-------------------------
OMB APPROVAL
OMB Number: 3235-0570
Expires: Nov. 30, 2005
Estimated average burden
hours per response: 5.0
-------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08669
--------------------------------
Atalanta/Sosnoff Investment Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
101 Park Avenue New York, New York 10178
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Kevin S. Kelly
Atalanta/Sosnoff Capital Corp. 101 Park Avenue New York, New York 10178
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 867-5000
----------------------------
Date of fiscal year end: May 31, 2003
--------------------
Date of reporting period: May 31, 2003
--------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
ATALANTA/SOSNOFF INVESTMENT TRUST
ANNUAL REPORT
MAY 31, 2003
ATALANTA/SOSNOFF FUND
ATALANTA/SOSNOFF VALUE FUND
ATALANTA/SOSNOFF INVESTMENT TRUST
PERFORMANCE
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE ATALANTA/SOSNOFF FUND AND THE S&P INDEX
[GRAPHIC OMITTED]
S&P 500 INDEX ATALANTA/SOSNOFF FUND
------------- ---------------------
PERIOD PERIOD
DATE RETURN BALANCE DATE RETURN BALANCE
---- ------ ------- ---- ------ -------
06/17/98 $ 10,000 06/17/98 $ 10,000
08/31/98 -11.73% 8,827 08/31/98 -8.00% 9,200
11/30/98 22.04% 10,772 11/30/98 15.87% 10,660
02/28/99 6.76% 11,500 02/28/99 11.54% 11,890
05/31/99 5.48% 12,130 05/31/99 3.78% 12,340
08/31/99 1.75% 12,342 08/31/99 -3.73% 11,880
11/30/99 5.52% 13,023 11/30/99 17.68% 13,980
02/29/00 -1.33% 12,849 02/29/00 12.95% 15,790
05/31/00 4.30% 13,401 05/31/00 -5.45% 14,930
08/31/00 7.13% 14,356 08/31/00 14.07% 17,030
11/30/00 -13.12% 12,473 11/30/00 -8.81% 15,530
02/28/01 -5.43% 11,795 02/28/01 -5.15% 14,731
05/31/01 1.62% 11,986 05/31/01 1.72% 14,985
08/31/01 -9.44% 10,855 08/31/01 -12.11% 13,170
11/30/01 0.86% 10,948 11/30/01 5.97% 13,957
02/28/02 -2.51% 10,673 02/28/02 -4.77% 13,291
05/31/02 -3.25% 10,327 05/31/02 -1.64% 13,074
08/31/02 -13.80% 8,901 08/31/02 -13.51% 11,308
11/30/02 2.69% 9,140 11/30/02 4.71% 11,840
02/28/03 -9.72% 8,252 02/28/03 -7.15% 10,993
05/31/03 15.05% 9,494 05/31/03 14.19% 12,554
06/30/03 1.28% 9,615
- ----------------------------------
ATALANTA/SOSNOFF FUND
AVERAGE ANNUAL TOTAL RETURNS(a)
SINCE INCEPTION* 4.70%
1 YEAR (3.98%)
- ----------------------------------
Past performance is not predictive of future performance.
*Initial public offering of shares was June 17, 1998.
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE ATALANTA/SOSNOFF VALUE FUND AND THE S&P INDEX
[GRAPHIC OMITTED]
S&P 500 INDEX ATALANTA/SOSNOFF VALUE FUND
------------- ---------------------------
PERIOD PERIOD
DATE RETURN BALANCE DATE RETURN BALANCE
---- ------ ------- ---- ------ -------
07/01/99 $ 10,000 07/01/99 $ 10,000
08/31/99 -3.60% 9,640 08/31/99 -9.10% 9,090
11/30/99 5.52% 10,172 11/30/99 7.04% 9,730
02/29/00 -1.33% 10,036 02/29/00 4.21% 10,140
05/31/00 4.30% 10,467 05/31/00 5.33% 10,680
08/31/00 7.13% 11,213 08/31/00 10.77% 11,830
11/30/00 -13.12% 9,742 11/30/00 7.35% 12,700
02/28/01 -5.43% 9,213 02/28/01 -7.38% 11,763
05/31/01 1.62% 9,362 05/31/01 4.54% 12,297
08/31/01 -9.44% 8,478 08/31/01 -9.48% 11,131
11/30/01 0.86% 8,551 11/30/01 4.79% 11,665
02/28/02 -2.51% 8,337 02/28/02 -1.22% 11,523
05/31/02 -3.25% 8,066 05/31/02 2.72% 11,836
08/31/02 -13.80% 6,953 08/31/02 -14.11% 10,166
11/30/02 2.69% 7,139 11/30/02 6.50% 10,828
02/28/03 -9.72% 6,446 02/28/03 -7.76% 9,987
05/31/03 15.05% 7,415 05/31/03 13.36% 11,321
- ----------------------------------
ATALANTA/SOSNOFF VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS(a)
SINCE INCEPTION* 3.22%
1 YEAR (4.36%)
- ----------------------------------
Past performance is not predictive of future performance.
*Initial public offering of shares was July 1, 1999.
(a) The total returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemptin of Fund
shares.
1
LETTER TO SHAREHOLDERS JULY 8, 2003
================================================================================
Dear Shareholder:
For the fiscal year ended May 31, 2003, the Atalanta/Sosnoff Fund returned
- -4.0%, compared with the S&P 500 Index return of -8.1%. For the 12 months ended
June 30, 2003, the Atalanta Sosnoff Fund returned 6.5%, compared with 0.3% for
the S&P 500 Index.
For the fiscal year ended May 31, 2003, the Atalanta/Sosnoff Value Fund returned
- -4.4%, compared with the S&P 500 Index return of -8.1%. For the 12 months ended
June 30, 2003, the Atalanta Sosnoff Value Fund returned 5.4%, compared with 0.3%
for the S&P 500 Index.
