<PAGE>
NORTH AMERICAN FUNDS
President's Message
- --------------------------------------------------------------------------------
December 22, 1995
Dear Fellow Shareholders:
The past twelve months has been a terrific period for the domestic
equity and bond markets and for the North American Funds. The U.S. equity
markets have set all-time records and the bond market has been very strong,
providing excellent returns for shareholders. Only the international equity
markets, particularly in Japan, have lagged. The pages immediately following
this letter provide detailed performance information and I encourage you to
review it with care.
I am reminded by looking back at my letter to you of one year ago that
the 1995 market performance is almost the direct opposite of 1994 where the U.S.
equity market was flat and the bond market very weak, while the international
equity markets performed well. This ongoing market rotation reinforces our
belief that long-term investors will fair best with a diversified investment
program reviewed periodically with a professional financial adviser. The North
American Funds, with our many investment portfolios and multiple managers
specializing in our investment disciplines, are designed to offer you the
opportunity to craft such a diversified investment program without changing fund
families and incurring multiple sales and transaction charges.
The new year will bring several exciting changes to the North American
Funds. The merger of the ultimate parent of our investment adviser with The
Manufacturers Life Insurance Company ("Manulife") will become effective January
1, 1996. I am pleased to report that shareholders of the North American Funds
overwhelmingly approved the necessary regulatory matters associated with this
merger at the Special Meeting of Shareholders on December 5, 1995. We are very
pleased to become associated with Manulife, one of North America's largest and
strongest financial institutions, whose financial strength and resources will
enable us to continue to build and expand the North American Funds concept.
Also in 1996 we intend to introduce three new specialized equity
portfolios to the North American Funds. Your Board of Trustees has invited two
of North America's best performing specialty equity managers to manage the new
portfolios. Fred Alger Management, Inc. will manage a domestic Small/Mid Cap
Fund that will invest primarily in companies with market capitalizations between
$500 million and $3.5 billion. Founders Asset Management, Inc. ("Founders")
will manage an International Small Cap Fund investing primarily in non-U.S.
companies with market capitalizations or annual revenues of $1 billion or less.
Founders will also manage a domestic Growth Equity Fund that will invest
primarily in domestic growth companies. In connection with the introduction of
the Growth Equity Fund we will change the name of the current "Growth Fund" to
"Value Equity Fund" to emphasize the difference between Founders' growth style
and Goldman Sachs' value investing style. We expect these portfolios to be
available March 1, 1996.
Thank you for your continued confidence in the North American Funds.
We are committed to serving your investment needs with the best selection of
managers and portfolios available in a single fund family. As always, our
customer service representatives are available to you daily at (800) 872-8037
from 8:30 a.m. to 5:00 p.m. EST, and our Automated Services Line may be accessed
24 hours a day at (800) 872-2251.
Sincerely yours,
John D. DesPrez III
President
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Performance and Portfolio Manager's Commentary........ iii
Results of Special Meeting of Shareholders................. xiii
Report of Independent Accountants.......................... 1
Statements of Assets and Liabilities....................... 2
Statements of Operations................................... 6
Statements of Changes in Net Assets........................ 8
Financial Highlights, Selected Per Share Data and Ratios... 11
Portfolio of Investments:
Global Growth Fund...................................... 25
Growth Fund............................................. 27
Growth and Income Fund.................................. 28
International Growth and Income Fund.................... 30
Asset Allocation Fund................................... 34
Strategic Income Fund................................... 37
Investment Quality Bond Fund............................ 40
U.S. Government Securities Fund......................... 42
National Municipal Bond Fund............................ 43
Money Market Fund....................................... 45
Notes to Financial Statements.............................. 46
</TABLE>
ii
<PAGE>
NORTH AMERICAN FUNDS
FUND PERFORMANCE AND PORTFOLIO MANAGER'S COMMENTARY
- --------------------------------------------------------------------------------
FUND PERFORMANCE
In the following pages we have set forth information regarding the performance
of each portfolio of the North American Funds, except the Money Market Fund.
There are several ways to evaluate a Fund's historical performance. One can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. WITH RESPECT TO ALL
THE PERFORMANCE INFORMATION PRESENTED, IT IS IMPORTANT TO UNDERSTAND THAT PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. RETURN AND PRINCIPAL FLUCTUATE,
AND YOUR SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
PERFORMANCE TABLES
The Performance Tables show two types of total return information: CUMULATIVE
AND AVERAGE ANNUAL TOTAL RETURNS. A CUMULATIVE TOTAL RETURN is an expression of
a Fund's total change in share value in percentage terms over a set period of
time -- one, five, and ten years (or since the Fund's inception if less than the
applicable period). An AVERAGE ANNUAL TOTAL RETURN takes the Fund's cumulative
total return for a time period greater than one year and shows what would have
happened if the Fund had performed at a constant rate each year. In addition,
for the three funds that were in existence prior to the change in portfolio
management assignments in December 1991, namely the Growth, Asset Allocation,
and U.S. Government Securities Funds, the tables show an average annual total
return for the period since the current portfolio manager assumed
responsibility. For all share classes, the tables show cumulative and average
annual total returns both net of the possible maximum applicable front-end or
back-end sales charge, as well as without giving effect to such possible maximum
charges ("net asset value").
GRAPH -- CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
The performance graph for each Fund shows the change in value of a $10,000
investment over the life of the Fund's Class A shares. Each Fund's performance
is compared to the performance of one or more broad-based securities indices as
a "benchmark." Fund results (which include the reinvestment of dividends and
capital gains distributions as well as the deduction of ongoing management and
distribution fees and fund operating expenses) reflect the deduction of the
maximum 4.75% sales charge applicable to Class A shares. Please note that
effective 4/1/94, Class B and Class C shares were offered. Performance of these
share classes will differ. Historical performance prior to 4/1/94 is that of
the Fund before it adopted the current multi-class structure. Benchmarks used
for comparison are unmanaged and do not reflect any fees or expenses.
PORTFOLIO MANAGER'S COMMENTARY
Finally, we have provided a commentary by each Fund's portfolio manager
regarding each Fund's performance during the fiscal year ended October 31, 1995.
All performance results referenced in the commentary are Class A share returns.
iii
<PAGE>
GLOBAL GROWTH FUND
INVESTMENT OBJECTIVE: To seek long term capital appreciation, by investing
primarily in a global portfolio of equity securities and
securities convertible into or exercisable for equity
securities.
PORTFOLIO MANAGER: Oechsle International Advisors, L.P.
INCEPTION DATE: November 1, 1990
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' Global Growth Fund Class
A shares at net asset value on November 1, 1990 through October 31, 1995, as
compared with the growth of a $10,000 investment in the Morgan Stanley Capital
International (MSCI) World Index over the same period. The graph also depicts
the growth of a $10,000 investment in Class A shares of the Global Growth Fund
on November 1, 1990 through October 31, 1995, assuming the deduction of the
maximum 4.75% front-end sales charge at the time of the initial investment and
reinvestment of dividends and capital gains at net asset value. The following
are the plot points used to draw this line graph.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge Investment in the
Month Ended of the Global Growth Fund of the Global Growth Fund MSCI World Index
<S> <C> <C> <C>
Oct-90 $10,000 $ 9,525 $10,000
Nov-90 $ 9,921 $ 9,450 $ 9,838
Dec-90 $10,024 $ 9,548 $10,045
Jan-91 $10,272 $ 9,784 $10,415
Feb-91 $10,927 $10,408 $11,381
Mar-91 $10,629 $10,124 $11,047
Apr-91 $10,659 $10,153 $11,135
May-91 $10,847 $10,332 $11,390
Jun-91 $10,233 $ 9,747 $10,688
Jul-91 $10,698 $10,190 $11,195
Aug-91 $10,597 $10,094 $11,161
Sep-91 $10,719 $10,209 $11,456
Oct-91 $10,880 $10,364 $11,644
Nov-91 $10,466 $ 9,969 $11,138
Dec-91 $11,161 $10,631 $11,951
Jan-92 $11,141 $10,612 $11,732
Feb-92 $11,181 $10,650 $11,531
Mar-92 $10,725 $10,215 $10,990
Apr-92 $11,049 $10,525 $11,145
May-92 $11,587 $11,037 $11,591
Jun-92 $11,252 $10,718 $11,204
Jul-92 $11,049 $10,525 $11,235
Aug-92 $11,060 $10,534 $11,510
Sep-92 $10,776 $10,264 $11,407
Oct-92 $10,491 $ 9,993 $11,100
Nov-92 $10,836 $10,322 $11,301
Dec-92 $10,841 $10,326 $11,394
Jan-93 $10,871 $10,355 $11,434
Feb-93 $11,004 $10,481 $11,707
Mar-93 $11,633 $11,081 $12,388
Apr-93 $12,243 $11,662 $12,965
May-93 $12,843 $12,233 $13,265
Jun-93 $12,710 $12,107 $13,156
Jul-93 $13,036 $12,416 $13,429
Aug-93 $13,716 $13,065 $14,047
Sep-93 $13,757 $13,103 $13,790
Oct-93 $13,960 $13,297 $14,172
Nov-93 $13,117 $12,494 $13,373
Dec-93 $14,046 $13,379 $14,029
Jan-94 $14,920 $14,211 $14,957
Feb-94 $14,982 $14,270 $14,766
Mar-94 $14,529 $13,839 $14,132
Apr-94 $14,910 $14,202 $14,571
May-94 $14,684 $13,986 $14,611
Jun-94 $14,848 $14,143 $14,573
Jul-94 $15,177 $14,456 $14,853
Aug-94 $15,640 $14,897 $15,303
Sep-94 $15,074 $14,358 $14,903
Oct-94 $15,239 $14,515 $15,330
Nov-94 $14,272 $13,594 $14,668
Dec-94 $14,256 $13,579 $14,812
Jan-95 $13,459 $12,820 $14,593
Feb-95 $13,459 $12,820 $14,802
Mar-95 $13,969 $13,305 $15,512
Apr-95 $14,288 $13,609 $16,069
May-95 $14,330 $13,649 $16,210
Jun-95 $14,298 $13,619 $16,208
Jul-95 $15,095 $14,378 $17,022
Aug-95 $14,999 $14,287 $16,646
Sep-95 $15,137 $14,418 $17,134
Oct-95 $14,702 $14,003 $16,867
</TABLE>
- --------------------------------------------------------------------------------
The Morgan Stanley Capital International (MSCI) World Index is a global index
which measures the performance of stock markets in the United States, Europe,
Canada, Australia, New Zealand, and the Far East. The index represents
approximately 60% of the combined market capitalization of the 23 countries. The
index attempts to replicate the industry composition of each local market and
includes a representative sampling of large, medium, and small capitalization
companies. The index is market-value weighted and calculated with both net and
gross dividends reinvested. The net return index reinvests dividends after
foreign taxes have been withheld and the gross return index reinvests dividends
before payment of foreign taxes.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Cumulative
Total Return Total Return
Since Since
Periods Ending October 31, 1995 1 Year Inception Inception
<S> <C> <C> <C>
Morgan Stanley Capital International World Index* 10.03% 11.02% 68.67%
Global Growth Fund Class A (at net asset value) -3.52% 8.05% 47.02%
Global Growth Fund Class A (net of 4.75% sales
charge) -8.11% 7.00% 40.03%
Global Growth Fund Class B (at net asset value) -4.09% 7.88% 45.86%
Global Growth Fund Class B (net of CDSC**) -8.88% 7.58% 43.86%
Global Growth Fund Class C (at net asset value) -4.09% 7.88% 45.86%
Global Growth Fund Class C (net of CDSC***) -5.05% 7.88% 45.86%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest
to the actual inception date of the Fund.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
This has been a roller coaster year for global equity markets. The level of
volatility in individual markets has been high and quite unusual. This has
masked some highly satisfying returns over the longer term.
The Fund's largest weighting has been and continues to be Japan. During 1995,
equity markets experienced a reversal in sentiment. While the Fund benefited
significantly from the outperformance of Japanese equities in the prior year,
the decline in this market limited performance of the Fund during the most re-
cent twelve month period. The economic, political, financial and currency con-
cerns that caused the recent poor performance of this market are now being se-
riously addressed by local authorities and this is having a positive impact on
the stock market. We expect this trend to continue.
We have believed for the past year that consensus expectations for growth
among the major European economies were too optimistic and that they would
have to be downgraded as time passed. At this stage, we expect there will be
more positive government action to counter the slowdown, mainly in the form of
lower short term interest rates. We are not anticipating aggressive
restimulation programs, though, because of the concerns over budget deficits
in most European countries and the need to bring them down in line with EMU
prerequisites. While the overall economic environment may appear lackluster,
there are many profitable investment opportunities. The portfolio continues to
be diversified on both a country and industry basis. The companies in the
portfolio represent solid fundamental values with above average earnings po-
tential over the next several years.
iv
<PAGE>
GROWTH FUND
INVESTMENT OBJECTIVE: To seek long term growth of capital by investing
primarily in common stocks and securities convertible
into or carrying the right to buy common stocks.
PORTFOLIO MANAGER: Goldman Sachs Asset Management
INCEPTION DATE: August 28, 1989
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' Growth Class A shares at
net asset value on August 28, 1989 through October 31, 1995, as compared with
the growth of a $10,000 investment in the S&P 500 Composite Index over the same
period. The graph also depicts the growth of a $10,000 investment in Class A
shares of the Growth Fund on August 28, 1989 through October 31, 1995, assuming
the deduction of the maximum 4.75% front-end sales charge at the time of the
initial investment and reinvestment of dividends and capital gains at net asset
value. The following are the plot points used to draw this line graph.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge Investment in the
Month Ended of the Growth Fund of the Growth Fund S&P 500
<S> <C> <C> <C>
Jul-89 $10,000 $ 9,525 $10,000
Aug-89 $10,114 $ 9,634 $10,000
Sep-89 $ 9,861 $ 9,393 $ 9,961
Oct-89 $ 9,135 $ 8,701 $ 9,737
Nov-89 $ 9,167 $ 8,732 $ 9,926
Dec-89 $ 9,227 $ 8,789 $10,165
Jan-90 $ 8,408 $ 8,008 $ 9,494
Feb-90 $ 8,572 $ 8,164 $ 9,603
Mar-90 $ 8,839 $ 8,419 $ 9,863
Apr-90 $ 8,580 $ 8,173 $ 9,627
May-90 $ 9,167 $ 8,731 $10,541
Jun-90 $ 8,978 $ 8,552 $10,477
Jul-90 $ 8,684 $ 8,272 $10,451
Aug-90 $ 7,698 $ 7,333 $ 9,495
Sep-90 $ 7,240 $ 6,896 $ 9,039
Oct-90 $ 7,110 $ 6,772 $ 9,008
Nov-90 $ 7,491 $ 7,135 $ 9,579
Dec-90 $ 7,796 $ 7,425 $ 9,847
Jan-91 $ 8,161 $ 7,774 $10,286
Feb-91 $ 8,675 $ 8,262 $11,010
Mar-91 $ 8,831 $ 8,412 $11,285
Apr-91 $ 8,927 $ 8,503 $11,319
May-91 $ 9,266 $ 8,826 $11,786
Jun-91 $ 8,883 $ 8,481 $11,252
Jul-91 $ 9,215 $ 8,777 $11,788
Aug-91 $ 9,390 $ 8,944 $12,051
Sep-91 $ 9,215 $ 8,777 $11,851
Oct-91 $ 9,337 $ 8,894 $12,022
Nov-91 $ 8,796 $ 8,378 $11,525
Dec-91 $ 9,751 $ 9,287 $12,843
Jan-92 $ 9,917 $ 9,446 $12,618
Feb-92 $10,292 $ 9,803 $12,770
Mar-92 $10,126 $ 9,645 $12,522
Apr-92 $10,327 $ 9,837 $12,902
May-92 $10,528 $10,028 $12,947
Jun-92 $10,214 $ 9,728 $12,754
Jul-92 $10,406 $ 9,912 $13,288
Aug-92 $10,091 $ 9,612 $13,002
Sep-92 $10,214 $ 9,728 $13,153
Oct-92 $10,528 $10,028 $13,214
Nov-92 $11,262 $10,727 $13,647
Dec-92 $11,594 $11,043 $13,818
Jan-93 $11,646 $11,093 $13,949
Feb-93 $11,437 $10,894 $14,129
Mar-93 $11,874 $11,310 $14,426
Apr-93 $11,428 $10,885 $14,093
May-93 $11,813 $11,251 $14,446
Jun-93 $11,909 $11,343 $14,491
Jul-93 $12,092 $11,518 $14,447
Aug-93 $12,145 $11,568 $14,978
Sep-93 $12,398 $11,809 $14,863
Oct-93 $12,415 $11,826 $15,185
Nov-93 $12,424 $11,834 $15,023
Dec-93 $12,847 $12,236 $15,209
Jan-94 $13,155 $12,530 $15,738
Feb-94 $13,340 $12,706 $15,299
Mar-94 $12,847 $12,236 $14,634
Apr-94 $12,838 $12,228 $14,838
May-94 $12,926 $12,312 $15,058
Jun-94 $12,679 $12,077 $14,690
Jul-94 $12,847 $12,236 $15,188
Aug-94 $13,480 $12,840 $15,795
Sep-94 $13,304 $12,672 $15,406
Oct-94 $13,014 $12,396 $15,764
Nov-94 $12,327 $11,741 $15,177
Dec-94 $12,570 $11,973 $15,400
Jan-95 $12,524 $11,929 $15,811
Feb-95 $13,354 $12,719 $16,419
Mar-95 $13,717 $13,066 $16,905
Apr-95 $13,950 $13,288 $17,415
May-95 $14,370 $13,687 $18,087
Jun-95 $14,827 $14,123 $18,510
Jul-95 $15,209 $14,487 $19,134
Aug-95 $15,377 $14,647 $19,164
Sep-95 $15,433 $14,700 $19,969
Oct-95 $14,864 $14,158 $19,909
</TABLE>
The Standard and Poor's 500 index contains a representative sample of common
stocks that trade on the New York and American Stock Exchanges and some
over-the-counter stocks. The capitalization ranges from $80 million to $76
billion. The index is weighted by market capitalization and calculated on a
total return basis with dividends reinvested.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund as been used.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since# Since Since#
Periods Ending October 31, 1995 1 Year 5 Years Inception Dec. 13, 1991 Inception Dec. 13, 1991
<S> <C> <C> <C> <C> <C> <C>
S&P 500* 26.30% 17.19% 11.81% 14.98% 99.09% 72.74%
Growth Fund Class A (at
net asset value) 14.22% 15.89% 6.64% 14.00% 48.64% 66.34%
Growth Fund Class A (net
of 4.75% sales charge) 8.79% 14.77% 5.80% 12.58% 41.58% 58.46%
Growth Fund Class B (at
net asset value) 13.58% 15.75% 6.53% 13.81% 47.72% 65.30%
Growth Fund Class B (net
of CDSC**) 8.58% 15.52% 6.53% 13.28% 47.72% 62.30%
Growth Fund Class C (at
net asset value) 13.58% 15.75% 6.53% 13.81% 47.72% 65.30%
Growth Fund Class C (net
of CDSC***) 12.58% 15.75% 6.53% 13.81% 47.72% 65.30%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
#Current investment manager (subadvisor) assignment became effective 12/13/91.
PORTFOLIO MANAGER'S COMMENTARY
In the fiscal year ending October 31, 1995, the Growth Fund had a Net Asset
Value total return of 14.22%. This compares with a total return of 26.30% for
the S&P 500.
The Federal Reserve's current policy of neutrality which began at the end of
1994 helped propel the stock market to record highs this year. As corporate
profits accelerated in the beginning of the year and as inflation remained in
check, growth stocks took off. Even so, the fund underperformed the benchmark
and this underperformance can be explained on two levels. The Fund uses a val-
ue-oriented approach and value stocks did not perform as well as growth
stocks. In addition, for most of the period, the portfolio was heavily ori-
ented towards cyclical stocks. The capital spending, basic industry, and con-
sumer cyclical sectors represented as much as 36% of the portfolio against a
market weighting of 22%. Retailers and specialty retailers were over-repre-
sented as well. Neither cyclicals or retailers have been favored by this peri-
od's market as recession fears resurfaced. However, as always, the Fund re-
mains a value driven portfolio in which we seek companies that are inexpensive
relative to our estimates for future earnings. Positive returns this year were
aided by stock selection, specifically Citicorp, Philip Morris, J C Penney,
and AT&T. Recently, we have reduced some of our cyclical exposure and in-
creased our exposure to areas of the market that were under-represented and
where we were able to find value. We have added exposure to the energy and
utility sector by purchasing companies such as Texaco and Long Island Light-
ing.
v
<PAGE>
GROWTH AND INCOME FUND
INVESTMENT OBJECTIVE: To seek long-term growth of capital and income consistent
with prudent investment risk, by investing primarily in a
diversified portfolio of common stocks of United States
issuers which the portfolio manager believes are of high
quality.
PORTFOLIO MANAGER: Wellington Management Company
INCEPTION DATE: May 1, 1991
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' Growth and Income Fund
Class A shares at net asset value on May 1, 1991 through October 31, 1995, as
compared with the growth a $10,000 investment in the S&P 500 Composite Index.
The graph also depicts the growth of a $10,000 investment in Class A shares of
the Growth and Income Fund on May 1, 1990 through October 31, 1995, assuming
the deduction of the maximum 4.75% front-end sales charge at the time of the
initial investment and reinvestment of dividends and capital gains at net asset
value. The following are the plot points used to draw this line graph.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 invested in Growth of $10,000 invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge investment in the
Month Ended of the Growth & Income Fund of the Growth & Income Fund S&P 500
<S> <C> <C> <C>
Apr-91 $10,000 $ 9,525 $10,000
May-91 $10,240 $ 9,754 $10,413
Jun-91 $ 9,879 $ 9,410 $ 9,941
Jul-91 $10,201 $ 9,716 $10,414
Aug-91 $10,352 $ 9,860 $10,646
Sep-91 $10,205 $ 9,720 $10,470
Oct-91 $10,588 $10,085 $10,621
Nov-91 $10,175 $ 9,692 $10,182
Dec-91 $11,088 $10,561 $11,346
Jan-92 $10,775 $10,263 $11,147
Feb-92 $10,876 $10,359 $11,281
Mar-92 $10,642 $10,137 $11,062
Apr-92 $10,805 $10,291 $11,398
May-92 $10,845 $10,330 $11,437
Jun-92 $10,779 $10,267 $11,267
Jul-92 $11,217 $10,684 $11,740
Aug-92 $11,146 $10,616 $11,487
Sep-92 $11,400 $10,859 $11,620
Oct-92 $11,480 $10,935 $11,674
Nov-92 $11,777 $11,218 $12,056
Dec-92 $12,007 $11,437 $12,208
Jan-93 $12,162 $11,584 $12,323
Feb-93 $12,286 $11,702 $12,482
Mar-94 $12,677 $12,075 $12,745
Apr-93 $12,430 $11,839 $12,450
May-93 $12,657 $12,055 $12,763
Jun-93 $12,656 $12,055 $12,802
Jul-93 $12,625 $12,025 $12,763
Aug-93 $13,008 $12,390 $13,233
Sep-93 $12,956 $12,341 $13,130
Oct-93 $13,153 $12,528 $13,415
Nov-93 $12,884 $12,272 $13,272
Dec-93 $13,112 $12,489 $13,436
Jan-94 $13,574 $12,929 $13,903
Feb-94 $13,406 $12,769 $13,516
Mar-94 $12,892 $12,279 $12,928
Apr-94 $13,028 $12,409 $13,109
May-94 $13,259 $12,629 $13,303
Jun-94 $12,932 $12,318 $12,978
Jul-94 $13,481 $12,840 $13,418
Aug-94 $13,871 $13,212 $13,954
Sep-94 $13,607 $12,961 $13,610
Oct-94 $13,819 $13,162 $13,926
Nov-94 $13,196 $12,569 $13,408
Dec-94 $13,421 $12,784 $13,605
Jan-95 $13,432 $12,794 $13,968
Feb-95 $13,957 $13,294 $14,505
Mar-95 $14,263 $13,585 $14,934
Apr-95 $14,700 $14,002 $15,386
May-95 $15,137 $14,418 $15,978
Jun-95 $15,458 $14,724 $16,532
Jul-95 $15,876 $15,122 $16,904
Aug-95 $16,008 $15,248 $16,930
Sep-95 $16,482 $15,699 $17,641
Oct-95 $16,206 $15,437 $17,588
</TABLE>
- --------------------------------------------------------------------------------
The Standard and Poor's 500 Index contains a representative sample of common
stocks that trade on the New York and American Stock Exchanges and some
over-the-counter stocks. The capitalization ranges from $80 million to $76
billion. The index is weighted by market capitalization and calculated on a
total return basis with dividends reinvested.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual
Total Return Cumulative
Total Return
Annual Since Since
Periods Ending October 31, 1995 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500* 26.30% 13.37% 75.88%
Growth and Income Fund Class A (at net asset
value) 17.28% 11.34% 62.06%
Growth and Income Fund Class A (net of 4.75%
sales charge) 11.71% 10.14% 54.37%
Growth and Income Fund Class B (at net asset
value) 16.73% 11.20% 61.18%
Growth and Income Fund Class B (net of CDSC**) 11.73% 10.89% 59.18%
Growth and Income Fund Class C (at net asset
value) 16.56% 11.14% 60.75%
Growth and Income Fund Class C (net of
CDSC***) 15.56% 11.14% 60.75%
</TABLE>
* All since inception returns for the indexes begin on the month-end closest
to the actual inception date of the Fund.
** The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
*** The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
The domestic stock market showed positive returns during the fiscal year ended
October 31, 1995, based upon productivity driven earnings gains, modest eco-
nomic growth, and low inflation. Technology related stocks led market returns
due to strong personal computer sales and expanding data communications. Fi-
nancial stocks also had favorable returns as investors anticipated lower short
term interest rates. The Fund underperformed the market for the period with a
net asset value total return of 17.28% compared to 26.30% for the S&P 500 Com-
posite Index. The Fund's underperformance was due to three primary factors.
First, the Fund emphasized the materials and industrial sectors which lagged
as investors feared a slowing economy would hurt cyclical earnings. Second,
the Fund's investments in the energy sector lagged due to soft crude oil pric-
es. Finally, the Fund was underweighted in the electronics sector which per-
formed strongly due to robust semiconductor pricing. The Fund benefitted from
holdings in the consumer staple and pharmaceutical sectors as investors sought
steady growers and perceived reasonably positive new product thrust in the
drug sector. The Fund was also helped by financial stocks, with banks, insur-
ance, and service companies all moving higher. Finally, the media related
stocks also performed reasonably well during the period.
vi
<PAGE>
INTERNATIONAL GROWTH AND INCOME FUND
INVESTMENT OBJECTIVE: Seeks to provide long-term growth of capital and income
by investing in a portfolio of securities of foreign
issuers. Under normal circumstances, the portfolio will
be invested approximately 85% in equity securities and
15% in fixed income securities.
PORTFOLIO MANAGER: J.P. Morgan Investment Management, Inc.
INCEPTION DATE: January 9, 1995
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' International Growth and
Income Fund Class A shares at net asset value on January 9, 1995 through October
31, 1995, as compared with the growth of both a $10,000 investment in the Morgan
Stanley Capital International EAFE Index and a $10,000 investment in the Salomon
Brothers Non-U.S. Dollar Bond Index over the same period. The graph also depicts
the growth of a $10,000 investment in Class A shares of the International Growth
and Income Fund on January 9, 1995 through October 31, 1995, assuming the
deduction of the maximum 4.75% front-end sales charge at the time of the initial
investment and reinvestment or dividends and capital gains at net asset value.
