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STRATUS FUND, INC.
200 CENTRE TERRACE, 1225 "L" STREET
LINCOLN, NEBRASKA 68508
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PROSPECTUS SUPPLEMENT
DATED NOVEMBER 17, 1997 TO
PROSPECTUS OF STRATUS FUND, INC.
DATED OCTOBER 1, 1997
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
GROWTH PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
INTERNATIONAL PORTFOLIO
A Special Meeting of the Shareholders of Stratus Fund, Inc. (the
"Fund"), is currently scheduled to be held on Friday, December 12, 1997. At the
Special Meeting, the proposals described below will be considered. If approved
by Shareholders, the Fund's capital structure and fundamental investment
limitations, the investment objective of Government Securities Portfolio and the
investment advisory agreements for Growth Portfolio and Capital Appreciation
Portfolio will be revised as indicated.
1. For the Fund, to approve a proposal to adopt Amended and Restated
Articles of Incorporation to create a multiple class structure for each
portfolio (each a "Portfolios" and collectively the "Portfolio") of the Fund. If
approved by Shareholders, the Amended and Restated Articles of Incorporation of
the Fund would redesignate the current shares of the Fund's investment
Portfolios as Institutional Class shares of such Portfolio, and would create a
new Retail Class A class of shares for each Portfolio. The rights and
preferences of the Fund's issued and outstanding shares would not be affected by
the redesignation of those shares as Institutional Class shares. The Retail
Class A shares of each Portfolio will have the same rights and preferences as
the Institutional Class of shares, except that purchasers of Retail Class A
shares may pay sales loads and will bear certain expenses incurred in connection
with distribution of such shares.
2. For the Fund, to revise the fundamental investment limitations
applicable to all Portfolios of the Fund to read as follows:
Without shareholder approval, each of the Portfolios may not:
(1) with respect to 75% of the value of the total assets of the
Government Securities Portfolio, Growth Portfolio, Capital
Appreciation Portfolio and International Portfolio, and with
respect to 100% of the value of the total assets of the
Intermediate Government Bond Portfolio, invest more than 5%
of the market value of its total assets in the securities of
any one issuer, other than obligations of or guaranteed by
the U.S. Government or any of its agencies or
instrumentalities, except that each Portfolio may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order;
(2) purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than
10% of the securities of any class of such issuer, to be
held by the Portfolio, except that a Portfolio may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order;
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(3) invest in companies for the purpose of exercising control or
influencing management;
(4) purchase or sell real estate, commodities or interests in
oil, gas or other mineral exploration or development
programs;
(5) make short sales of securities or purchase securities on
margin, except that a Portfolio (a) may obtain such
short-term credit as is necessary for the clearance of
purchases and sales of securities, (b) may make margin
payments in connection with transactions in financial
futures contracts and options thereon, and (c) may make
short sales of securities if at all times when a short
position is open it owns at least an equal amount of such
securities or owns securities comparable to or exchangeable
for at least an equal amount of such securities;
(6) underwrite securities of other issuers;
(7) purchase or sell commodity contracts, except that a
Portfolio may, as appropriate and consistent with its
investment policies and other investment restrictions, for
hedging purposes, write, purchase or sell options (including
puts, calls and combinations thereof), write covered call
options, enter into futures contracts on securities,
securities indices and currencies, options on such futures
contracts, forward foreign currency exchange contracts and
forward commitments;
(8) make loans to other persons other than by purchasing part of
an issue of debt obligations; a Portfolio may, however,
invest up to 10% of its total assets, taken at market value
at time of purchase, in repurchase agreements maturing in
not more than seven days;
(9) borrow money, except to meet extraordinary or emergency
needs for funds, and then only from banks in amounts not
exceeding 10% of its total assets, nor purchase securities
at any time borrowings exceed 5% of its total assets; or
(10) mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned by the
respective Portfolio except as may be necessary in
connection with borrowings as described in (9) above and
then securities mortgaged, hypothecated or pledged may not
exceed 5% of the respective Portfolio's total assets taken
at market value.
3. For the Capital Appreciation Portfolio, to approve an amendment to
the investment advisory agreement with Union Bank and Trust Company that would
(i) revise the incentive advisory fee schedule from a range of 0.00% to 2.80% to
a range of 0.40%to 2.40% and (ii) change the stated index used to determine the
incentive fee from the S&P 500 Index to the Russell 2000 Index.
4. For the Growth Portfolio, to approve an amendment to the investment
advisory agreement with Union Bank and Trust Company to change the annual
advisory fee from 0.50% of average daily net assets to 0.75% of average daily
net assets.
5. For the Government Securities Portfolio, to change the investment
objective from "current income consistent with the preservation of capital" to
"providing high total return consistent with long term preservation of capital."
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