The Funds' outperformance for the year ended May 31, 2003 is attributable to
several factors. Our overweighting of the Healthcare sector (22% for the
Atalanta Sosnoff Fund ("ASF") and 21% for the Atalanta Sosnoff Value Fund
("ASVF")) relative to the S&P 500 weighting (14%) coupled with good stock
selection within the group, contributed positively to both relative and absolute
performance. The Funds' securities in this sector returned 1% for ASF and flat
for ASVF while the companies that comprise the S&P Healthcare sector declined
5%.
The Funds also overweighted the Financial sector (21% for ASF and 23% for ASVF)
vs. the S&P 500 (20%), and similarly, favorable stock selection in this group
returned 3% for ASF and 2% for ASVF vs. a decline of 3% for the Financial sector
in the S&P 500.
Though the Funds were underweighted in the Telecommunication Services sector (2%
for ASF and ASVF, respectively) relative to the S&P 500 (4%), good stock
selection contributed meaningfully to both absolute and relative performance.
The Funds held Nextel Communications, which advanced over 200% from our initial
purchases in early June 2002.
The Funds were overweighted in the Consumer Discretionary Sector (16% for ASF
and 15% for ASVF) compared with the S&P 500 (12%) which contributed to
outperformance in this sector (10% for ASF and 14% for ASVF) for the year ended
May 31, 2003.
The Fund's average cash balance for the fiscal year was approximately 15%, which
added value as the S&P 500 as a whole declined over 8% for the year ended May
31, 2003. This defensive posture was prudent in light of continued market
volatility that began with the bursting of the internet bubble in early 2000,
the collapse in capital spending, and uncertainty surrounding the capacity of
corporations to grow earnings.
This past quarter we have pursued an aggressive reinvestment program in
equities. At present, we are over 90% invested, up from an average 75 percent
commitment early in April. So far, this aggressive action has gotten results,
spilling over into early July.
Our basic perception is that the economy is bound to get a little better sooner
rather than later. Capital spending has wound down in the corporate sector and
is likely to recover, albeit slowly. Surveys of projected spending for
information technology are still flattish. However, corporate cash flow is
positive and will unleash more spending, share buybacks and strategic
acquisitions and mergers as well as dividend increases.
As for consumers, they are benefiting from the Federal Reserve Board's largesse.
As expected, the Fed eased again and at some point could announce its intention
to buy back long term Treasury notes. Interest rates will sink lower if they
implement such a program, refinancing of single family home mortgages will
proliferate and the cost of carry on
2
consumer loans will remain very manageable even within a context of 6 percent
unemployment.
Next year, the sustainability factors for consumer spending could shift from low
interest rates to rising consumer confidence and stock market buoyancy. By the
fourth quarter, GDP growth should approach the norm of 3 percent, spurred on by
the refinancing boom and continued low interest rates. Consumer confidence, as
expected, rose moderately of late. This index reached 84 in May, up from its
nadir in March of 61. It seems headed back to pre-war levels around 100 by
yearend. It may be too much to expect long term Treasuries to dwell around the 4
percent level. As the economy levitates so will interest rates but probably no
more than 100 basis points within the context of inflation of no more than 2
percent.
Despite the weakness of the dollar which is actually helping our broadly based
internationals like IBM, Intel and Microsoft, we expect domestic cash flow
available for equity investment will mount as capital flows out of money market
accounts and bonds and individuals get over their internet mistakes years back.
The earnings power of the Standard and Poor's 500 will be bolstered by the weak
dollar as much as 3 percent. This puts our projection for S&P earnings back up
to $51.50 a share. On a price earnings valuation the market seems rich, but on a
relative valuation to 10-year Treasuries, it's slightly undervalued.
In short, we are in the midst of a good working market, particularly in sectors
that will benefit from a quickening pace of GDP. The greater part of our buys of
late have been earmarked for economically sensitive sectors such as technology,
brokerage houses, home builders and media properties where we added to
established positions. Our barbell of defensive stocks on one end and cyclical
growth on the opposite end has tilted more towards growth and cyclical growth
sectors. We are, however, not turning our back on healthcare, which remains a
very reasonably priced defensive growth sector along with insurance.
There are surely plenty of deep-seated problems still lingering to ruminate
over. The new tax reform act does little to stimulate the economy near term. The
country will run budget deficits of at least $400 billion per annum for at least
a few years. Additionally, a much weaker dollar will cause some capital outflow
sooner or later. Meanwhile, our trade deficit is horrendous and our balance of
payments deficit is unspeakably humongous. These are macro long cycle issues
that generally are ignored when our economy is re-igniting.
Many academic economists reason that the level of consumer debt creation during
the past decade will be a drag on economic recovery for years to come. We'll
see. They are calling for initiatives putting the Federal deficit at 6 to 7
percent of GDP comparable to what we had when President Reagan came into office
in 1983 after a horrendous recession. Without such stimulus they see recession
around the corner. Nobody in Washington is even dreaming of fiscal stimulus of
this magnitude going forward. We think the academics are too bearish just so
long as the cost to carry debt in the consumer and corporate sectors remains
manageable.
In summary, the market has rallied because the economy shows less propensity to
lapse into recession than a few months ago. If the economy gets a little
better-retail sales, housing and capital spending, the market could turn even
more buoyant. We expect to stay at least 90% invested just so long as the
economic indicators are moving in the right direction.