The following are the plot points used to draw this line graph.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Growth of $10,000
Invested in Invested in Growth of $10,000 Growth of $10,000 Growth of $10,000
Class A shares Class A shares Investment in Investment in Investment in
at Net Asset Value with 4.75% charge the MSCI the Salomon Bros. the 85%/15%
of the Int'l of the Int'l EAFE Non-US $ Bond Composite
Month Ended Growth & Income Fund Growth & Income Fund Index Index Index
<S> <C> <C> <C> <C> <C>
Dec-94 $10,000 $9,525 $10,000 $10,000 $10,000
Jan-95 $ 9,800 $9,335 $ 9,618 $10,217 $ 9,708
Feb-95 $ 9,580 $9,134 $ 9,590 $10,586 $ 9,739
Mar-95 $10,030 $9,554 $10,185 $11,639 $10,403
Apr-95 $10,350 $9,858 $10,580 $11,870 $10,774
May-95 $10,150 $9,668 $10,457 $12,158 $10,712
Jun-95 $ 9,977 $9,503 $10,276 $12,185 $10,582
Jul-95 $10,488 $8,890 $10,919 $12,201 $11,111
Aug-95 $10,228 $9,742 $10,505 $11,544 $10,881
Sep-95 $10,308 $9,818 $10,713 $11,893 $10,890
Oct-95 $10,137 $9,658 $10,428 $11,915 $10,651
</TABLE>
- --------------------------------------------------------------------------------
The EAFE (Europe, Asia and the Far East) index represents approximately 60% of
the combined market capitalization of 20 countries. The index attempts to
replicate the industry composition of each local market and includes a
representative sampling of large, medium, and small capitalization companies.
The index is market value-weighted and calculated both with net and gross
dividends reinvested. The net return index reinvests dividends after foreign
taxes have been withheld and the gross return index reinvests dividends
before payment of taxes.
The Salomon Brothers Non-U.S. Dollar Bond Index provides a measure of the total
return of the performance of high quality securities in the Government bond,
Eurobond and Foreign bond sectors of the international market. The bonds must
have a minimum quality of AA and a minimum maturity of five years.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Cumulative
Total Return
Since
Periods Ending October 31, 1995 Inception
<S> <C>
Morgan Stanley Capital International EAFE Index* 4.28%
Salomon Brothers Non-US Dollar Bond Index* 19.15%
85%/15% Composite Index*+ 6.51%
International Growth and Income Fund Class A (at net asset value) 1.37%
International Growth and Income Fund Class A (net of 4.75% sales
charge) -3.44%
International Growth and Income Fund Class B (at net asset value) 1.28%
International Growth and Income Fund Class B (net of CDSC**) -3.72%
International Growth and Income Fund Class C (at net asset value) 1.28%
International Growth and Income Fund Class C (net of CDSC***) 0.28%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
+Comprised of 85% of the return of the MSCI EAFE and 15% of the return of the
Salomon Brothers Non-US Dollar.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
Both international equity and fixed income markets began 1995 on a turbulent
note, with bonds coming off a difficult 1994 and equities confronting the de-
valuation of the Mexican peso and a prolonged recession in Japan. However, as
the year progressed, international equity and fixed income returns improved on
slowing economic growth, lower interest rates and benign inflation levels. We
have been moderately overweighted in Japan since inception, as Japanese equi-
ties have appeared consistently undervalued over the past year. Although this
detracted from the Fund's equity performance in the first half of the year,
the Fund's overweighting helped results considerably as the yen weakened and
the stock market rallied in the latter part of the period.
The Fund's fixed income returns were slightly below the Salomon Non-US Dollar
Bond Index, and were largely the result of underweighting Japanese government
bonds earlier in the year. However, positions in core European bond markets
(Germany and the Netherlands), as well as in Canada, provided a consistent
yield advantage and were helpful to the Fund's results. The Fund's ongoing
currency strategy of partially hedging yen exposure into dollars proved bene-
ficial in the last quarter. In fact, it was the most positive contributor to
overall performance because the U.S. dollar continued to strengthen against
most major currencies.
vii
<PAGE>
ASSET ALLOCATION FUND
INVESTMENT OBJECTIVE: To seek the highest total return consistent with a
moderate level of risk tolerance. This Portfolio attempts
to limit the decline in portfolio value in very adverse
market conditions to 10% over any twelve month period. The
Asset Allocation Fund will invest in a combination of
equity, fixed-income and money market securities. The
portfolio manager retains absolute discretion to
determine the amount of the Portfolio's assets invested in
each category of securities at all times. There can be no
assurance that the 10% limit on the decline in portfolio
value will not be exceeded.
PORTFOLIO MANAGER: Goldman Sachs Asset Management
INCEPTION DATE: August 28, 1989
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- -------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' Asset Allocation Fund
Class A shares at net asset value on August 28, 1989 through October 31, 1995,
as compared with the growth of both a $10,000 investment in the S&P 500
Composite Index and a $10,000 investment in the Lehman Brothers Aggregate Bond
Index over the same period. The graph also depicts the growth of a $10,000
investment in Class A shares of the Asset Allocation Fund on August 28, 1988
through October 31, 1995, assuming the deduction of the maximum 4.75% front-end
sales charge at the time of the initial investment and reinvestment of dividends
and capital gains at net asset value. The following are the plot points used to
draw this line graph.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested Growth of $10,000 Invested Growth of $10,000 Growth of $10,000 Growth of $10,000
in Class A shares at Net in Class A shares with Investment Investment in the Investment
Asset Value of the Asset 4.75% charge of the Asset in the Lehman Brothers in the 50%/50%
Month Ended Allocation Fund Allocation Fund S&P 500 Aggregate Bond Index Composite Index
<S> <C> <C> <C> <C> <C>
Jul-89 $10,000 $ 9,525 $10,000 $10,000 $10,000
Aug-89 $10,059 $ 9,581 $10,000 $10,000 $10,000
Sep-89 $ 9,931 $ 9,459 $ 9,061 $10,051 $10,006
Oct-89 $ 9,676 $ 9,216 $ 9,737 $10,299 $10,018
Nov-89 $ 9,735 $ 9,272 $ 9,926 $10,397 $10,162
Dec-89 $ 9,788 $ 9,323 $10,165 $10,425 $10,295
Jan-90 $ 9,184 $ 8,748 $ 9,494 $10,301 $ 9,898
Feb-90 $ 9,275 $ 8,834 $ 9,603 $10,334 $ 9,969
Mar-90 $ 9,275 $ 8,834 $ 9,863 $10,342 $10,103
Apr-90 $ 9,043 $ 8,614 $ 9,627 $10,247 $ 9,937
May-90 $ 9,526 $ 9,074 $10,541 $10,550 $10,546
Jun-90 $ 9,481 $ 9,030 $10,477 $10,720 $10,599
Jul-90 $ 8,368 $ 8,923 $10,451 $10,868 $10,660
Aug-90 $ 8,733 $ 8,318 $ 9,495 $10,723 $10,109
Sep-90 $ 8,406 $ 8,006 $ 9,039 $10,812 $ 9,926
Oct-90 $ 8,324 $ 7,828 $ 9,008 $10,949 $ 9,979
Nov-90 $ 8,651 $ 8,240 $ 9,579 $11,184 $10,382
Dec-90 $ 8,935 $ 8,511 $ 9,847 $11,359 $10,603
Jan-91 $ 9,217 $ 8,780 $10,286 $11,499 $10,893
Feb-91 $ 9,667 $ 9,208 $11,010 $11,597 $11,304
Mar-91 $ 9,782 $ 9,317 $11,285 $11,077 $11,481
Apr-91 $ 9,845 $ 9,377 $11,319 $11,804 $11,562
May-91 $ 9,959 $ 9,486 $11,786 $11,873 $11,830
Jun-91 $ 9,717 $ 9,256 $11,252 $11,867 $11,560
Jul-91 $ 9,994 $ 9,519 $11,788 $12,031 $11,910
Aug-91 $10,217 $ 9,732 $12,051 $12,291 $12,171
Sep-91 $10,196 $ 9,711 $11,851 $12,541 $12,196
Oct-91 $10,366 $ 9,873 $12,022 $12,680 $12,351
Nov-91 $10,227 $ 9,742 $11,525 $12,796 $12,161
Dec-91 $10,852 $10,336 $12,843 $13,176 $13,010
Jan-92 $10,905 $10,387 $12,618 $12,997 $12,808
Feb-92 $11,163 $10,633 $12,770 $13,082 $12,926
Mar-92 $11,013 $10,490 $12,522 $13,008 $12,765
Apr-92 $11,195 $10,663 $12,902 $13,102 $13,002
May-92 $11,420 $10,878 $12,947 $13,349 $13,148
Jun-92 $11,249 $10,714 $12,754 $13,533 $13,144
Jul-92 $11,498 $10,952 $13,288 $13,809 $13,549
Aug-92 $12,459 $11,867 $13,002 $13,949 $13,476
Sep-92 $11,442 $10,898 $13,153 $14,114 $13,634
Oct-92 $11,532 $10,984 $13,214 $13,927 $13,571
Nov-92 $11,984 $11,415 $13,647 $13,930 $13,789
Dec-92 $12,251 $11,669 $13,818 $14,152 $13,985
Jan-93 $12,377 $11,790 $13,949 $14,423 $14,186
Feb-93 $12,320 $11,735 $14,129 $14,676 $14,403
Mar-93 $12,654 $12,053 $14,426 $14,737 $14,582
Apr-93 $12,412 $11,822 $14,093 $14,839 $14,466
May-93 $12,631 $12,031 $14,446 $14,858 $14,652
Jun-93 $12,815 $12,206 $14,491 $15,128 $14,810
Jul-93 $12,942 $12,327 $14,447 $15,213 $14,830
Aug-93 $13,080 $12,459 $14,978 $15,480 $15,229
Sep-93 $13,218 $12,590 $14,863 $15,522 $15,193
Oct-93 $13,264 $12,634 $15,185 $15,580 $15,383
Nov-93 $13,195 $12,568 $15,023 $15,448 $15,236
Dec-93 $13,484 $12,844 $15,209 $15,531 $15,370
Jan-94 $12,736 $13,084 $15,738 $15,741 $15,740
Feb-94 $12,724 $13,073 $15,299 $15,468 $15,384
Mar-94 $13,280 $12,649 $14,634 $15,086 $14,860
Apr-94 $13,232 $12,604 $14,838 $14,966 $14,902
May-94 $13,268 $12,638 $15,058 $14,964 $15,011
Jun-94 $13,100 $12,478 $14,690 $14,931 $14,811
Jul-94 $13,292 $12,661 $15,188 $15,227 $15,208
Aug-94 $13,664 $13,015 $15,795 $15,246 $15,521
Sep-94 $13,496 $12,855 $15,406 $15,022 $15,214
Oct-94 $13,364 $12,729 $15,764 $15,008 $15,386
Nov-94 $12,944 $12,329 $15,177 $14,975 $15,076
Dec-94 $13,120 $12,497 $15,400 $15,078 $15,239
Jan-95 $13,237 $12,608 $15,811 $15,377 $15,594
Feb-95 $13,848 $13,190 $16,419 $15,742 $16,081
Mar-95 $14,056 $13,388 $16,905 $15,839 $16,372
Apr-95 $14,342 $13,661 $17,415 $16,060 $16,738
May-95 $14,790 $14,094 $18,087 $16,682 $17,385
Jun-95 $14,992 $14,280 $18,510 $16,804 $17,657
Jul-95 $15,252 $14,528 $19,134 $16,767 $17,951
Aug-95 $15,512 $14,776 $19,164 $16,969 $18,067
Sep-95 $15,720 $14,974 $19,969 $17,134 $18,552
Oct-95 $15,629 $14,887 $19,909 $17,357 $18,633
</TABLE>
- --------------------------------------------------------------------------------
The Standard and Poor's 500 Index contains a representative sample of common
stocks that trade on the New York and American Stock Exchanges and some
over-the-counter stocks. The capitalization ranges from $80 million to $76
billion. The index is weighted by market capitalization and calculated on a
total return basis with dividends reinvested. The Lehman Brothers Aggregate Bond
Index includes fixed rate debt issues rated investment grade or higher by
Moody's, Standard & Poor's or Fitch. The index includes Government, Corporate,
Mortgage-backed and Asset-backed issues. All issues have at least one year to
maturity and an outstanding par value of at least $100 million for Government
issues and $80 million for all shares. Returns are market value weighted.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since# Since Since#
Periods Ending October 31, 1995 1 Year 5 Years Inception Dec. 13, 1991 Inception Dec. 13, 1991
<S> <C> <C> <C> <C> <C> <C>
S&P 500* 26.30% 17.19% 11.81% 14.98% 99.09% 72.74%
Lehman Brothers
Aggregate Bond Index* 15.65% 9.65% 9.35% 8.09% 73.57% 35.64%
50%/50% Composite*+ 20.98% 13.42% 10.58% 11.54% 86.33% 54.19%
Asset Allocation Fund
Class A (at net asset
value) 16.95% 13.43% 7.51% 11.24% 56.29% 51.24%
Asset Allocation Fund
Class A (net of 4.75%
sales charge) 11.39% 12.33% 6.66% 9.85% 48.87% 44.05%
Asset Allocation Fund
Class B (at net asset
value) 16.31% 13.29% 7.40% 11.06% 55.31% 50.29%
Asset Allocation Fund
Class B (net of CDSC**) 11.31% 13.04% 7.40% 10.48% 55.31% 47.29%
Asset Allocation Fund
Class C (at net asset
value) 16.25% 13.27% 7.39% 11.04% 55.22% 50.21%
Asset Allocation Fund
Class C (net of
CDSC***) 15.25% 13.27% 7.39% 11.04% 55.22% 50.21%
</TABLE>
* All since inception returns for the indexes begin on the month-end closest
to the actual inception date of the Fund.
+ Comprised of 50% of the return of the S&P 500 and 50% of the return of the
Lehman Brothers Aggregate Bond Index.
** The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
*** The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
# Current investment manager (subadvisor) assignment became effective
12/13/91.
PORTFOLIO MANAGER'S COMMENTARY
The Federal Reserve's return to a policy of neutrality helped to propel both
stock and bond markets this year to see record returns. The fixed income mar-
ket had an unusually good year in terms of capital appreciation as the 30-year
Treasury yield declined to 6.33% from 7.97% over the course of the year. The
Fund's underperformance can be explained by both our fixed income strategy and
our equity strategy over the year. Over the period, we were slightly
overweighted in mortgages relative to the benchmark and this proved to be a
disappointing strategy. In the equity portion of the portfolio, we were
overweighted in the retail sector and other cyclical sectors compared to the
S&P 500 and these were weak during the period. Cyclical stocks fared poorly as
investors worried about a possible slowdown in the economy. Equity holdings
which benefitted the portfolio over the course of the year were Philip Morris,
Tenet Healthcare, Entergy and NationsBank. In our view although stock levels
appear expensive, both our growth and valuation models are bullish enough so
overall we find stocks attractive.
viii
<PAGE>
STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE: To seek a high level of total return consistent with
preserva-tion of capital, by giving its portfolio manager
broad discre-tion to deploy the Portfolio's assets among
certain segments of the fixed-income market as the
portfolio manager believes will best contribute to
achievement of the Portfolio's invest-ment objective.
PORTFOLIO MANAGER: Salomon Brothers Asset Management Inc
INCEPTION DATE: November 1, 1993
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' Strategic Income Fund
Class A shares at net asset value on November 1, 1993 through October 31, 1995,
as compared with the growth of a $10,000 investment in the Lehman Brothers
Aggregate Bond Index. The graph also depicts the growth of a $10,000 investment
in Class A shares of the Strategic Income Fund on November 1, 1993 through
October 31, 1995, assuming the deduction of the maximum 4.75% front-end sales
change at the time of the initial investment and reinvestment of dividends and
capital gains at net asset value. The following are the plot points used to draw
this line graph.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge Investment in the Lehman Brothers
Month Ended of the Strategic Income Fund of the Strategic Income Fund Aggregate Bond Index
<S> <C> <C> <C>
Oct-93 $10,000 $9,525 $10,000
Nov-93 $10,019 $9,543 $9,915
Dec-93 $10,122 $9,641 $9,969
Jan-94 $10,283 $9,795 $10,103
Feb-94 $10,001 $9,525 $9,928
Mar-94 $9,539 $9,086 $9,683
Apr-94 $9,444 $8,996 $9,606
May-94 $9,567 $9,113 $9,604
Jun-94 $9,522 $9,070 $9,583
Jul-94 $9,564 $9,110 $9,773
Aug-94 $9,615 $9,158 $9,786
Sep-94 $9,638 $9,180 $9,642
Oct-94 $9,621 $9,164 $9,633
Nov-94 $9,561 $9,107 $9,612
Dec-94 $9,435 $8,986 $9,678
Jan-95 $9,448 $8,999 $9,869
Feb-95 $9,543 $9,090 $10,104
Mar-95 $9,592 $9,136 $10,166
Apr-95 $9,899 $9,429 $10,308
May-95 $10,244 $9,758 $10,707
Jun-95 $10,381 $9,888 $10,785
Jul-95 $10,428 $9,933 $10,761
Aug-95 $10,463 $9,966 $10,891
Sep-95 $10,642 $10,137 $10,997
Oct-95 $10,720 $10,211 $11,140
</TABLE>
- -------------------------------------------------------------------------------
The Lehman Brothers Aggregate Bond Index includes fixed rate debt issues rated
investment grade or higher by Moody's, Standard & Poor's or Fitch. The index
includes Government, Corporate, Mortgage-backed and Asset-backed issues. All
issues have at least one year to maturity and an outstanding par value of at
least $100 million for Government issues and $50 million for all others. Returns
are market value weighted.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- -------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Cumulative
Total Return Total Return
Since Since
Periods Ending October 31, 1995 1 Year Inception Inception
<S> <C> <C> <C>
Lehman Brothers Aggregate Bond Index* 15.65% 5.55% 11.40%
Strategic Income Fund Class A (at net asset
value) 11.43% 3.56% 7.20%
Strategic Income Fund Class A (net of 4.75% sales
charge) 6.14% 1.05% 2.11%
Strategic Income Fund Class B (at net asset
value) 10.72% 3.02% 6.09%
Strategic Income Fund Class B (net of CDSC**) 5.72% 0.55% 1.09%
Strategic Income Fund Class C (at net asset
value) 10.72% 3.01% 6.07%
Strategic Income Fund Class C (net of CDSC***) 9.72% 3.01% 6.07%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
The U.S. fixed income markets staged an impressive rally during the year ended
October 31, 1995, supported by signs of economic weakness and an overall shift
in investor sentiment that the Fed's next move would be to ease short term in-
terest rates. During the year, the Fund allocated its assets among U.S. in-
vestment grade, International Government, U.S. High Yield and Emerging Markets
Debt sectors. The heaviest weighting was given to the U.S. High Yield sector
as an improvement in credit fundamentals and near record flows into mutual
funds continued to provide strong support for this sector. The Fund also main-
tained about a 22% allocation to the emerging debt market sector for most of
the year. The emerging debt markets did trade off in the early part of the
year due to the reaction to the Mexican peso devaluation. However, the market
rebounded as the outlook for sovereign risk improved and better technical fac-
tors ensued. During the year, Poland was awarded an investment grade rating
marking a positive contribution to the Fund. We continue to believe that this
sector offers attractive long term total return opportunities. On the interna-
tional government side, the Fund maintained an underweighting in Japanese gov-
ernment bonds and an overweighting in German government bonds. The non-dollar
positions continue to be hedged to minimize currency risk. We believe that
prospects for growth for both Japan and Europe will be below trend over the
next six months. In addition, we expect the Bundesbank to ease its discount
rate in the next several months. Finally the U.S. investment grade sector made
a positive contribution to the Fund Treasury Bonds rallied throughout the
year. Low inflation and declining interest rates contributed to the overall
positive returns for the fixed income markets.
ix
<PAGE>
INVESTMENT QUALITY BOND FUND
INVESTMENT OBJECTIVE: To seek a high level of current income consistent with the
maintenance of principal and liquidity, by investing
primar-ily in a diversified portfolio of investment grade
corporate bonds and U.S. Government bonds with
intermediate to longer term maturities.
PORTFOLIO MANAGER: Wellington Management Company
INCEPTION DATE: May 1, 1991
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- ------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and
capital gains) of a $10,000 investment in North American Funds' Investment
Quality Bond Fund Class A shares at net asset value on May 1, 1991 through
October 31, 1995, as compared with the growth of a $10,000 investment in the
Lehman Brothers Aggregate Bond Index over the same period. The graph also
depicts the growth of a $10,000 investment in Class A shares of the Investment
Quality Bond Fund on May 1, 1991 through October 31, 1995, assuming the
deduction of the maximum 4.75% front-end sales charge at the time of the initial
investment and reinvestment of dividends and capital gains at net asset value.
The following are the plot points used to draw this line graph.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge Investment in the Lehman Brothers
Month Ended of the Investment Quality Bond Fund of the Investment Quality Bond Fund Aggregate Bond Index
<S> <C> <C> <C>
Apr-91 $10,000 $ 9,525 $10,000
May-91 $10,085 $ 9,606 $10,058
Jun-91 $10,080 $ 9,602 $10,053
Jul-91 $10,157 $ 9,674 $10,193
Aug-91 $10,395 $ 9,901 $10,413
Sep-91 $10,614 $10,110 $10,624
Oct-91 $10,721 $10,212 $10,743
Nov-91 $10,808 $10,294 $10,841
Dec-91 $11,200 $10,668 $11,163
Jan-92 $10,991 $10,469 $11,011
Feb-92 $11,085 $10,558 $11,083
Mar-92 $11,018 $10,495 $11,020
Apr-92 $11,065 $10,540 $11,100
May-92 $11,320 $10,782 $11,309
Jun-92 $11,511 $10,964 $11,465
Jul-92 $11,791 $11,231 $11,699
Aug-92 $11,915 $11,349 $11,817
Sep-92 $12,085 $11,511 $11,958
Oct-92 $11,901 $11,335 $11,799
Nov-92 $11,930 $11,363 $11,802
Dec-92 $12,127 $11,551 $11,989
Jan-93 $12,382 $11,794 $12,219
Feb-93 $12,604 $12,006 $12,433
Mar-93 $12,676 $12,074 $12,485
Apr-93 $12,757 $12,151 $12,572
May-93 $12,769 $12,162 $12,588
Jun-93 $13,016 $12,397 $12,816
Jul-93 $13,051 $12,431 $12,889
Aug-93 $13,312 $12,680 $13,114
Sep-93 $13,372 $12,737 $13,150
Oct-93 $13,408 $12,771 $13,200
Nov-93 $13,192 $12,565 $13,087
Dec-93 $13,254 $12,624 $13,158
Jan-94 $13,437 $12,799 $13,336
Feb-94 $13,081 $12,459 $13,104
Mar-94 $12,654 $12,053 $12,781
Apr-94 $12,524 $11,929 $12,679
May-94 $12,517 $11,923 $12,677
Jun-94 $12,474 $11,881 $12,649
Jul-94 $12,706 $12,103 $12,901
Aug-94 $12,712 $12,109 $12,917
Sep-94 $12,503 $11,909 $12,726
Oct-94 $12,459 $11,867 $12,715
Nov-94 $12,428 $11,838 $12,687
Dec-94 $12,534 $11,938 $12,774
Jan-95 $12,749 $12,143 $13,027
Feb-95 $13,056 $12,436 $13,337
Mar-95 $13,130 $12,506 $13,419
Apr-95 $13,322 $12,689 $13,606
May-95 $13,859 $13,201 $14,133
Jun-95 $13,947 $13,286 $14,236
Jul-95 $13,902 $13,241 $14,205
Aug-95 $14,058 $13,390 $14,376
Sep-95 $14,201 $13,527 $14,516
Oct-95 $14,441 $13,755 $14,705
</TABLE>
- --------------------------------------------------------------------------------
The Lehman Brothers Aggregate Bond Index includes fixed rate debt issues rated
investment grade or higher by Moody's, Standard & Poor's or Fitch. The Index
includes Government, Corporate, Mortgage-backed and Asset-backed issues. All
issues have at least one year to maturity and an outstanding par value of at
least $100 million for Government issues and $50 million for all others. Returns
are market value weighted.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual
Total Return Cumulative
Total Return
Since Since
Periods Ending October 31, 1995 1 Year Inception Inception
<S> <C> <C> <C>
Lehman Brothers Aggregate Bond Index* 15.65% 8.95% 47.05%
50%/50% Composite Index*+ 17.07% 9.60% 51.03%
Investment Quality Bond Fund Class A (at net
asset value) 15.91% 8.52% 44.41%
Investment Quality Bond Fund Class A (net of
4.75% sales charge) 10.40% 7.35% 37.55%
Investment Quality Bond Fund Class B (at net
asset value) 15.12% 8.28% 43.02%
Investment Quality Bond Fund Class B (net of
CDSC**) 10.12% 7.95% 41.02%
Investment Quality Bond Fund Class C (at net
asset value) 15.12% 8.28% 43.02%
Investment Quality Bond Fund Class C (net of
CDSC***) 14.12% 8.28% 43.02%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
+Comprised of 50% of the return of the Lehman Brothers Corporate Bond Index
and 50% of the return of the Lehman Brothers Government Bond Index.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
The bond market rallied strongly during the year ended October 31, 1995. Per-
ceptions of a strong economy turned substantially weaker, inflation stayed
low, and hopes grew for a material reduction in the government budget deficit.
For the fiscal year, the Fund had a net asset value total return of 15.91%
compared to 15.65% for the Lehman Aggregate Bond Index. Among the three pri-
mary bond market sectors, corporate securities fared best, as earnings stayed
resilient and deleveraging continued, government securities finished next, and
mortgages fared the worst, as declining interest rates increased prepayment
risk and caused prices to lag. In general, investors preferred to buy bonds
with incremental spread over Treasury Bonds, such as corporates and mortgages,
rather than stay in Treasury Bonds and assume that capital gains would contin-
ue. The Fund's net asset value total return was aided by two main features.
Duration was maintained in a range from neutral to modestly more aggressive
than the market's duration, clearly adding to returns during the strong rally.
The Fund's emphasis on the mortgage sector, where we paid close attention to
prepayment risk did not suffer to the same degree as the overall mortgage mar-
ket and added to total return relative to staying in Treasury Bonds. The
weighting in the corporate sector also provided a boost to the Fund's total
return.
x
<PAGE>
U.S. GOVERNMENT SECURITIES FUND
INVESTMENT OBJECTIVE: To seek a high level of current income consistent with
preser-vation of capital and maintenance of liquidity by
investing in securities issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities.
PORTFOLIO MANAGER: Salomon Brothers Asset Management Inc
INCEPTION DATE: August 28, 1989
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' National Municipal Bond
Fund Class A shares at net asset value on July 6, 1993 through October 31, 1995,
as compared with the growth of a $10,000 investment in the Lehman Brothers
Municipal Bond Index over the same period. The graph also depicts the growth of
a $10,000 investment in Class A shares of the National Municipal Bond Fund on
July 6, 1993 through October 31, 1995, assuming the deduction of the maximum
4.75% front-end sales charge at the time of the initial investment and
reinvestment of dividends and capital gains at net asset value. The following
are the plot points used to draw this line graph.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 4.75% charge Investment in the Lehman Bros.
Month Ended of the National Muni Fund of the National Muni Fund Municipal Bond Index
<S> <C> <C> <C>
Jun-93 $10,000 $9,525 $10,000
Jul-93 $10,020 $9,544 $10,013
Aug-93 $10,261 $9,774 $10,221
Sep-93 $10,373 $9,881 $10,338
Oct-93 $10,417 $9,922 $10,358
Nov-93 $10,300 $9,811 $10,266
Dec-93 $10,457 $9,960 $10,483
Jan-94 $10,616 $10,112 $10,603
Feb-94 $10,302 $9,813 $10,328
Mar-94 $9,665 $9,206 $9,908
Apr-94 $9,742 $9,280 $9,992
May-94 $9,839 $9,372 $10,078
Jun-94 $9,756 $9,293 $10,020
Jul-94 $9,944 $9,472 $10,200
Aug-94 $9,943 $9,471 $10,236
Sep-94 $9,709 $9,248 $10,086
Oct-94 $9,454 $9,005 $9,907
Nov-94 $9,158 $8,723 $9,727
Dec-94 $9,494 $9,043 $9,945
Jan-95 $9,766 $9,302 $10,226
Feb-95 $10,106 $9,626 $10,523
Mar-95 $10,195 $9,711 $10,644
Apr-95 $10,209 $9,724 $10,656
May-95 $10,587 $10,085 $10,996
Jun-95 $10,435 $9,939 $10,900
Jul-95 $10,514 $10,015 $11,003
Aug-95 $10,649 $10,143 $11,143
Sep-95 $10,717 $10,208 $11,214
Oct-95 $10,897 $10,380 $11,377
</TABLE>
- --------------------------------------------------------------------------------
The Lehman Brothers Municipal Bond is intended to be a benchmark for the
long-term, investment-grade tax-exempt bond market. The index consists of
approximately 21,000 municipal bonds which are priced by Muller Data
Corporation. The bonds must have a minimum credit rating of at least Baa, been
issued within the last five years and as part of a deal of at least $50 million,
have a maturity of at least one year and an amount outstanding of at least $3
million. Bonds subject to the Alternative Minimum Tax and bonds with floating or
zero coupons are excluded.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date of the fund has been used.
