x.xx $18.80 $17.78 $15.89 $13.52
---------- ------------ ----------- ----------- ------------
Total return(5) x.xx% 25.82% 19.60% 32.32% 5.32%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $xx,xxx $18,227 $12,427 $4,292 $1,460
Ratio of expenses to average net assets
(annualized)(6) x.xx% 1.49% 1.66% 1.75% 1.66%
Ratio of net investment income to average net
assets (annualized) x.xx% 0.14% 0.29% 0.84% 0.71%
Portfolio turnover rate xx.xx% 118.26% 86.66% 125.28% 123.64%
</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 April 30, 1996 (effective date of registration) to
December 31, 1996.
(4) For the period April 30, 1997 (inception of operations) to December 31,
1997.
(5) Total returns assume purchase at net asset value 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>
PERIOD ENDED 1998 1997 1996 1995 1994
- ------------ ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Growth and Income Fund x.xx% 1.69% 1.83% 2.39% 3.25%
Strategic Growth Fund x.xx% 1.82% 2.12% 3.25% 3.25%
Global Growth Fund x.xx% 2.48% 3.25% NA NA
Emerging Growth Fund x.xx% 3.25% NA NA NA
</TABLE>

11
<PAGE>

STOCK FUNDS

STRATEGIC GROWTH FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(1) 1995(1) 1994(2)
----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>

Net asset value, beginning of period $xx.xx $13.92 $12.63 $9.98 $9.92
----------- ------------ ---------- ---------- ----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx 0.05 0.07 0.03 (0.05)
Net gain or loss on securities (both realized
and unrealized) 0.xx 3.60 2.85 2.82 0.21
----------- ------------ ---------- ---------- ----------
Total from investment operations x.xx 3.65 2.92 2.85 0.16
----------- ------------ ---------- ---------- ----------

LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.xx) (0.05) (0.07) (0.06) (0.10)
Distributions (from realized capital gains) (x.xx) (1.30) (1.56) (0.14) 0.00
Distributions (in excess of realized gains) x.xx 0.00 0.00 0.00 0.00
----------- ------------ ---------- ---------- ----------
Total distributions (x.xx) (1.35) (1.63) (0.20) (0.10)
----------- ------------ ---------- ---------- ----------
Net asset value, end of period $x.xx $16.22 $13.92 $12.63 $9.98
----------- ------------ ---------- ---------- ----------
Total return(3) x.xx% 26.23% 23.13% 28.58% 1.57%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $xx,xxx $12,344 $5,689 $2,332 $327
Ratio of expenses to average net assets
(annualized)(4) x.xx% 1.71% 1.81% 2.14% 1.80%
Ratio of net investment income to average net
assets (annualized) x.xx% 0.37% 0.59% 0.56% 0.82%
Portfolio turnover rate xx.xx% 85.55% 119.87% 73.32% 54.01%
</TABLE>

12
<PAGE>

STOCK FUNDS

GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
1998(1) 1997(1) 1996(3)
----------- ------------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $xx.xx $10.91 $10.14
----------- ------------- -----------

INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx (0.05) (0.03)
Net gain or loss on securities (both realized
and unrealized) 0.xx 2.63 1.08
----------- ------------- -----------
Total from investment operations 0.xx 2.58 1.05
----------- ------------- -----------

LESS DISTRIBUTIONS:
Dividends (from net investment income) 0.00 0.00 0.00
Distributions (from realized capital gains) (x.xx) (0.84) (0.27)
Distributions (in excess of realized gains) x.xx (0.10) (0.01)
----------- ------------- -----------
Total distributions x.xx) (0.94) (0.28)
----------- ------------- -----------
Net asset value, end of period $x.xx $12.55 $10.91
----------- ------------- -----------
Total return(3) x.xx% 23.64% 10.34%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $xx,xxx $5,691 $2,210
Ratio of expenses to average net assets
(annualized)(4) x.xx% 2.14% 2.24%
Ratio of net investment income to average net
assets (annualized) x.xx% (0.40%) (0.75%)
Portfolio turnover rate xx.xx% 63.62% 64.89%
</TABLE>

13
<PAGE>

STOCK FUNDS

EMERGING GROWTH FUND
<TABLE>
<CAPTION>
1998(1) 1997(4)
----------- -------------
<S> <C> <C>
Net asset value, beginning of period $xx.xx $10.00
----------- -------------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.xx (0.12)
Net gain or loss on securities (both realized
and unrealized) 0.xx 3.05
----------- -------------
Total from investment operations 0.xx 2.93
----------- -------------

LESS DISTRIBUTIONS:
Dividends (from net investment income) 0.xx 0.00
Distributions (from realized capital gains) x.xx 0.00
Distributions (in excess of realized gains) x.xx 0.00
----------- -------------
Total distributions x.xx 0.00
----------- -------------
Net asset value, end of period $x.xx $12.93
----------- -------------
Total return(3) x.xx% 29.30%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $xx,xxx $2,235
Ratio of expenses to average net assets
(annualized)(4) x.xx% 2.23%
Ratio of net investment income to average net
assets (annualized) x.xx% (1.35%)
Portfolio turnover rate xx.xx% 17.06%
</TABLE>

14
<PAGE>

PART B

ATLAS FUNDS

-----------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

-----------------------------------------------

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
May 1, 1999 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 May 1, 1999.

<PAGE>

TABLE OF CONTENTS

PAGE

Description of Certain Securities and
Investment Policies.............................................. B-_

Fundamental Investment Restrictions ................................ B-__

Portfolio Turnover ................................................. B-__

Management of the Company .......................................... B-__

Investment Advisory and Other Services ............................. B-__

Execution of Portfolio Transactions ................................ B-__

How to Invest ...................................................... B-__

Other Investment and Redemption Services ........................... B-__

Taxes .............................................................. B-__

Additional Information ............................................. B-__

Investment Results ................................................. B-__

Financial Statements ............................................... B-__

Appendix -- Industry Classifications ............................... B-__

<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 - ATLAS STRATEGIC INCOME FUND.

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 LOWER-RATED SECURITIES.

In seeking high current income, the Strategic Income Fund may invest in
higher-yielding, lower-rated debt securities ("junk bonds"). 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 portfolio managers 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
portfolio managers believe offer yields and risks comparable to rated
securities.

These risks mean that a Fund may not achieve the expected income from
lower-grade securities, and that a Fund's 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.

Risks of high yield securities may include:

- limited liquidity and secondary market support;

- substantial market price volatility resulting from changes in prevailing
interest rates;

- subordination to the prior claims of banks and other senior lenders;

B-2

<PAGE>

- 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;

- the possibility that earnings of the issuer may be insufficient to meet its
debt service; and

- 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.

DERIVATIVE INVESTMENTS.

The Strategic Income Fund invests in a number of different kinds of
derivative investments. The Fund may use some types of derivatives for hedging
or diversification 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 addition to the risk 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
portfolio manager 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.

One type of derivative the 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 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 the Fund may invest in include "debt
exchangeable for common stock" of an issuer or "equity-linked debt securities"
of an issuer. At maturity, such debt security is exchanged for common stock of
the issuer or is payable in an amount based on the price of the issuer's common
stock at the time of maturity. In either case, there is a risk that the amount
payable at maturity will be less than the principal amount of the debt (because
the price of the issuer's common stock is not as high as was expected).

U.S. GOVERNMENT MORTGAGE SECURITIES.