With all good wishes,
Martin T. Sosnoff
3
ATALANTA/SOSNOFF FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF MAY 31, 2003)
[GRAPHIC OMITTED]
ATALANTA/SOSNOFF FUND S&P 500 INDEX
--------------------- -------------
Information Technology 27.7% 16.3%
Financial 24.3 20.7
Health Care 21.8 14.4
Consumer Discretionary 18.6 11.0
Industrials 4.8 10.4
Telecom Services 0.9 3.8
Consumer Staples 0 11.8
Energy 0 5.9
Utilities 0 3.0
Materials 0 2.7
Cash & Equivalents 1.9 0.0
TOP TEN HOLDINGS (AS OF MAY 31, 2003)
% OF
STOCK SECTOR PORTFOLIO
- --------------------------------------------------------------------------------
EchoStar Communications Corp. Information Technology 5.39%
Citigroup, Inc. Financials 5.11%
Berkshire Hathaway, Inc. - Class B Financials 4.53%
Microsoft Corp. Information Technology 4.30%
Wellpoint Health Networks, Inc. Health Care 4.27%
International Business Machines Corp. Information Technology 4.25%
Pfizer, Inc. Health Care 4.02%
Comcast Corp. Consumer Discretionary 3.96%
Boston Scientific Corp. Health Care 3.35%
Dell Computer Corp. Information Technology 3.17%
-------
TOTAL: 42.35%
=======
COMPARATIVE PERFORMANCE
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
--------------- -----------------------------------
SINCE INCEPTION* YEAR ENDED SINCE INCEPTION*
TO MAY 31, JUNE 30, TO JUNE 30,
2003 2003 2003
--------------- -----------------------------------
Atalanta/Sosnoff Fund 25.5% 6.5% 4.9%
Morningstar Large Cap Blend Category n/a (1.2%) n/a
Lipper Large-Cap Core Index n/a (1.0%) n/a
S&P 500 Index (5.06%) 0.3% (0.8%)
*Inception June 17, 1998
4
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO CHARACTERISTICS (UNAUDITED)
================================================================================
SECTOR CONCENTRATION VS. THE S&P 500 INDEX (AS OF MAY 31, 2003)
[GRAPHIC OMITTED]
ATALANTA/SOSNOFF VALUE FUND S&P 500 INDEX
--------------------------- -------------
Consumer Discretionary 19.0% 11.0%
Financial 24.1 20.7
Health Care 19.3 14.4
Information Technology 26.9 16.3
Consumer Staples 0.8 11.8
Telecom Services 1.1 3.8
Industrials 6.2 10.4
Energy 0 5.9
Utilities 0 3.0
Materials 0 2.7
Cash & Equivalents 2.6 0.0
TOP TEN HOLDINGS (AS OF MAY 31, 2003)
% OF
STOCK SECTOR PORTFOLIO
- --------------------------------------------------------------------------------
Citigroup, Inc. Financials 4.93%
EchoStar Communications Corp. Information Technology 4.81%
Berkshire Hathaway, Inc. - Class B Financials 4.60%
International Business Machines Corp. Information Technology 4.44%
Microsoft Corp. Information Technology 4.10%
Comcast Corp. Consumer Discretionary 3.57%
Wellpoint Health Networks, Inc. Health Care 3.31%
Ace LTD Financials 3.25%
Boston Scientific Corp. Health Care 3.23%
Express Scripts, Inc. Industrials 3.04%
-------
TOTAL: 39.28%
=======
COMPARATIVE PERFORMANCE
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
--------------- -----------------------------------
SINCE INCEPTION* YEAR ENDED SINCE INCEPTION*
TO MAY 31, JUNE 30, TO JUNE 30,
2003 2003 2003
--------------- -----------------------------------
Atalanta/Sosnoff Value Fund 13.2% 5.4% 3.5%
Lipper Large-Cap Value Index n/a (2.1%) n/a
S&P 500 Index (25.9%) 0.3% (6.9%)
*Inception July 1, 1999
5
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 2003
================================================================================
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment securities:
At amortized cost ........................... $ 24,512,483 $ 2,232,941
============ ===========
At market value (Note 1) .................... $ 28,777,440 $ 2,580,508
Dividends receivable .......................... 17,022 1,459
Receivable for capital shares sold ............ 500 --
Receivable from Adviser (Note 3) .............. -- 11,631
Other assets .................................. 14,506 8,155
------------ -----------
TOTAL ASSETS ........................... 28,809,468 2,601,753
------------ -----------
LIABILITIES
Payable for securities purchased .............. 144,360 12,323
Payable for capital shares redeemed ........... 89,279 --
Payable to Adviser (Note 3) ................... 23,662 --
Payable to other affiliates (Note 3) .......... 7,020 5,000
Other accrued expenses and liabilities ........ 4,615 2,750
------------ -----------
TOTAL LIABILITIES ...................... 268,936 20,073
------------ -----------
NET ASSETS .................................... $ 28,540,532 $ 2,581,680
============ ===========
Net assets consist of:
Paid-in capital ............................... $30,907,451 $ 2,638,067
Accumulated net realized losses
from security transactions .................. (6,631,876) (403,954)
Net unrealized appreciation on investments .... 4,264,957 347,567
------------ -----------
Net assets .................................... $28,540,532 $ 2,581,680
============ ===========
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) .............................. 2,748,491 255,659
============ ===========
Net asset value, offering price and
redemption price per share (Note 1) ......... $ 10.38 $ 10.10
============ ===========
See accompanying notes to financial statements.
6
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2003
================================================================================
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends ................................... $ 228,072 $ 24,613
----------- -----------
EXPENSES
Investment advisory fees (Note 3) ........... 175,473 16,287
Professional fees ........................... 41,097 24,109
Administration fees (Note 3) ................ 55,598 8,610
Accounting services fees (Note 3) ........... 24,000 24,000
Transfer agent fees (Note 3) ................ 17,250 12,000
Service plan expense (Note 3) ............... 23,681 123
Trustees' fees and expenses ................. 9,769 8,910
Custodian fees .............................. 10,287 4,506
Insurance expense ........................... 11,462 1,049
Organization expense (Note 1) ............... 11,528 --
Printing of shareholder reports ............. 7,852 1,469
Registration fees ........................... 4,500 4,209
Postage and supplies ........................ 5,733 1,604
Other expenses .............................. 4,246 4,107
----------- -----------
TOTAL EXPENSES ......................... 402,476 110,983
Fees waived and/or expenses reimbursed
by the Adviser (Note 3) ................ (51,530) (78,409)
----------- -----------
NET EXPENSES ........................... 350,946 32,574
----------- -----------
NET INVESTMENT LOSS ........................... (122,874) (7,961)
----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized losses from
security transactions .................. (2,582,885) (185,509)
Net realized gains (losses) on
option contracts written (Note 4) ...... (24,282) 4,499
Net change in unrealized appreciation/
depreciation on investments ............ 1,903,064 93,636
----------- -----------
NET REALIZED AND UNREALIZED
LOSSES ON INVESTMENTS ....................... (704,103) (87,374)
----------- -----------
NET DECREASE IN NET ASSETS
FROM OPERATIONS ............................. $ (826,977) $ (95,335)
----------- -----------
See accompanying notes to financial statements.