- --------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since# Since Since#
Periods Ending October 31, 1995 1 Year 5 Years Inception Dec. 13, 1991 Inception Dec. 13, 1991
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch 1-10 Year
Government Index* 11.92% 8.37% 8.47% 7.04% 65.14% 30.54%
U.S. Government
Securities Fund Class A
(at net asset value) 13.15% 8.38% 8.02% 6.82% 60.96% 29.24%
U.S. Government
Securities Fund Class A
(net of 4.75%
sales charge) 7.77% 7.33% 7.17% 5.49% 53.31% 23.08%
U.S. Government
Securities Fund Class B
(at net asset value) 12.45% 8.18% 7.86% 6.57% 59.47% 28.04%
U.S. Government
Securities Fund Class B
(net of CDSC**) 7.45% 7.88% 7.86% 5.92% 59.47% 25.04%
U.S. Government
Securities Fund Class C
(at net asset value) 12.45% 8.18% 7.86% 6.57% 59.47% 28.04%
U.S. Government
Securities Fund Class C
(net of CDSC***) 11.45% 8.18% 7.86% 6.57% 59.47% 28.04%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
#Current investment manager (subadvisor) assignment became effective 12/13/91.
PORTFOLIO MANAGER'S COMMENTARY
The U.S. fixed income markets staged an impressive rally in 1995 supported by
signs of economic weakness and an overall shift in investor sentiment that the
Fed's next move would be to ease short term interest rates. As the year began,
we lengthened the Fund's average duration and moved to a bullet structure to
participate in the rally. We also reduced the exposure to mortgage securities
to protect the fund from prepayments resulting from increased refinancing ac-
tivity. Moving into the second half of the year, we shifted to a neutral dura-
tion position as economic indicators revealed that a recession threat was sub-
siding. The Fund decreased its holdings of CMOs and agency debentures as
spreads on those securities tightened. Proceeds from the liquidations were in-
vested into Treasury Bonds and discount 15 year pass-throughs. The Fund posted
a 13.15% return for the one year period outperforming the Merrill Lynch 1-10
Year Government Index by 1.23%. In December of 1994, the Fund changed its
benchmark from the Merrill Lynch 1-5 Year Government Index to the Merrill
Lynch 1-10 Year Government Index. The Merrill Lynch 1-10 Year Government Index
better reflects the average duration of the portfolio.
We expect some steepening of the yield curve over the next several months and
continue to favor a bullet structure for the Fund to take advantage of this.
We remain optimistic about the prospects for a credible budget reduction out
of Washington and a further interest rate easing over the next six months.
xi
<PAGE>
NATIONAL MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE: To seek a high level of current income which is exempt
from regular federal income taxes, consistent with the
preservation of capital, by investing primarily in a
portfolio of municipal obligations. The portfolio will not
invest in municipal obli-gations that are rated below
investment grade at the time of purchase.
PORTFOLIO MANAGER: Salomon Brothers Asset Management Inc
INCEPTION DATE: July 6, 1993
Change in Value of $10,000 Investment and Comparative Indices
[CHART APPEARS HERE]
- -------------------------------------------------------------------------------
A line graph showing the growth (including reinvestment of dividends and capital
gains) of a $10,000 investment in North American Funds' U.S. Government
Securities Fund Class A shares at net asset value on August 28, 1989 through
October 31, 1995, as compared with the growth a $10,000 investment in the
Merrill Lynch 1-10 Year Government Index over the same period. The graph also
depicts the growth of a $10,000 investment in Class A shares of the U.S.
Government Securities Fund on August 28, 1989 through October 31, 1995, assuming
the deduction of the maximum 4.75% front-end sales charge at the time of the
initial investment and reinvestment of dividends and capital gains at net asset
value. The following are the plot points used to draw this line graph.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with a 4.75% charge Investment in the Merrill Lynch
Month Ended of the U.S. Gov't Securities Fund of the U.S. Gov't Securities Fund 1-10 Year Government Index
<S> <C> <C> <C>
Jul-89 $10,000 $ 9,525 $10,000
Aug-89 $ 9,979 $ 9,505 $10,000
Sep-89 $ 9,995 $ 9,520 $10,050
Oct-89 $10,166 $ 9,683 $10,256
Nov-89 $10,255 $ 9,767 $10,357
Dec-89 $10,302 $ 9,812 $10,383
Jan-90 $10,201 $ 9,716 $10,324
Feb-90 $10,227 $ 9,742 $10,349
Mar-90 $10,233 $ 9,747 $10,370
Apr-90 $10,162 $ 9,680 $10,334
May-90 $10,386 $ 9,892 $10,552
Jun-90 $10,523 $10,024 $10,690
Jul-90 $10,662 $10,155 $10,843
Aug-90 $10,557 $10,055 $10,796
Sep-90 $10,638 $10,133 $10,894
Oct-90 $10,765 $10,254 $11,046
Nov-90 $10,984 $10,463 $11,211
Dec-90 $11,148 $10,619 $11,370
Jan-91 $11,290 $10,754 $11,485
Feb-91 $11,362 $10,823 $11,545
Mar-91 $11,424 $10,881 $11,608
Apr-91 $11,545 $10,997 $11,728
May-91 $11,614 $11,062 $11,795
Jun-91 $11,611 $11,060 $11,807
Jul-91 $11,789 $11,229 $11,934
Aug-91 $11,969 $11,400 $12,157
Sep-91 $12,149 $11,572 $12,364
Oct-91 $12,258 $11,675 $12,504
Nov-91 $12,366 $11,779 $12,651
Dec-91 $12,638 $12,038 $12,960
Jan-92 $12,490 $11,897 $12,829
Feb-92 $12,570 $11,973 $12,878
Mar-92 $12,471 $11,879 $12,825
Apr-92 $12,624 $12,024 $12,942
May-92 $12,816 $12,207 $13,127
Jun-92 $13,009 $12,391 $13,317
Jul-92 $13,242 $12,613 $13,564
Aug-92 $13,369 $12,734 $13,721
Sep-92 $13,550 $12,907 $13,911
Oct-92 $13,379 $12,744 $13,740
Nov-92 $13,314 $12,681 $13,679
Dec-92 $13,476 $12,836 $13,859
Jan-93 $13,714 $13,063 $14,118
Feb-93 $13,886 $13,227 $14,329
Mar-93 $14,004 $13,339 $14,383
Apr-93 $14,089 $13,420 $14,497
May-93 $14,037 $13,370 $14,454
Jun-93 $14,246 $13,569 $14,661
Jul-93 $14,290 $13,612 $14,691
Aug-93 $14,474 $13,786 $14,916
Sep-93 $14,518 $13,829 $14,980
Oct-93 $14,535 $13,845 $15,006
Nov-93 $14,454 $13,767 $14,934
Dec-93 $14,505 $13,816 $14,992
Jan-94 $14,638 $13,943 $15,142
Feb-94 $14,438 $13,752 $14,927
Mar-94 $14,266 $13,588 $14,718
Apr-94 $14,269 $13,591 $14,618
May-94 $14,257 $13,580 $14,633
Jun-94 $14,231 $13,555 $14,643
Jul-94 $14,396 $13,712 $14,825
Aug-94 $14,444 $13,758 $14,871
Sep-94 $14,268 $13,590 $14,752
Oct-94 $14,226 $13,550 $14,755
Nov-94 $14,190 $13,516 $14,681
Dec-94 $14,274 $13,596 $14,737
Jan-95 $14,512 $13,823 $14,981
Feb-95 $14,812 $14,109 $15,268
Mar-95 $14,899 $14,191 $15,352
Apr-95 $15,063 $14,348 $15,528
May-95 $15,618 $14,876 $15,972
Jun-95 $15,706 $14,960 $16,076
Jul-95 $15,652 $14,909 $16,087
Aug-95 $15,805 $15,054 $16,219
Sep-95 $15,910 $15,154 $16,328
Oct-95 $16,096 $15,331 $16,514
</TABLE>
- -------------------------------------------------------------------------------
The Merrill Lynch 1-10 Year Government Index consists of all those issues in the
Government Master Index with a maturity greater than or equal to one year and
less than or equal to ten years. When an issue no longer meets the maturity
criteria, it is dropped from the index.
Index information is available on a month-end basis only, therefore the closest
month-end to the inception date or the fund has been used.
- -------------------------------------------------------------------------------
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual
Total Return Cumulative
Total Return
Since Since
Periods Ending October 31, 1995 1 Year Inception Inception
<S> <C> <C> <C>
Lehman Brothers Municipal Long Bond Index* 14.84% 5.68% 13.77%
National Municipal Bond Fund Class A (at net
asset value) 15.26% 3.79% 8.97%
National Municipal Bond Fund Class A (net of
4.75% sales charge) 9.79% 1.62% 3.80%
National Municipal Bond Fund Class B (at net
asset value) 14.42% 3.23% 7.62%
National Municipal Bond Fund Class B (net of
CDSC**) 9.42% 1.55% 3.62%
National Municipal Bond Fund Class C (at net
asset value) 14.42% 3.23% 7.62%
National Municipal Bond Fund Class C (net of
CDSC***) 13.42% 3.23% 7.62%
</TABLE>
*All since inception returns for the indexes begin on the month-end closest to
the actual inception date of the Fund.
**The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1% over 6 years.
***The returns reflect the applicable Contingent Deferred Sales Charge of 1%
for 12 months.
PORTFOLIO MANAGER'S COMMENTARY
The Fund participated in this year's fixed-income rally as evidenced by its
net asset value return of 15.26%. The year started with a high degree of vola-
tility and uncertainty as interest rates climbed through mid-November followed
by the bankruptcy announcement of Orange County, California in December, 1994.
During the first quarter of the new year, long tax-exempt securities
outperformed Treasury Bonds in part due to a dramatic decline in new issue
supply. With interest rates ratcheting down, April marked the beginning of a
resurgence in the new issue calendar which would remain steady for the balance
of the year. At the same time, debate over tax reform and its implications for
municipals unsettled investors and altered the relationship between tax-ex-
empts and the taxable market. The uncertainty led individual investors to seek
safe harbor in short municipals which remained rich, and left longer maturi-
ties to become increasingly undervalued. In addition, municipals were dealt a
further blow as the allure of higher returns in the stock market diverted some
funds usually earmarked for tax-exempts. Toward year end, longer maturity
municipals began to see some support as mutual funds restructured their port-
folios in order to achieve more favorable call and coupon features. Individual
investors also extended, but contained their purchases to inside of twenty
years. While market technicals are expected to remain favorable over the com-
ing months, continued rhetoric over tax reform is likely to cause periodic
volatility.
xii
<PAGE>
Results of Special Meeting of Shareholders
- --------------------------------------------------------------------------------
On December 5, 1995 a Special Meeting of Shareholders of the North American
Funds was held for the purpose of considering and voting upon:
Proposal 1 Approval of a new investment advisory agreement between the North
- ----------
American Funds (the "Fund") and NASL Financial Services, Inc., the
Fund's investment adviser (the "Adviser").
Proposal 2 Approval of new subadvisory agreements between the Adviser and each
- ----------
of the subadvisers that perform subadvisory services for the
portfolios of the Fund, in each case on substantially identical
terms as the current agreement (shareholders of each portfolio voted
on the subadvisory agreement applicable to such portfolio).
Proposal 3 Approval of a new subadvisory consulting agreement for the Strategic
- ----------
Income Fund between Salomon Brothers Asset Management Inc and
Salomon Brothers Asset Management Limited, on substantially
identical terms as the current agreement (only shareholders of the
Strategic Income Fund voted on this proposal).
Proposal 4 Approval of an amendment to the fundamental investment restriction
- ----------
of the Fund regarding borrowing to permit each portfolio of the Fund
to borrow (i) for temporary or emergency purposes (not for
leveraging) in an amount up to 33 1/3% of its assets and (ii) in
connection with reverse repurchase agreements, mortgage dollar rolls
and similar transactions.
At the meeting, all proposals were approved by shareholders of each portfolio.
The number of votes cast FOR or AGAINST or which ABSTAINED from voting is set
forth below for each proposal:
<TABLE>
<CAPTION>
SHARES
- --------- --------------------------------
PORTFOLIO FOR AGAINST ABSTAINED
- --------- ---------- ------- ---------
<S> <C> <C> <C>
PROPOSAL 1
- ----------
Global Growth 4,862,894 94,501 296,775
Growth 3,878,646 247,821 150,960
Growth and Income 3,046,668 15,592 271,481
International Growth and Income 1,670,388 14,106 68,544
Asset Allocation 3,942,104 72,626 323,924
Strategic Income 2,522,386 19,410 154,433
Investment Quality Bond 981,216 14,901 73,545
U.S. Government Securities 5,209,086 109,303 497,055
National Municipal Bond 971,872 13,629 107,007
Money Market 10,196,728 188,359 548,928
PROPOSAL 2
- ----------
Global Growth 4,839,738 113,145 301,287
Growth 3,866,913 118,566 291,948
Growth and Income 3,029,485 22,848 281,409
International Growth and Income 1,669,122 14,139 69,775
Asset Allocation 3,924,672 87,556 326,426
Strategic Income 2,520,599 29,623 146,008
Investment Quality Bond 976,579 13,348 79,735
U.S. Government Securities 5,194,194 114,577 506,673
National Municipal Bond 977,007 8,272 107,231
Money Market 10,286,633 199,863 447,519
PROPOSAL 3
- ----------
Strategic Income 2,523,025 28,707 144,497
PROPOSAL 4
- ----------
Global Growth 4,794,693 166,610 292,867
Growth 3,783,100 203,053 291,275
Growth and Income 2,978,703 70,512 284,527
International Growth and Income 1,638,234 41,509 73,295
Asset Allocation 3,868,842 149,675 320,137
Strategic Income 2,431,870 76,450 187,909
Investment Quality Bond 957,632 30,324 81,705
U.S. Government Securities 5,036,175 250,219 529,050
National Municipal Bond 983,549 25,214 83,746
Money Market 9,875,744 523,333 534,938
</TABLE>
xiii
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------
To the Trustees and Shareholders of the North American Funds:
We have audited the accompanying statements of assets and liabilities of North
American Funds (the "Funds") (comprising, respectively, the Global Growth,
Growth, Growth and Income, International Growth and Income, Asset Allocation,
Strategic Income, Investment Quality Bond, U.S. Government Securities, National
Municipal Bond and Money Market Funds) including the portfolio of investments,
as of October 31, 1995, and the related statements of operations, the statements
of changes in net assets and the financial highlights for each of the periods
indicated therein. 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 the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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
October 31, 1995 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
presentations. 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 each
of the portfolios comprising the North American Funds as of October 31, 1995 and
the results of their operations, the changes in their net assets and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 22, 1995
1
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
GLOBAL GROWTH AND GROWTH AND ASSET
GROWTH GROWTH INCOME INCOME ALLOCATION
FUND FUND FUND FUND FUND
------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at
value* (Includes a repurchase
agreement of $12,472,000 in
the Asset Allocation Fund)
(See accompanying portfolio
of investments)............... $131,095,029 $125,841,142 $95,030,308 $20,525,251 $110,177,967
Receivable for forward foreign
currency contracts to sell
(Notes 2 and 7)............... 25,374,792 -- -- 3,880,853 --
Forward foreign currency
contracts to buy, at value
(Cost: $1,671,545 and
$1,072,065 in the Global
Growth and International
Growth and Income Funds,
respectively)
(Notes 2 and 7)............... 1,684,655 -- -- 1,027,970 --
Cash........................... 190 497 499 723 205
Foreign currency (Cost:
$356,489, $2,269 and $909,044
in the Global Growth, Growth
and Income and International
Growth and Income Funds,
respectively)................. 357,879 -- 1,883 910,685 --
Receivables:
Investments sold............. 575,728 1,515,940 989,252 131,634 9,925,043
Fund shares sold............. 275,666 276,005 566,361 153,779 98,709
Dividends.................... 251,670 157,531 190,224 56,510 63,426
Interest..................... 579 1,727 43,296 38,252 510,766
Foreign tax withholding
reclaim..................... 77,504 -- -- 18,348 --
From adviser (Note 5)........ 103,011 82,643 75,771 52,256 60,664
Deferred organization expenses
(Note 2)...................... -- -- 626 557 --
Other assets................... 23,661 18,951 20,157 7,024 15,240
------------ ------------ ----------- ----------- ------------
Total assets.............. 159,820,364 127,894,436 96,918,377 26,803,842 120,852,020
------------ ------------ ----------- ----------- ------------
LIABILITIES
Forward foreign currency
contracts to sell, at value
(Cost: $25,374,792 and
$3,880,853 in the Global
Growth and International
Growth and Income Funds,
respectively) (Notes 2 and 7). 25,867,812 -- -- 3,462,151 --
Variation margin payable for
open futures contracts........ -- -- -- -- 226
Payables:
Forward foreign currency
contracts to buy (Notes
2 and 7).................... 1,671,545 -- -- 1,072,065 --
Investments purchased........ -- 751,067 2,252,941 440,519 20,130,484
Fund shares redeemed......... 1,490,339 1,375,445 177,474 146,458 68,356
Dividend and interest
withholding tax............. 31,642 -- 1,841 8,654 111
Investment adviser........... 102,526 75,822 55,906 16,236 59,020
Custodian and transfer
agent fees.................. 50,904 27,923 14,997 10,186 18,934
Other accrued expenses....... 54,158 45,208 29,708 5,943 41,046
------------ ------------ ----------- ----------- ------------
Total liabilities......... 29,268,926 2,275,465 2,532,867 5,162,212 20,318,177
------------ ------------ ----------- ----------- ------------
NET ASSETS..................... $130,551,438 $125,618,971 $94,385,510 $21,641,630 $100,533,843
============ ============ =========== =========== ============
Net assets consist of:
Accumulated undistributed
net investment income
(loss) (Note 2)............. $1,556,196 $322,091 $452,599 ($231,087) $2,141,058
Accumulated undistributed
net realized gain (loss)
on investments.............. (3,967,298) 10,211,913 815,808 245,193 6,339,527
Unrealized appreciation
(depreciation) on:
Investments................. 8,150,165 8,991,501 13,364,726 (326,878) 7,919,596
Futures contracts........... -- -- -- -- (4,372)
Foreign currency and
forward foreign currency
contracts.................. (481,889) -- (386) 375,126 --
Capital shares at par value
of $.001 (Note 3)........... 9,495 7,921 6,418 2,142 8,365
Additional paid-in capital... 125,284,769 106,085,545 79,746,345 21,577,134 84,129,669
----------- ------------ ----------- ----------- ------------
Net assets................ $130,551,438 $125,618,971 $94,385,510 $21,641,630 $100,533,843
============ ============ =========== =========== ============
*Investments in securities,
at identified cost (Note 2)... $122,944,864 $116,849,641 $81,665,582 $20,852,129 $102,258,371
============ ============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
GLOBAL GROWTH AND GROWTH AND ASSET
GROWTH GROWTH INCOME INCOME ALLOCATION
FUND FUND FUND FUND FUND
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUES
Class A Shares
Net assets at value....... $23,894,330 $22,026,336 $12,179,615 $6,896,648 $10,033,223
Shares outstanding........ 1,726,660 1,381,954 827,682 682,252 834,714
Net asset value and
redemption price per
share..................... $ 13.84 $ 15.94 $ 14.72 $ 10.11 $ 12.02
=========== =========== =========== ========== ===========
Public offering price per share
(100/95.25 of NAV)
On sales of $100,000 or more
the offering price is
reduced................. $ 14.53 $ 16.73 $ 15.45 $ 10.61 $ 12.62
=========== =========== =========== ========== ===========
Class B Shares
Net assets at value....... $23,317,145 $19,874,107 $19,052,023 $8,421,319 $ 9,875,164
Shares outstanding........ 1,698,251 1,254,421 1,297,356 834,017 824,443
Net asset value, offering price
and redemption price
per share................. $ 13.73 $ 15.84 $ 14.69 $ 10.10 $ 11.98
=========== =========== =========== ========== ===========
Class C Shares
Net assets at value....... $83,339,963 $83,718,528 $63,153,873 $6,323,663 $80,625,456
Shares outstanding........ 6,069,937 5,284,502 4,292,794 626,235 6,706,025
Net asset value, offering price
and redemption price
per share................. $ 13.73 $ 15.84 $ 14.71 $ 10.10 $ 12.02
=========== =========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT U.S. NATIONAL
STRATEGIC QUALITY GOVERNMENT MUNICIPAL MONEY
INCOME BOND SECURITIES BOND MARKET
FUND FUND FUND FUND FUND
------------- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value*
(Includes repurchase agreements of
$19,390,000 in the U.S. Government
Securities Fund) (See accompanying
portfolio of investments).............. $48,576,962 $21,104,353 $127,716,824 $20,716,170 $19,629,542
Receivable for forward foreign currency
contracts to sell (Notes 2 and 7)...... $4,535,858 -- -- -- --
Forward foreign currency contracts to buy,
at value (Cost: $1,665,464)
(Notes 2 and 7)........................ $1,673,104 -- -- -- --
Cash..................................... 1,108 211 896 73,291 928
Foreign currency (Cost: $2,171).......... 1,076 -- -- -- --
Receivables:
Investments sold....................... 637,552 -- 9,995 130,592 --
Fund shares sold....................... 334,829 78,641 179,325 85,007 2,796,870
Dividends.............................. 867 -- -- -- --
Interest............................... 810,457 314,957 935,846 323,275 1,175
Foreign tax withholding reclaim........ 968 -- -- -- --
From adviser (Note 5).................. 32,962 14,860 70,041 11,930 16,899
Deferred organization expenses (Note 2).. 7,547 623 -- 6,897 --
Other assets............................. 15,434 10,138 15,236 17,352 13,664
----------- ----------- ------------ ----------- -----------
Total assets........................ 56,628,724 21,523,783 128,928,163 21,364,514 22,459,078
----------- ----------- ------------ ----------- -----------
LIABILITIES
Forward foreign currency contracts to
sell, at value (Cost: $4,535,858)
(Notes 2 and 7)........................ 4,653,168 -- -- -- --
Payables:
Forward foreign currency contracts to
buy (Notes 2 and 7).................. 1,665,464 -- -- -- --
Investments purchased.................. 5,060,376 446,240 13,123,546 974,950 --
Fund shares redeemed................... 85,843 19,618 135,308 8,839 94,811
Dividends.............................. 117,408 15,267 182,964 28,456 5,018
Dividend and interest withholding tax.. 1,257 -- -- -- --
Investment adviser..................... 28,167 10,243 65,369 10,303 4,541
Custodian and transfer agent fees...... 11,576 3,283 13,720 7,194 9,598
Other accrued expenses................. 15,037 6,456 45,161 6,637 7,662
Deferred mortgage dollar roll income..... 3,938 -- 4,194 -- --
----------- ----------- ------------ ----------- -----------
Total liabilities................... 11,642,234 501,107 13,570,262 1,036,379 121,630
----------- ----------- ------------ ----------- -----------
NET ASSETS............................... $44,986,490 $21,022,676 $115,357,901 $20,328,135 $22,337,448
=========== =========== ============ =========== ===========
Net assets consist of:
Accumulated undistributed net investment
income (loss) (Note 2)............... ($35,848) $46,769 ($389,597) ($572) --
Accumulated undistributed net realized
loss on investments.................. (400,335) (681,015) (3,350,703) (472,444) --
Unrealized appreciation
(depreciation) on:
Investments.......................... (636,076) 688,152 1,926,082 397,080 --
Foreign currency and forward foreign
currency contracts................. (109,200) -- -- -- --
Capital shares at par value of $.001
(Note 3)............................. 4,961 1,992 11,555 2,114 $22,338
Additional paid-in capital............. 46,162,988 20,966,778 117,160,564 20,401,957 22,315,110
----------- ----------- ------------ ----------- -----------
Net assets.......................... $44,986,490 $21,022,676 $115,357,901 $20,328,135 $22,337,448
=========== =========== ============ =========== ===========
*Investments in securities, at identified
cost (Note 2)......................... 49,213,038 20,416,201 125,790,742 20,319,090 19,629,542
=========== =========== ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT U.S. NATIONAL
STRATEGIC QUALITY GOVERNMENT MUNICIPAL MONEY
INCOME BOND SECURITIES BOND MARKET
FUND FUND FUND FUND FUND
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUES
Class A Shares
Net assets at value....... $10,041,469 $10,344,645 $81,178,946 $7,617,877 $11,378,848
Shares outstanding........ 1,107,567 979,526 8,130,813 791,917 11,378,848
Net asset value and
redemption price
per share............... $ 9.07 $ 10.56 $ 9.98 $ 9.62 $ 1.00
=========== =========== =========== ========== ===========
Public offering price per
share (100/95.25 of NAV)
On sales of $100,000 or
more the offering price
is reduced.......... $ 9.52 $ 11.09 $ 10.48 $ 10.10 $ --
=========== =========== =========== ========== ===========
Class B Shares
Net assets at value....... $20,672,386 $ 3,471,927 $13,992,934 $5,876,506 $ 1,564,104
Shares outstanding........ 2,280,183 328,970 1,402,069 610,972 1,564,104
Net asset value, offering price
and redemption price
per share............... $ 9.07 $ 10.55 $ 9.98 $ 9.62 $ 1.00
=========== =========== =========== ========== ===========
Class C Shares
Net assets at value....... $14,272,635 $ 7,206,104 $20,186,021 $6,833,752 $ 9,394,496
Shares outstanding........ 1,574,343 683,013 2,022,679 710,507 9,394,496
Net asset value, offering price
and redemption price
per share............... $ 9.07 $ 10.55 $ 9.98 $ 9.62 $ 1.00
=========== =========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL
GLOBAL AND GROWTH AND ASSET
GROWTH GROWTH INCOME INCOME ALLOCATION
FUND FUND FUND FUND * FUND
------------ ------------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest (net of $1,141 and $1,763
withholding tax in the International
Growth and Income and Asset
Allocation Funds, respectively)...... $ 287,020 $ 771,583 $ 269,878 $ 94,652 $ 3,576,675
Dividends (net of $240,552, $1,726,
$23,496, $29,231 and $740
withholding tax in the Global
Growth, Growth, Growth and Income,
International Growth and Income,
and Asset Allocation Funds,
respectively)........................ 2,054,763 1,548,021 2,111,938 189,092 1,081,735
----------- ----------- ----------- --------- -----------
Total income...................... 2,341,783 2,319,604 2,381,816 283,744 4,658,410
----------- ----------- ----------- --------- -----------
Expenses:
Distribution for Class A.............. 73,621 67,051 32,645 15,082 29,492
Distribution for Class B.............. 190,549 116,728 102,904 38,902 73,080
Distribution for Class C.............. 916,826 778,650 539,778 31,365 824,230
Investment adviser fee (Note 5)....... 1,185,949 758,694 521,769 102,022 687,562
Custodian fees........................ 168,607 51,830 47,815 48,666 64,759
Transfer agent fees................... 356,590 288,609 195,003 30,014 242,272
Accounting/administration............. 193,451 156,770 104,998 15,705 143,001
Audit and legal fees.................. 58,396 51,023 23,180 4,062 50,007
Amortization of deferred organization
expenses (Note 2).................... 6,931 -- 1,259 78 --
Miscellaneous......................... 77,456 49,356 45,462 14,011 51,035
----------- ----------- ----------- --------- -----------
Expenses before reimbursement
by adviser........................... 3,228,376 2,318,711 1,614,813 299,907 2,165,438
Reimbursement of expenses by
adviser (Note 5)..................... 185,804 280,198 210,892 56,027 264,797
----------- ----------- ----------- --------- -----------
Net expenses...................... 3,042,572 2,038,513 1,403,921 243,880 1,900,641
----------- ----------- ----------- --------- -----------
Net investment income (loss)...... (700,789) 281,091 977,895 39,864 2,757,769
----------- ----------- ----------- --------- -----------
Realized and unrealized gain (loss)
on investments, futures and
foreign currency:
Net realized gain (loss) on:
Investment transactions.............. (3,295,215) 10,219,108 716,372 275,761 6,529,806
Futures contracts.................... -- -- -- -- 2,303
Foreign currency transactions and
forward foreign currency contracts.. 1,789,553 -- 102,753 (260,048) --