Under normal conditions, the Atlas U.S. Government and Mortgage Securities
Fund will invest at least 50% of its 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 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 Fund invests 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 Fund will be affected by
reinvestment of prepayments at higher or lower rates than the original
investment. Also, to the extent the Fund purchases 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.

The Government and Strategic Income 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 Fund 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.

REPURCHASE AGREEMENTS.

Each Atlas Fund, except the U.S. Treasury Money Fund, may engage in
repurchase agreement transactions on portfolio securities with member banks of
the Federal Reserve System or with certain dealers listed on the Federal Reserve
Bank of New York's list of reporting dealers. Under the terms of a typical
repurchase agreement, a Fund would acquire an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the obligation
at an agreed upon price and time, thereby determining the yield during the
Funds' holding period. This arrangement results in a fixed rate of return that
is not subject to market fluctuations during the Fund's holding period. The
value of the underlying securities will be monitored by the Adviser or by a
Fund's Subadviser to ensure that it at least equals at all times the total
amount of the repurchase obligation, including interest.

A Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert these rights. The
Adviser, or the Subadviser if applicable, acting under the supervision of the
Board of Directors, reviews, on an ongoing basis, the creditworthiness and the
values of the collateral of those banks and dealers with which a Fund enters
into repurchase agreements to evaluate potential risks.

A repurchase agreement is considered to be a loan collateralized by the
underlying securities under the 1940 Act. Investments by the Municipal Funds in
repurchase agreements, if

B-3

<PAGE>

any, are limited by the restrictions on those Funds' investment in taxable
instruments.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.

In order to secure yields or prices deemed advantageous at the time, all
Funds may purchase or sell securities on a "when-issued" or "delayed delivery"
basis. The Funds will not enter into such a transaction for the purpose of
leverage. In such transactions delivery of the securities occurs beyond the
normal settlement periods (generally within two months but not more than 120
days), but no payment or delivery is made by, and no interest accrues to, the
Fund prior to the actual delivery or payment by the other party to the
transaction. To the extent that assets of a Fund are not invested prior to the
settlement of a purchase of securities, the Fund will earn no income; however,
it is intended that each Fund will be fully invested to the extent practicable.
While when-issued or delayed delivery securities may be sold prior to the
settlement date, a Fund will purchase such securities for the purpose of
actually acquiring them unless a sale appears desirable for investment reasons.

At the time a Fund makes the commitment to purchase a security on a
when-issued or delayed delivery basis, it will record the transaction and
reflect the value of the security in determining its net asset value. The Funds
do not believe that the net asset value or income of their portfolios will be
adversely affected by their purchase of securities on a when-issued or delayed
delivery basis.

Due to fluctuations in the value of securities purchased on a when-issued
or delayed delivery basis, the yields obtained on such securities may be higher
or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers. Similarly, the sale of
securities on a firm commitment basis can involve the risk that the prices
available in the market when delivery is made may actually be higher than those
obtained in the transaction itself.

When the Fund engages in when-issued or delayed transactions, it relies on
the buyer or seller, as the case may be, to consummate the transaction. Failure
of the buyer or seller to do so may result in the Fund losing the opportunity to
obtain a price and yield considered to be advantageous. A Fund will establish a
segregated account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount equal to the amount of its when-issued
or firm commitment obligation. Such segregated securities either will mature
or, if necessary, be sold on or before the settlement date.

B-4

<PAGE>

When-issued transactions and forward commitments allow a Fund a technique
to use against anticipated changes in interest rates and prices. For instance,
in periods of rising interest rates and falling prices, a Fund might sell
securities in its portfolio on a forward commitment basis to attempt to limit
its exposure to anticipated falling prices. In periods of falling interest
rates and rising prices, a Fund might sell portfolio securities and purchase the
same or similar securities on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields.

DOLLAR REVERSE REPURCHASE AND REVERSE DOLLAR REVERSE REPURCHASE AGREEMENTS.

The Government Funds and the Strategic Income Fund may engage in dollar
reverse repurchase and reverse dollar reverse repurchase agreements with respect
to mortgage-backed securities. These agreements involve the purchase or sale by
the Fund of securities that are substantially similar to those sold or purchased
by the Fund upon the initiation of the transaction, as the case may be. For
this purpose, "substantially similar" means that the securities are issued by
the same U.S. Government agency or instrumentality, have the same original term
to maturity, and have the same original rate of interest, but may be backed by
different pools of mortgage obligations. Dollar reverse repurchase agreements
are subject to the same risks and restrictions as described in the Prospectus
with respect to reverse repurchase agreements. Reverse dollar reverse
repurchase agreements are subject to the same risks and restrictions as
described in "Repurchase Agreements" above with respect to repurchase
agreements.

OPTIONS ON SECURITIES, INDICES AND CURRENCIES (ALL BOND AND STOCK FUNDS ARE
ELIGIBLE TO USE THE FOLLOWING OPTIONS).

1. PURCHASING PUT AND CALL OPTIONS ON SECURITIES.

By purchasing a put option, a Fund obtains the right (but not the
obligation) to sell the option's underlying security to the writer of the option
at a fixed strike price. The option may give the Fund the right to sell only on
the option's expiration date, or may be exercisable at any time up to and
including that date. In return for this right, the Fund pays the writer the
current market price for the option (known as an option premium).

A Fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Fund exercises
the option, it completes the sale of the underlying security at the strike
price. The

B-5

<PAGE>

Fund may also terminate a put option position by effecting a "closing
transaction" (i.e. selling an option of the same series as the option previously
purchased) in the secondary market at its current price, if a liquid secondary
market exists.

Put options may be used by a Fund to hedge against losses on sales of
securities. If securities prices fall, the value of the put option would be
expected to rise and offset all or a portion of the Fund's resulting losses in
its securities holdings. However, option premiums tend to decrease over time as
the expiration date nears. Therefore, because of the cost of the option premium
and transaction costs, the Fund would expect to suffer a loss in the put option
if prices do not decline sufficiently to offset the deterioration in the value
of the option premium. At the same time, because the maximum the Fund has at
risk is option premium, purchasing put options offers potential profit from an
increase in the value of the securities hedged.

A Fund may also purchase options whether or not it holds such securities in
its portfolio. Buying a put option on an investment it does not own permits a
Fund either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event of a decline
in the securities market, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio securities.

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying security at the option's strike
price. By purchasing a call option, a Fund would attempt to participate in
potential price increases of the underlying security, but with risk limited to
the cost of the option if securities prices fell. At the same time, the Fund
can expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option. The value of debt securities underlying calls
purchased by the Strategic Income Fund will not exceed the value of the portion
of the Fund's portfolio invested in cash or cash equivalents (i.e., securities
with maturities of less than one year).

2. WRITING PUT AND CALL OPTIONS ON SECURITIES.

When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Fund assumes the obligation to pay

B-6

<PAGE>

the strike price for the option's underlying security if the other party to the
option chooses to exercise it. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of the
underlying security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. Prior to exercise, the Fund may seek
to terminate its position in a put option by effecting a closing purchase
transaction with respect to the option in the secondary market (i.e. buying an
option of the same series as the option previously written) at its current
price. If the secondary market is not liquid for an option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes, and must continue
to set aside assets to cover its obligation.