7
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
ATALANTA/
SOSNOFF
FUND
------------------------------
YEAR YEAR
ENDED ENDED
MAY 31, MAY 31,
2003 2002
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment loss ......................... $ (122,874) $ (114,755)
Net realized gains (losses) on:
Security transactions .................. (2,582,885) (2,673,746)
Option contracts written (Note 4) ...... (24,282) --
Net change in unrealized appreciation/
depreciation on investments ............ 1,903,064 (249,092)
----------- -----------
Net decrease in net assets from operations .... (826,977) (3,037,593)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ................... 10,419,763 13,551,335
Payments for shares redeemed ................ (8,041,532) (3,590,860)
----------- -----------
Net increase in net assets from
capital share transactions .................. 2,378,231 9,960,475
----------- -----------
TOTAL INCREASE IN NET ASSETS .................. 1,551,254 6,922,882
NET ASSETS:
Beginning of year ........................... 26,989,278 20,066,396
----------- -----------
End of year ................................. $ 28,540,532 $ 26,989,278
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold ................................. 1,101,989 1,199,347
Shares redeemed ............................. (850,044) (322,960)
----------- -----------
Net increase in shares outstanding .......... 251,945 876,387
Shares outstanding, beginning of year ....... 2,496,546 1,620,159
----------- -----------
Shares outstanding, end of year ............. 2,748,491 2,496,546
=========== ===========
See accompanying notes to financial statements.
8
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
ATALANTA/
SOSNOFF
VALUE FUND
------------------------------
YEAR YEAR
ENDED ENDED
MAY 31, MAY 31,
2003 2002
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment loss ......................... $ (7,961) $ (9,499)
Net realized gains (losses) on:
Security transactions .................. (185,509) (209,061)
Option contracts written ............... 4,499 --
Net change in unrealized appreciation/
depreciation on investments ............ 93,636 107,888
----------- -----------
Net decrease in net assets from operations .... (95,335) (110,672)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains ..................... -- (69,638)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ................... 251,501 13,695
Net asset value of shares issued in
reinvestment of distributions
to shareholders ........................ -- 69,638
Payments for shares redeemed ................ (44,451) (469,220)
----------- -----------
Net increase (decrease) in net assets from
capital share transactions ............. 207,050 (385,887)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....... 111,715 (566,197)
NET ASSETS:
Beginning of year ........................... 2,469,965 3,036,162
----------- -----------
End of year ................................. $ 2,581,680 $ 2,469,965
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold ................................. 26,596 1,302
Shares reinvested ........................... -- 6,582
Shares redeemed ............................. (4,805) (43,047)
----------- -----------
Net increase (decrease) in shares outstanding 21,791 (35,163)
Shares outstanding, beginning of year ....... 233,868 269,031
----------- -----------
Shares outstanding, end of year ............. 255,659 233,868
=========== ===========
See accompanying notes to financial statements.
9
ATALANTA/SOSNOFF FUND
FINANCIAL HIGHLIGHTS
=======================================================================================================================
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
2003 2002 2001 2000 1999(a)
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE
OUTSTANDING THROUGHOUT
EACH PERIOD:
Net asset value at beginning of period ....... $ 10.81 $ 12.39 $ 14.93 $ 12.34 $ 10.00
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss ........................ (0.04) (0.05) (0.04) (0.12) (0.05)
Net realized and unrealized gains
(losses) on investments .................. (0.39) (1.53) 0.17 2.71 2.39
---------- ---------- ---------- ---------- ----------
Total from investment operations ............. (0.43) (1.58) 0.13 2.59 2.34
---------- ---------- ---------- ---------- ----------
Less distributions:
From net realized gains .................... -- -- (2.67) -- --
---------- ---------- ---------- ---------- ----------
Net asset value at end of period ............. $ 10.38 $ 10.81 $ 12.39 $ 14.93 $ 12.34
========== ========== ========== ========== ==========
Total return ................................. (3.98%) (12.75%) 0.37% 20.99% 23.40%(b)
========== ========== ========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) .......... $ 28,541 $ 26,989 $ 20,066 $ 18,485 $ 13,480
========== ========== ========== ========== ==========
Ratio of net expenses to average net assets(c) 1.50% 1.50% 1.50% 1.50% 1.50%(d)
Ratio of net investment loss to average
net assets ................................. (0.53%) (0.54%) (0.36%) (0.88%) ( 0.60%)(d)
Portfolio turnover rate ...................... 120% 98% 141% 143% 124%(d)
(a) Represents the period from the initial public offering of shares, June 17,
1998, through May 31, 1999.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 1.72%, 1.83%, 1.73%, 1.95%
and 2.54%(d) for the periods ended May 31, 2003, 2002, 2001, 2000 and 1999,
respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
10
ATALANTA/SOSNOFF VALUE FUND
FINANCIAL HIGHLIGHTS
========================================================================================================
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MAY 31,
2003 2002 2001 2000(a)
- --------------------------------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE
OUTSTANDING THROUGHOUT
EACH PERIOD:
Net asset value at beginning of period ....... $ 10.56 $ 11.29 $ 10.68 $ 10.00
--------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ............... (0.03) (0.04) 0.04 (0.03)
Net realized and unrealized gains (losses)
on investments ........................... (0.43) (0.38) 1.62 0.71
--------- --------- --------- ---------
Total from investment operations ............. (0.46) (0.42) 1.66 0.68
--------- --------- --------- ---------
Less distributions:
From net investment income ................. -- -- (0.04) --
From net realized gains .................... -- (0.31) (1.01) --
--------- --------- --------- ---------
Total distributions .......................... -- (0.31) (1.05) --
--------- --------- --------- ---------
Net asset value at end of period ............. $ 10.10 $ 10.56 $ 11.29 $ 10.68
========= ========= ========= ==========
Total return ................................. ( 4.36%) (3.74%) 15.14% 6.80%(b)
========= ========= ========= ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) .......... $ 2,582 $ 2,470 $ 3,036 $ 2,137
========= ========= ========= ==========
Ratio of net expenses to average net assets(c) 1.50% 1.50% 1.50% 1.50%(d)
Ratio of net investment income (loss) to
average net assets ......................... (0.37%) ( 0.38%) 0.34% ( 0.38%)(d)
Portfolio turnover rate ...................... 143% 200% 983% 416%(d)
(a) Represents the period from the initial public offering of shares, July 1,
1999, through May 31, 2000.