Change in unrealized appreciation
(depreciation) on:
Investments.......................... (2,565,015) 3,234,064 9,980,846 (326,878) 5,539,360
Futures contracts.................... -- -- -- -- (4,372)
Translation of foreign currency and
forward foreign currency contracts.. (137,518) -- (386) 375,126 --
----------- ----------- ----------- --------- -----------
Net gain (loss) on investments,
futures and foreign currency..... (4,208,195) 13,453,172 10,799,585 63,961 12,067,097
----------- ----------- ----------- --------- -----------
Net increase (decrease) in net assets
resulting from operations............. ($4,908,984) $13,734,263 $11,777,480 $ 103,825 $14,824,866
=========== =========== =========== ========= ===========
</TABLE>
* For the period January 9, 1995 (commencement of
operations) to October 31, 1995.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT U.S. NATIONAL
STRATEGIC QUALITY GOVERNMENT MUNICIPAL MONEY
INCOME BOND SECURITIES BOND MARKET
FUND FUND FUND FUND FUND
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest (net of $1,317,
$344 and $6,288 withholding
tax in the Strategic Income,
Investment Quality Bond and
U.S. Government Securities
Funds, respectively).... $3,538,808 $1,312,109 $ 8,527,776 $1,001,625 $1,320,486
---------- ---------- ----------- ---------- ----------
Expenses:
Distribution for Class A.. 37,384 36,598 305,276 11,600 --
Distribution for Class B.. 133,210 18,574 68,916 41,698 --
Distribution for Class C.. 114,221 42,293 161,281 41,468 --
Investment adviser fee
(Note 5)................. 265,680 99,260 661,449 96,299 44,306
Custodian fees............ 28,763 31,976 70,387 30,698 27,160
Transfer agent fees....... 79,352 47,848 219,441 26,694 71,483
Accounting/administration. 50,078 23,477 160,387 22,863 32,458
Audit and legal fees...... 14,418 8,177 63,444 7,156 11,017
Amortization of deferred
organization expenses
(Note 2)................. 2,515 1,259 -- 2,515 --
Miscellaneous............. 33,293 26,578 54,493 27,995 33,010
---------- ---------- ----------- ---------- ----------
Expenses before waiver
and reimbursement
by adviser............... 758,914 336,040 1,765,074 308,986 219,434
Waiver of expenses and
reimbursement by
adviser (Note 5)........ 180,344 89,606 240,085 109,122 107,839
---------- ---------- ----------- ---------- ----------
Net expenses............ 578,570 246,434 1,524,989 199,864 111,595
---------- ---------- ----------- ---------- ----------
Net investment income... 2,960,238 1,065,675 7,002,787 801,761 1,208,891
---------- ---------- ----------- ---------- ----------
Realized and unrealized gain (loss)
on investments and foreign currency:
Net realized gain (loss) on:
Investment transactions.. 264,926 24,835 2,016,765 (451,322) --
Foreign currency transactions
and forward foreign
currency contracts...... (81,640) -- -- -- --
Change in unrealized appreciation
(depreciation) on:
Investments.............. 919,881 1,318,370 4,354,862 1,830,370 --
Translation of foreign
currency and forward
foreign currency
contracts............... (109,134) -- -- -- --
---------- ---------- ----------- ---------- ----------
Net gain on investments
and foreign currency.. 994,033 1,343,205 6,371,627 1,379,048 --
---------- ---------- ----------- ---------- ----------
Net increase in net assets
resulting from operations... $3,954,271 $2,408,880 $13,374,414 $2,180,809 $1,208,891
========== ========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH FUND GROWTH FUND
---------------------------- ---------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/95 10/31/94
------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Net investment income
(loss)......................... $ (700,789) $ (848,113) $ 281,091 $ (353,647)
Net realized gain
(loss) on:
Investment
transactions................. (3,295,215) 5,396,829 10,219,108 5,394,478
Foreign currency and
forward foreign
currency contracts........... 1,789,553 (793,391) - -
Change in unrealized
appreciation
(depreciation) on:
Investments................. (2,565,015) 4,393,238 3,234,064 (1,865,268)
Foreign currency and
forward foreign
currency contracts......... (137,518) (346,782) - -
------------ ------------ ------------ -----------
Net increase (decrease) in
net assets resulting from
operations..................... (4,908,984) 7,801,781 13,734,263 3,175,563
Net equalization credits
(charges) (Note 2).............. (34,561) - 21,466 19,535
Distributions to
shareholders from:
Net investment income
Class A....................... - - - -
Class B....................... - - - -
Class C....................... - - - (137,622)
Net realized gains on
investments and foreign
currency transactions
Class A....................... (277,128) - (890,547) -
Class B....................... (2,291,951) - (316,510) -
Class C....................... (1,476,968) (881,357) (3,831,715) (399,699)
Increase in net assets
from capital share
transactions (Note 3).......... 6,043,444 63,074,225 24,302,675 25,718,450
------------ ------------ ------------ -----------
Increase (decrease) in
net assets...................... (2,946,148) 69,994,649 33,019,632 28,376,227
Net assets at beginning
of period....................... 133,497,586 63,502,937 92,599,339 64,223,112
------------ ------------ ------------ -----------
Net assets at end of period...... $130,551,438 $133,497,586 $125,618,971 $92,599,339
============ ============ ============ ===========
Accumulated undistributed
net investment income (loss).... $ 1,556,196 $ (1,092,560) $ 322,091 $ (334,304)
============ ============ ============ ===========
<CAPTION>
INTERNATIONAL
GROWTH AND
GROWTH AND INCOME FUND INCOME FUND
-------------------------- -------------
YEAR YEAR 01/09/95*
ENDED ENDED TO
10/31/95 10/31/94 10/31/95
------------ ----------- --------------
<S> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Net investment income
(loss)......................... $ 977,895 $ 519,687 $ 39,864
Net realized gain
(loss) on:
Investment
transactions................. 716,372 1,405,598 275,761
Foreign currency and
forward foreign
currency contracts........... 102,753 - (260,048)
Change in unrealized
appreciation
(depreciation) on:
Investments................. 9,980,846 605,644 (326,878)
Foreign currency and
forward foreign
currency contracts......... (386) - 375,126
----------- ----------- -----------
Net increase (decrease) in
net assets resulting from
operations..................... 11,777,480 2,530,929 103,825
Net equalization credits
(charges) (Note 2).............. 83,756 48,673 -
Distributions to
shareholders from:
Net investment income
Class A....................... (161,680) (17,409) (14,446)
Class B....................... (104,194) (5,573) (14,765)
Class C....................... (570,011) (419,264) (12,260)
Net realized gains on
investments and foreign
currency transactions
Class A....................... (128,810) - -
Class B....................... (109,460) - -
Class C....................... (1,148,241) (353,371) -
Increase in net assets
from capital share
transactions (Note 3).......... 26,649,617 18,830,460 21,579,276
----------- ----------- -----------
Increase (decrease) in
net assets...................... 36,288,457 20,614,445 21,641,630
Net assets at beginning
of period....................... 58,097,053 37,482,608 -
----------- ----------- -----------
Net assets at end of period...... $94,385,510 $58,097,053 $21,641,630
=========== =========== ===========
Accumulated undistributed
net investment income (loss).... $ 452,599 $ 224,303 $ (231,087)
=========== =========== ===========
</TABLE>
- -------------------
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND STRATEGIC INCOME FUND INVESTMENT QUALITY BOND FUND
--------------------------- ------------------------- ----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94
---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................... $ 2,757,769 $ 1,961,624 $ 2,960,238 $ 1,477,142 $ 1,065,675 $ 871,065
Net realized gain (loss) on:
Investment transactions................ 6,529,806 4,389,994 264,926 (672,756) 24,835 (728,382)
Futures contracts...................... 2,303
Foreign currency and forward foreign
currency contracts.................... - - (81,640) (12,035) - -
Change in unrealized appreciation
(depreciation) on:
Investments............................ 5,539,360 (5,721,035) 919,881 (1,555,957) 1,318,370 (1,230,724)
Futures contracts...................... (4,372)
Foreign currency and forward foreign
currency contracts.................... - - (109,134) (66) - -
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............... 14,824,866 630,583 3,954,271 (763,672) 2,408,880 (1,088,041)
Net equalization credits (charges)
(Note 2)................................ (54,967) 51,522 - - 20,893 (6,490)
Distributions to shareholders from:
Net investment income
Class A................................ (235,768) - (974,298) (1,194,801) (701,998) (751,752)
Class B................................ (110,719) - (1,054,898) (127,517) (110,088) (8,359)
Class C................................ (1,850,266) (1,600,382) (930,449) (155,606) (255,000) (41,612)
Net realized gains on investments and
foreign currency transactions
Class A................................ (362,509) - - - - (131,745)
Class B................................ (237,460) - - - - -
Class C................................ (3,967,004) (2,569,588) - - - -
Increase in net assets from capital
share transactions (Note 3)............. (6,965,262) 6,876,195 14,605,227 31,628,233 5,614,479 1,399,668
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets........ 1,040,911 3,388,330 15,599,853 29,386,637 6,977,166 (628,331)
Net assets at beginning of period........ 99,492,932 96,104,602 29,386,637 - 14,045,510 14,673,841
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of period.............. $100,533,843 $99,492,932 $44,986,490 $29,386,637 $21,022,676 $14,045,510
============ =========== =========== =========== =========== ===========
Accumulated undistributed net
investment income (loss)................ $ 2,141,058 $ 1,629,773 $ (35,848) $ (781) $ 46,769 $ 46,444
============ =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT NATIONAL MUNICIPAL
SECURITIES FUND BOND FUND MONEY MARKET FUND
----------------------------- --------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............... $ 7,002,787 $ 7,740,947 $ 801,761 $ 515,870 $ 1,208,891 $ 669,113
Net realized gain (loss) on
investment transactions............ 2,016,765 (5,787,502) (451,322) (10,154) - -
Change in unrealized appreciation
(depreciation) on investments...... 4,354,862 (5,169,920) 1,830,370 (1,558,848) - -
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations........... 13,374,414 (3,216,475) 2,180,809 (1,053,132) 1,208,891 669,113
Net equalization charges (Note 2).... (101,581) (105,052) - - - -
Distributions to shareholders from:
Net investment income
Class A............................ (6,031,782) (7,163,972) (429,394) (455,481) (467,507) (453,322)
Class B............................ (421,002) (31,100) (188,030) (29,972) (88,435) (5,777)
Class C............................ (1,008,460) (163,828) (184,416) (31,225) (652,949) (210,014)
Net realized gains on investments
Class A............................ - (3,172,235) - - - -
Increase in net assets from capital
share transactions (Note 3)......... (4,588,211) (35,309,159) 7,339,594 4,048,362 1,356,401 2,871,867
------------ ------------ ----------- ----------- ----------- -----------
Increase (decrease) in net assets.... 1,223,378 (49,161,821) 8,718,563 2,478,552 1,356,401 2,871,867
Net assets at beginning of period.... 114,134,523 163,296,344 11,609,572 9,131,020 20,981,047 18,109,180
============ ============ =========== =========== =========== ===========
Net assets at end of period.......... $115,357,901 $114,134,523 $20,328,135 $11,609,572 $22,337,448 $20,981,047
============ ============ =========== =========== =========== ===========
Accumulated undistributed net
investment income (loss)............ $ (389,597) $ 432,979 $ (572) $ (721) - -
============ ============ =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH FUND
-------------------------------------------------------------------------------------------------
YEAR 04/01/94* YEAR 04/01/94* YEAR YEAR
ENDED TO ENDED TO ENDED ENDED YEARS ENDED OCTOBER, 31
10/31/95 10/31/94 10/31/95** 10/31/94 10/31/95** 10/31/94 ---------------------------
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C 1993 1992 1991
-------- --------- ---------- --------- ---------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 14.82 $ 14.13 $ 14.79 $ 14.13 $ 14.79 $ 13.74 $ 10.33 $ 10.76 $ 10.12
Income (loss) from
- ------------------
investment operations
---------------------
Net investment income
(loss) (B).................. -- (0.01) (0.09) (0.03) (0.09) (0.10) (0.01) (0.02) 0.25
Net realized and unrealized
gain (loss) on securities... (0.54) 0.70 (0.53) 0.69 (0.53) 1.15 3.43 (0.37) 0.63
------- ------- ------- ------- ------- -------- ------- ------- ------
Total from investment
operations....... (0.54) 0.69 (0.62) 0.66 (0.62) 1.05 3.42 (0.39) 0.88
Less distributions
- ------------------
Dividends from net
investment income........... -- -- -- -- -- -- (0.01) -- (0.24)
Distributions from capital
gains....................... (0.44) -- (0.44) -- (0.44) -- -- -- --
Distributions from capital... -- -- -- -- -- -- -- (0.04) --
------- ------- ------- ------- ------- -------- ------- ------- ------
Total distributions...... (0.44) -- (0.44) -- (0.44) -- (0.01) (0.04) (0.24)
------- ------- ------- ------- ------- -------- ------- ------- ------
Net asset value, end of
period...................... $ 13.84 $ 14.82 $ 13.73 $ 14.79 $ 13.73 $ 14.79 $ 13.74 $ 10.33 $10.76
======= ======= ======= ======= ======= ======== ======= ======= ======
Total return............. (3.52%) 9.16%(D) (4.09%) 8.94%(D) (4.09%) 8.94% 33.06% (3.57%) 8.80%
Net assets, end of period
(000's)..................... $23,894 $18,152 $23,317 $13,903 $83,340 $101,443 $63,503 $14,291 $8,828
Ratio of operating expenses
to average net assets (C).. 1.75% 1.75%(A) 2.40% 2.40%(A) 2.40% 2.40% 2.40% 2.52% 1.47%
Ratio of net investment
income (loss) to average net
assets.................... 0.03% (0.12%)(A) (0.61%) (0.77%)(A) (0.64%) (0.91%) (0.40%) (0.27%) 1.41%
Portfolio turnover rate...... 57% 54% 57% 54% 57% 54% 57% 69% 70%
</TABLE>
______________________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement by adviser of $0.02 and $0.02 per share for the
Global Growth Fund - Classes A and B respectively, for the year ended
October 31, 1995 and $0.01 and $0.01 per share for the Global Growth Fund -
Classes A and B respectively, for the period April 1, 1994 to October 31,
1994, and $0.02, $0.01, $0.02, $0.02 and $0.05 per share for the Global
Growth Fund - Class C for the years ended 1995, 1994, 1993, 1992 and 1991,
respectively.
(C) The ratio of operating expenses, before reimbursement from adviser, was
1.92% and 2.58% for the Global Growth Fund - Classes A and B respectively,
for the year ended October 31, 1995 and 1.97% and 2.71% for the Global
Growth Fund - Classes A and B respectively, for the period April 1, 1994 to
October 31, 1994, and 2.53%, 2.52%, 2.72%, 2.78% and 4.37% for the Global
Growth Fund - Class C for the years ended 1995, 1994, 1993, 1992 and 1991,
respectively.
(D) Historical total returns for Classes A and B shares are one year performance
returns which include Class C performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND
-------------------------------------------------
YEAR 04/1/94* YEAR 04/1/94*
ENDED TO ENDED TO
10/31/95** 10/31/94 10/31/95** 10/31/94
CLASS A CLASS A CLASS B CLASS B
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... 14.78 $ 14.59 14.77 $14.59
Income (loss) from investment operations
- ----------------------------------------
Net investment income (loss) (B)........ 0.12 0.02 0.02 (0.02)
Net realized and unrealized gain
on securities......................... 1.83 0.17 1.84 0.20
------- ------- ------- ------
Total from investment
operations.................. 1.95 0.19 1.86 0.18
Less distributions
- ------------------
Distributions from capital gains........ (0.79) --- (0.79) ---
------- ------- ------- ------
Net asset value, end of period.......... $ 15.94 $ 14.78 $ 15.84 $14.77
======= ======= ======= ======
Total return.................. 14.22% 4.82%(D) 13.58% 4.75%(D)
Net assets, end of period (000's)....... $22,026 $16,326 $19,874 $5,054
Ratio of operating expenses to average
net assets (C)........................ 1.34% 1.34%(A) 1.99% 1.99%(A)
Ratio of net investment income (loss) to
average net assets.................... 0.79% 0.13%(A) 0.13% (0.52%)(A)
Portfolio turnover rate................. 54% 39% 54% 39%
</TABLE>
______________________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement by adviser of $0.04 and $0.05 per share for the
Growth Fund - Classes A and B respectively, for the year ended October 31,
1995 and $0.06 and $0.03 per share for the Growth Fund - Classes A and B
respectively, for the period April 1, 1994 to October 31, 1994.
(C) The ratio of operating expenses, before reimbursement by adviser, was 1.62%
and 2.32% for the Growth Fund - Classes A and B respectively, for the year
ended October 31, 1995 and 1.79% and 2.82% for the Growth Fund - Classes A
and B respectively, for the period April 1, 1994 to October 31, 1994.
(D) Historical total returns for Classes A and B shares are one year performance
returns which include Class C performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND - CLASS C
---------------------------------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, 08/28/89*
-------------------------------------------------------------------------------------- TO
1995** 1994 1993 1992 1991 1990 10/31/89
-------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning $ 14.77 $ 14.21 $ 12.05 $ 10.70 $ 8.22 $ 11.19 $ 12.25
of period...................
Income (loss) from
- ------------------
investment operations
- ----------------------
Net investment income (loss) 0.02 (0.07) 0.01 (0.01) 0.02 0.05 0.01
(B).........................
Net realized and unrealized
gain (loss) on securities... 1.84 0.74 2.15 1.37 2.54 (2.39) (1.07)
------- ------- ------- ------- ------- ------- -------
Total from
investment
operations....... 1.86 0.67 2.16 1.36 2.56 (2.34) (1.06)
Less distributions
- ------------------
Dividends from net
investment income........... - (0.03) - - (0.03) (0.05) -
Distributions from capital
gains....................... (0.79) (0.08) - - - (0.58) -
Distributions from capital... - - - (0.01) (0.05) - -
------- ------- ------- ------- ------- ------- -------
Total distributions (0.79) (0.11) - (0.01) (0.08) (0.63) -
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period...................... $ 15.84 $ 14.77 $ 14.21 $ 12.05 $ 10.70 $ 8.22 $ 11.19
======= ======= ======= ======= ======= ======= =======
Total return....... 13.58% 4.75% 17.93% 12.75% 31.32% (22.16%) (8.65%)
Net assets, end of period
(000's)..................... $83,719 $71,219 $64,223 $24,291 $15,354 $19,370 $30,627
Ratio of operating expenses to
average net assets (C)....... 1.99% 1.99% 1.99% 2.47% 2.97% 2.85% 2.57%(A)
Ratio of net investment income
(loss) to average net assets. 0.15% (0.49%) 0.27% (0.15%) 0.27% 0.43% 0.37%(A)
Portfolio turnover rate...... 54% 39% 40% 91% 37% 58% 65%(A)
</TABLE>
______________________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.04, $0.04, $0.02,
$0.05 and $0.01 per share for the Growth Fund - Class C for the years ended
1995, 1994, 1993, 1992 and 1991, respectively.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 2.23%, 2.29%, 2.35%, 3.00% and 3.12% for the Growth Fund -
Class C for the years ended 1995, 1994, 1993, 1992 and 1991, respectively.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
--------------------------------------------------------------------------------------------------
YEAR 04/01/94* YEAR 05/01/94* YEAR YEAR YEARS ENDED 05/01/91*
ENDED TO ENDED TO ENDED ENDED OCTOBER 31, TO
10/31/95** 10/31/94 10/31/95** 10/31/94 10/31/95 10/31/94
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C l993 1992 10/31/91
---------- -------- ---------- --------- --------- -------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.............. $ 13.09 $12.29 $ 13.08 $12.29 $ 13.08 $ 12.71 $ 11.21 $ 10.51 $10.00
Income from investment
operations
- -----------
Net investment income (B). 0.26 0.12 0.16 0.10 0.18 0.15 0.14 0.18 0.11
Net realized and unrealized
gain on securities........ 1.90 0.76 1.94 0.77 1.90 0.46 1.48 0.70 0.47
------ ------ ------ ------ ------- ------ ------- ------ ------
Total from investment
operations........... 2.16 0.88 2.10 0.87 2.08 0.61 1.62 0.88 0.58
Less distributions
- ------------------
Dividends from net
investment income........ (0.23) (0.08) (0.19) (0.08) (0.15) (0.13) (0.12) (0.18) (0.07)
Distributions from capital
gains................... (0.30) -- (0.30) -- (0.30) (0.11) -- -- --
------ ------ ------ ------ ------- ------ ------- ------ ------
Total distributions (0.53) (0.08) (0.49) (0.08) (0.45) (0.24) (0.12) (0.18) (0.07)
------ ------ ------ ------ ------ ------ ------- ------ ------
Net asset value, end of
period.............. $14.72 $13.09 $14.69 $13.08 $14.71 $13.08 $12.71 $11.21 $10.51
====== ====== ====== ====== ====== ====== ======= ====== ======
Total return....... 17.28% 5.06%(D) 16.73% 4.98%(D) 16.56% 4.85% 14.57% 8.42% 5.88%
Net assets, end of
period (000's)..... $12,180 $8,134 $19,052 $3,885 $63,154 $46,078 $37,483 $10,821 $2,090
Ratio of operating
expenses to average
net assets (C)...... 1.34% 1.34%(A) 1.99% 1.99%(A) 1.99% 1.99% 1.99% 1.94% 1.85%(A)
Ratio of net investment
income to average net
assets................ 1.91% 1.72%(A) 1.14% 1.07%(A) 1.26% 1.11% 1.12% 1.51% 2.05%(A)
Portfolio turnover
rate................. 40% 45% 40% 45% 40% 45% 37% 48% 111%(A)
</TABLE>
_______________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement by adviser of $0.05 and $0.05 per share for the
Growth and Income Fund - Classes A and B respectively, for the year ended
October 31, 1995 and $0.05 and $0.12 per share for the Growth and Income
Fund - Classes A and B respectively, for the period April 1, 1994 to October
31, 1994. After expense reimbursement and waiver by adviser of $0.04,
$0.05, $0.06, $0.15 and $0.37 per share for the Growth and Income Fund -
Class C for the years ended 1995, 1994, 1993 and 1992 and the period May 1,
1991 (commencement of operations) to October 31, 1991, respectively.
(C) The ratio of operating expenses, before reimbursement adviser, was 1.69% and
2.33% for the Growth and Income Fund - Classes A and B respectively, for the
year ended October 31, 1995, and 2.08% and 3.12% for the Growth and Income
Fund - Classes A and B respectively, for the period April 1, 1994 to October
31, 1994. The ratio of operating expenses, before reimbursement and waiver
by adviser, was 2.26%, 2.38%, 2.46%, 3.18% and 10.69% for the Growth and
Income Fund - Class C for the years ended 1995, 1994, 1993 and 1992 and the
period May 1, 1991 (commencement of operations) to October 31, 1991,
respectively.
(D) Historical total returns for Classes A and B shares are one year performance
returns which include Class C performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH AND INCOME FUND
------------------------------------------------------
01/09/95* 01/09/95* 01/09/95*
TO TO TO
10/31/95** 10/31/95** 10/31/95**
CLASS A CLASS B CLASS C
------------------ ---------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period.... $10.00 $10.00 $10.00
Income from investment operations:
- ---------------------------------
Net investment income (B)............... 0.06 0.01 0.01
Net realized and unrealized gain on
investments and foreign currency
transactions........................... 0.08 0.12 0.12
------ ----- ------
Total from investment
operations.................. 0.14 0.13 0.13
Less distributions
- ------------------
Dividends from net investment income.... (0.03) (0.03) (0.03)
------ ----- ------
Net asset value, end of period.......... $10.11 $10.10 $10.10
====== ====== ======
Total return.................. 1.37% 1.28% 1.28%
Net assets, end of period (000's)....... $6,897 $8,421 $6,324
Ratio of operating expenses to
average net assets (C)................ 1.75%(A) 2.40%(A) 2.40%(A)
Ratio of net investment income to
average net assets.................... 0.70%(A) 0.15%(A) 0.13%(A)
Portfolio turnover rate................. 69%(A) 69%(A) 69%(A)
</TABLE>
_____________________________
* Commencement of operations.
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement by adviser of $0.04, $0.04 and $0.04 per share
for the International Growth and Income Fund - Classes A, B and C
respectively, for the period January 9, 1995 (commencement of operations)
to October 31, 1995.
(C) The ratio of operating expenses, before reimbursement from adviser, was
2.18%, 2.93% and 2.93% for the International Growth and Income Fund,
Classes A, B and C respectively, for the period January 9, 1995
(commencement of operations) to October 31, 1995.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-------------------------------------------------------
YEAR 04/1/94* YEAR 04/1/94*
ENDED TO ENDED TO
10/31/95** 10/31/94 10/31/95** 10/31/94
CLASS A CLASS A CLASS B CLASS B
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $11.13 $11.06 $11.12 $11.06
Income (loss) from investment operations
- ----------------------------------------
Net investment income (B)............... 0.38 0.17 0.30 0.12
Net realized and unrealized gain
(loss) on securities.................. 1.35 (0.10) 1.36 (0.06)
------ ------ ------ ------
Total from investment
operations.................. 1.73 0.07 1.66 0.06
Less distributions
- ------------------
Dividends from net investment income.... (0.32) - (0.28) -
Distributions from capital gains........ (0.52) - (0.52) -
------ ------ ------ ------
Total distributions........... (0.84) - (0.80) -
------ ------ ------ ------
Net asset value, end of period.......... $12.02 $11.13 $11.98 $11.12
====== ====== ====== ======
Total return.................. 16.95% 0.76%(D) 16.31% 0.67%(D)
Net assets, end of period (000's)....... $10,033 $7,830 $9,875 $4,760
Ratio of operating expenses to average
net assets (C)........................ 1.34% 1.34%(A) 1.99% 1.99%(A)
Ratio of net investment income to
average net assets..................... 3.39% 2.72%(A) 2.69% 2.07%(A)
Portfolio turnover rate................. 226% 246% 226% 246%
</TABLE>
______________________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement by adviser of $0.04 and $0.04 for the Asset
Allocation Fund - Classes A and B respectively, for the year ended October
31, 1995 and $0.03 and $0.04 for the Asset Allocation Fund - Classes A and
B respectively, for the period April 1, 1994 to October 31, 1994.
(C) The ratio of operating expenses, before reimbursement from adviser, was
1.69% and 2.37% for the Asset Allocation Fund - Classes A and B
respectively, for the year ended October 31, 1995 and 1.86% and 2.73% for
the Asset Allocation Fund - Classes A and B respectively, for the period
April 1, 1994 to October 31, 1994.
(D) Historical total returns for Classes A and B shares are one year
performance returns which include Class C performance prior to April 1,
1994.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND - CLASS C (D)
--------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, 08/28/89*
-------------------------------------------------------------- TO
1995** 1994 1993 1992 1991 1990 10/31/89
------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning $ 11.12 $ 11.52 $ 10.20 $ 9.76 $ 8.12 $ 9.84 $ 10.17
of period...................