A Fund may write a put option as an alternative to purchasing a security.
If the security's price rises, the Fund would expect the put to lapse
unexercised and to profit from a written put option, although its gain would be
limited to the amount of the premium it received. If the security's price
remains the same over time, it is likely that the Fund will also profit, because
it should be able to close out the option at a lower price. If the security's
price falls, the Fund would expect to suffer a loss. If the put is exercised,
the Fund must fulfill its obligation to purchase the underlying investment at
the exercise price, which will usually exceed the market value of the investment
at that time. This loss should be less than the loss the Fund would have
experienced from purchasing the underlying security directly (assuming the
secondary market for the put option and the underlying security are equally
liquid) because the premium received for writing the option should mitigate the
effect of the price decline.

Writing a call option obligates a Fund to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing covered call options generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, the Fund would seek to mitigate the effects of a price decline.
At the same time, the Fund would give up some ability to participate in security
price increases when writing call options.

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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.

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.

CONVERTIBLE SESCURITIES.

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.

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.

FOREIGN SECURITIES.

Each Stock Fund and the Strategic Income Fund may purchase "foreign
securities," which are equity or debt securities issued by companies organized
under the laws of countries other than the United States. These securities are
listed on one or more foreign securities exchanges or are traded in the foreign
over-the-counter markets. Securities of foreign issuers represented by American
Depository Receipts, traded in the U.S. over-the-counter markets, or listed on a
U.S. securities exchange are not considered to be "foreign securities" because
they are not subject to many of the special considerations and risks that apply
to investments in foreign securities traded and held abroad. 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.

Foreign securities 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 reimposed.

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Foreign securities that a fund may purchase include securities issued by
issuers in undeveloped or emerging markets. Such investments involve added
risks, including less developed legal and economic structures, less stable
political systems, illiquid securities markets, and greater volatility of
prices.

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 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.

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:

- any collateralized repayment of principal at final maturity;

- the collateralized interest payments;

- the uncollateralized interest payments; and

- 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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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. No
more than 15% of a Fund's net assets will be held as collateral for such short
sales at any one time.

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 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 Municipal Funds.

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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 a Municipal Fund.

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. The State now comprises 12.3% of the
nation's population and 12.5% 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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defense-related manufacturing, trade, entertainment, real estate, and
financial services. After experiencing strong growth throughout much of the
1980's, from 1990-1993 California suffered through a severe recession,
the worst since the 1930's, heavily influenced by large cutbacks in
defense/aerospace industries and military base closures and a major drop in
real estate construction. California's economy has been recovering and
growing steadily stronger since the start of 1994, to the point where the
State's economic growth is outpacing the rest of the nation. The
unemployment rate, while still higher than the national average, fell to an
average of 5.9% in 1998, compared to over 10% at the worst of the recession.
Recent economic reports indicate that, while the rate of economic growth is
expected to moderate over the next three years, the increases in employment
and income may exceed those of the nation as a whole. The unsettled
financial situation occurring in certain Asian economies may adversely affect
the State's export-related industries and, therefore, the State's rate of
economic growth.

The Governor signed the 1998-99 Budget Act on August 21, 1998. The 1998-99
Budget Act is based on projected General Fund revenues and transfers of $57.0
billion (after giving effect to various tax reductions enacted in 1997 and
1998), a 4.2% increase from the revised 1997-98 figures. Special Fund revenues
were estimated at $14.3 billion. The revenue projections were based on the
Governor's May Revision to the 1998-99 Budget and may be overstated in light of
the possible effect on California's economic growth of worsening economic
problems in various international markets.

The Budget Act provides authority for expenditures of $57.3 billion from
the General Fund (a 7.3% increase from 1997-98), $14.7 billion from Special
Funds, and $3.4 billion from bond funds. The Budget Act projects a balance in
the SFEU at June 30, 1999 of $1.255 billion, a little more than 2% of General
Fund revenues. The budget Act assumes the State will carry out its normal
intra-year cash flow borrowing in the amount of $1.7 billion of revenue
anticipation notes issued in October, 1998.

The most significant feature of the 1998-99 budget was agreement on a total
of $1.4 billion of tax cuts. The central element is a bill which provides for a
phased-in reduction of the Vehicle License Fee (VLF). Since the VLF is
currently transferred to cities and counties, the bill provides for the General
Fund to replace the lost revenues. Starting on January 1, 1999, the VLF will be
reduced by 25%, at a cost to the General Fund of approximately $500 million in
the 1998-99 Fiscal Year and about $1 billion annually thereafter.

The Governor's proposed budget for fiscal year 1999-2000 proposes total
State spending of $76.2 billion (excluding the expenditure of federal funds and
selected bond funds), which is up 4.1% from the 1998-1999 budget. This total
includes $60.5 billion in General Fund spending (a 3.8% increase) and $15.7 in
special funds spending. The Governor's proposed budget anticipates a $415
million reserve by the close of the fiscal year. The proposed budget addresses
an anticipated funding shortfall of $2.3 billion (which includes funds to
rebuild the reserve) through a combination of new state and federal resources,
the rescheduling of certain expenditures, under budgeting certain expenditures,
spending cutbacks, and savings assumptions.

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

B-32

<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+. In October, 1997, Fitch raised its rating from A+ to AA-
referring to the State's fundamental strengths, the extent of its economic
recovery and the return of financial stability. In October 1998, Moody's raised
its rating from A1 to Aa3 citing the State's continuing economic recovery and a
number of actions taken to improve the State's credit condition, including the
rebuilding of cash and budget reserves.

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%. In December, 1997, Moody's
raised its ratings on $325 million of Orange County pension obligation bonds
to Baa3 from Ba. In February 1998, Fitch assigned outstanding Orange County
pension obligation bonds a BBB rating.

Los Angeles County, the nation's largest county, has also experienced
financial difficulty. It has not yet recovered from the ongoing loss of
revenue caused by state property tax shift initiatives in 1993 through 1995. In
April 1998, the Los Angeles County Chief Administrative Officer proposed an
approximately $13.2 billion 1998-99 budget, which would be 5.3% larger than the
1997-98 budget, and which would not require cuts in services and jobs to close a
projected deficit. In June 1998, the Los Angeles County Board of Supervisors
approved an approximately $13.6 billion 1998-99 budget, reserving the right to
make further changes to reflect revenue allocation decisions in the final State
budget. In December 1998, Moody's raised the ratings on the County's general
obligation bonds to A1 from A2.

In October 1997, the Governor issued Executive Order W-163-97 stating that
Year 2000 solutions would be a State priority and requiring each agency of the
State, no later than December 31, 1998, to address Year 2000 problems in their
essential systems and protect those systems from corruption by non-compliant
systems, in accordance with the Department of Information Technology's
California 2000 Program. There can be no assurance that steps being taken by
state or local government agencies with respect to the Year 2000 problem will be
sufficient to avoid any adverse impact upon the budgets or operations of those
agencies.

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.

B-33

<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

B-34
<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.

B-35
<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

B-36
<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.

B-37
<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

B-38
<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.

(17) Conduct its investment program in a manner inconsistent with prudent
investment management.

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.

B-39
<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).

B-40
<PAGE>

MANAGEMENT OF THE COMPANY

ORGANIZATION.

Atlas Assets, Inc. (the "Company") is an open-end, management investment
company, or mutual fund, offering twelve portfolios (the "Atlas Funds"). The
Company was organized as a Maryland corporation on November 17, 1987 and began
operations on January 10, 1990.

Each Atlas Fund, with the exception of the California Municipal Money Fund
and the California Municipal Bond Fund, (the "California Funds") is
"diversified." This means that, with respect to at least 75% of a Fund's total
assets, it 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 total assets and no more than 10% of
the issuer's outstanding voting securities.