(b) Not annualized.
(c) Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 5.11%, 4.14%, 4.26% and
4.87%(d) for the periods ended May 31, 2003, 2002, 2001 and 2000,
respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
11
ATALANTA/SOSNOFF FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 2003
================================================================================
COMMON STOCKS -- 96.8% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY-- 18.6%
AOL Time Warner, Inc.* ............................ 39,000 $ 593,580
Clear Channel Communications, Inc.* ............... 10,700 435,490
Comcast Corp.* .................................... 39,500 1,138,390
Costco Wholesale Corp.* ........................... 12,000 444,600
Fox Entertainment Group, Inc.* .................... 30,600 860,166
KB HOME ........................................... 5,800 362,500
Lowes Companies, Inc. ............................. 12,600 532,476
Viacom, Inc. - Class B* ........................... 14,627 665,821
Wal-Mart Stores, Inc. ............................. 5,000 263,050
-----------
5,296,073
-----------
FINANCIALS -- 23.0%
Ace LTD ........................................... 24,500 894,250
Berkshire Hathaway, Inc. - Class B* ............... 549 1,303,326
Citigroup, Inc. ................................... 35,880 1,471,798
Freddie Mac ....................................... 9,300 556,233
Goldman Sachs Group, Inc. (The) ................... 8,600 700,900
Lehman Brothers Holdings, Inc. .................... 6,300 451,269
Morgan Stanley .................................... 9,400 430,050
RenaissanceRE Holdings LTD ........................ 16,800 750,960
-----------
6,558,786
-----------
HEALTHCARE -- 21.8%
Boston Scientific Corp. ........................... 18,500 963,850
INAMED Corp. ...................................... 8,700 448,398
Johnson & Johnson ................................. 9,800 532,630
Pfizer, Inc. ...................................... 37,300 1,157,046
Pharmaceutical Product Development, Inc.* ......... 20,300 569,415
Universal Health Services, Inc. - Class B* ........ 16,100 731,101
Wellpoint Health Networks, Inc.* .................. 14,400 1,228,896
Wyeth ............................................. 13,600 596,360
-----------
6,227,696
-----------
INDUSTRIALS -- 4.8%
D.R. Horton, Inc. ................................. 11,700 307,593
Express Scripts, Inc.* ............................ 11,600 759,104
Ryland Group, Inc. (The) .......................... 4,600 299,460
-----------
1,366,157
-----------
INFORMATION TECHNOLOGY-- 27.7%
Cisco Systems, Inc.* .............................. 48,400 787,952
Dell Computer Corp.* .............................. 29,200 913,668
EchoStar Communications Corp.* .................... 46,200 1,551,396
Hewlett-Packard Co. ............................... 33,000 643,500
International Business Machines Corp. ............. 13,900 1,223,756
Microsoft Corp. ................................... 50,300 1,237,883
Nokia Oyj - ADR ................................... 41,800 754,072
Taiwan Semiconductor Manufacturing LTD - ADR* ..... 78,718 798,200
-----------
7,910,427
-----------
12
ATALANTA/SOSNOFF FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 96.8%(CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES-- 0.9%
Nextel Communications, Inc.* ...................... 17,400 $ 260,826
-----------
TOTAL COMMON STOCKS (Cost $23,352,661) ............ $ 27,619,965
-----------
REAL ESTATE INVESTMENT TRUSTS-- 1.3%
Equity Office Properties Trust (Cost $389,851) .... 14,400 $ 387,504
-----------
CASH EQUIVALENTS -- 2.7%
First American Treasury Obligation Fund -
Class S (Cost $769,971) ........................... 769,971 $ 769,971
-----------
TOTAL INVESTMENT SECURITIES-- 100.8%
(Cost $24,512,483) ................................ $ 28,777,440
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.8%) .... (236,908)
-----------
NET ASSETS-- 100.0% ............................... $ 28,540,532
===========
See accompanying notes to financial statements.