Income (loss) from
- ------------------
investment operations
---------------------
Net investment income (B).... 0.31 0.22 0.21 0.20 0.27 0.32 0.05
Net realized and unrealized
gain (loss) on securities... 1.35 (0.15) 1.30 0.87 1.70 (1.66) (0.38)
------- ------- ------- ------- ------- ------- -------
Total from
investment
operations....... 1.66 0.07 1.51 1.07 1.97 (1.34) (0.33)
Less distributions
- ------------------
Dividends from net
investment income........... (0.24) (0.18) (0.09) (0.19) (0.33) (0.26) ---
Distributions from capital
gains....................... (0.52) (0.29) (0.10) (0.44) --- --- ---
Distributions from capital... --- --- --- --- --- (0.12) ---
------- ------- ------- ------- ------- ------- -------
Total distributions (0.76) (0.47) (0.19) (0.63) (0.33) (0.38) ---
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period...................... $ 12.02 $ 11.12 $ 11.52 $ 10.20 $ 9.76 $ 8.12 $ 9.84
======= ======= ======= ======= ======= ======= =======
Total return....... 16.25% 0.67% 15.02% 11.25% 24.53% (13.97%) (3.24%)
Net assets, end of period
(000's)..................... $80,626 $86,902 $96,105 $48,160 $30,724 $34,713 $43,915
Ratio of operating expenses
to average net assets (C)... 1.99% 1.99% 1.99% 2.40% 2.88% 2.63% 2.13%(A)
Ratio of net investment
income to average
net assets.................. 2.76% 1.93% 1.96% 1.93% 2.77% 3.34% 3.09%(A)
Portfolio turnover rate...... 226% 246% 196% 171% 84% 73% 84%(A)
</TABLE>
_____________________________
* Commencement of operations
** Net investment income per share has been calculated using the average shares
method for fiscal year 1995.
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.03, $0.04, $0.03 and
$0.04 for the Asset Allocation Fund - Class C for the years ended 1995,
1994, 1993 and 1992, respectively.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 2.24%, 2.22%, 2.28% and 2.89% for the Asset Allocation Fund -
Class C for the years ended 1995, 1994, 1993 and 1992, respectively.
(D) On July 10, 1992, the Aggressive Fund and Conservative Fund portfolios of
the old Asset Allocation Funds were liquidated and shares were exchanged for
shares of the new Asset Allocation Fund. The new Asset Allocation Fund is
comprised of the Moderate Fund portfolio of the old Asset Allocation Fund
(the accounting "survivor") and the assets of the former Aggressive and
Conservative portfolios of the old Asset Allocation Funds. For purposes of
presenting financial highlights - selected per share data and ratios, only
the historical results of the old Moderate Fund have been presented since it
is considered the accounting survivor of the merger because the investment
objective of the new Asset Allocation Fund is substantially the same as that
of the old Moderate Fund. At the date of the merger, 3,567,198 shares of
the old Moderate Fund with a per share value of $8.11 were decreased to
2,891,572 shares with a per share value of $10.00, similar to a reverse
stock split, and re-named as shares of the new Asset Allocation Fund. The
historical per share data presented above has been adjusted as though a
reverse stock split had occurred at the beginning of the earliest period
presented which results in fewer shares outstanding at a correspondingly
higher net asset value per share.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND
--------------------------------------------------------------------------------
YEAR 11/01/93* YEAR 04/01/94* YEAR 04/01/94*
ENDED TO ENDED TO ENDED TO
10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 8.90 $ 10.00 $ 8.90 $ 9.31 $ 8.90 $ 9.31
Income (loss) from
investment operations
- ----------------------
Net investment income (B).... 0.78 0.65 0.73 0.38 0.73 0.38
Net realized and unrealized
gain (loss)
on securities.............. 0.18 (1.10) 0.17 (0.41) 0.17 (0.41)
------- ------- ------- ------- ------- ------
Total from investment
operations....... 0.96 (0.45) 0.90 (0.03) 0.90 (0.03)
Less distributions
- ------------------
Dividends from net
investment income........... (0.79) (0.65) (0.73) (0.38) (0.73) (0.38)
------- ------- ------- ------- ------- ------
Net asset value, end of
period...................... $ 9.07 $ 8.90 $ 9.07 $ 8.90 $ 9.07 $ 8.90
======= ======= ======= ======= ======= =======
Total return......... 11.43% (3.79%) 10.72% (4.18%)(D) 10.72% (4.20%)(D)
Net assets, end of period
(000's)..................... $10,041 $ 15,507 $20,672 $ 5,440 $14,273 $ 8,439
Ratio of operating expenses
to average net assets (C).... 1.07% 0.41% 1.95% 1.00%(A) 1.95% 1.00%(A)
Ratio of net investment
income to average net assets.. 9.08% 8.26% 8.10% 8.59%(A) 8.25% 8.59%(A)
Portfolio turnover rate...... 180% 136% 180% 136% 180% 136%
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.05 and $0.04 per
share for the Strategic Income Fund - Class A for the years ended October
31, 1995 and 1994, and $0.04 and $0.05 for the Strategic Income Fund -
Classes B and C respectively, for the year ended October 31, 1995 and $0.05
and $0.04 for the Strategic Income Fund - Classes B and C respectively, for
the period April 1, 1994 to October 31, 1994.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 1.69% and 0.96% for the Strategic Income Fund - Class A for the
years ended October 31, 1995 and 1994. The ratio of operating expenses,
before reimbursement and waiver from adviser, was 2.38% and 2.37% for the
Strategic Income Fund - Classes B and C respectively, for the year ended
October 31, 1995 and 2.04% and 1.96% for the Strategic Income Fund - Classes
B and C respectively, for the period April 1, 1994 to October 31, 1994.
(D) Historical total returns for Classes B and C shares are one year performance
returns which include Class A performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR 04/01/94* YEAR 04/01/94* YEARS ENDED
ENDED ENDED ENDED TO ENDED TO OCTOBER, 31 05/01/91*
10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94 ----------------- TO
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C 1993 1992 10/31/91
-------- -------- -------- --------- -------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 9.74 $ 11.16 $ 9.74 $10.21 $ 9.74 $10.21 $ 10.56 $10.26 $10.00
Income (loss) from
- ------------------
investment operations
---------------------
Net investment income (B).... 0.68 0.60 0.61 0.33 0.61 0.33 0.66 0.82 0.40
Net realized and unrealized
gain (loss) on securities... 0.82 (1.37) 0.82 (0.51) 0.82 (0.51) 0.64 0.27 0.30
------- ------- ------ ------ ------ ------ ------- ------ ------
Total from
investment
operations....... 1.50 (0.77) 1.43 (0.18) 1.43 (0.18) 1.30 1.09 0.70
Less distributions
- ------------------
Dividends from net
investment income........... (0.68) (0.56) (0.62) (0.29) (0.62) (0.29) (0.64) (0.7) (0.40)
Distributions from capital
gains....................... -- (0.09) -- -- -- -- (0.06) -- --
Distributions from capital... -- -- -- -- -- -- -- -- (0.04)
------- ------- ------ ------ ------ ------ ------- ------ -----
Total distributions (0.68) (0.65) (0.62) (0.29) (0.62) (0.29) (0.70) (0.79) (0.44)
------- ------- ------ ------ ------ ------ ------- ------ -----
Net asset value, end of
period...................... $ 10.56 $ 9.74 $10.55 $ 9.74 $10.55 $ 9.74 $ 11.16 $10.56 $10.26
======= ======= ====== ====== ====== ====== ======= ====== ======
Total return....... 15.91% (7.08%) 15.12% (7.34%)(D) 15.12% (7.34%)(D) 12.66% 11.00% 7.21%
Net assets, end of period
(000's)..................... $10,345 $11,150 $3,472 $ 489 $7,206 $2,406 $14,674 $6,773 $2,713
Ratio of operating expenses
to average net assets (C)... 1.25% 1.25% 1.90% 1.90%(A) 1.90% 1.90%(A) 0.98% 0.00% 0.00%(A)
Ratio of net investment
income to average
net assets.................. 6.72% 5.86% 5.95% 5.70%(A) 6.00% 5.70%(A) 5.82% 7.76% 7.08%(A)
Portfolio turnover rate...... 132% 186% 132% 186% 132% 186% 41% 44% 39%(A)
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.05, $0.06, $0.07,
$0.27 and $0.19 per share for the Investment Quality Bond Fund - Class A for
the years ended 1995, 1994, 1993 and 1992 and the period May 1, 1991
(commencement of operations) to October 31, 1991, respectively. After
expense reimbursement by adviser of $0.08 and $0.06 per share for the
Investment Quality Bond Fund - Classes B and C respectively, for the year
ended October 31, 1995 and $0.19 and $0.07 per share for the Investment
Quality Bond Fund - Classes B and C respectively, for the period April 1,
1994 to October 31, 1994.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 1.73%, 1.74%, 1.57%, 2.56% and 3.37% for the Investment Quality
Bond Fund - Class A for the years ended 1995, 1994, 1993 and 1992 and the
period May 1, 1991 (commencement of operations) to October 31, 1991,
respectively. The ratio of operating expenses, before reimbursement by
adviser, was 2.69% and 2.50% for the Investment Quality Bond Fund - Classes
B and C respectively, for the year ended October 31, 1995 and 4.88% and
3.05% for the Investment Quality Bond Fund - Classes B and C respectively,
for the period April 1, 1994 to October 31, 1994.
(D) Historical total returns for Classes B and C shares are one year performance
returns which include Class A performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND - CLASS A
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
-----------------------------------------------------------------------------
08/28/89*
TO
1995 1994 1993 1992 1991 1990 10/31/89
------- -------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning $ 9.45 $ 10.35 $ 10.04 $ 9.89 $ 9.47 $ 9.74 $ 9.73
of period...................
Income (loss) from
- ------------------
investment operations
---------------------
Net investment income (B).... 0.63 0.53 0.51 0.74 0.84 0.75 0.15
Net realized and unrealized
gain (loss) on securities... 0.57 (0.74) 0.34 0.13 0.42 (0.20) 0.01
------- -------- -------- -------- ------- ------- -------
Total from
investment
operations....... 1.20 (0.21) 0.85 0.87 1.26 0.55 0.16
Less distributions
- ------------------
Dividends from net (0.67) (0.50) (0.50) (0.72) (0.84) (0.75) (0.15)
investment income...........
Distributions from capital ---- (0.19) (0.04) ---- ---- ---- ----
gains.......................
Distributions from capital... ---- ---- ---- ---- ---- (0.07) ----
------- -------- -------- -------- ------- ------- -------
Total distributions (0.67) (0.69) (0.54) (0.72) (0.84) (0.82) (0.15)
------- -------- -------- -------- ------- ------- -------
Net asset value, end of $ 9.98 $ 9.45 $ 10.35 $ 10.04 $ 9.89 $ 9.47 $ 9.74
period...................... ======= ======== ======== ======== ======= ======= =======
Total return....... 13.15% (2.13%) 8.64% 9.15% 13.86% 5.90% 1.66%
Net assets, end of period $81,179 $100,622 $163,296 $118,543 $45,662 $43,299 $56,069
(000's).....................
Ratio of operating expenses
to average net assets (C)... 1.25% 1.25% 1.07% 0.24% 0.68% 2.28% 2.18%(A)
Ratio of net investment
income to average
net assets.................. 6.54% 5.39% 4.97% 7.21% 8.65% 7.89% 8.54%(A)
Portfolio turnover rate...... 469% 279% 208% 108% 195% 71% 93%(A)
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.02, $0.02, $0.04,
$0.19, $0.18 and $0.03 per share for the U.S. Government Securities Fund -
Class A for the years ended 1995, 1994, 1993, 1992, 1991 and 1990,
respectively.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 1.45%, 1.47%, 1.42%, 2.13%, 2.61% and 2.57% for the years ended
1995, 1994, 1993, 1992, 1991 and 1990, respectively.
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------
YEAR 04/1/94* YEAR 04/1/94*
ENDED TO ENDED TO
10/31/95 10/31/94 10/31/95 10/31/94
CLASS B CLASS B CLASS C CLASS C
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $9.45 $9.77 $9.45 $9.77
Income (loss) from investment operations
- ----------------------------------------
Net investment income (B)............... 0.56 0.29 0.56 0.26
Net realized and unrealized gain (loss)
on securities......................... 0.58 (0.35) 0.58 (0.32)
----- ----- ----- -----
Total from investment
operations.................. 1.14 (0.06) 1.14 (0.06)
Less distributions
- ------------------
Dividends from net investment income.... (0.61) (0.26) (0.61) (0.26)
----- ----- ----- -----
Total distributions........... (0.61) (0.26) (0.61) (0.26)
----- ----- ----- -----
Net asset value, end of period.......... $9.98 $9.45 9.98 $9.45
===== ===== ===== =====
Total return.................. 12.45% (2.44%)(D) 12.45% (2.44%)(D)
Net assets, end of period (000's)....... $13,993 $2,746 20,186 $10,766
Ratio of operating expenses to average
net assets (C)........................ 1.90% 1.90%(A) 1.90% 1.90%(A)
Ratio of net investment income to
average net assets..................... 5.53% 5.06%(A) 5.74% 5.06%(A)
Portfolio turnover rate................. 469% 279% 469% 279%
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement by adviser of $0.04 and $0.03 per share for the
U.S. Government Securities Fund - Classes B and C respectively, for the
year ended October 31, 1995 and $0.08 and $0.03 per share for the U.S.
Government Securities Fund - Classes B and C respectively, for the period
April 1, 1994 to October 31, 1994 .
(C) The ratio of operating expenses, before reimbursement from adviser, was
2.28% and 2.15% for the U.S. Government Securities Fund - Classes B and C
respectively, for the year ended October 31, 1995 and 3.40% and 2.44% for
the U.S. Government Securities Fund - Classes B and C respectively, for the
period April 1, 1994 to October 31, 1994.
(D) Historical total returns for Classes B and C shares are one year
performance returns which include Class A performance prior to April 1,
1994.
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL BOND FUND
---------------------------------------------------------------------------------
YEAR YEAR YEAR 04/01/94* YEAR 04/01/94*
ENDED ENDED ENDED TO ENDED TO 07/6/93*
10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94 TO
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C 10/31/93
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 8.82 $10.25 $ 8.81 $ 9.30 $ 8.81 $ 9.30 $10.00
Income (loss) from
- ------------------
investment operations
---------------------
Net investment income (B).... 0.51 0.51 0.43 0.25 0.43 0.25 0.17
Net realized and unrealized
gain (loss) on securities... 0.80 (1.43) 0.81 (0.49) 0.81 (0.49) 0.24
------ ------ ------ ------ ------ ------- ------
Total from
investment
operations....... 1.31 (0.92) 1.24 (0.24) 1.24 (0.24) 0.41
Less distributions
- ------------------
Dividends from net
investment income........... (0.51) (0.51) (0.43) (0.25) (0.43) (0.25) (0.16)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period...................... $ 9.62 $ 8.82 $ 9.62 $ 8.81 $ 9.62 $ 8.81 $10.25
====== ====== ====== ====== ====== ====== ======
Total return....... 15.26% (9.24%) 14.42% (9.71%)(D) 14.42% (9.71%)(D) 4.17%
Net assets, end of period
(000's)..................... $7,618 $7,663 $5,876 $2,036 $6,834 $1,911 $9,131
Ratio of operating expenses
to average net assets (C)... 0.80% 0.57% 1.70% 1.24%(A) 1.70% 1.24%(A) 0.23%(A)
Ratio of net investment
income to average
net assets.................. 5.55% 5.28% 4.59% 4.62%(A) 4.53% 4.62%(A) 4.86%(A)
Portfolio turnover rate...... 44% 6% 44% 6% 44% 6% 150%(A)
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.05, $0.07 and $0.03
per share for the National Municipal Bond Fund - Class A for the years ended
1995 and 1994 and the period July 6, 1993 (commencement of operations) to
October 31, 1993, respectively. After expense reimbursement and waiver by
adviser of $0.07 and $0.09 per share for the National Municipal Bond Fund -
Classes B and C respectively, for the year ended October 31, 1995 and $0.09
and $0.09 per share for the National Municipal Bond Fund - Classes B and C
respectively, for the period April 1, 1994 to October 31, 1994.
(C) The ratio of operating expenses, before reimbursement and waiver by adviser,
was 1.34%, 1.26% and 1.10% for the National Municipal Bond Fund - Class A
for the years ended 1995 and 1994 and the period July 6, 1993 (commencement
of operations) to October 31, 1993, respectively. The ratio of operating
expenses, before reimbursement and waiver by adviser, was 2.41% and 2.63%
for the National Municipal Bond Fund - Classes B and C respectively, for the
year ended October 31, 1995 and 2.81% and 2.78% for the National Municipal
Bond Fund - Classes B and C respectively, for the period April 1, 1994 to
October 31, 1994.
(D) Historical total returns for Classes B and C shares are one year performance
returns which include Class A performance prior to April 1, 1994.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND -- CLASS A
---------------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, 08/28/89*
-------------------------------------------------------------------- TO
1995 1994 1993 1992 1991 1990 10/31/89
------- ------ ------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
- ----------------------
operations
----------
Net investment income (B)... 0.05 0.03 0.03 0.04 0.06 0.06 0.01
Less distributions
Dividends from net
investment income......... (0.05) (0.03) (0.03) (0.04) (0.06) (0.06) (0.01)
------- ------ ------- ------ ------ ------ ------
Net asset value, end of
period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ====== ======= ====== ====== ====== ======
Total return.......... 5.60% 3.48% 2.80% 3.69% 6.22% 5.76% 0.53%
Net assets, end of period
(000's).................. $11,379 $8,499 $18,109 $2,244 $3,421 $4,526 $7,781
Ratio of operating expenses
to average net assets (C). 0.50% 0.50% 0.50% 0.50% 1.00% 2.45% 1.96%(A)
Ratio of net investment
income to average net
assets.................... 5.45% 3.40% 2.75% 3.77% 6.01% 5.52% 6.59%(A)
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement and waiver by adviser of $0.004, $0.0044,
$0.0084, $0.0211, $0.0270 and $0.0002 per share for the Money Market Fund-
Class A for the years ended 1995, 1994, 1993, 1992, 1991 and 1990,
respectively.
(C) The ratio of operating expenses, before reimbursement and waiver from
adviser, was 0.96%, 0.95%, 1.32%, 2.71%, 2.68% and 2.47% for the Money
Market Fund - Class A for the years ended 1995, 1994, 1993, 1992, 1991 and
1990, respectively.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUND
-------------------------------------------------------
YEAR 04/1/94* YEAR 04/1/94*
ENDED TO ENDED TO
10/31/95 10/31/94 10/31/95 10/31/94
CLASS B CLASS B CLASS C CLASS C
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
- ---------------------------------
Net investment income (B)............... 0.05 0.02 0.05 0.02
Less distributions
- ------------------
Dividends from net investment income.... (0.05) (0.02) (0.05) (0.02)
------- ------- ------- -------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total return.................. 5.60% 3.48%(D) 5.60% 3.48%(D)
Net assets, end of period (000's)....... $1,564 $ 312 $9,394 $12,170
Ratio of operating expenses to average
net assets (C)........................ 0.50% 0.50%(A) 0.50% 0.50%(A)
Ratio of net investment income to
average net assets.................... 5.52% 3.96%(A) 5.46% 3.96%(A)
</TABLE>
______________________________
* Commencement of operations
(A) Annualized
(B) After expense reimbursement by adviser of $0.009 and $0.005 per share for
the Money Market Fund - Classes B and C respectively, for the year ended
October 31, 1995 and $0.0228 and $0.0037 per share for the Money Market
Fund - Classes B and C respectively, for the period April 1, 1994 to
October 31, 1994.
(C) The ratio of operating expenses, before reimbursement from adviser, was
1.41% and 0.95% for the Money Market Fund - Classes B and C respectively,
for the year ended October 31, 1995 and 4.83% and 1.18% for the Money
Market Fund - Classes B and C respectively, for the period April 1, 1994 to
October 31, 1994.
(D) Historical total returns for Classes B and C shares are one year
performance returns which include Class A performance prior to April 1,
1994.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 94.69%
Aluminum - 0.44%
Aluminum Company of America 11,400 $ 581,400
----------
Apparel & Textiles - 0.86%
Albany International Corporation 54,000 1,120,500
----------
Auto Parts - 0.95%
Danaher Corporation 40,000 1,240,000
----------
Automobiles - 2.61%
Daimler-Benz AG 3,524 1,698,660
Fiat, SPA 356,599 1,161,072
Hayes Wheels International,
Incorporated 21,500 564,375
----------
3,424,107
Banking - 4.33%
Bangkok Bank 61,800 638,506
BankAmerica Corporation 8,600 494,500
Hang Seng Bank 168,000 1,406,935
HSBC Holdings 65,500 974,474
Sakura Bank 55,000 532,284
Sumitomo Bank 56,000 990,860
Sumitomo Trust & Banking 55,000 634,440
----------
5,671,999
Broadcasting - 1.52%
Wolters Kluwer 21,940 1,996,821
----------
Building Construction - 0.86%
Fluor Corporation 20,000 1,130,000
----------
Business Services - 3.30%
Eaux (Cie Generale Des) 13,900 1,291,906
Interpublic Group Companies,
Incorporated 23,000 891,250
Secom Company 33,000 2,148,492
----------
4,331,648
Chemicals - 4.17%
The Dow Chemical Company 19,000 1,303,875
Imperial Chemical Industries, PLC, ADR 78,000 953,882
Sekisui Chemical 111,000 1,443,179
Sumitomo Chemical 380,000 1,764,505
----------
5,465,441
Computers & Business Equipment - 1.13%
International Business Machines
Corporation 1,760 171,160
Olivetti & C., SPA* 1,423,600 1,062,788
Tandy Corporation 5,000 246,875
----------
1,480,823
Conglomerates - 4.43%
Berjaya Sports 382,000 796,773
BTR 286,400 1,521,429
Grand Metropolitan 140,500 972,949
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Conglomerates - continued
Hutchison Whampoa 282,000 $ 1,553,759
Renong, BHD 631,000 963,510
-----------
5,808,420
Construction Materials - 1.00%
Maeda Road Construction 73,000 1,305,929
-----------
Construction & Mining Equipment - 0.47%
City Developments 99,000 613,057
-----------
Containers & Glass - 0.77%
Mark IV Industries, Incorporated 51,766 1,009,437
-----------
Domestic Oil - 0.68%
Phillips Petroleum Company 27,800 896,550
-----------
Drugs & Health Care - 5.26%
Astra AB, Free, Class A 105,735 3,885,092
Astra AB, Free, Class B 28,645 1,035,268
Bristol Myers Squibb Company 2,100 160,125
Isolyser, Incorporated* 44,000 786,500
Yamanouchi Pharmaceutical Company 46,000 1,025,270
-----------
6,892,255
Electric Utilities - 0.29%
Companhia Energetica De Sao Paulo* 37,100 379,563
-----------
Electrical Equipment - 2.69%
General Electric Company 27,500 1,739,375
NEC Corporation 135,000 1,781,612
-----------
3,520,987
Electronics - 11.55%
AMP, Incorporated 32,800 1,287,400
Emulex Corporation* 26,400 425,700
Intel Corporation 7,600 531,050
Kyocera Corporation 13,000 1,064,959
Mitsumi Electric 150,000 3,621,878
Rohm Company 51,000 3,096,046
TDK Corporation 58,000 2,988,025
Tokyo Electron 49,000 2,126,790
-----------
15,141,848
Financial Services - 0.51%
Partner Re Holding 25,000 665,625
-----------
Food & Beverages - 1.94%
Fraser & Neave 79,000 933,687
Ohsho Food Service Corporation 22,000 427,978
Universal Foods Corporation 34,600 1,185,050
-----------
2,546,715
Gold - 1.92%
Placer Dome, Incorporated 115,200 2,520,000
-----------
Homebuilders - 1.41%
Yokogawa Bridge Corporation 132,000 1,845,251
-----------
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Hotels and Restaurants - 1.70%
Equity Inns, Incorporated 24,800 $ 291,400
Hospitality Franchise Systems,
Incorporated* 24,000 1,470,000
Morrison Restaurants, Incorporated 30,250 472,656
----------
2,234,056
Household Appliances - 1.14%
Sharp Corporation 108,000 1,499,194
----------
Industrial Machinery - 6.24%
Ebara Corporation 100,000 1,388,142
Exedy Corporation 61,000 948,140
Keppel Corporation 152,000 1,247,841
Kolbenschmidt AG* 8,586 1,244,348
Mannesmann AG 4,810 1,583,172
Mitsubishi Heavy Industries, Ltd. 230,000 1,773,987
----------
8,185,630
Insurance - 0.63%
Tokio Marine & Fire Insurance Company 81,000 831,419
----------
Leisure Time - 1.22%
Genting, BHD 66,000 568,831
Resorts World, BHD 212,000 1,034,553
----------
1,603,384
Liquor - 1.89%
LVHM Moet Hennessy 12,470 2,481,199
----------
Miscellaneous - 0.14%
New World Infrastructure, Ltd. 158 278
Nippon Hi Pack Company 16,000 111,990
Sari Corporation 5,000 72,829
----------
185,097
Mutual Funds - 1.36%
India Gateway Fund* 17,000 304,980
Indian Opportunities Fund* 34,018 351,403
Korea Equity Fund, Incorporated 64,000 584,000
The R.O.C. Taiwan Fund 56,300 541,888
----------
1,782,271
Non-Ferrous Metals - 3.64%
QNI, Ltd. 1,543,500 2,962,843
Western Mining Corporation Holdings 281,767 1,807,189
----------
4,770,032
Paper - 0.71%
Schmalbach Lubeca AG 4,705 925,892
----------
Petroleum Services - 1.46%
Petronas Gas, BHD* 83,000 280,913
Schlumberger, Ltd. 26,200 1,630,950
----------
1,911,863
Photography - 0.52%
Minolta Camera Company, Ltd.* 140,000 678,821
----------
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Real Estate - 2.79%
Mitsubishi Estate 75,000 $ 799,159
------------
New World Development Company 95,000 369,841
Storage USA, Incorporated 10,000 292,500
Sun Hung Kai Properties 275,000 2,196,315
------------
3,657,815
Retail Grocery - 1.17%
ASDA Group, PLC 426,420 691,036
Hac Kimisawa Company 67,000 838,360
------------
1,529,396
Retail Trade - 5.14%
Big B, Incorporated 50,000 737,500
Friedman's, Incorporated, Class A* 31,000 627,750
Oneida, Ltd. 24,000 396,000
Service Merchandise Company,
Incorporated* 40,000 215,000
Wal-Mart Stores, Incorporated 50,000 1,081,250
Walgreen Company 56,000 1,596,000
Xebio Company 56,000 2,080,258
------------
6,733,758
Steel - 1.14%
Nippon Steel Corporation 450,000 1,491,275
------------
Telecommunication Services - 0.94%
Cable and Wireless, PLC 121,000 790,087
Seibu Electric & Machinery 86,000 445,574
------------
1,235,661
Telephone - 8.68%
British Telecommunications, PLC 254,100 1,510,539
DDI Corporation 300 2,431,204
Nippon Telegraph & Telephone Corporation 306 2,509,741
Stet 406,700 1,151,976
Telefonica De Espana SA 165,360 2,086,391
Telephone & Data Systems, Incorporated 6,500 260,000
Vodafone Group 345,550 1,428,638
------------
11,378,489
Trucking & Freight - 1.09%
Gulfmark International, Incorporated* 2,800 64,400
Yamato Transport 127,000 1,365,658
------------
1,430,058
TOTAL COMMON STOCK
(Cost $115,561,413) $124,133,686
------------
PREFERRED STOCKS - 1.38%
Automobiles - 1.29%
Porsche AG* 3,629 1,688,686
------------
Mutual Funds - 0.09%
India Gateway Fund 20,000 118,800
------------
TOTAL PREFERRED STOCK
(Cost $1,945,508) $ 1,807,486
------------
</TABLE>
*Non-income producing
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
WARRANTS - 0.90%*
Banking - 0.39%
Deutsche Bank AG (Expiration date
06/30/97; strike price DEM 61) 32,340 $ 516,944
----------
Miscellaneous - 0.51%
Volkswagen AG (Expiration date
10/27/98; strike price DEM 221) 8,070 667,913
----------
TOTAL WARRANTS
(Cost $1,468,943) $1,184,857
----------
REPURCHASE AGREEMENT - 3.03%
<CAPTION>
Principal Maturity
Amount Amount
--------- ---------
<S> <C>
$3,969,000 Repurchase Agreement with State
Street Bank & Trust Company dated
10/31/95 at 5.25%, to be repurchased
at $3,969,579 on 11/01/95,
collateralized by $3,820,000 U.S.