The California Funds are classified as "non-diversified" under the
Investment Company Act of 1940, due to the limited number of securities
available to meet their investment objectives. 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 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
may assume large positions in the obligations of a small number of issuers which
may cause the Fund's share price to fluctuate to a greater extent than share
prices of funds holding more diversified portfolios.

The Company is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders. The Directors meet periodically
throughout the year to oversee the activities of the Company and the actions of
the service providers to the Funds.

The Company's Board of Directors has authorized two classes of stock (Class
A and Class B) for each Fund, which constitute the Company's shares of capital
stock. 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.

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. 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.

DIRECTORS AND OFFICERS.

The Directors and officers of Atlas Assets, Inc. (the "Company"), their
business addresses and principal occupations during the past five years are:

Positions Principal Occupations
Name, Age and Address Held and Business Experience
- ---------------------------- ----------------- ------------------------------
<S> <C> <C>
Marion O. Sandler, 68 (1) 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, 52 (2)(3) Director Certified Public Accountant/
Hood and Strong Tax Partner of Hood and Strong
101 California Street
San Francisco, CA 94111

Russell W. Kettell, 55 (1) Director President of GWFC and Senior
1901 Harrison Street Executive Vice President of
Oakland, CA 94612 World Savings

Julian A. Lerner, 73 (2)(3) Director Trustee, American Skandia Advisor
One Spurling Plaza, Suite 208 Funds, Inc. and American Skandia
12850 Spurling Road Master Trust since May, 1997;
Dallas, Texas 75230 Trustee, American Skandia Trust
since September, 1996; Trustee, IDEX
Series Fund since March, 1996;
January, 1995 - March, 1996 Investment
Consultant; 1986-1995 Senior Vice
President and Portfolio Manager of
AIM Charter Fund and AIM Summit Fund;
1990-1993 Portfolio Manager to Atlas
Growth and Income Fund

David J. Teece, 50 (2)(3) Director Professor, Haas School of Business,
University of California and Director, Institute of Management,
IMIO #1930 Innovation and Organization, University
Haas School of Business S-402 of California, Berkeley. Chairman of the
Berkeley, CA 94720 Board of LEGG, Inc., a New York Stock
Exchange listed professional services
firm
</TABLE>

B-41
<PAGE>

Positions Principal Occupations
Name, Age and Address Held and Business Experience
- ---------------------------- ----------------- ------------------------------
<S> <C> <C>
Julius Louis Helvey, 66 (1) Executive Vice Executive Vice President
1901 Harrison Street President and of World Savings, GWFC,
Oakland, CA 94612 Chief Financial Adviser and Distributor
Officer

Larry E. LaCasse, 55 (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

Steven J. Gray, 43 (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
</TABLE>

B-42
<PAGE>

- ---------------

(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.

As of March 31, 1999, 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 ________% of the Class A shares outstanding of the
Atlas Emerging Growth Fund and ___________% of the total shares of that
Fund. In addition, as of such date, the Distributor owned beneficially
and of record an aggregate of _______% 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 March 31, 1999, officers and directors as a group owned approximately
___________% of the shares of the Atlas California Municipal Money Fund, but
owned less than 1% of each class of

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<PAGE>

the shares of each of the other Funds. The officers and directors as a group
owned ___________% 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, 1998 to the Directors who are not
affiliated with the Investment Adviser and the aggregate compensation paid to
such Directors for service on the Company's Board and that of all other funds in
the "Company complex", (of which there currently are none, as defined in
Schedule 14A under the Securities Exchange Act of 1934):

<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement from
Benefits Estimated Company and
Accrued as Annual Company
Aggregate Part of Benefits Complex
Compensation Company Upon Paid to
Name from Company Expenses Retirement Directors
- ---- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Barbara A. Bond $______ None N/A $______(13)*

Julian A. Lerner $_____ None N/A $ _____(13)*

David J. Teece $______ None N/A $______(13)*

Marion O. Sandler None None N/A None

Russell W. Kettell None None N/A None
</TABLE>
* Indicates total number of funds in Company complex.

INVESTMENT ADVISORY AND OTHER SERVICES

Atlas Advisers, Inc. ("Investment Adviser"), a wholly owned subsidiary of
Golden West Financial Corporation, serves as the investment adviser to the
Company. Golden West Financial is a New York Stock Exchange listed savings and
loan holding company headquartered in Oakland, California. The Company has
entered into an Investment Advisory Agreement with the Investment Adviser 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 23, 1998.

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

B-44
<PAGE>

for the purpose of voting on such approval. The Advisory Agreement also
provides that either party thereto has the right with respect to any Fund to
terminate it without penalty, upon 60 days written notice to the other party,
and that the Advisory Agreement automatically terminates in the event of its
assignment (as defined in the 1940 Act).

The directors and officers of the Investment Adviser are: Marion O.
Sandler (Director, President and Chief Executive Officer), James T. Judd
(Director), Dirk S. Adams (Director), Julius Louis Helvey (Group Senior Vice
President and Chief Financial Officer), Larry E. LaCasse (Group Senior Vice
President and Chief Operating Officer), and 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. The Investment
Adviser has agreed to waive all or a portion of management fees and absorb a
portion of the ordinary operating expenses of certain Funds during the fiscal
year ending December 31, 1999, in order to cap operating expenses at levels set
forth in the current prospectus.

For the fiscal years ended December 31, 1996, 1997 and 1998, the Adviser
received management fees in the amount of $4,356,766, $5,138,083 and
$6,391,515, respectively. Such amounts were net of management fee waivers in
the amount of $347,612, $434,218 and $356,232, respectively. Each Fund pays
the Adviser a management fee at an annual rate equal to a percentage of each
Fund's average net assets as follows:

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 .55% .55% .50%
Income Fund)
Strategic Income Fund .75% .70% .65%
Stock Funds .70% .60% .50%
(other than the Global Growth and
Emerging Growth Funds)
Global Growth and Emerging Growth Funds .80% .75% .70%
</TABLE>

The fees are allocated to each class of shares based upon the relative
proportion of the Fund's net assets represented by that class.

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. The Subadvisory Agreement 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 23, 1998, and by shareholders of the Municipal Funds at a meeting held
on March 17, 1993.

The Adviser pays Boston Advisors for its portfolio management services out
of the management fees the Adviser receives from the Funds. For the fiscal
years ended December 31, 1996, 1997 and 1998, Boston Advisors received
subadvisory fees in the amount of $520,863, 518,113 and $530,502, respectively.
Boston Advisor's parent company, The Boston Company, Inc., is a wholly owned
subsidiary of Mellon Bank Corporation, a publicly owned multibank holding
company.

B-45
<PAGE>

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 23, 1998 with respect to
each of the Stock Funds and the Strategic Income Fund. The shareholders of the
Atlas Growth and Income Fund approved the Oppenheimer Subadvisory Agreement at a
meeting on September 29, 1993. The Adviser pays Oppenheimer for its portfolio
management services out of the management fees the Adviser receives from the
Funds. For the fiscal years ended December 31, 1996, 1997 and 1998, Oppenheimer
received subadvisory fees in the amount of $504,602, $921,523 and $1,397,785,
respectively.

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.