* Non-income producing security
13
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 2003
================================================================================
COMMON STOCKS -- 95.7% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY-- 19.0%
AOL Time Warner Inc.* ............................. 3,400 $ 51,748
Clear Channel Communications, Inc.* ............... 1,300 52,910
Comcast Corp.* .................................... 3,200 92,224
Costco Wholesale Corp.* ........................... 1,500 55,575
Fox Entertainment Group, Inc.* .................... 2,600 73,086
KB HOME ........................................... 1,000 62,500
Lowes Companies, Inc. ............................. 1,100 46,486
Viacom, Inc. - Class B* ........................... 1,200 54,624
-----------
489,153
-----------
CONSUMER STAPLES-- 0.8%
Anheuser-Busch Companies, Inc. .................... 400 21,052
-----------
FINANCIALS -- 22.4%
Ace LTD ........................................... 2,300 83,950
Berkshire Hathaway, Inc. - Class B* ............... 50 118,700
Citigroup, Inc. ................................... 3,100 127,162
Freddie Mac ....................................... 800 47,848
Goldman Sachs Group, Inc. (The) ................... 800 65,200
Lehman Brothers Holdings, Inc. .................... 500 35,815
Morgan Stanley .................................... 800 36,600
RenaissanceRE Holdings LTD ........................ 1,400 62,580
-----------
577,855
-----------
HEALTHCARE -- 19.3%
Boston Scientific Corp.* .......................... 1,600 83,360
INAMED Corp.* ..................................... 800 41,232
Johnson & Johnson ................................. 900 48,915
Pfizer, Inc. ...................................... 2,200 68,244
Pharmaceutical Product Development, Inc.* ......... 1,800 50,490
Universal Health Services, Inc. - Class B* ........ 1,500 68,115
Wellpoint Health Networks, Inc.* .................. 1,000 85,340
Wyeth ............................................. 1,200 52,620
-----------
498,316
-----------
INDUSTRIALS -- 6.2%
D.R Horton, Inc. .................................. 2,100 55,209
Express Scripts, Inc.* ............................ 1,200 78,528
Ryland Group, Inc. (The) .......................... 400 26,040
-----------
159,777
-----------
INFORMATION TECHNOLOGY-- 26.9%
Cisco Systems, Inc.* .............................. 4,800 78,144
Dell Computer Corp.* .............................. 2,300 71,967
EchoStar Communications Corp.* .................... 3,700 124,246
Hewlett-Packard Co. ............................... 3,600 70,200
International Business Machines Corp. ............. 1,300 114,452
Microsoft Corp. ................................... 4,300 105,823
Nokia Oyj - ADR ................................... 3,500 63,140
Taiwan Semiconductor Manufacturing LTD - ADR* ..... 6,470 65,606
-----------
693,578
-----------
14
ATALANTA/SOSNOFF VALUE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 95.7% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES-- 1.1%
Nextel Communications, Inc.* ...................... 2,000 $ 29,980
-----------
TOTAL COMMON STOCKS (Cost $2,121,160) ............. $ 2,469,711
-----------
REAL ESTATE INVESTMENT TRUSTS-- 1.7%
Equity Office Properties Trust (Cost $44,040) ..... 1,600 $ 43,056
-----------
CASH EQUIVALENTS-- 2.6%
First American Treasury Obligation Fund -
Class S (Cost $67,741) ............................ 67,742 $ 67,741
-----------
TOTAL INVESTMENT SECURITIES-- 100.0%
(Cost $2,232,941) ................................. $ 2,580,508
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.0% ...... 1,172
-----------
NET ASSETS-- 100.0% ............................... $ 2,581,680
===========
See accompanying notes to financial statements.
* Non-income producing security
15
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2003
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Atalanta/Sosnoff Fund and the Atalanta/Sosnoff Value Fund (individually, a
Fund, and, collectively, the Funds) are each a no-load series of the
Atalanta/Sosnoff Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940. The Trust was
organized as an Ohio business trust on January 29, 1998. The Atalanta/Sosnoff
Fund was capitalized on May 6, 1998, when Atalanta/Sosnoff Capital Corporation
(Delaware) (the Adviser) purchased the initial 10,000 shares of the Fund at $10
per share. The public offering of shares of the Atalanta/Sosnoff Fund commenced
on June 17, 1998. The public offering of shares of the Atalanta/Sosnoff Value
Fund commenced on July 1, 1999, when the Adviser purchased the initial 200,000
shares of the Fund at $10 per share. The Funds had no operations prior to the
public offering of their respective shares except for the initial issuance of
shares.
The Atalanta/Sosnoff Fund seeks long-term capital appreciation through equity
investments in companies which the Adviser believes are entering into a period
of accelerating earnings momentum.
The Atalanta/Sosnoff Value Fund seeks long-term capital appreciation by
investing primarily in equity securities which the Adviser believes are
fundamentally undervalued.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time). Securities which are traded on stock exchanges are
valued at the last reported sale price or, if not traded on a particular day, at
the closing bid price. Securities which are quoted by NASDAQ are valued at the
NASDAQ Official Closing Price. Securities traded in the over-the-counter market,
and which are not quoted by NASDAQ, are valued at the last sale price, if
available, otherwise, at the last quoted bid price. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith in accordance with consistently applied procedures established by and
under the general supervision of the Board of Trustees.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of each Fund is equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Discounts and premiums on fixed-income
securities are amortized using the interest method.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually to shareholders of each Fund. Net
realized short-term capital gains, if any, may be distributed throughout the
year and net realized long-term capital gains, if any, are distributed at least
once each year. The amount of distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations
which may differ from accounting principles generally accepted in the United
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
States. These "book/tax" differences are either temporary or permanent in nature
and are primarily due to losses deferred due to wash sales.
There were no distributions for the Atalanta/Sosnoff Fund during the years ended
May 31, 2003 and 2002.
The tax character of distributions paid for the Atalanta/Sosnoff Value Fund
during the years ended May 31, 2003 and 2002 was as follows:
- --------------------------------------------------------------------------------
YEAR
ENDED ORDINARY LONG-TERM TOTAL
MAY 31, INCOME CAPITAL GAINS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Atalanta/Sosnoff Value Fund 2003 $ -- $ -- $ --
2002 $ 39,557 $ 30,081 $ 69,638
- --------------------------------------------------------------------------------
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are determined on a specific identification basis.
Organization costs -- Costs incurred by the Atalanta/Sosnoff Fund in connection
with its organization and registration of shares, net of certain expenses, have
been capitalized and are being amortized on a straight-line basis over a five
year period beginning with the commencement of operations.
Option transactions - The Funds may write covered call options for which
premiums are received and are recorded as liabilities, and are subsequently
valued daily at the closing prices on their primary exchanges. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised increase the proceeds used to
calculate the realized gain or loss on the sale of the security. If a closing
purchase transaction is used to terminate the Funds' obligation on a call, a
gain or loss will be realized, depending upon whether the price of the closing
purchase transaction is more or less than the premium previously received on the
call written.
Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results could
differ from those estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable income, the Fund (but not
the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The tax character of distributable earnings at May 31, 2003 was as follows:
- --------------------------------------------------------------------------------
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
FUND FUND
- --------------------------------------------------------------------------------
Capital loss carryforwards........... $ ( 6,434,917) $ ( 399,083)
Unrealized appreciation.............. 4,067,998 342,696
------------ ------------
Total distributable earnings......... $ ( 2,366,919) $ ( 56,387)
============ ============
- --------------------------------------------------------------------------------
As of May 31, 2003, the Funds had the following capital loss carryforwards for
federal income tax purposes. These capital loss carryforwards may be utilized in
the current and future years to offset net realized capital gains, if any, prior
to distribution to shareholders.