Treasury Note, 7.125% due 02/29/00
(valued at $4,053,029, including
interest) $3,969,000
----------
TOTAL INVESTMENTS
(Global Growth Fund) (Cost $122,944,864) $131,095,029
============
Growth Fund
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 91.48%
Aerospace - 5.62%
McDonnell Douglas Corporation 43,400 $3,547,950
Northrop Grumman Corporation 61,600 3,526,600
----------
7,074,550
Air Travel - 0.20%
AMR Corporation* 3,900 257,400
----------
Automobiles - 3.50%
Ford Motor Company 126,900 3,648,375
General Motors Corporation 17,400 761,250
----------
4,409,625
Banking - 5.51%
Citicorp 27,600 1,790,550
Nationsbank Corporation 57,500 3,780,625
Shawmut National Corporation 40,100 1,358,387
----------
6,929,562
Broadcasting - 0.37%
Multimedia, Incorporated* 10,500 464,625
----------
Chemicals - 1.60%
Geon Company 80,700 2,007,412
----------
Computers & Business Equipment - 1.45%
Compaq Computer Corporation* 32,800 1,828,600
----------
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Construction & Mining Equipment - 1.72%
Harnischfeger Industries, Incorporated 68,600 $2,160,900
----------
Containers & Glass - 0.10%
Owens-Illinois, Incorporated* 9,900 124,987
----------
Domestic Oil - 3.48%
Mobil Corporation 12,200 1,229,150
Tenneco, Incorporated 71,800 3,150,225
----------
4,379,375
Drugs & Health Care - 5.60%
Columbia/HCA Healthcare Corporation 26,600 1,306,725
Tambrands, Incorporated 21,500 962,125
Tenet Healthcare Corporation* 225,300 4,027,237
U.S. Healthcare, Incorporated 19,500 750,750
----------
7,046,837
Electric Utilities - 0.13%
Long Island Lighting Company 9,800 166,600
----------
Electrical Equipment - 4.72%
Fisher Scientific International,
Incorporated 64,900 2,036,238
Millipore Corporation 110,400 3,905,400
----------
5,941,638
Electronics - 2.61%
Analog Devices, Incorporated* 33,100 1,195,737
National Semiconductor Corporation* 49,100 1,196,813
Varian Associates, Incorporated 17,400 893,925
----------
3,286,475
Financial Services - 8.41%
Federal Home Loan Mortgage
Corporation 15,700 1,087,225
Federal National Mortgage Association 13,100 1,373,863
First USA, Incorporated 65,300 3,003,800
Partner Re Holding 121,400 3,232,275
PennCorporation Financial Group,
Incorporated 53,700 1,282,087
Salomon, Incorporated 16,700 603,288
----------
10,582,538
Forest Products - 3.71%
Georgia Pacific Corporation 56,600 4,669,500
----------
Household Products - 1.05%
Snap-On, Incorporated 31,100 1,317,863
----------
Industrial Machinery - 4.00%
Keystone International, Incorporated 60,000 1,335,000
Pall Corporation 101,400 2,471,625
Silicon Valley Group, Incorporated* 37,800 1,223,775
----------
5,030,400
Insurance - 1.77%
Lincoln National Corporation,
Incorporated 29,700 1,325,363
Integon Corporation 54,790 897,186
----------
2,222,549
</TABLE>
*Non-income producing
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
International Oil - 3.98%
Amoco Corporation 9,100 $ 581,263
Chevron Corporation 10,500 490,875
Exxon Corporation 8,600 656,825
Royal Dutch Petroleum Company 4,900 602,087
Texaco, Incorporated 39,300 2,677,313
------------
5,008,363
Paper - 2.72%
Stone Container Corporation 207,100 3,417,150
------------
Plastics - 1.99%
First Brands Corporation 54,800 2,507,100
------------
Railroads & Equipment - 0.84%
Trinity Industries, Incorporated 35,750 1,059,094
------------
Retail Trade - 8.53%
Charming Shoppes, Incorporated 462,400 1,329,400
Dillard Department Stores, Incorporated 115,300 3,127,512
Musicland Stores, Incorporated* 140,250 911,625
J.C. Penney Company, Incorporated 28,200 1,187,925
Sears, Roebuck and Company 18,500 629,000
Service Merchandise Company,
Incorporated* 257,100 1,381,912
TJX Companies, Incorporated 160,200 2,162,700
------------
10,730,074
Steel - 1.13%
Quanex Corporation 72,200 1,425,950
------------
Telecommunication Services - 4.10%
Tele-Communications, Incorporated* 141,200 2,400,400
Valassis Communications,
Incorporated* 199,200 2,763,900
------------
5,164,300
Telephone - 1.95%
American Telephone & Telegraph
Company 38,400 2,457,600
------------
Tobacco - 5.87%
Philip Morris Companies, Incorporated 43,400 3,667,300
RJR Nabisco Holdings Corporation 44,500 1,368,375
Universal Corporation 111,800 2,347,800
------------
7,383,475
Trucking & Freight - 4.82%
Consolidated Freightways,
Incorporated 181,800 4,226,850
Kirby Corporation* 111,500 1,839,750
------------
6,066,600
TOTAL COMMON STOCKS
(Cost $106,129,641) $115,121,142
------------
</TABLE>
REPURCHASE AGREEMENT - 8.52%
<TABLE>
<CAPTION>
Principal Maturity
Amount Amount
- ------------ ------------
<S> <C>
$10,720,000 Repurchase Agreement with State
Street Bank & Trust Company dated
10/31/95 at 5.80%, to be repurchased at
$10,721,727 on 11/01/95,
collateralized by $8,195,000 U.S.
Treasury Bond, 9.25% due 02/15/16
(valued at $10,937,597,
including interest) $ 10,720,000
------------
TOTAL INVESTMENTS
(Growth Fund) (Cost $116,849,641) $125,841,142
============
</TABLE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 91.11%
Aerospace - 0.93%
Northrop Grumman Corporation 15,500 $ 887,375
----------
Aluminum - 1.26%
Alcan Aluminium, Ltd 37,700 1,192,263
----------
Automobiles - 2.84%
Chrysler Corporation 26,068 1,345,760
Ford Motor Company 47,103 1,354,219
----------
2,699,979
Banking - 4.51%
Citicorp 24,000 1,557,000
J.P. Morgan & Company, Incorporated 21,700 1,673,613
Republic New York Corporation 18,000 1,055,250
----------
4,285,863
Broadcasting - 1.74%
Viacom, Incorporated* 33,000 1,650,000
----------
Business Services - 1.75%
First Data Corporation 15,000 991,875
Nokia Corporation, ADR 12,000 669,000
----------
1,660,875
Chemicals - 3.70%
The Dow Chemical Company 18,000 1,235,250
Morton International, Incorporated 41,000 1,250,500
Zeneca Group, PLC, ADR 18,300 1,031,662
----------
3,517,412
Computers & Business Equipment - 4.45%
DST Systems, Incorporated 2,000 42,000
Hewlett-Packard Company 17,200 1,593,150
International Business Machines
Corporation 16,000 1,556,000
Xerox Corporation 8,000 1,038,000
----------
4,229,150
Construction & Mining Equipment - 1.05%
Foster Wheeler Corporation 26,500 993,750
----------
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Domestic Oil - 1.93%
Unocal Corporation 70,000 $1,837,500
----------
Drugs & Health Care - 8.06%
Abbott Laboratories 30,000 1,192,500
Bristol-Myers Squibb Company 13,200 1,006,500
Johnson & Johnson 14,000 1,141,000
McKesson Corporation 30,000 1,432,500
Pfizer, Incorporated 32,200 1,847,475
Rhone Poulenc Rorer, Incorporated 22,000 1,036,750
----------
7,656,725
Electric Utilities - 2.64%
DPL, Incorporated 50,000 1,187,500
Pinnacle West Capital Corporation 48,000 1,320,000
----------
2,507,500
Electrical Equipment - 2.59%
General Electric Company 17,000 1,075,250
Hubbell, Incorporated 23,000 1,385,750
----------
2,461,000
Electronics - 1.82%
AMP, Incorporated 44,000 1,727,000
----------
Financial Services - 3.80%
Federal National Mortgage Association 8,900 933,387
Fleet Financial Group, Incorporated 44,000 1,705,000
State Street Boston Corporation 25,000 971,875
----------
3,610,262
Food & Beverages - 3.17%
General Mills,Incorporated 16,800 963,900
PepsiCo, Incorporated 16,000 844,000
Sara Lee Corporation 41,000 1,204,375
----------
3,012,275
ForestProducts - 0.92%
Georgia-Pacific Corporation 10,600 874,500
----------
Household Products - 2.48%
Colgate Palmolive Company 13,000 900,250
Procter & Gamble Company 18,000 1,458,000
----------
2,358,250
Industrial Machinery - 1.92%
Keystone International,Incorporated 35,000 778,750
York International Corporation 24,000 1,050,000
----------
1,828,750
Insurance - 4.47%
Chubb Corporation 19,300 1,734,588
General Re Corporation 11,700 1,695,037
Marsh & McLennan Companies 10,000 818,750
----------
4,248,375
International Oil - 4.79%
Amoco Corporation 25,700 1,641,588
Chevron Corporation 28,000 1,309,000
Exxon Corporation 21,000 1,603,875
----------
4,554,463
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Liquor - 1.38%
Anheuser-Busch Companies,Incorporated 19,900 $1,313,400
----------
Newspapers - 1.61%
Gannett, Incorporated 28,100 1,527,937
----------
Non-Ferrous Metals - 1.04%
Engelhard Corporation 39,825 990,647
----------
Paper - 5.11%
International Paper Company 50,000 1,850,000
Kimberly Clark Corporation 22,000 1,597,750
Minnesota Mining & Manufacturing Company 24,700 1,404,813
----------
4,852,563
Petroleum Services - 1.18%
Dresser Industries,Incorporated 54,000 1,120,500
----------
Photography - 0.49%
Eastman Kodak Company 7,500 469,687
----------
Plastics - 0.45%
Illinois Tool Works, Incorporated 7,400 430,125
----------
Pollution Control - 0.61%
Browning Ferris Industries, Incorporated 20,000 582,500
----------
Publishing - 1.45%
Dun & Bradstreet Corporation 23,000 1,374,250
----------
Real Estate - 1.41%
Post Properties, Incorporated 22,300 669,000
Storage USA, Incorporated 23,000 672,750
----------
1,341,750
Retail Trade - 4.49%
J.C.Penney Company, Incorporated 19,000 800,375
The May Department Stores Company 30,500 1,197,125
Rite Aid Corporation 40,000 1,080,000
Wal-Mart Stores, Incorporated 55,000 1,189,375
----------
4,266,875
Software - 1.81%
Policy Management Systems Corporation* 36,500 1,720,063
----------
Telephone - 8.38%
American Telephone & Telegraph Company 29,000 1,856,000
BCE, Incorporated 37,000 1,244,125
NYNEX Corporation 42,000 1,974,000
U.S. West, Incorporated 34,929 1,663,494
Vodafone Group PLC, ADR 30,000 1,226,250
----------
7,963,869
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Tires And Rubber - 0.88%
The Goodyear Tire and Rubber Company 22,000 $ 836,000
-----------
TOTAL COMMON STOCKS
(Cost $73,466,632) $86,583,433
-----------
PREFERRED STOCKS - 3.13%
Computers & Business Equipment - 1.34%
Ceridian Corporation 13,000 1,267,500
-----------
Drugs & Health Care - 1.18%
Beverly Enterprises, Incorporated 22,000 1,122,000
-----------
Real Estate - 0.61%
Security Capital Pacific 24,500 581,875
-----------
TOTAL PREFERRED STOCKS
(Cost $2,452,277) $ 2,971,375
-----------
<CAPTION>
Principal
Amount Value
--------- -----------
<S> <C> <C>
CONVERTIBLE BONDS - 2.14%
General Instrument Corporation,
5.00% due 06/15/00 $ 800,000 $ 804,000
Noble Affiliates, Incorporated,
4.25% due 01/11/03 1,300,000 1,228,500
-----------
TOTAL CONVERTIBLE BONDS
(Cost $2,303,673) $ 2,032,500
-----------
<CAPTION>
Principal Maturity
Amount Amount
---------- -----------
<S> <C>
REPURCHASE AGREEMENT -3.62%
$3,443,000 Repurchase Agreement with Shearson
Lehman dated 10/31/95 at 5.86%, to
be repurchased at $3,443,560 on 11/01/95,
collateralized by $3,290,000 U.S.
Treasury Note, 7.875% due 01/15/98
(valued at $3,595,073, including
interest) $ 3,443,000
-----------
TOTAL INVESTMENTS
(Growth & Income Fund) (Cost $81,665,582) $95,030,308
===========
International Growth & Income Fund
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 86.18%
Agricultural Machinery - 0.25%
Kvaerner 1,300 $ 51,775
-----------
Air Travel - 0.27%
Singapore Airlines 6,000 55,626
-----------
Aluminum - 0.25%
Sankyo Aluminium 10,000 52,104
-----------
Apparel & Textiles - 0.95%
Christian Dior 795 78,035
Kurabo Industries 20,000 68,039
Tomen Corporation 15,000 48,976
-----------
195,050
Auto Parts - 0.54%
Fuji Heavy Industries* 20,000 69,212
Nissan Diesel Motor* 10,000 42,035
-----------
111,247
Automobiles - 2.59%
Daimler Benz AG 110 53,023
Honda Motor Company 8,000 139,205
Mitsubishi Motor 10,000 83,289
Rolls Royce 18,000 43,826
Toyota Motor Company 6,000 111,442
Volkswagen AG 320 100,824
-----------
531,609
Banking - 12.66%
ABN AMRO Holdings N.V. 1,000 42,020
Asahi Bank, Ltd. 10,000 99,712
Barclays 3,000 35,217
Banco Intercontinental Espanol 720 62,411
Banco Popular Espanol SA 320 50,836
Credit Company France 1,100 54,661
Credit Local De France 650 51,454
CS Holdings AG 675 68,969
Dai Ichi Kangyo Bank 11,000 186,031
Daishi Bank 18,000 96,779
Daiwa Bank 23,000 137,152
Deutsche Bank AG 2,200 99,513
Development Bank Singapore 6,000 68,790
Deutsche Pfandbrief & Hypobk 1,340 52,359
Fukui Bank 10,000 47,021
Generale De Banque 230 74,388
Hokkaido Takushoku Bank, Ltd. 20,000 49,660
HSBC Holdings - GBP 4,300 63,973
HSBC Holdings - HKD 7,200 104,763
Hyakugo Bank 4,000 23,188
Industrial Bank Japan 5,000 136,370
Lloyds Bank 5,000 61,541
National Australia Bank, Ltd. 9,200 78,769
Nippon Credit Bank 15,000 58,801
Public Bank, BHD 59,000 104,486
The Royal Bank of Scotland Group 9,000 72,925
Sakura Bank 15,000 145,168
Sanwa Bank 5,000 85,048
Shiga Bank 8,000 46,923
Schweizerische Bankgesellschaft 40 43,337
Schweizerischer Bankverein 260 106,721
Societe Generale 753 86,231
Standard Chartered Bank 7,000 57,439
Yasuda Trust & Banking 10,000 44,675
-----------
2,597,331
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
BROADCASTING - 0.88%
Gakken Company* 7,000 $ 38,663
News Corporation 12,400 62,529
Pearson 4,000 39,747
TV Francaise 380 39,243
---------
180,182
BUILDING CONSTRUCTION - 0.25%
SXL Corporation 5,000 50,345
---------
BUSINESS SERVICES - 1.53%
Chubb Security 6,000 31,541
Eaux Cie Generale 1,018 94,616
Havas 400 27,729
Inchcape, PLC 3,000 14,822
Kawasho Corporation 12,000 42,231
South West Water 4,650 36,832
Toppan Printing Company 5,000 65,986
----------
313,757
CHEMICALS - 4.84%
Air Liquide 331 55,504
Allied Colloids 18,000 37,850
BOC Group 2,000 27,478
Ciba-Geigy AG 210 181,829
Daido Hoxan, Incorporated 8,000 54,353
Hoechst AG 400 105,058
Kumiai Chemical Industry Company 4,000 20,138
Mitsubishi Chemical 12,000 54,431
Mitsubishi Gas Chemical 20,000 87,199
Mitsui Petrochemical Industry 15,000 118,921
Mitsui Toatsu Chemicals 20,000 73,708
Rhone-Poulenc SA, Class A 2,420 52,754
Showa Denko K.K.* 25,000 73,317
Solvay SA 100 50,622
---------
993,162
COMPUTERS & BUSINESS EQUIPMENT - 0.37%
Ricoh Company 7,000 75,272
---------
CONGLOMERATES - 2.66%
Aker AS 2,000 23,446
Asatsu, Incorporated 1,000 34,508
BIC Corporation 300 28,466
BTR 12,000 63,747
CSR, Ltd. 17,500 55,854
Grand Metropolitan 9,000 62,324
Hanson 12,300 37,678
Kanematsu Corporation 20,000 68,234
Preussag AG 125 35,521
Tokai Rika Company 6,000 46,337
Tomkins 10,000 39,447
Tractebel International 135 49,447
U.S. Industries, Incorporated 90 1,350
---------
546,359
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
CONSTRUCTION MATERIALS - 0.84%
Holderbank Financier Glarus AG 45 $36,149
Lafarge 623 41,290
Tarmac 31,000 42,150
Toyo Construction Company 10,000 51,420
---------
171,009
CONSTRUCTION & MINING EQUIPMENT - 0.13%
Daito Trust Construction 3,000 26,394
---------
CONTAINERS & GLASS - 0.72%
Caradon, PLC 11,000 34,435
Central Glass Company* 10,000 31,771
Compagnie De Saint-Gobain 430 51,265
Nippon Sheet Glass 7,000 30,314
---------
147,785
DRUGS & HEALTH CARE - 5.50%
Chugai Pharmaceutical Company 6,000 54,783
Daiichi Pharmaceutical Company 6,000 83,875
Glaxo Wellcome 13,700 184,760
Hafslund Nycomed, Class B 2,500 69,857
Kaken Pharmaceutical 10,000 81,724
Kyowa Hakko Kogyo 3,000 27,831
Lion Corporation 10,000 55,526
Roche Holdings AG 16 116,269
Sandoz AG 215 177,446
Sanofi 1,182 75,390
Schering AG 1,000 69,764
SmithKline Beecham, Class A 6,500 67,877
Synthelabo 975 62,766
---------
1,127,868
ELECTRIC UTILITIES - 3.51%
Electrabel 435 97,552
Empresa Nacional De Electridad SA 1,500 74,598
Fuerzas Electricas De Cataluna SA, Series A 9,500 57,519
Hong Kong Electric 16,500 56,126
RWE AG 100 35,592
Scottish Hydro Electric, PLC 9,000 48,379
Shikoku Electric Power, Incorporated 5,100 119,155
Tohoku Electric Power Company 3,030 71,089
Veba AG 3,900 160,117
---------
720,127
ELECTRICAL EQUIPMENT - 4.88%
Alcatel Alsthom Cie Generale D'Electric 560 47,822
BBC Brown Boveri AG 20 23,201
BICC Group, PLC 5,000 20,830
Fuji Electric Company 15,000 72,291
General Electric Company 10,000 49,644
Hitachi, Ltd. 17,000 174,495
Mitsubishi Cable 6,000 30,324
NEC Corporation 12,000 158,366
Nissin Electric 8,000 53,101
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Electrical Equipment - continued
Siemens AG 255 $ 133,696
Sumitomo Electric Industries 6,000 69,212
Toshiba Plant Kensetsu Company 8,000 62,564
Yaskawa Electric Corporation 12,000 50,325
Yorkshire Electricity Group 4,000 56,063
----------
1,001,934
Electronics - 0.43%
Alps Electric Company, Ltd. 5,000 51,322
SGS Thomson Microelectronics, Incorporated* 800 36,891
----------
88,213
Financial Services - 0.57%
Daiwa Securities 10,000 117,308
----------
Food & Beverages - 4.00%
Danone 560 89,438
Guinness 8,000 64,126
Hillsdown Holdings 22,000 58,261
Itoham Foods, Incorporated 5,000 36,610
Japan Tobacco, Incorporated 10 85,439
Nestle SA 90 94,336
Nippon Flour Mills 6,000 28,037
Nippon Suisan Kaisha, Ltd.* 18,000 73,024
Orkla 1,200 58,391
Reckitt & Colman, PLC 5,400 57,458
Scottish & Newcastle Breweries 4,400 40,800
Snow Brand Milk Products Company, Ltd. 4,000 26,199
Southcorp Holdings, Ltd. 24,000 51,737
United Biscuits, PLC 13,000 56,213
----------
820,069
Forest Products - 0.34%
Sumitomo Forestry Company 5,000 70,385
----------
Oil & Gas Production - 0.45%
Elf Aquitaine 1,369 93,224
----------
Gas & Pipeline Utilities - 0.40%
British Gas, PLC 10,000 38,103
Osaka Gas Company 13,000 43,590
----------
81,693
Homebuilders - 0.78%
Bilfinger & Berger
Bauaktiengesellschaft AG 180 66,240
Bouygues 332 35,304
Sekisui House 5,000 57,676
----------
159,220
Household Appliances - 1.91%
Matsushita Electric Industrial
Company, Ltd. 10,000 141,747
Pioneer Electronic 5,000 76,739
Sony Corporation 3,000 134,904
Thorn Emi, PLC 1,700 39,590
----------
392,980
<CAPTION>
Shares Value
-------- ----------
<S> <C> <C>
Household Products - 0.83%
Erid Beghin Say 200 $ 33,619
Uni Charm Corporation 2,000 44,968
Unilever NV 700 91,704
----------
170,291
Industrial Machinery - 4.14%
Daikin Industries 8,000 63,737
Ebara Corporation 4,000 55,526
Fischer AG 30 41,487
Glynwed International, PLC 5,000 26,640
Ishikawajima-Harima Heavy Industries 25,000 100,689
Kawasaki Heavy Industry 6,000 25,104
Kitz Corporation 10,000 43,013
M.A.N. AG 230 66,667
Minebea Company 10,000 81,138
NSK 7,000 41,947
Okamura Corporation 5,000 35,192
Sembawang Corporation, Ltd. 9,000 43,631
Sidel 100 34,723
Toshiba Corporation 10,000 72,438
Toyo Umpanki Company 5,000 17,596
Tsubakimoto Chain 4,000 18,769
Valeo 850 38,397
Vickers 11,000 43,652
----------
850,346
Insurance - 4.77%
Abbey National 7,000 59,265
Allianz AG Holdings 50 92,533
AXA Company 1,350 74,980
Chuo Trust & Banking 7,000 61,244
CIC Union Europe 400 27,402
Compagnie Financiere Richemont AG 30 41,751
Fortis AG 380 40,771
Guardian Royal Exchange 23,000 83,273
International Nederlanden 660 39,362
Munchener Ruckvers 80 166,070
Schweiz Ruckversicherungs 70 76,579
Tokio Marine & Fire Insurance Company 10,000 102,644
Willis Corroon Group, PLC 21,400 42,631
Zurich Versicherung 250 71,567
----------
980,072
International Oil - 1.54%
The British Petroleum Company 9,000 66,166
Cosmo Oil Company 20,000 97,756
Petrofina SA 170 52,751
Shell Transport & Trading Company 8,500 99,447
----------
316,120
Investment Companies - 0.93%
Marubeni Corporation 13,000 63,288
Nomura Securities 7,000 127,963
----------
191,251
Leisure Time - 0.49%
Forte 12,000 47,810
Granada Group, PLC 5,000 53,518
----------
101,328
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial sttements.