The Company has adopted a Principal Underwriting Agreement with Atlas
Securities, Inc. (the "Distributor"), 794 Davis Street, San Leandro, California,
which serves as the sole underwriter and distributor of each Fund's shares. The
Distributor, like the Investment Adviser, is a wholly owned subsidiary of Golden
West Financial Corporation. Pursuant to the Principal Underwriting Agreement, a
commission is paid to the Distributor 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, 1996, 1997 and 1998, the Distributor received and retained sales
commissions from the Company for the sale of Class B shares in the amounts of
$28,622, $61,415 and $_____________, 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

B-46

<PAGE>

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, 1998, the Distributor received reimbursements for
distribution expenses for Class A shares in the amount $_________.

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, 1998,
the Distributor received distribution fees for Class B shares in the amount of
$_______. As of such date, $_______ of unreinbursed expenses, representing
[_____%] of the Funds' aggregate net asset value, was carried over to be paid
in future years.

B-47
<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, 1996, 1997 and 1998 were $243,144, $360,735 and $_________, respectively.
Total brokerage commissions for the Atlas Balanced Fund for the fiscal years
ended December 31, 1996, 1997 and 1998 were $10,248, $13,226 and $___________,
respectively. Total brokerage commissions paid by the Atlas Strategic Growth
Fund were $63,883, $125,727 and $________, 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, and for the fiscal years
ended December 31, 1997 and 1998 were $52,719, $88,161 and $_________,
respectively. Total brokerage commissions paid by the Atlas Emerging Growth Fund
for the period April 30, 1997 (effective date of registration) to December 31,
1997, and for the fiscal year ended December 31, 1998 was $9,549 and $_________,
respectively. Broker-dealers used by the Stock

B-48
<PAGE>

Funds' Subadviser to execute portfolio 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, after receipt
by the Funds' Shareholder Services Agent of a request in good order, is the
next determined 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

B-49

<PAGE>

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.

B-50
<PAGE>

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-51

<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

B-52
<PAGE>

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 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. For
purposes of determining eligibility for reduced minimum initial amounts,
"employee accounts" are defined as accounts of officers, directors, current or
retired employees of Golden West Financial Corporation and its operating
subsidiaries. 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.

B-53
<PAGE>

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

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.

CHECKWRITING REDEMPTIONS.

The checkwriting feature available for Atlas money and bond fund accounts
does not create a bank or savings and loan checking account or any banking
relationship between you and the fund or any bank or savings and loan
association. A "check" is merely an instruction to the Shareholder Service
Agent to process a redemption. Because the Shareholder Services Agent is not a
depository institution, it can give no assurance that a stop payment order will
be effective.

B-54
<PAGE>

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
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.

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

B-55
<PAGE>

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.

B-56
<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

B-57
<PAGE>

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.

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.

B-58
<PAGE>

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.

B-59
<PAGE>

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

B-60
<PAGE>

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

B-61
<PAGE>

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.

B-62
<PAGE>

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, 1999.
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

B-63
<PAGE>

The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) for Class A shares, deduction
of the maximum applicable sales charge, if any, 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, yields, and other
performance information for Class A or Class B shares of a Fund may be quoted
numerically or in a table, graph, or similar illustration. Performance
information may be compared to the record of the Standard & Poor's Daily
Stock Price Index of 500 Common Stocks (S&P 500), the Dow Jones Industrial
Average (DJIA), the cost of living (measured by the Consumer Price Index, or
CPI), and other widely recognized benchmark indicators over the same period.
Tabular comparisons, hypothetical examples and explanatory illustrations may
be used from recognized sources such as Ibbotson Associates, Inc.'s "Stocks,
Bonds and Inflation", which instead of comparing actual Fund performance,
demonstrate performance of stocks, bonds, indices, averages, government or
other securities, and other recognized benchmark economic and market
indicators such as the rate of inflation. A Fund may have the ability to
invest in securities not included in the S&P, DJIA or other indices and its
investment portfolio may or may not be similar in composition to the indices.
These indices and averages are based on the prices of unmanaged groups of
stocks, and, unlike fund total returns, their returns do not include the
effect of paying brokerage commissions and other costs of investing.

B-64
<PAGE>

YIELDS.

Current yield ("YIELD") is computed by dividing the difference between
dividends and interest earned during a one-month period ("a") and expenses
accrued for the period (net of reimbursements) ("b") by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends ("c") and the maximum offering price per share on the last
day of the period ("d") according to the following formula as required by the
Securities and Exchange Commission:

A-B 6
YIELD = 2[(----- + 1) - 1]
cd

Current yield may also be calculated on the basis of the net asset value per
share rather than the public offering price.

Income from "roll" transactions (the sale of mortgage backed or other
securities together with an agreement, for which a Fund receives a fee, to
purchase similar securities at a future date) is recorded for accounting
purposes as interest income ratably over the term of each roll transaction and
is included in net investment income for purposes of determining a Fund's yield.

MONEY FUNDS YIELDS.

Current yield for the Money Funds will be calculated based on the net
change, exclusive of capital charges, over a seven-day period, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent.

TAX-EQUIVALENT YIELDS.

Tax-equivalent yield for the Municipal Funds and the Treasury Money Fund
will be computed by dividing that portion of the yield of the class of shares
of the Fund which is tax-exempt by one minus a stated income tax rate and
adding the quotient to that portion, if any, of the yield of such class of
shares of the Fund that is not tax-exempt.

B-65
<PAGE>

TAX-EQUIVALENT EFFECTIVE YIELD.

Tax-equivalent effective yield for the Municipal Funds and the Treasury
Money Fund is calculated in the same way as tax equivalent yield, with the
additional assumption that dividends and distributions are reinvested.

EFFECTIVE YIELDS.

Effective yield and tax-equivalent effective yield will be calculated by
determining the net change, or tax-equivalent assumed net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding one, raising the sum to a power equal to 365 divided by seven, and
subtracting one from the result.

DISTRIBUTION RATES.

Distribution rates for the Bond and Stock Funds will be calculated by
annualizing the aggregate per share dollar amount of actual distributions
made over a 30 day period divided by the net asset value 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.

B-66
<PAGE>

The Company also may, from time to time, compare the results of an investment
in Class A or Class B shares of one or more of the Funds with averages,
rankings and indices, including, but not limited to the following:

(1) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury (excluding
flower bonds and foreign targeted issues), all publicly issued debt of agencies
of the U.S. Government (excluding mortgage backed securities), and all public,
fixed rate, non-convertible investment grade domestic corporate debt rated at
least Baa by Moody's Investors Service or BBB by Standard and Poor's
Corporation, or, in the case of nonrated bonds, BBB by Fitch Investors Service
(excluding collateralized mortgage obligations).

(2) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures supplied
by the U.S. League of Savings Institutions). Savings accounts offer a
guaranteed rate of return on principal, but no opportunity for capital growth.
During a portion of the averaging period, the maximum rates paid on some savings
deposits were fixed by law.

(3) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (E.G., food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).

(4) Lipper Analytical Services, Inc., which ranks mutual funds by overall
performance, investment objectives and assets, and publishes averages on broad
based categories of mutual funds and indexes of cumulative total returns for
various periods.

(5) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back fixed
income securities.

The yields of the Money Funds may also be compared to the Donoghue's Money
Fund Averages, which are averages compiled by IBC/Donoghue's Organization, Inc.,
a widely recognized independent monitor of the performance of money market
mutual funds, to other Donoghue's rankings, to the average yield reported by the
Bank Rate Monitor for money market deposit accounts and certificates of deposit
offered by leading banks and thrift institutions in top standard metropolitan
statistical areas, or to other widely recognized independent monitoring and
ranking services and publications.