- --------------------------------------------------------------------------------
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
EXPIRES MAY 31, FUND FUND
- --------------------------------------------------------------------------------
2009 ............................... $ 968,544 $ --
2010 ............................... 987,464 151,889
2011 ............................... 4,478,969 247,194
------------ ------------
$ 6,434,917 $ 399,083
============ ============
- --------------------------------------------------------------------------------
The following information is based upon the federal income tax cost of the
investment securities as of May 31, 2003:
- --------------------------------------------------------------------------------
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
FUND FUND
- --------------------------------------------------------------------------------
Gross unrealized appreciation ....... $ 4,467,999 $ 363,963
Gross unrealized depreciation ....... ( 400,001) ( 21,267)
------------ ------------
Net unrealized appreciation ......... $ 4,067,998 $ 342,696
============ ============
Federal income tax cost ............. $ 24,709,442 $ 2,237,812
============ ============
- --------------------------------------------------------------------------------
The difference between the federal income tax cost and the financial statement
cost of portfolio investments is due to certain timing differences in the
recognition of capital losses under income tax regulations and accounting
principles generally accepted in the United States.
Reclassification of capital accounts -- For the year ended May 31, 2003, the
Atalanta/Sosnoff Fund and the Atalanta/Sosnoff Value Fund reclassified net
investment losses of $122,874 and $7,961, respectively, against paid-in capital
on the Statements of Assets and Liabilities. Such reclassifications, the result
of permanent differences between the financial statement and income tax
reporting requirements, have no effect on the Funds' net assets or net asset
value per share.
18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the year ended May 31, 2003:
- --------------------------------------------------------------------------------
ATALANTA/
ATALANTA/ SOSNOFF
SOSNOFF VALUE
FUND FUND
- --------------------------------------------------------------------------------
Purchases of investment securities... $ 26,248,168 $ 2,854,127
============ ============
Proceeds from sales of investment
securities ......................... $ 24,571,336 $ 2,704,055
============ ============
- --------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust are also officers of the Adviser. Certain other
officers of the Trust are also officers of Ultimus Fund Solutions, LLC
(Ultimus), the administrative services agent, shareholder servicing and transfer
agent and accounting services agent for the Trust.
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement. Each Fund pays the Adviser an investment advisory
fee, computed and accrued daily and paid monthly, at an annual rate of 0.75% of
average daily net assets of each Fund. The base management fee of 0.75% may be
increased or decreased by 0.25% if a Fund outperforms or underperforms its
relevant benchmark by at least 2.00% (referred to as the "performance fee
adjustment"). No performance fee adjustments were required during the year ended
May 31, 2003.
The Adviser has committed to waive its investment advisory fees and reimburse
the Funds for expenses incurred to the extent necessary to limit total operating
expenses of each Fund (before any performance fee adjustment) to a maximum level
of 1.50% of each Fund's average daily net assets. Accordingly, during the year
ended May 31, 2003, the Adviser waived investment advisory fees of $51,530 for
the Atalanta/Sosnoff Fund and waived all of its investment advisory fees of
$16,287 and reimbursed $62,122 of other operating expenses for the
Atalanta/Sosnoff Value Fund.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, Ultimus supplies non-investment
related statistical and research data, internal regulatory compliance services
and executive and administrative services for the Funds. Ultimus prepares the
tax returns, reports to shareholders of each Fund, reports to and filings with
the Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For these services, prior to
April 1, 2003, Ultimus received a monthly fee at an annual rate of 0.15% of the
Trust's average daily net assets up to $50 million; 0.125% of such net assets
between $50 million and $100 million; 0.10% of such net assets between $100
million and $250 million; 0.075% of such net assets between $250 million and
$500 million; and 0.05% of such net assets in excess of $500 million, subject to
a $6,000 minimum monthly fee for the Trust. Effective April 1, 2003, Ultimus
receives a monthly fee at an annual rate of 0.15% of each Fund's average daily
net assets up to $50 million; 0.125% of such net assets between $50 million and
$100 million; 0.10% of such net assets between $100 million and $250 million;
0.075% of such nets assets between $250 million and $500 million; and 0.05% of
such net assets in excess of $500 million, subjects to a $2,000 minimum monthly
fee per Fund.
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
FUND ACCOUNTING AGREEMENT
Under the terms of a Fund Accounting Agreement, Ultimus calculates the daily net
asset value per share and maintains the financial books and records of each
Fund. For these services, Ultimus receives a fee, based on current asset levels,
of $2,000 per month from each Fund plus an asset-based fee computed as a
percentage of each Fund's average net assets. In addition, each Fund reimburses
Ultimus for out-of-pocket expenses related to the pricing of each Fund's
portfolio securities.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer Agent and Shareholder Services Agreement, Ultimus
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of each
Fund's shares, acts as dividend and distribution disbursing agent, and performs
other shareholder service functions. For these services, Ultimus receives a
monthly fee at an annual rate of $18 per shareholder account from each Fund,
subject to a $1,500 minimum monthly fee for each Fund, except if a Fund has less
than 25 shareholders, the monthly fee is reduced to $1,000 and if a Fund has
less than 100 shareholders but not less than 25, the monthly fee is reduced to
$1,250. In addition, each Fund reimburses Ultimus for out-of-pocket expenses
including, but not limited to, postage and supplies.
SERVICE PLAN
The Trust has adopted a Service Plan (the Plan) under which each Fund
compensates Atalanta/Sosnoff Management Corporation (the Distributor) for
services related to the distribution and promotion of Fund shares. Each Fund
pays the Distributor a fee, computed and accrued daily and paid monthly, at a
maximum annual rate of 0.25% of the average daily net assets of each Fund.
During the year ended May 31, 2003, the Atalanta/Sosnoff Fund and the
Atalanta/Sosnoff Value Fund incurred expenses of $23,681 and $123 respectively,
under the Plan.