32
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - CONTINUED
(showing percentage of total value of investments)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
MINING - 0.26%
DSM NV 710 $ 53,189
--------
MISCELLANEOUS - 0.54%
Renault 1,900 59,447
Seita 1,500 52,146
--------
111,593
NON-FERROUS METALS - 1.16%
Alusuisse-Lonza Holding, Ltd. 35 26,759
Mitsubishi Material 15,000 67,745
RTZ Corporation, PLC 4,000 55,399
Western Mining Corporation Holdings 13,700 87,869
--------
237,772
PAPER - 0.52%
Nippon Paper Industries 10,000 68,723
Rexam, PLC 6,000 38,419
--------
107,142
PETROLEUM SERVICES - 3.17%
Broken Hill Proprietary Company, Ltd. 8,560 115,933
Norsk Hydro AS 4,200 167,272
Repsol SA 2,080 62,116
Royal Dutch Petroleum Company 1,420 176,308
Total, SA "B" Shares 1,740 107,529
Toyoda Machine Works, Ltd. 3,000 22,025
--------
651,183
PUBLISHING - 1.08%
Citic Pacific, Ltd. 23,000 71,841
Elsevier NV 4,460 57,665
Lagardere Groupe 2,425 45,276
Reuters Holdings 5,000 46,482
--------
221,264
RAILROADS & EQUIPMENT - 1.14%
East Japan Railway Company 17 80,268
Nagoya Railroad Company 8,000 37,617
Tobu Railway Company 10,000 56,601
Zexel Corporation 10,000 59,827
--------
234,313
REAL ESTATE - 1.85%
Cheung Kong Holdings 31,000 174,813
Mepc 6,000 35,668
Mitsui Fudosan Company 5,000 57,188
Tokyu Land Corporation 28,000 112,772
--------
380,441
RETAIL GROCERY - 0.58%
Maruetsu, Incorporated 8,000 61,782
Sainsbury 8,600 57,583
--------
119,365
RETAIL TRADE - 3.90%
Argos 6,000 48,474
Argyll Group 11,200 56,930
Ava Allgemeine Handles-Der Verbr AG 130 49,318
Carrefour 100 58,731
Castorama Dubois 165 26,757
Daiei, Incorporated 5,000 52,300
Douglas Holdings AG 800 29,270
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
RETAIL TRADE - CONTINUED
Familymart Company 1,000 $ 42,133
Izumiya Company 3,000 46,043
Kingfisher 7,000 52,624
Mitsukoshi, Ltd. 15,000 118,921
Nagasakiya Company* 10,000 37,538
Promodes 360 87,679
Sears, PLC 32,000 51,352
Takashimaya Company, Ltd. 3,000 41,644
--------
799,714
STEEL - 2.35%
Arbed SA* 300 29,855
Daido Steel Company 10,000 44,479
Nisshin Steel Company 20,000 74,099
NKK Company 25,000 60,365
Sumitomo Metal Industry 75,000 203,089
Thyssen AG 200 35,990
Usinor Sacilor* 2,300 34,335
--------
482,212
TELECOMMUNICATION SERVICES - 0.25%
Cable and Wireless 8,000 52,237
--------
TELEPHONE - 1.70%
British Telecommunications 23,500 139,700
Hong Kong Telecommunications, Ltd. 38,800 67,747
Kon PTT Nederland 1,100 38,693
Telekom Malaysia 9,000 64,463
Vodafone Group 9,400 38,863
--------
349,466
TIRES AND RUBBER - 0.47%
Yokohama Rubber Company 18,000 95,547
--------
TOBACCO - 0.44%
B.A.T. Industries 11,000 90,261
--------
TOYS, AMUSEMENTS & SPORTING GOODS - 0.45%
Casio Computer Company 6,000 52,495
Mizuno Company 5,000 40,227
--------
92,722
TRUCKING & FREIGHT - 1.12%
Nippon Express Company 10,000 81,138
Nippon Road Company 10,000 82,115
Peninsular & Oriental Steam Navigation Company 4,100 31,244
TNT, Ltd.* 25,000 35,230
--------
229,727
TOTAL COMMON STOCKS
(Cost $18,017,806) $17,689,584
-----------
PREFERRED STOCKS - 0.27%
Electrical Equipment - 0.27%
Legrand 500 55,009
------
TOTAL PREFERRED STOCKS
(Cost $46,816) $ 55,009
--------
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - Continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
WARRANTS - 0.05%*
Construction Materials - 0.00%
Holderbank Financiere Glarus AG
(Expiration date 12/20/95; Strike
price CHF 640) 225 $ 268
----------
Non-Ferrous Metals - 0.05%
Maeda Corporation (Expiration date
02/05/97; Strike price $856) 10 10,563
----------
TOTAL WARRANTS
(Cost $15,875) $ 10,831
----------
<CAPTION>
Principal
Amount Value
--------------- ----------
<S> <C> <C>
CONVERTIBLE BONDS - 1.72%
Bot Cayman Finance,
4.25% due 03/31/49 (Yen) 30,000,000 $ 353,390
----------
TOTAL CONVERTIBLE BONDS
(Cost $391,691) $ 353,390
----------
CORPORATE BONDS - 0.23%
Treuhandanstalt,
7.75% due 10/01/02 DEM 60,000 46,313
----------
TOTAL CORPORATE BONDS
(Cost $45,129) $ 46,313
----------
FOREIGN GOVERNMENT OBLIGATIONS - 8.23%
Commonwealth of Australia - 0.23%
8.75%, due 01/15/01 AUD 60,000 46,425
----------
Government of Canada - 1.55%
8.75%, due 12/01/05 CAD 250,000 202,480
9.75%, due 06/01/01 CAD 140,000 116,536
----------
319,016
Kingdom of Denmark - 0.33%
7.00%, due 12/15/04 DKK 100,000 17,376
8.00%, due 11/15/01 DKK 260,000 49,345
----------
66,721
Government of France - 0.70%
7.50%, due 04/25/05 FRF 400,000 82,968
8.50%, due 04/25/03 FRF 272,000 60,089
----------
143,057
Government of Germany - 2.08%
7.375%, due 01/03/05 DEM 180,000 135,332
9.00%, due 10/20/00 DEM 360,000 292,072
----------
427,404
Government of Great Britain - 1.00%
United Kingdom Treasury,
7.00%, due 11/06/01 (Pounds) 80,000 122,806
United Kingdom Treasury,
8.50%, due 12/07/05 (Pounds) 50,000 82,065
----------
204,871
Government of Japan - 1.15%
4.80%, due 12/20/02 (Yen) 21,300,000 $ 236,935
----------
Government of Netherland - 1.19%
6.75%, due 11/15/05 NLG 380,000 244,695
----------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS (Cost $1,653,812) $1,689,124
----------
<CAPTION>
Principal Maturity
Amount Amount
- --------- ----------
<S> <C>
REPURCHASE AGREEMENT - 3.32%
$681,000 Repurchase Agreement with State
Street Bank & Trust Company dated
10/31/95 at 5.25%, to be repurchase
at $681,099 on 11/01/95, collateralized
by $655,000 U.S. Treasury Note, 7.125%
due 02/29/00 (valued at $694,957,
including interest) $ 681,000
-----------
TOTAL INVESTMENTS
(International Growth & Income Fund)
(Cost $20,852,129) $20,525,251
===========
ASSET ALLOCATION FUND
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 47.24%
Aerospace - 2.60%
Lockheed Martin Corporation 4,600 $ 313,375
McDonnell Douglas Corporation 19,400 1,585,950
Northrop Grumman Corporation 16,900 967,525
----------
2,866,850
Auto Parts - 0.62%
Lear Seating Corporation* 24,600 682,650
----------
Automobiles - 2.04%
Ford Motor Company 62,200 1,788,250
General Motors Corporation 10,600 463,750
----------
2,252,000
Banking - 2.52%
BankAmerica Corporation 10,000 575,000
Nationsbank Corporation 24,200 1,591,150
Shawmut National Corporation 18,000 609,750
----------
2,775,900
Chemicals - 0.85%
Geon Company 37,700 937,787
----------
Computers & Business Equipment - 1.29%
Compaq Computer Corporation* 18,100 1,009,075
Storage Technology Corporation* 16,600 408,775
----------
1,417,850
Containers & Glass - 1.00%
Owens-Illinois, Incorporated* 87,400 1,103,425
----------
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ----------
<S> <C> <C>
Domestic Oil - 1.58%
Ashland, Incorporated 14,900 $ 471,213
Atlantic Richfield Company 6,900 736,575
Mobil Corporation 5,300 533,975
----------
1,741,763
Drugs & Health Care - 2.17%
Columbia/HCA Healthcare Corporation 12,000 589,500
Tenet Healthcare Corporation* 100,600 1,798,225
----------
2,387,725
Electric Utilities - 2.24%
CMS Energy Corporation 17,400 480,675
Entergy Corporation 29,900 852,150
Long Island Lighting Company 66,500 1,130,500
----------
2,463,325
Electronics - 0.24%
Apple Computer, Incorporated 7,300 265,081
----------
Financial Services - 3.40%
Greenpoint Financial Corporation 44,500 1,201,500
Partner Re Holding 51,600 1,373,850
Travelers Group, Incorporated 23,200 1,171,600
----------
3,746,950
Food & Beverages - 1.65%
Chiquita Brands International,
Incorporated 112,000 1,820,000
----------
Forest Products - 1.56%
Georgia-Pacific Corporation 20,800 1,716,000
----------
Homebuilders - 1.05%
Centex Corporation 20,000 655,000
Lennar Corporation 22,000 503,250
----------
1,158,250
Household Appliances - 0.37%
Sunbeam Corporation 27,400 411,000
----------
Insurance - 1.82%
Integon Corporation 44,290 725,249
Lincoln National Corporation,
Incorporated 26,400 1,178,100
USLIFE Corporation 3,750 106,875
----------
2,010,224
International Oil - 1.98%
Royal Dutch Petroleum Company 8,600 1,056,725
Texaco, Incorporated 16,500 1,124,062
----------
2,180,787
Investment Companies - 0.24%
Lehman Brothers Holdings,
Incorporated 12,100 263,175
----------
Leisure Time - 1.64%
Brunswick Corporation 51,200 998,400
Outboard Marine Corporation 39,000 809,250
----------
1,807,650
<CAPTION>
Shares Value
-------- ----------
<S> <C> <C>
Liquor - 1.11%
Anheuser-Busch Companies,
Incorporated 18,600 $1,227,600
----------
Paper - 2.23%
Champion International Corporation 17,100 914,850
Stone Container Corporation 93,700 1,546,050
----------
2,460,900
Petroleum Services - 1.03%
Tosco Corporation 32,800 1,131,600
----------
Retail Grocery - 0.89%
Fleming Companies, Incorporated 43,300 979,663
----------
Retail Trade - 3.39%
Melville Corporation 19,500 624,000
J.C. Penney Company, Incorporated 28,300 1,192,137
Sears, Roebuck and Company 23,200 788,800
Supervalu, Incorporated 36,700 1,128,525
----------
3,733,462
Telecommunication Services - 1.75%
Tele-Communications, Incorporated* 56,700 963,900
Valassis Communications,
Incorporated* 69,400 962,925
----------
1,926,825
Tires and Rubber - 0.97%
The Goodyear Tire and Rubber
Company 28,000 1,064,000
----------
Tobacco - 3.75%
Philip Morris Companies, Incorporated 22,000 1,859,000
RJR Nabisco Holdings Corporation 49,540 1,523,355
Universal Corporation 35,800 751,800
----------
4,134,155
Trucking & Freight - 1.26%
Consolidated Freightways, Incorporated 59,700 1,388,025
----------
TOTAL COMMON STOCKS
(Cost $45,173,098) $52,054,622
----------
<CAPTION>
Principal
Amount Value
---------- ----------
<S> <C> <C>
CORPORATE BONDS - 13.39%
Electric Utilities - 0.26%
Central Maine Power Company,
7.375% due 01/01/99 $ 290,000 $ 290,208
----------
Finance & Banking - 8.00%
Auburn Hills Trust,
12.00% due 05/01/20 250,000 374,840
BankAmerica Corporation,
7.75% due 07/15/02 400,000 426,004
BanPonce Financial Corporation,
5.17% due 07/15/96 1,000,000 992,300
</TABLE>
* Non-income producing
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
FINANCE & BANKING - continued
Capital One Financial,
8.625% due 01/15/97 $ 900,000 $ 925,245
Chrysler Financial Corporation,
10.34% due 05/15/08 600,000 612,738
Comdisco, Incorporated,
7.33% due 03/06/97 500,000 506,805
Continental Bank, N.A.,
11.25% due 07/01/01 700,000 782,565
Continental Bank, N.A.,
12.50% due 04/01/01 450,000 571,563
Corporacion Andina De Fomento,
7.375% due 07/21/00 110,000 110,350
Corporation Andina De Fomento,
7.25% due 04/30/98 250,000 249,493
Countrywide Funding Corporation,
8.43% due 11/16/99 500,000 535,715
Financiera Energetica Nacional,
6.625% due 12/13/96 810,000 803,925
Ford Motor Credit Company,
6.80% due 08/15/97 800,000 809,400
General Motors Acceptance
Corporation, 7.625% due 03/09/98 575,000 593,274
General Motors Acceptance
Corporation, 7.50% due 11/04/97 175,000 179,525
Household Finance Corporation,
7.25% due 08/19/06 98,978 100,183
Security Pacific Corporation,
11.50% due 11/15/00 200,000 242,610
-----------
8,816,535
PETROLEUM SERVICES - 0.03%
Empresa Col De Petroleos,
7.25% due 07/08/98 30,000 29,400
-----------
INDUSTRIALS - 2.53%
Comdisco, Incorporated,
9.75% due 01/15/97 250,000 260,333
News America Holdings,
Incorporated, 7.50% due 03/01/00 550,000 569,382
News America Holdings,
Incorporated, 9.125% due 10/15/99 351,000 383,752
RJR Nabisco, Incorporated,
8.625% due 12/01/02 250,000 256,853
RJR Nabisco, Incorporated,
8.00% due 07/15/01 220,000 221,815
Tenneco, Incorporated,
10.00% due 08/01/98 1,000,000 1,092,730
-----------
2,784,865
OTHER - 1.88%
British Aerospace Finance,
Incorporated, 7.55% due 05/15/97 350,000 355,411
Time Warner, Incorporated,
7.975% due 08/15/04 125,000 128,411
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
OTHER - continued
Time Warner, Incorporated,
7.95% due 02/01/00 $1,525,000 $ 1,585,344
-----------
2,069,166
TELEPHONE - 0.69%
Tele-Communications, Incorporated,
7.00% due 08/04/97 750,000 757,762
-----------
TOTAL CORPORATE BONDS
(Cost $14,757,681) $14,747,936
-----------
U.S. TREASURY OBLIGATIONS - 7.26%
U.S. TREASURY STRIPS - 4.82%
Principal Only, due 11/15/04**** 5,670,000 3,275,276
Principal Only, due 08/15/09 1,500,000 628,875
Principal Only, due 05/15/20 2,480,000 499,869
Principal Only, due 08/15/20 4,600,000 912,180
-----------
5,316,200
U.S. TREASURY BONDS - 0.76%
8.00%, due 11/15/21 150,000 179,297
8.125%, due 08/15/21 130,000 157,218
11.125%, due 08/15/03 380,000 499,639
-----------
836,154
U.S TREASURY NOTES - 1.68%
6.25%, due 02/15/03 1,060,000 1,078,720
7.375%, due 11/15/97 520,000 536,983
7.75%, due 01/31/00 220,000 235,778
-----------
1,851,481
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $7,253,575) $ 8,003,835
-----------
U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS - 15.52%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 3.99%
6.125%, due 09/20/00 370,000 371,369
6.50%, due 11/15/18 800,000 790,744
7.50%, due 01/01/99 TBA** 2,000,000 2,021,860
8.20%, due 01/16/98 350,000 360,007
9.00%, due 01/01/05 - 11/01/05 809,026 846,694
-----------
4,390,674
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.57%
Zero coupon, due 01/25/24 - Remic 800,000 594,744
6.11%, due 09/20/00 330,000 331,036
7.00%, due 12/01/23 612,709 607,538
8.79%, due 01/30/02 190,000 193,435
-----------
1,726,753
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 9.96%
7.00%, due 01/01/99 TBA** 2,000,000 1,986,240
7.50%, due 01/01/99 TBA** 1,000,000 1,013,120
8.00%, due 01/01/99 TBA** 5,000,000 5,145,300
9.00%, due 07/15/16 - 01/15/22 1,733,137 1,829,321
9.50%, due 05/15/25 928,888 1,003,997
-----------
10,977,978
</TABLE>
** Purchased on a forward commitment (Note 2).
**** At October 31, 1995 a portion of this security was pledged to cover margin
requirements for open futures contracts.
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS
(Cost $16,876,845) $17,095,405
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
FIXED INCOME - OTHER - 4.56%
Guaranteed - 0.47%
Resolution Funding Corporation,
zero coupon due 01/15/21 $ 390,000 $ 72,649
Resolution Funding Corporation,
zero coupon due 10/15/20 2,370,000 447,835
---------
520,484
Miscellaneous Asset Backed Securities - 3.09%
Case Equipment Loan Trust,
7.30% due 03/15/02 541,085 550,343
Discover Card Trust, Series 1991,
Class A, 7.20% due 04/16/98 580,000 580,539
General Motors Acceptance
Corporation, 6.30% due 06/15/99 283,601 284,398
General Motors Acceptance Corporation
Grantor Trust, Series 1995,
Class A, 7.15% due 03/15/00 445,316 451,715
Honda Auto Receivables Grantor
Trust, 6.20% due 12/15/00 242,505 243,131
Premier Auto Trust, Series 1995,
Class A4, 7.85% due 02/04/98 950,000 973,151
Premier Auto Trust, Series 1994,
Class A3, 4.75% due 02/02/00 60,000 59,306
Premier Auto Trust, Series 933,
Class A3, 4.90% due 12/15/98 208,851 206,762
Premier Auto Trust, Series 1995
Class A5, 7.90% due 05/04/99 50,000 51,640
----------
3,400,985
Other Collaterized Mortgage Obligations - 1.00%
Sears Credit Account Master Trust, Series
1995, Class A, 7.00% due 10/15/04 300,000 308,904
Standard Credit Card Master Trust, Series
1995, Class A, 7.85% due 02/07/02 510,000 540,121
Standard Credit Card Master Trust, Series
1994, Class A, 8.25% due 11/07/03 230,000 251,776
----------
1,100,801
TOTAL FIXED INCOME - OTHER
(Cost $4,942,449) $5,022,270
----------
FOREIGN BONDS - 0.71%
Province of Quebec, Canada,
13.25% due 09/15/14 500,000 631,010
Republic of Columbia,
9.25% due 02/03/00 150,000 150,889
----------
781,899
TOTAL FOREIGN BONDS
(Cost $782,723) $ 781,899
----------
***
REPURCHASE AGREEMENT - 11.32%****
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Amount
--------- -----------
<S> <C>
$12,472,000 Repurchase Agreement with State
Street Bank & Trust Company dated
10/31/95 at 5.80%, to be repurchased
at $12,474,009 on 11/01/95, collateralized
by $9,535,000 U.S. Treasury Bond,
9.25% due 02/15/16 (valued at
$12,726,051, including interest) $ 12,472,000
------------
TOTAL INVESTMENTS
(Asset Allocation Fund) (Cost $102,258,371) $110,177,967
============
Strategic Income Fund
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ---------
<S> <C> <C>
CORPORATE BONDS - 47.38%
Business Services - 1.99%
Borg-Warner Security Corporation,
9.125% due 05/01/03 $ 500,000 $ 430,000
Katz Corporation,
12.75% due 11/15/02 500,000 535,000
---------
965,000
Drug & Health Care - 1.13%
Dade International, Incorporated,
Series B, 13.00% due 02/01/05 500,000 547,500
---------
Finance & Banking - 8.58%
Empress River Casino Finance
Corporation, 10.75% due 04/01/02 500,000 502,500
Foamex Capital Corporation,
11.875% due 10/01/04 500,000 497,500
Indah Kiat International Finance
Company, 11.375% due 06/15/99 500,000 521,250
Paine Webber Group, Incorporated,
6.30% due 02/15/96 1,400,000 1,399,770
Trump Taj Mahal Funding, Incorporated,
zero coupon due 11/15/99 509,875 433,394
United States Banknote Corporation,
11.625% due 08/01/02 500,000 380,000
Venture Holdings Trust,
9.75% due 04/01/04 500,000 435,000
----------
4,169,414
Food & Beverages - 0.50%
Flagstar Corporation,
10.75% due 09/15/01 260,000 240,500
----------
Food Stores - 0.74%
Penn Traffic Company,
9.625% due 04/15/05 500,000 360,000
----------
Gas Exploration - 1.02%
Petro PSC Properties,
12.50% due 06/01/02 500,000 495,000
----------
</TABLE>
*** At October 31, 1995 a portion of this security was pledged to cover forward
commitments purchased.
**** At October 31, 1995 a portion of this security was pledged to cover margin
requirements for open futures contracts.
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
General Obligation - 0.45%
United States Leasing, International,
8.45% due 01/25/05 $200,000 $220,018
----------
Hotels & Restaurants - 0.26%
Family Restaurants, Incorporated,
9.75% due 02/01/02 250,000 125,000
----------
Industrials - 11.35%
American Safety Razor Company,
Series A, 9.875% due 08/01/05 500,000 501,250
Berry Plastics Corporation,
12.25% due 04/15/04 650,000 684,125
Consolidated Cigar Corporation,
10.50% due 03/01/03 550,000 555,500
Harris Chemical, Incorporated,
Step-up to 10.25% due 07/15/01 500,000 447,500
Jordan Industries, Incorporated,
10.375% due 08/01/03 450,000 405,000
Marcus Cable Company,
14.25% due 12/15/05 750,000 445,312
Pathmark Stores, Incorporated,
9.625% due 05/01/03 430,000 425,700
Plastic Specialties & Technologies,
Incorporated, 11.25% due 12/01/03 500,000 455,000
Renco Metals, Incorporated,
12.00% due 07/15/00 500,000 542,500
Revlon Worldwide Corporation,
Series B, zero coupon due 03/15/98 500,000 372,500
Specialty Equipment Companies,
Incorporated, 11.375% due 12/01/03 250,000 257,500
Terex Corporation,
13.75% due 05/15/02 500,000 422,500
----------
5,514,387
Leisure Time - 3.01%
Bally's Grand, Incorporated,
10.375% due 12/15/03 500,000 498,750
Bally's Park Place, Incorporated,
9.25% due 03/15/04 500,000 492,500
Hollywood Casino, Incorporated,
12.75% due 11/01/03 500,000 472,500
----------
1,463,750
Other - 8.84%
Decorative Home Accents,
Incorporated, 13.00% due 06/30/02 500,000 500,000
Herff Jones, Incorporated,
11.00% due 08/15/05 500,000 521,250
Hines Horticulture, Incorporated,
11.75% due 10/05/05 500,000 511,250
Outdoor Systems, Incorporated,
10.75% due 08/15/03 500,000 477,500
RBX Corporation,
11.25% due 10/15/05 500,000 497,500
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
Other - continued
SC International Services,
Incorporated, 13.00% due 10/01/05 $ 500,000 $ 515,000
Samsonite Corporation,
11.125% due 07/15/05 500,000 480,000
The Selmer Company, Incorporated,
11.00% due 05/15/05 500,000 492,500
Williamhouse Regency,
Incorporated, 11.50% due 06/15/05 300,000 297,000
-----------
4,292,000
Other Utilities - 1.69%
Waters Corporation, Series B,
12.75% due 09/30/04 750,000 821,250
-----------
Paper - 0.49%
Crown Paper Company,
11.00% due 09/01/05 250,000 238,750
-----------
Retail Trade - 2.78%
Apparel Retailers, Incorporated,
Series B, Step-up to 12.75%
due 08/15/05 1,000,000 610,000
Cole National Group, Incorporated,
11.25% due 10/01/01 500,000 495,000
Finlay Fine Jewerly Corporation,
10.625% due 05/01/03 250,000 246,875
-----------
1,351,875
Telephone - 3.01%
In Flight Phone Corporation,
Step-up to 14.00% due 05/15/02 1,000,000 390,000
A Plus Communications,
Incorporated, 11.875% due 11/01/05 500,000 503,750
Telex Communications, Incorporated,
12.00% due 07/15/04 550,000 569,250
-----------
1,463,000
Telecommunication Services - 1.54%
Adelphia Communications
Corporation, 12.50% due 05/15/02 500,000 487,500
Wireless One, Incorporated,
13.00% due 10/15/03 250,000 259,375
-----------
746,875
TOTAL CORPORATE BONDS
(Cost $23,568,299) $23,014,319
-----------
U.S. TREASURY OBLIGATIONS - 3.36%
U.S. Treasury Bonds - 0.53%
8.875%, due 08/15/17 200,000 257,032
-----------
U.S. Treasury Notes - 2.83%
6.75%, due 04/30/00 500,000 518,125
7.75%, due 01/31/00 800,000 857,376
-----------
1,375,501
TOTAL U.S. TREASURY
OBLIGATIONS (Cost $1,554,376) $ 1,632,533
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS - 10.97%
Federal Home Loan Mortgage Corporation - 1.59%
8.50%, due 05/01/08 $ 742,001 $ 771,265
-----------
Federal National Mortgage Association - 9.38%
6.50%, due 09/01/10 TBA** 1,005,000 996,829
6.50%, due 09/01/25 TBA** 2,500,000 2,425,000
7.00%, due 09/01/25 TBA** 837,500 830,432
7.52%, due 08/26/05 300,000 306,570
-----------
4,558,831
TOTAL U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS
(Cost $5,292,100) $ 5,330,096
-----------
FOREIGN GOVERNMENT OBLIGATIONS - 26.85%
Republic of Argentina - 4.58%
6.812%, due 03/31/05 3,750,000 2,226,563
-----------
Kingdom of Belgium - 0.21%
6.50%, due 03/31/05 BEF 3,000,000 100,387
-----------
Federal Republic of Brazil - 5.21%
4.00%, due 04/15/14 $1,820,700 924,005
4.25%, due 04/15/24 1,500,000 727,502
6.00%, due 09/15/13 750,000 382,500
6.812%, due 04/15/06 750,000 496,875
-----------
2,530,882
National Republic of Bulgaria - 2.57%
2.00%, due 07/28/12 4,500,000 1,248,750
-----------
Government of Canada - 0.37%
6.25%, due 02/01/98 CAD 76,000 56,299
9.00%, due 12/01/04 CAD 152,000 124,207
-----------
180,506
Government of Costa Rica - 0.33%
Series B, 6.25% due 05/21/15 $ 300,000 157,500
-----------
Kingdom of Denmark - 0.19%
7.00%, due 12/15/04 DKK 170,000 29,539
9.00%, due 11/15/98 DKK 310,000 60,712
-----------
90,251
Republic of Ecuador - 0.51%
6.812%, due 02/27/15 $ 750,000 247,500
-----------
Government of France - 1.31%
7.50%, due 04/25/05 FRF 2,190,000 454,248
8.00%, due 05/12/98 FRF 844,000 179,963
-----------
634,211
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
Federal Republic of Germany - 3.20%
6.875%, due 05/12/05 DEM 1,018,000 $ 742,599
7.375%, due 01/03/05 DEM 1,080,000 811,995
-----------
1,554,594
Republic of Italy - 0.70%
9.50%, due 12/01/97 ITL 405,000,000 247,421
9.50%, due 01/01/05 ITL 170,000,000 94,097
-----------
341,518
Netherland Government - 0.55%
7.00%, due 06/15/05 NLG 180,000 118,247
6.25%, due 07/15/98 NLG 230,000 151,020
-----------
269,267
Government of Mexico - 2.41%
Mexico United States Rights,
0% due 12/31/19 $2,000,000 0
Series B, 6.25% due 12/31/19 2,000,000 1,170,000
-----------
1,170,000
Government of Poland - 2.70%
2.75%, due 10/27/24 750,000 347,813
3.75%, due 10/27/14 1,500,000 963,750
-----------
1,311,563
Government of Spain - 0.27%
10.00%, due 02/28/05 ESP 3,310,000 25,614
11.45%, due 08/30/98 ESP 12,630,000 106,365
-----------
131,979
Government of United Kingdom - 1.74%
Great British Treasury,
7.00% due 11/06/01 POUND 550,000 844,293
-----------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS (Cost $13,244,263) $13,039,764
-----------
<CAPTION>
Shares Value
------ ------
<S> <C> <C>
WARRANTS - 0.01%*
BPC Holdings Corporation (Expiration
date 04/15/04; strike price $18.797) 500 $6,250
------
TOTAL WARRANTS (Cost $0) $6,250
------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Amount
- ----------- ----------
<S> <C>
REPURCHASE AGREEMENT - 11.43%***
$5,554,000 Repurchase Agreement with J.P. Morgan dated
10/31/95 at 5.85%, to be repurchased at
$5,554,903 on 11/01/95, collateralized by
$3,838,000 U.S. Treasury Bond, 12.00% due
05/15/05 (valued at $5,877,355, including
interest) $ 5,554,000
-----------
TOTAL INVESTMENTS
(Strategic Income Fund) (Cost $49,213,038) $48,576,962
===========
</TABLE>
* Non-income producing
** Purchased on a forward commitment (Note 2).
*** At October 31, 1995 a portion of this security was pledged to cover forward
commitments purchased.
The accompany notes are an integal part of the financial statements.