B-67
<PAGE>

The performance of a Fund's Class A or Class B shares may be compared to
those of other mutual funds having similar objectives, expressed as an average
or as a rating or ranking prepared by IBC/Donoghue Organization, Wiesenberger
Investment Company Service, Lipper Analytical Services, Inc., CDA Investment
Technologies, other recognized independent services which monitor the
performance of mutual funds or other economic or market indicators from
published sources such as Ibbotson Associates, Inc.'s "Stocks, Bonds, Bills and
Inflation". Similar comparisons may be made with respect to various benchmark
securities, indices and averages which illustrate general market or economic
performance. These comparisons may be illustrated by means of tables or of bar,
pie, or mountain charts or other type of graphic illustration, numerically, or
by means of hypothetical examples and illustrations from recognized sources.
Performance will be calculated for each class of shares of a Fund by relating
net asset value per share at the beginning of a period, assuming reinvestment of
all gains, distributions and dividends paid during the period, to the net asset
value at the end of the period.

Indices, averages and rankings prepared by the research departments of such
financial organizations as Salomon Brothers, Inc., Merrill Lynch, Pierce,
Fenner & Smith, Inc., Bear Stearns & Co., Inc., Ibbotson Associates and other
similar providers of financial research data, may be used, as well as
information provided by the Board of Governors of the Federal Reserve System.

Performance rankings, ratings, averages, indices and excerpts of comments,
descriptions and other references or reviews of the Funds, their investment
managers, policies, strategies, rankings, or other comparisons appearing in
magazines, newspapers, investment newsletters, and other periodicals, including
MONEY MAGAZINE, FORBES, FORTUNE, BUSINESS WEEK, WALL STREET JOURNAL, NEW YORK
TIMES, LOS ANGELES TIMES, DALLAS MORNING NEWS, BARRONS, INVESTORS DAILY, MUTUAL
FUND VALUES, FACTS, CHANGING TIMES, IBBOTSON ASSOCIATES, AND OTHERS may also be
used.

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<PAGE>

The performance of the Municipal Funds may also be compared to the
following charts illustrating tax free and tax equivalent investment yields,
which may be updated each year to reflect that year's current brackets and
rates:

1999 FEDERAL TAX BRACKETS*

<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%

Single Return Up to $25,750 25,751-62,450 62,451-130,250 130,251-283,150 Over 283,150

Joint Return Up to $43,050 43,051-104,050 104,051-158,550 158,551-283,150 Over 283,150

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-69
<PAGE>

1999 FEDERAL AND CALIFORNIA COMBINED TAX BRACKETS*

<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 0-5,131 5,132-12,161 12,162-19,163 19,164-25,750 25,751-26,664 26,645-33,673 33,674-62,450

Joint Return 0-10,262 10,263-24,322 24,323-38,386 38,387-43,050 43,051-53,288 53,289-67,346 67,347-104,050

To Match a Tax
Free Yield of** A taxable investment would have to pay:
<S> <C> <C> <C> <C> <C> <C> <C>
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>

B-70
<PAGE>

1999 FEDERAL AND CALIFORNIA COMBINED TAX BRACKETS* (CONTINUED)

<S> <C> <C> <C>
Federal Rate 31.00% 36.00% 39.60%
California Rate 9.30% 9.30% 9.30%

37.42% 41.95% 45.22%***
------ ------ ---------

Single Return 62,451-130,250 130,251-283,150 Over 283,150

Joint Return 104,051-158,550 158,551-283,150 Over 283,150

To Match a Tax
Free Yield of** A taxable investment would have to pay:
<S> <C> <C> <C>
2.0% 3.20% 3.45% 3.65%
3.0% 4.79% 5.17% 5.48%
4.0% 6.39% 6.89% 7.30%
5.0% 7.99% 8.61% 9.13%
6.0% 9.59% 10.34% 10.95%
7.0% 11.19% 12.06% 12.78%
8.0% 12.78% 13.78% 14.60%
</TABLE>

*Net amount subject to income tax after deductions and exemptions, based on 1998
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.
***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%.

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<PAGE>

INCREASE IN MARGINAL TAX RATE

Based on adjusted gross income.
Reduction in Itemized Deductions: (See note 1 below.)

AGI AGI
$126,660 Above
and below $126,660
--------- -------------------------
<S> <C> <C> <C> <C>
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
-------------- -------------------------
<S> <C> <C> <C> <C>
31.00% 36.00% 39.6%
------ ------ -----
Joint Return $189,950-312,450 N/A 1.58% 0***
Single Return $126,600-249,100 0.68% 0.79% 0**
</TABLE>

NOTE 1: ITEMIZED DEDUCTIONS REDUCED

For 1999, a taxpayer (single or married filing jointly) whose AGI exceeds
$126,600 must reduce his itemized deductions by 3% of this excess adjusted
gross income (AGI-$126,600). 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 1999, the deduction for personal exemptions is reduced for high-income
taxpayers. This reduction affects taxpayers whose adjusted gross income (AGI)
exceeds $189,950 for those who file joint returns and $126,600 for single
taxpayers. This phaseout increases the marginal tax rate as shown above.

** Single taxpayers with taxable incomes of more than $283,150, who are
therefore in the 39.6% bracket, will have AGIs above the $249,100 level at
which personal exemptions are fully phased out.

*** Married taxpayers with taxable incomes of more than $283,150, who are
therefore in the 39.6% bracket, will typically have AGIs above the $312,450
level at which personal exemptions are fully phased out.

B-72
<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.

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:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AZ CA CO FL KS MO NJ TX

2.00% 2.11% 2.21% 2.11% 2.00% 2.14% 2.13% 2.14% 2.00%
3.00% 3.16% 3.31% 3.16% 3.00% 3.21% 3.19% 3.20% 3.00%
4.00% 4.21% 4.41% 4.21% 4.00% 4.28% 4.26% 4.27% 4.00%
5.00% 5.27% 5.51% 5.26% 5.00% 5.34% 5.32% 5.34% 5.00%
6.00% 6.32% 6.62% 6.32% 6.00% 6.41% 6.38% 6.41% 6.00%
7.00% 7.37% 7.72% 7.37% 7.00% 7.48% 7.45% 7.48% 7.00%
8.00% 8.42% 8.82% 8.42% 8.00% 8.55% 8.51% 8.54% 8.00%
</TABLE>

B-73
<PAGE>

1999 STATE TAX BRACKETS

<S> <C> <C> <C> <C> <C> <C> <C>
ARIZONA RATE 2.87% 3.20% 3.74% 4.72% 5.04%
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 1.00% 2.00% 4.00% 6.00% 8.00% 9.30%
Single Return 0-5,131 5,132-12,161 12,162-119,193 19,194-26,644 26,645-33,673 Over 33,673
Joint Return 0-10,262 10,263-24,322 24,323-38,386 38,387-53,288 53,289-67,346 Over 67,346

COLORADO RATE 5.00%

FLORIDA RATE 0.00%

KANSAS RATE 3.50% 6.25%. 6.45%.
Single Return 0-15,000 15,001-30,000 Over 30,000
Joint Return 0-30,000 30,001-60,000 Over 60,000

MISSOURI RATE 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%
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 6,001-7,000

5.00% 5.50% 6.00%
7,001-8,000 8,001-9,000 Over 9,000

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-74
<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, 1998)