4. CALL OPTIONS WRITTEN
A summary of written call option contracts during the year ended May 31, 2003 is
as follows:
- ------------------------------------------------------------------------------------------------------
ATALANTA/SOSNOFF ATALANTA/SOSNOFF
FUND VALUE FUND
- ------------------------------------------------------------------------------------------------------
OPTION OPTION OPTION OPTION
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- ------------------------------------------------------------------------------------------------------
Options outstanding at beginning of year...... -- $ -- -- $ --
Options written............................... 680 92,313 250 26,174
Options canceled in a closing
purchase transaction......................... ( 680) ( 92,313) ( 250) ( 26,174)
--------- --------- --------- ---------
Options outstanding at end of year -- $ -- -- $ --
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------
20
REPORT OF INDEPENDENT AUDITORS
================================================================================
To the Shareholders and
Board of Trustees of
Atalanta/Sosnoff Investment Trust
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the Atalanta/Sosnoff Investment Trust
comprised of the Atalanta/Sosnoff Fund and Atalanta/Sosnoff Value Fund (the
"Funds") as of May 31, 2003, and the related statements of operations for the
year then ended and the statements of changes in net assets and financial
highlights for the two years in the period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights presented herein for each of the respective years or periods ended
May 31, 2001 were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on the financial highlights in their
report dated June 22, 2001.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 2003 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Atalanta/Sosnoff Fund and the Atalanta/Sosnoff Value Fund of the
Atalanta/Sosnoff Investment Trust as of May 31, 2003, the results of their
operations for the year then ended, and the changes in their net assets and
financial highlights for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Cincinnati, Ohio
June 27, 2003
21
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS (UNAUDITED)
================================================================================
Overall responsibility for management of the Funds rests with the Board of
Trustees. The Trustees serve during the lifetime of the Trust and until its
termination, or until death, resignation, retirement or removal. The Trustees,
in turn, elect the officers of the Trust to actively supervise its day-to-day
operations. The officers have been elected for an annual term. The following are
the Trustees and executive officers of the Trust:
POSITION HELD LENGTH OF
TRUSTEE/EXECUTIVE OFFICER ADDRESS AGE WITH THE TRUST TIME SERVED
- -----------------------------------------------------------------------------------------
*Toni E. Sosnoff 101 Park Avenue 60 President Since May 1998
New York, NY and Trustee
Howard A. Drucker 25 East End Avenue 61 Trustee Since May 1998
New York, NY
Irving L. Straus 1501 Broadway 82 Trustee Since May 1998
New York, NY
Aida L. Wilder 26 Old Albany Post Road 55 Trustee Since May 1998
Rhinebeck, NY
Kevin S. Kelly 101 Park Avenue 38 Vice President Since November
New York, NY 2002
Robert G. Dorsey 135 Merchant Street 46 Vice President Since July 2001
Cincinnati, OH
Mark J. Seger 135 Merchant Street 41 Treasurer Since July 2001
Cincinnati, OH
John F. Splain 135 Merchant Street 46 Secretary Since July 2001
Cincinnati, OH
* Mrs. Sosnoff is an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940.
Each Trustee oversees two portfolios of the Trust. The principal occupations of
the Trustees and executive officers of the Funds during the past five years and
public directorships held by the Trustees are set forth below:
Toni E. Sosnoff is Vice President of the Adviser.
Howard A. Drucker is a real estate investor and manager with various properties
throughout the United States of America.
Irving L. Straus is the Chairman of Straus Corporate Communications (a public
relations firm).
Aida L. Wilder is Vice President of Wilder Consolidated Enterprises (a
restaurant operations company).
Kevin S. Kelly is Senior Vice President, Chief Operating Officer and Chief
Financial Officer of the Adviser.
22
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS (UNAUDITED)
(CONTINUED)
================================================================================
Robert G. Dorsey is a Managing Director of Ultimus Fund Solutions, LLC and
Ultimus Fund Distributors, LLC. Prior to March 1999, he was President of
Countrywide Fund Services, Inc. (a mutual fund services company).
Mark J. Seger is a Managing Director of Ultimus Fund Solutions, LLC and Ultimus
Fund Distributors, LLC. Prior to March 1999, he was First Vice President of
Countrywide Fund Services, Inc.
John F. Splain is a Managing Director of Ultimus Fund Solutions, LLC and Ultimus
Fund Distributors, LLC. Prior to March 1999, he was First Vice President and
Secretary of Countrywide Fund Services, Inc. and affiliated companies.
Additional information about members of the Board of Trustees and Executive
Officers is available in the Statement of Additional Information (SAI). To
obtain a free copy of the SAI, please call 1-877-SOSNOFF (1-877-767-6633).
23
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
ATALANTA/SOSNOFF INVESTMENT TRUST
101 Park Avenue o New York, New York 10178
toll free 1-877-SOSNOFF (767-6633)
website o www.atalantasosnoff.com
e-mail o asfund@atalantasosnoff.com
BOARD OF TRUSTEES
Toni E. Sosnoff
Howard A. Drucker
Irving L. Straus
Aida L. Wilder
INVESTMENT ADVISER
Atalanta/Sosnoff Capital Corp. (Delaware)
101 Park Avenue o New York, New York 10178
212-867-5000
DISTRIBUTOR
Atalanta/Sosnoff Management Corporation
101 Park Avenue o New York, New York 10178
TRANSFER AGENT
Ultimus Fund Solutions, LLC
P.O. Box 46707 o Cincinnati, Ohio 45246-0707
Shareholder Services
Nationwide: (Toll-Free) 1-877-SOSNOFF
1-877-767-6633
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling toll-free 1-877-SOSNOFF (1-877-767-6633), or on the
Securities and Exchange Commission's website at http://sec.gov.
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not required
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 301-2(c) under the Investment Company Act of 1940) are effective
based on their evaluation of these controls and procedures as of a date within
90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2): Attached hereto
Exhibit 99.CERT Certifications pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Atalanta/Sosnoff Investment Trust
------------------------------------------------------------------
By (Signature and Title)* /s/Toni E. Sosnoff
-------------------------------------
Toni E. Sosnoff, President
Date August 6, 2003
-------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/Toni E. Sosnoff
-------------------------------------
Toni E. Sosnoff, President
Date August 6, 2003
-------------------------------
By (Signature and Title)* /s/ Mark J. Seger
-------------------------------------
Mark J. Seger, Treasurer
Date August 4, 2003
-------------------------------
* Print the name and title of each signing officer under his or her signature.