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
---- ---- ------- -------
<S> <C> <C> <C> <C>
7-day Yield 3.02% 3.20% 3.95% 3.20%
7-day Effective 3.06% 3.25% 4.02% 3.25%
7-day Tax Equivalent 5.59% 5.38% * **
</TABLE>
*AZ = 4.26%; CA = 4.43%; CO = 4.23%; KS = 4.36%; MO = 4.28%; NJ = 4.29%
**AZ = 3.44%; CA = 3.58%; CO = 3.42%; KS = 3.52%; MO = 3.46%; NJ = 3.47%

B-75
<PAGE>

INVESTMENT RESULTS (CONTINUED)

YIELDS (30 DAYS ENDING DECEMBER 31, 1998)

Atlas
Atlas Atlas U.S. Gov. & Atlas Atlas
California National Mortgage Strategic Atlas Growth &
Municipal Municipal Securities Income Balanced Income
Class A Bond Fund Bond Fund Fund Fund Fund Fund
------- --------- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
30-day Yield 3.61% 3.92% 6.03% 7.24% 3.22% 1.12%
30-day Tax
Equivalent 6.59% 6.49% N/A N/A N/A N/A
</TABLE>

YIELDS (30 DAYS ENDING DECEMBER 31, 1998)

Atlas
Atlas Atlas U.S. Gov. & Atlas Atlas
California National Mortgage Strategic Atlas Growth &
Municipal Municipal Securities Income Balanced Income
Class B Bond Fund Bond Fund Fund Fund Fund Fund
------- --------- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
30-day Yield 3.11% 3.41% 5.52% 6.49% 2.71% 0.55%
30-day Tax
Equivalent 5.68% 5.65% N/A N/A N/A N/A
</TABLE>

B-76
<PAGE>

INVESTMENT RESULTS (CONTINUED)

TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1998)

Atlas
Atlas Atlas U.S. Gov. &
California National Mortgage
Municipal Municipal Securities
Class A Bond Fund Bond Fund Fund
------- --------- --------- ----
<S> <C> <C> <C>
One Year 5.94% 5.70% 6.06%
Five Years 5.13% 5.23% 6.03%
Since Inception 7.66% 7.81% 7.94%

Atlas Atlas Atlas Atlas Atlas
Strategic Growth & Atlas Strategic Global Emerging
Income Income Balanced Growth Growth Growth
Class A Fund Fund Fund Fund Fund Fund
------- --------- ---- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
One Year 4.03% 25.83% 8.63% 11.222% 16.19% 5.77%#
Five Years N/A 20.19% 13.93% 17.58% N/A N/A
Since Inception 8.60% 18.39% 13.09% 17.10% 19.30% 20.99%
</TABLE>

# Aggregate return since inception, April 30, 1997.

B-77
<PAGE>

INVESTMENT RESULTS (CONTINUED)

TOTAL RETURN (FROM INCEPTION OF OPERATIONS TO DECEMBER 31, 1998)

Atlas
Atlas Atlas U.S. Gov. &
California National Mortgage
Municipal Municipal Securities
Class B Bond Fund Bond Fund Fund
------- --------- --------- ----
<S> <C> <C> <C>
One Year 2.41% 2.08% 2.54%
Since Inception (1) 6.09% 6.26% 7.10%
</TABLE>

Atlas Atlas Atlas Atlas Atlas Atlas
Strategic Growth & Atlas Strategic Global Emerging
Income Income Balanced Growth Growth Growth
Class B Fund Fund Fund Fund Fund Fund
------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
One Year 0.35(3) 22.14% 5.04% 7.39% 12.58% 2.18(4)
Since Inception (1) 7.07% 23.74% 15.41% 19.39% 18.02%(2) 18.61%
</TABLE>

(1) Aggregate return since July 1, 1994, except for Global Growth Fund.
(2) Aggregate return since effective date of registration, April 30, 1996.
(3) Aggregate return since inception, May 20, 1996.
(4) Aggregate return since inception, April 30, 1997.

B-78
<PAGE>

FINANCIAL STATEMENTS

The Company's audited financial statements for its fiscal year ended
December 31, 1998, as contained in the Annual Report to Shareholders for the
fiscal year ended December 31, 1998 (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-79
<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-80
<PAGE>

PART C

ATLAS FUNDS

------------------------------

OTHER INFORMATION

------------------------------

<PAGE>

ATLAS ASSETS, INC.

PART C: OTHER INFORMATION

Item 23. EXHIBITS:

C-1

<PAGE>

(a). (1) Articles of Incorporation for the Registrant. (1)

(2) Articles of Amendment for the Registran. (1)

(3) Articles Supplementary for the Atlas California Double
Tax Free Money Fund, the Atlas Tax Free Money Fund, the Atlas
California Double Tax Free Income Fund, the Atlas Tax Free
Income Fund and the Atlas U.S. Government and Mortgage Securities
Fund. (1)

C-2
<PAGE>

(4) Articles Supplementary for the Atlas Growth and Income
Fund. (1)

(5) Amended Articles Supplementary changing the names of certain
Atlas Funds as follows: Atlas California Municipal Money Fund,
Atlas National Municipal Money Fund, Atlas California Municipal
Bond Fund, and Atlas National Municipal Bond Fund. (2)

(6) Articles Supplementary for the Atlas U.S. Treasury Money
Fund. (2)

(7) Articles Supplementary for the Atlas U.S. Government
Intermediate Fund (formerly the Atlas U.S. Treasury Intermediate
Fund). (1)

(8) Articles Supplementary for the Atlas California Insured
Intermediate Municipal Fund. (1)

(9) Articles Supplementary for the Atlas National Insured
Intermediate Municipal Fund. (1)

(10) Articles Supplementary for the Atlas Balanced Fund.(2)

(11) Articles Supplementary for the Atlas Strategic Growth
Fund. (2)

(12) Articles Supplementary for classification of shares. (2)

(13) Articles Supplementary for the Atlas Global Growth Fund. (1)

(14) Articles Supplementary for the Atlas Strategic Income
Fund. (1)

(b). Bylaws for the Registrant. (2)

(c). None.

(d). (1) Investment Advisory Agreement dated January 12, 1990 between
Atlas Advisers, Inc. and Registrant. (1)

(2) Amendment to Investment Advisory Agreement dated
November 1, 1991 between Atlas Advisers, Inc. and Registrant. (2)

C-3
<PAGE>

(3) Form of Subadvisory Agreement between The Boston Company
Advisors, Inc. and Registrant. (2)

(4) Form of Subadvisory Agreement between OppenheimerFunds, Inc.
and Registrant. (1)

(5) Form of Waiver/Reinbursement Agreement between Atlas
Advisors, Inc. and Registrant. (4)

(e). Principal Underwriting Agreement dated January 12, 1990 between
Atlas Securities, Inc. and Registrant. (2)

(f). None.

(g). (a) Custodian Contract dated November 1, 1995 between Investors
Bank and Trust Company and Registrant. (1)

(h). (a) Transfer Agency and Service Agreement dated January 12, 1990
between State Street Bank and Trust Company and Registrant. (2)

(i). Opinion and Consent of Counsel. (3)

(j). Consent of Independent Auditors.

(k). None.

(l). Investment Representations of Purchaser dated December 19, 1989
from Golden West Financial Corporation relating to initial
shares. (2)

(m). (1) Distribution Plan dated January 12, 1990 between Atlas
Securities, Inc. and the Registrant. (1)

(2) Distribution Plan dated February 18, 1994 for Class B Shares
of the Registrant. (1)

(n). None

(o). Atlas Funds Multiple Class Plan adopted on August 11, 1995
pursuant to Rule 18f-3. (1)

(p). Power of Attorney. (3)

- --------------------

(1) Incorporated by reference to Post-Effective Amendment No. 19 as filed
on February 27, 1996.

(2) Incorporated by reference to Post-Effective Amendment No. 21 as filed
on April 14, 1997.

(3) Incorporated by reference to Post-Effective Amendment No. 22 as
filed on April 22, 1998.

(4) To be filed in subsequent Post-Effective Amendment pursuant to Rule
485(b).

C-4
<PAGE>

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Listed below are the direct or indirect wholly-owned subsidiaries of
Golden West Financial Corporation.
STATE OF
NAME INCORPORATION
- -------------------------------------------- -------------
World Savings and Loan Association *
World Savings Bank, FSB **
World Savings Bank, SSB Texas
Atlas Securities, Inc. California
Atlas Advisers, Inc. California
1901 Corporation California
Commerce Invest Company of Shawnee, Inc. Kansas
World Mortgage Company Colorado
Golden West Savings Association Service, Co. California
First S&L Shares, Inc. Colorado

* Federally chartered savings and loan association.
** Federally chartered savings bank.

C-5
<PAGE>

Item 25. INDEMNIFICATION

Subsection (B) of Section 2-418 of the General Corporation Law of
Maryland empowers a Maryland corporation such as Registrant to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director, officer, employee or agent of that corporation or a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding unless he acted in bad faith, or with active and
deliberate dishonesty or otherwise as provided in such statute.

The Maryland Code provisions also include, inter alia, authority to
make advances of expenses pending resolution of the matter, to purchase
insurance to cover the corporation and its agents, and a requirement to report
instances of indemnification to the corporation's stockholders. In addition,
directors and officers may in most cases be protected from the assessment of
personal monetary liability in certain legal actions notwithstanding the
availability or not of indemnification.

Article VII(g) of the Articles of Incorporation of Registrant, as
amended, contains indemnification and limitation provisions meant to conform to
the above statute and to the provisions of Section 17 of the Investment Company
Act of 1940, as amended ("1940 Act") and to 1940 Act Release No. 11330
(September 4, 1980). These provisions will implement "reasonable and fair
means" to determine whether indemnification shall be made which include: (1)
reference to a final decision on the merits by a court or other body that
liability did not occur by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable, factually based decision to the same effect by
(a) a vote of a majority of a quorum of directors who are neither "interested
persons" of the Registrant (as defined in Section 2(a)(19) of the 1940 Act) nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Directors, officers and controlling
persons by the Registrant's charter and bylaws, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in said Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Series of expenses incurred or
paid by a Director, officer or controlling

C-6
<PAGE>

person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.

Effective January 1990, Registrant and the interested Directors and
officers of the Registrant obtained coverage under a Professional Indemnity
insurance policy. The terms and conditions of policy coverage conform generally
to the standard coverage available to the investment company industry. The
coverage was renewed effective March 1998. Similar coverage is afforded the
investment adviser and the principal underwriter and their Directors, officers
and employees.

To the extent permitted by the 1940 Act, the non-interested Directors
may be indemnified by the Company with respect to errors and omissions. To the
extent not so permitted, Golden West Financial Corporation may so indemnify the
non-interested Directors to the extent permitted by Delaware law.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

A. INVESTMENT ADVISER--Atlas Advisers, Inc.

See the material following the captions "What Companies are
affiliated with the Funds?" appearing as a portion of Part A hereof, and
"Management of the Company" and "Investment Advisory and Other Services"
appearing as a portion of Part B hereof.

B. SUB-ADVISER--Boston Safe Advisors, Inc.

The list required by this Item 28 of officers and directors of
The Boston Company Advisors, Inc. ("Boston Advisors"), together with all other
information required by this Item 28 including, but not limited to, any other
business, profession, vocation or employment of a substantial nature engaged in
by Boston Advisors and its officers and directors during the past two years, is
incorporated by reference to the Form ADV filed by Boston Advisors (SEC File No.
801-14158).

C. SUB-ADVISER--OppenheimerFunds, Inc.

The list required by this Item 28 of officers and directors of
OppenheimerFunds, Inc. ("Oppenheimer"), together with all other information
required by this Item 28 including, but not limited to, any other business,
profession, vocation or employment of

C-7
<PAGE>

a substantial nature engaged in by Oppenheimer and its officers and directors
during the past two years, is incorporated by reference to the Form ADV, as
amended, filed by Oppenheimer (SEC File No.801-8253).

Item 27. PRINCIPAL UNDERWRITERS

(a) None.

(b) Directors and officers of Atlas Securities, Inc., principal
underwriter of the Registrant:

Positions and Positions and
Name and Principal Offices with Offices with
Place of Business Underwriter Registrant
- -------------------- --------------- ----------------

Marion O. Sandler Chairman, Presi- Chairman, Presi-
1901 Harrison Street dent and Chief dent and Chief
Oakland, CA 94612 Executive Officer Executive Officer

James T. Judd Director N/A
1901 Harrison Street
Oakland, CA 94612

Dirk S. Adams Director N/A
1901 Harrison Street
Oakland, CA 94612

Julius Louis Helvey Executive Vice Executive Vice
1901 Harrison Street President and Chief President and Chief
Oakland, CA 94612 Financial Officer Financial Officer

Larry E. LaCasse Group Senior VIce Group Senior Vice
794 Davis Street President and Chief President and Chief
San Leandro, CA 94577 Operating Officer Operating Officer

W. Lawrence Key Senior Vice N/a
794 Davis Street President-
San Leandro, CA 94577 National Sales
Manager

Steven J. Gray Vice President, Vice President,
794 Davis Street Chief Legal Counsel Chief Legal Counsel
San Leandro, CA 94577 and Secretary and Secretary

C-8
<PAGE>

Item 28. LOCATION OF ACCOUNTS AND RECORDS

Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of the Fund Custodian, Investors Bank and Trust Company, 89 South
Street, Boston, MA 02111.

Item 29. MANAGEMENT SERVICES

None.

Item 30. UNDERTAKINGS

(a) All previously furnished required undertakings have been
satisfied.

(b) All previously furnished required undertakings have been
satisfied.

(c) The Registrant undertakes to furnish copies of its latest
annual report and semi-annual report, upon request and without charge, to every
person to whom a prospectus is delivered.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly
caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Oakland,
and the State of California, on the 1st day of February, 1999.

ATLAS ASSETS, INC.
(Registrant)

By: Marion O. Sandler *
-------------------------
Marion O. Sandler
Chairman, Chief Executive
Officer and President

C-9
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.

Marion O. Sandler * Chief Executive February 1, 1999
- ------------------------- Officer, President, -----------------
Marion O. Sandler and Chairman Date

Julius Louis Helvey * Chief Financial February 1, 1999
- ------------------------- Officer and Group -----------------
Julius Louis Helvey Senior Vice President Date

Russell W. Kettell * Director February 1, 1999
- ------------------------- -----------------
Russell W. Kettell Date

SIGNATURES CONTINUED

Barbara A. Bond * Director February 1, 1999
- ------------------------- -----------------
Barbara A. Bond Date

Julian A. Lerner * Director February 1, 1999
- ------------------------- -----------------
Julian A. Lerner Date

David J. Teece * Director February 1, 1999
- ------------------------- -----------------
David J. Teece Date

*By /s/Larry E. LaCasse
- -------------------------
Larry E. LaCasse,
Attorney-in-Fact
Pursuant to Power of Attorney
filed herewith.

C-10