39
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Investment Quality Bond Fund
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
CORPORATE BONDS - 34.65%
Drug & Health Care - 0.27%
OrNda Healthcorp, 11.375%, 08/15/04 $ 50,000 $ 56,000
Electric Utilities - 2.93%
Cincinnati Gas & Electric Company,
6.90% due 06/01/25 200,000 204,022
The Cleveland Electric Illuminating
Company, 9.50% due 05/15/05 25,000 25,000
Rochester Gas & Electric
Corporation, 8.25% due 03/15/02 100,000 107,394
Virginia Electric & Power Company,
9.375% due 06/01/98 262,000 282,213
----------
618,629
Finance & Banking - 15.93%
American General Finance
Corporation, 8.00% due 02/15/05 230,000 243,860
Associates Corporation of North
America, 6.95% due 08/01/02 320,000 328,502
BankAmerica Corporation,
9.50% due 04/01/01 114,000 129,477
Beneficial Corporation,
8.40% due 05/15/08 75,000 85,615
Beneficial Corporation,
8.90% due 06/06/01 30,000 33,417
Comerica, Incorporated,
7.125% due 12/01/13 175,000 169,794
Commercial Credit Group,
Incorporated, 10.00% due 05/01/99 50,000 55,846
First National Bank of Boston,
8.00% due 09/15/04 225,000 242,860
First Union Corporation,
7.50% due 04/15/35 300,000 320,013
General Motors Acceptance
Corporation, 7.00% due 09/15/02 200,000 203,716
General Motors Acceptance
Corporation, 6.00% due 01/11/99 150,000 148,929
International Lease Finance
Corporation, 7.50% due 03/01/99 200,000 207,522
NBD Bancorp, 8.25% due 11/01/24 300,000 349,480
Norwest Corporation, 6.00% due 03/15/00 100,000 98,835
Republic New York Corporation,
9.75% due 12/01/00 155,000 176,323
Republic New York Corporation,
9.70% due 02/01/09 100,000 124,318
Texaco Capital, Incorporated,
8.93% due 07/23/01 60,000 67,336
United Bankshares, Incorporated,
8.625% due 04/15/98 200,000 210,494
Wells Fargo & Company,
8.75% due 05/01/02 150,000 166,518
----------
3,362,855
Food Stores - 0.10%
Big V Supermarkets, Incorporated,
11.00% due 02/15/04 $ 25,000 $ 20,375
----------
Forest Products - 1.09%
Boise Cascade Corporation,
9.85% due 06/15/02 200,000 229,348
----------
Hotels & Restaurants - 0.23%
Hammons Hotels,
8.875% due 02/15/04 50,000 48,750
----------
Industrials - 6.96%
Allied-Signal, Incorporated
9.875% due 06/01/02 100,000 117,334
Amoco Canada Petroleum Company,
Ltd., 7.95% due 10/01/22 100,000 109,731
Armco, Incorporated,
9.375% due 11/01/00 50,000 49,250
Cablevision Industries Corporation,
9.25% due 04/01/08 25,000 26,625
Cincinnati Milacron, Incorporated,
7.875% due 05/15/00 130,000 132,113
Coastal Corporation,
8.75% due 05/15/99 400,000 427,020
Container Corporation of America,
9.75% due 04/01/03 50,000 50,375
Fort Howard Corporation,
9.25% due 03/15/01 50,000 49,625
General Re Corporation,
9.00% due 09/12/09 100,000 119,435
GS Technologies , Incorporated,
12.25% due 10/01/05 50,000 50,750
Interlake Corporation,
12.00% due 11/15/01 25,000 24,750
K & F Industries, Incorporated,
11.875% due 12/01/03 50,000 53,000
Monsanto Company,
8.875% due 02/06/98 140,000 148,443
Portola Packaging, Incorporated,
10.75% due 10/01/05 25,000 25,688
Repap New Brunswick, Incorporated,
9.875% due 07/15/00 50,000 51,125
Westvaco Corporation,
9.65% due 03/01/02 30,000 34,357
----------
1,469,621
Non-Bank Finance - 0.26%
KFW International Financial,
Incorporated, 8.85% due 06/15/99 50,000 54,449
----------
Other - 0.25%
Kindercare Learning Centers,
Incorporated, 10.375% due 06/01/01 50,000 51,750
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
Publishing - 1.51%
Time Warner, Incorporated,
9.125% due 01/15/13 $ 295,000 $ 319,694
----------
Retail Trade - 0.90%
Sears, Roebuck and Company,
9.25% due 08/01/97 180,000 189,407
----------
Steel - 0.26%
AK Steel Corporation,
10.75% due 04/01/04 50,000 54,500
----------
Telecommunication Services - 1.70%
Comcast Corporation,
9.125% due 10/15/06 50,000 51,250
Heritage Media Corporation,
11.00% due 06/15/02 50,000 53,125
Tele-Communications, Incorporated,
9.80% due 02/01/12 200,000 229,112
Videotron, Ltd., 10.25% due 10/15/02 25,000 26,063
----------
359,550
Telephone - 1.73%
GTE Florida, Incorporated,
6.31% due 12/15/02 200,000 198,332
Illinois Bell Telephone Company,
7.625% due 04/01/06 35,000 35,577
New York Telephone Company,
7.875% due 06/15/17 100,000 103,829
Paging Network, Incorporated,
10.125% due 08/01/07 25,000 26,625
----------
364,363
Transportation - 0.53%
CSX Corporation, 9.04% due 02/28/97 75,000 77,400
Southern Railway Company,
8.75% due 10/15/03 30,000 34,275
----------
111,675
TOTAL CORPORATE BONDS
(Cost $7,000,474) $7,310,966
----------
U.S. TREASURY OBLIGATIONS - 33.24%
U.S. Treasury Bonds - 33.24%
8.875%, due 02/15/19 810,000 1,046,674
9.25%, due 02/15/16 250,000 330,780
10.75%, due 02/15/03 1,850,000 2,367,704
12.00%, due 08/15/13 2,180,000 3,270,349
----------
7,015,507
TOTAL U.S. TREASURY
OBLIGATIONS (Cost $6,705,695) $7,015,507
----------
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS - 20.28%
Federal Home Loan Mortgage Corporation - 10.80%
6.50%, due 07/15/08 - 04/01/24 $1,003,501 $ 974,050
7.00%, due 10/01/25 895,502 888,499
8.00%, due 11/15/99 400,000 416,624
----------
2,279,173
Federal National Mortgage Association - 4.36%
4.50%, due 01/25/98 - Remic 129,953 127,435
6.25%, due 11/25/19 - Remic 500,000 491,405
6.60%, due 09/25/18 300,000 302,061
----------
920,901
Government National Mortgage Association - 5.12%
7.00%, due 10/15/23 398,000 395,262
8.00%, due 10/15/16 - 04/15/17 657,601 684,109
----------
1,079,371
TOTAL U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS
(Cost $4,225,039) $4,279,445
----------
FIXED INCOME - OTHER - 4.95%
Miscellaneous Asset Backed Securities - 4.95%
Advanta Credit Card Master Trust, Series
1994, Class A, 6.155% due 10/01/01 300,000 300,750
Premier Auto Trust, Series 1993,
Class A2, 4.65% due 11/02/99 113,820 112,112
Western Financial Grantor Trust, Series
1995, Class A1, 7.10% due 07/01/00 198,132 200,732
World Omni Automobile Lease,
6.05% due 11/25/01 200,000 200,812
World Omni Automobile Lease, Series
1994, Class A, 6.45% due 09/25/00 230,211 231,289
----------
1,045,695
TOTAL FIXED INCOME - OTHER
(Cost $1,037,984) $1,045,695
----------
FOREIGN BONDS - 2.09%
Canadian - 2.09%
Hydro-Quebec, 8.05% due 07/07/24 400,000 441,740
----------
TOTAL FOREIGN BONDS
(Cost $436,009) $ 441,740
----------
<CAPTION>
Principal Maturity
Amount Amount
- ---------- ----------
<S> <C>
REPURCHASE AGREEMENT - 4.79%
$1,011,000 Repurchase Agreement with Shearson
Lehman dated 10/31/95 at 5.86%, to
be repurchased at $1,011,165 on
11/01/95, collateralized by $915,000
U.S. Treasury Note, 8.875% due
11/15/98 (valued at $1,048,293,
including interest) $1,011,000
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Investment Quality Bond Fund)
(Cost $20,416,201) $21,104,353
===========
U.S. Government Securities Fund
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 27.17%
U.S. Treasury Bonds - 3.42%
8.875%, due 08/15/17 $ 3,400,000 $ 4,369,544
------------
U.S. Treasury Notes - 23.75%
6.125%, due 05/31/97 2,000,000 2,014,380
6.75%, due 04/30/00 15,500,000 16,061,875
7.125%, due 02/29/00 5,550,000 5,824,003
7.75%, due 01/31/00 6,000,000 6,430,320
------------
30,330,578
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $33,500,469) $ 34,700,122
------------
U.S. GOVERNMENT AGENCY
AND MORTGAGE-BACKED OBLIGATIONS - 56.41%
Federal Home Loan Mortgage Corporation - 19.37%
6.00%, due 05/01/09 - 10/01/10 23,999,985 23,429,985
8.00%, due 06/01/08 324,192 333,847
8.25%, due 07/01/06 319,418 329,176
8.50%, due 05/01/08 627,187 648,981
------------
24,741,989
Federal National Mortgage Association - 29.75%
6.50%, due 08/01/10 - 10/01/10 16,274,988 16,142,672
6.50%, due 08/01/25 TBA** 9,000,000 8,730,000
7.00%, due 08/01/25 TBA** 4,437,500 4,400,048
7.52%, due 08/26/05 4,000,000 4,087,604
8.00%, due 08/01/04 102,583 105,564
8.25%, due 03/25/06 - Remic 675,000 722,034
8.50%, due 08/01/02 245,782 255,306
11.00%, due 02/01/15 1,021 1,144
11.50%, due 02/01/20 3,139,191 3,553,156
------------
37,997,528
Government National Mortgage Association - 3.68%
7.50%, due 04/15/02 - 02/15/07 619,748 630,441
7.75%, due 04/15/04 83,284 85,651
8.00%, due 11/15/06 - 02/15/08 55,329 57,604
10.25%, due 02/15/00 - 03/15/01 295,621 309,107
10.50%, due 01/15/01 21,342 22,415
11.00%, due 03/15/00 - 09/20/15 254,030 272,541
11.25%, due 04/15/98 - 10/20/15 31,314 33,997
11.50%, due 08/20/00 - 02/15/16 1,131,760 1,268,516
11.75%, due 09/15/98 1,731 1,826
12.00%, due 02/15/14 - 06/20/15 208,200 238,116
12.25%, due 03/15/14 - 01/20/15 170,696 191,947
12.50%, due 11/15/10 - 07/15/15 1,003,166 1,162,447
13.25%, due 07/15/14 73,522 83,884
<CAPTION>
Principal
Amount Value
--------- ---------
<S> <C> <C>
Government National Mortgage
Association - continued
13.50%, due 11/15/12 $ 79,459 $ 93,930
14.50%, due 06/15/11 9,126 10,435
15.00%, due 07/15/11 - 09/15/12 189,745 230,954
--------------
4,693,811
Other U.S. Government Agency Obligations - 3.61%
Tennessee Valley Authority,
8.25% due 11/15/96 4,500,000 4,607,415
--------------
TOTAL U.S. GOVERNMENT AGENCY AND
MORTGAGE-BACKED OBLIGATIONS
(Cost $71,279,578) $ 72,040,743
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.24%
Drexel Burnham Lambert, 9.30%
due 06/01/17 (Collateralized by
GNMA, 10.00%) 66,366 67,755
Goldman Sachs Trust 7, 9.10%
due 04/27/17 (Collateralized by
FNMA, 10.00%) 39,336 39,140
Merrill Lynch Trust XXV, 8.75%
due 03/20/19 (Collateralized by
FHLMC, 10.00%) 60,673 60,787
Shearson Lehman, Incorporated,
7.50% due 06/01/18 (Collateralized
by GNMA, 11.50%) 1,412,979 1,418,277
--------------
1,585,959
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost $1,620,695) $ 1,585,959
--------------
<CAPTION>
Principal Maturity
Amount Amount
---------- ----------
<S> <C>
REPURCHASE AGREEMENTS - 15.18%***
$9,695,000 Repurchase Agreement with J.P. Morgan dated
10/31/95 at 5.85%, to be repurchased at $9,696,575
on 11/01/95, collateralized by $6,699,000 U.S.
Treasury Bond, 12.00% due 05/15/05 (valued at
$10,258,572, including interest) $ 9,695,000
9,695,000 Repurchase Agreement with State Street Bank &
Trust Company dated 10/31/95 at 5.83%, to be
repurchased at $9,696,570 on 11/01/95,
collateralized by $10,145,000 U.S. Treasury Bill,
5.35% due 04/18/96 (valued at $9,891,375,
including interest) 9,695,000
------------
$ 19,390,000
TOTAL INVESTMENTS
(U.S. Government Securities Fund)
(Cost $125,790,742) $127,716,824
============
</TABLE>
* Purchased on a forward commitment (Note 2).
** At October 31, 1995 a portion of these securities was pledged to equal
forward commitments purchased.
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Municipal Bond Fund
Principal
Amount Value
--------- -------
<S> <C> <C>
LONG-TERM INVESTMENTS - 96.14%
Alabama - 4.00%
Alabama Housing Finance Authority
Single Family Mortgage Revenue
Collateralized Home Mortgage Program,
Series B-2, 6.40%, 04/01/25 $ 575,000 $ 589,484
Courtland Alabama, Industrial Development
Board, Solid Waste Disposal Revenue
(Champion International Corporation
Project), 5.90%, 02/01/17 250,000 239,757
----------
829,241
California - 4.59%
California State Public Works Board
Lease Revenue, Various Community
College Projects, 7.00%, 03/01/14 500,000 544,320
Los Angeles, California Harbor Department
Revenue, Series B, 6.625%, 08/01/19 390,000 406,899
----------
951,219
Florida - 5.05%
Jacksonville, Florida Water & Sewer
Revenue, 6.35%, 08/01/25 1,000,000 1,045,410
----------
Georgia - 2.11%
Savannah, Georgia Hospital Authority
Revenue Refunding & Improvement
(Candler Hospital), 7.00%, 01/01/23 430,000 438,084
----------
Illinois - 5.74%
Illinois Health Facilities Authority
Revenue (OSF Health Care System),
6.00%, 11/15/23 200,000 194,448
Illinois Health Facilities Authority
Revenue (Hospital Association
Project), 7.00%, 02/15/22 200,000 210,092
Chicago, Illinois Wastewater Transmission
Revenue, 6.375%, 01/01/24 750,000 783,757
----------
1,188,297
Indiana - 2.11%
Indiana Bond Bank Special Program
(Sanitary District of City of Gary, Indiana
Project), Series B, 6.20%, 02/01/13 150,000 153,811
City of Lawrenceburg, Indiana Pollution
Control Revenue Refunding (Indiana
Michigan Power Company Project),
Series E, 5.90%, 11/01/19 300,000 283,836
----------
437,647
Iowa - 0.74%
Iowa Finance Authority Hospital Facility
Revenue Refunding (Trinity Regional
Hospital Project), 7.00%, 07/01/12 150,000 153,596
----------
<CAPTION>
Principal
Amount Value
----------- ---------
<S> <C> <C>
Kentucky - 0.22%
Trimble County, Kentucky Pollution
Control Revenue (Louisville Gas & Electric
Company), Series B, 6.55%, 11/01/20 $ 40,000 $ 44,708
----------
Louisiana - 2.23%
Louisiana Public Facilities Authority Hospital
Revenue Refunding (Touro Infirmary
Project), Series A, 6.125%, 08/15/23 500,000 462,135
----------
Maine - 0.12%
Maine State Housing Authority Mortgage
Purchase, Series A-4, 6.375%, 11/15/12 25,000 25,342
----------
Michigan - 2.20%
Clarkston, Michigan Community Schools,
5.90%, 05/01/16 450,000 454,887
----------
Nebraska - 6.04%
Nebraska Higher Education Loan Program
Income Revenue, 6.65%, 06/01/08 1,200,000 1,250,880
----------
Nevada - 9.03%
Clark County, Nevada Passenger Facilities
Charge Revenue, 5.50%, 07/01/25 500,000 470,765
Clark County, Nevada Passenger Facilities,
Charge Revenue, 5.75%, 07/01/23 500,000 479,925
Nevada Housing Division, Single-Family
Program, 6.35%, 10/01/12 600,000 606,270
Nevada Housing Division, Single-Family
Program, Series B-2, 6.95%, 10/01/26 300,000 312,615
----------
1,869,575
New Jersey - 5.22%
New Jersey Economic Development
Authority Water Facilities Revenue
(New Jersey American Water Company,
Incorporated Project) 6.875%, 11/01/34 1,000,000 1,080,610
----------
New York - 20.02%
Metropolitan Transportation Authority,
New York Service Contract (Transit
Facilities), Series O, 6.25%, 07/01/14 375,000 392,194
New York State Local Government Assistance
Corporation, Series B, 5.375%, 04/01/16 850,000 809,982
New York, NY, Series D,
6.00%, 02/15/20 1,000,000 972,510
New York City Housing Development
Corporation (Multi-Family Housing),
Series A, 5.85%, 05/01/25 200,000 191,878
</TABLE>
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
New York - continued
New York State Dormitory Authority
Revenue, State University Educational
Facilities, Series A, 6.25%, 05/15/08 $ 500,000 $ 513,710
New York State Environmental Facilities
Corporation Pollution Control Revenue
Refunding (IBM Corporation Project),
7.125%, 07/01/12 580,000 621,569
New York State Mortgage Agency
Revenue, Series 40-A, 6.35%, 04/01/21 630,000 644,572
---------
4,146,415
Ohio - 4.15%
Ohio State Air Quality Development
Authority Revenue, 6.10%, 09/01/30 850,000 860,489
---------
Pennsylvania - 4.69%
Monroeville, Pennsylvania Hospitals
Authority Hospitals Revenue,
6.25%, 10/01/15 1,000,000 972,230
---------
Rhode Island - 2.76%
Rhode Island Depositors Economic
Protection Corporation Special Obligation
Refunding, Series A, 5.625%, 08/01/09 225,000 224,872
Rhode Island Housing & Mortgage
Finance Corporation, Homeownership
Opportunity, Series 5, 6.40%, 04/01/24 150,000 149,211
Rhode Island State Health & Educational
Building Corporation, J&W University,
Series A, 5.875%, 04/01/20 200,000 196,806
---------
570,889
South Dakota - 0.22%
South Dakota Housing Development
Authority, Homeowner Mortgage,
Series D, 6.85%, 05/01/26 45,000 46,232
---------
Tennessee - 2.27%
Humphreys County, Tennessee Industrial
Development Board Solid Waste Disposal
Revenue (E.I. Du Pont Denemours &
Company Project), 6.70%, 05/01/24 450,000 470,002
---------
Texas - 4.18%
Lower Neches Valley Authority, Texas
Industrial Development Corporation
Sewer Facilities Revenue, Mobil Oil
Refining Corporation, 6.40%, 03/01/30 750,000 768,757
Texas State Veterans Housing
Assistance, 6.80%, 12/01/23 95,000 97,856
---------
866,613
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
Virginia - 1.68%
Virginia State Housing Development
Authority Commonwealth Mortgage,
Subseries B-5, 6.30%, 01/01/27 $ 45,000 $ 44,451
Virginia State Housing Development
Authority Commonwealth Mortgage,
Subseries I-1, 6.55%, 07/01/17 300,000 304,185
---------
348,636
Washington - 0.81%
Economic Development Corporation
of Pierce County (Washington) Solid
Waste Revenue (Occidental Petroleum
Corporation Project), 5.80%, 09/01/29 95,000 84,522
Washington State Housing Finance
Commission Single-Family Mortgage
Revenue Refunding, Series D-1,
6.15%, 01/01/26 35,000 33,970
Washington State Public Power Supply
System Nuclear Project Number 1
Revenue Refunding, 5.70%, 07/01/17 50,000 48,901
-----------
167,393
Wisconsin - 5.96%
Wisconsin Housing & Economic
Development Authority Home Ownership
Revenue, Series D, 6.10%, 07/01/24 200,000 200,760
Wisconsin State Health & Educational
Facilities Authority Revenue, Mercy
Hospital of Janesville, Incorporated,
6.60%, 08/15/22 1,000,000 1,034,880
-----------
1,235,640
TOTAL LONG-TERM INVESTMENTS
(Cost $19,519,090) $19,916,170
-----------
SHORT-TERM INVESTMENTS - 3.86%
Arizona - 3.38%
Pinal County, Arizona Industrial
Development Authority Pollution Control
Revenue, VR, 4.00%, 11/01/95 700,000 700,000
-----------
Florida - 0.48%
Manatee County, Florida Pollution
Control Revenue, VR, 4.00%, 11/01/95 100,000 100,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $800,000) $ 800,000
-----------
TOTAL INVESTMENTS
(National Municipal Bond Fund)
(Cost $20,319,090) $20,716,170
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 1995 - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
COMMERCIAL PAPER - 99.35%
American General Finance
Corporation, 5.65% due 11/22/95 $420,000 $418,616
American Home Products
Corporation, 5.73% due 11/10/95 500,000 499,284
Assets Securitization Cooporative
Corporation, 5.70% due 11/17/95 600,000 598,480
Associates Corporation of North
America, 5.68% due 02/08/96 600,000 590,628
Cariplo Finance, Incorporated,
5.69% due 11/30/95 600,000 597,250
Central & South West Corporation,
5.67% due 11/13/95 400,000 399,244
Chase Manhattan Bank, New York,
5.77% due 04/15/96 600,000 600,000
CIESCO, Incorporated,
5.75% due 11/22/95 600,000 597,987
CIT Group Holdings, Incorporated,
5.70% due 01/24/96 600,000 592,020
The Coca-Cola Company,
5.77% due 12/01/95 400,000 398,077
Corporate Asset Fund,
5.70% due 11/15/95 300,000 299,335
Corporate Receivables Corporation,
5.70% due 11/08/95 450,000 449,501
Dean Witter Discover & Company,
5.73% due 11/17/95 600,000 598,472
Dresdner U.S. Finance,
5.72% due 01/22/96 600,000 592,183
ESC Securitization, Incorporated,
5.68% due 12/05/95 650,000 646,513
Falcon Asset Securitization,
5.72% due 11/14/95 250,000 249,483
Ford Motor Credit Corporation,
5.70% due 11/10/95 600,000 599,145
General Electric Capital Corporation,
5.59% due 03/01/96 600,000 588,727
General Motors Acceptance
Corporation, 5.65% due 12/15/95 600,000 595,857
Household International,
Incorporated, 5.73% due 02/08/96 600,000 590,545
IBM Credit Corporation,
5.72% due 11/08/95 560,000 559,377
Indosuez of North America,
Incorporated, 5.70% due 01/29/96 600,000 591,545
Kreditbank North America,
5.74% due 01/31/96 500,000 492,745
Matterhorn Capital Corporation,
5.72% due 11/17/95 600,000 598,475
MetLife Funding, Incorporated,
5.70% due 11/07/95 20,000 19,981
Monsanto Company,
5.75% due 11/21/95 800,000 797,445
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
COMMERCIAL PAPER - continued
Norwest Corporation,
5.66% due 11/17/95 $650,000 $648,365
PNC Funding Corporation,
5.75% due 02/05/96 600,000 590,800
PHH Corporation,
5.73% due 11/10/95 600,000 599,140
Preferred Receivables Funding,
5.72% due 01/25/96 600,000 591,897
Prudential Funding Corporation,
5.71% due 12/11/95 600,000 596,193
Riverwoods Funding Corporation,
5.69% due 11/13/95 600,000 598,862
Sears Roebuck Acceptance
Corporation, 5.70% due 02/22/96 600,000 589,265
Societe Generale of North America,
Incorporated, 5.64% due 03/18/96 650,000 635,947
SunTrust Banks, Incorporated,
5.71% due 11/27/95 500,000 497,938
Toshiba America,
5.65% due 01/12/96 600,000 593,220
TOTAL COMMERCIAL PAPER $19,502,542
-----------
<CAPTION>
Principal Maturity
Amount Amount
--------- ---------
<S> <C>
REPURCHASE AGREEMENT - 0.65%
$127,000 Repurchase Agreement with Shearson Lehman dated
10/31/95 at 5.87%, to be repurchased at $127,021
on 11/01/95, collateralized by $100,000 U.S.
Treasury Bond, 8.75% due 08/15/20 (value at
$129,925, including interest) $127,000
--------
TOTAL INVESTMENTS
(Money Market Fund) $19,629,542
===========
<CAPTION>
Key to Security
Key to Currency Abbreviations Abbreviations
- ----------------------------- ----------------
<S> <C>
AUD - Australian Dollar ADR - American Depository
BEF - Belgian Franc Receipt
CAD - Canadian Dollar FRN - Floating Rate Note
DKK - Danish Krone IO - Interest Only, carries
FRF - French Franc notional principal amount
DEM - German Deutsche Mark TBA - To Be Announced
- Great British Pound VR - Variable Rate
ITL - Italian Lira Demand Note*
- Japanese Yen *Maturity date shown is the
NLG - Netherland Guilder date of next interest rate
ESP - Spanish Peseta change and coupon rate is
CHF - Swiss Franc the rate effective as of
October 31, 1995.
</TABLE>
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE TRUST. North American Funds (the "Fund") is an open-end,
diversified management investment company. The Fund is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended. It is a series company, which means it has several
portfolios, each with a stated investment objective which it pursues through
separate investment policies. As of October 31, 1995, the Fund offered the
following ten portfolios with A, B and C Classes: the Global Growth Fund, the
Growth Fund, the Growth and Income Fund, the International Growth and Income
Fund, the Asset Allocation Fund, the Strategic Income Fund, the Investment
Quality Bond Fund, the U.S. Government Securities Fund, the National Municipal
Bond Fund and the Money Market Fund.
On April 1, 1994, the multiple class structure as approved by the Board of
Trustees and shareholders was implemented. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge up to
4.75%. Class B shares are sold with a contingent deferred sales charge which
declines to zero from 5% depending on the period of time shares are held. Class
B shares will automatically convert to Class A shares of the same portfolio six
years after purchase. Class C shares are sold without an initial sales charge.
Class C shares will automatically convert to Class A shares of the same
portfolio ten years after purchase. All three classes of shares have identical
voting, dividend, liquidation and other rights, except that each class has
exclusive voting rights with respect to its distribution plan. Classes A, B and
C of the Money Market Fund have the same expense structure and no distribution
expense.
NASL Financial Services, Inc. ("NASL Financial"), a wholly-owned subsidiary of
North American Security Life Insurance Company, serves as investment adviser,
principal underwriter and distributor for the Fund.
NEW PORTFOLIO. On January 9, 1995, the International Growth and Income Fund
commenced operations. The subadviser to this portfolio is J.P. Morgan
Investment Management Inc. Deferred organization costs of $635 were incurred
and are being amortized over five years.
2. SIGNIFICANT ACCOUNTING POLICIES. The Fund follows the policies described
below when preparing the portfolios' financial statements. These policies are
in accordance with generally accepted accounting principles.
SECURITY VALUATION. Securities held by the Money Market Fund and money market
instruments with remaining maturities of 60 days or less held by the other funds
are valued at either the amortized cost basis or original cost plus accrued
interest, both of which approximate current market value. All other securities
held by the Fund are valued at the last sale price as of the close of business
on a principal securities exchange (domestic or foreign) or, lacking any sales,
at the closing bid price. Securities traded only in the over-the-counter market
are valued at the last bid price quoted by brokers making markets in the
securities at the close of trading on the Exchange. Other assets and securities
for which no such quotation or valuations are readily available are valued at
their fair value as determined in good faith under consistently applied
procedures established by and under the general supervision of the Trustees.
FOREIGN CURRENCY TRANSLATIONS. The accounting records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of securities, other assets and other liabilities at the
current rate of exchange of such currencies against U.S. dollars; and
(ii) purchases and sales of securities, income and expenses at the rate of
exchange quoted on the respective dates of such transactions.
Gains and losses that arise from changes in foreign exchange rates have been
segregated from gains and losses that arise from changes in the market prices of
investments. These gains and losses are included with gains and losses on
foreign currency and forward foreign currency contracts in the Statements of
Operations.
46
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 2 - CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS. All portfolios with the exception of the
U.S. Government Securities, National Municipal Bond and Money Market Funds may
purchase and sell forward foreign currency contracts in order to hedge a
specific transaction or portfolio position.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held at the end of the period and the resulting net unrealized
appreciation (depreciation) and related net receivable or payable amount are
determined using forward currency exchange rates supplied by a quotation
service. The Fund could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably.
Net realized gains (losses) on forward foreign currency contracts, shown in the
Statements of Operations, includes net gains or losses realized by a portfolio
on contracts which have matured or which the fund has terminated by entering
into an offsetting commitment.
FUTURES. All portfolios other than the U.S. Government Securities and Money
Market Fund may purchase and sell financial futures contracts and options on
those contracts. The portfolios invest in contracts based on financial
instruments such as U.S. Treasury bonds or notes or on securities indices such
as the S&P 500 Index, in order to hedge against a decline in the value of
securities owned by the portfolios.
When a portfolio sells a futures contract based on a financial instrument, the
portfolio becomes obligated to deliver that kind of instrument at an agreed upon
date for a specified price. The portfolio realizes a gain or loss depending on
whether the price of an offsetting purchase is less or more than the price of
the initial sale or on whether the price of an offsetting sale is more or less
than the price of the initial purchase. The Fund could be exposed to risks if
it could not close out futures positions because of an illiquid secondary market
or the inability of counterparties to meet the terms of their contracts. Upon
entering into futures contracts, the Fund is required to deposit with a broker
an amount, initial margin, which represents 5% of the purchase price indicated
in the futures contract.
Payments to and from the broker, known as variation margin, are required to be
made on a daily basis as the price of the futures contract fluctuates, making
the long or short positions in the contract more or less valuable. If the
position is closed out by taking an opposite position prior to the settlement
date of the futures contract, a final determination of variation margin is made,
cash is required to be paid to or released by the broker, and the portfolio
realizes a gain or loss.
FORWARD COMMITMENTS. The Fund may make forward commitments to purchase and sell
securities. Delivery and payment for securities which have been purchased or
sold on a forward commitment basis can take place a month or more (not to exceed
120 days) after the date of the transaction. The price of the underlying
securities and the date when the securities will be delivered and paid for are
fixed at the time the transaction is negotiated. The value of the securities
underlying a forward commitment to purchase securities, and any subsequent
fluctuations in their value, is taken into account when determining the
portfolio's net asset value starting on the day the portfolio agrees to purchase
the securities. At October 31, 1995, forward commitments in the Asset
Allocation, Strategic Income and U.S. Government Securities Funds were valued at
$10,166,520, $4,252,261 and $13,130,048, respectively.
MORTGAGE DOLLAR ROLLS. The Strategic Income and U. S. Government Securities
Funds may enter into mortgage dollar rolls in which it sells mortgage securities
for delivery in the current month and simultaneously contracts to repurchase
similar, but not identical, securities at the same price on an agreed upon date.
The Fund receives compensation as consideration for entering into the commitment
to repurchase. The compensation is recorded as deferred income and amortized to
income over the roll period. As the holder, the counterparty receives all
principal and interest payments, including prepayments, made with respect to the
similar security. Mortgage dollar rolls may be renewed with a new sale and
repurchase price with a cash settlement made at renewal without physical
delivery of the securities subject to the contract.
ORGANIZATION COSTS. Cost incurred by the Fund in connection with its
organization, its initial registration with the Securities and Exchange
Commission and with various states, and the initial public offering of its
shares is being amortized on a straight line basis over a five-year period for
the Global Growth, Growth and Income, International Growth and Income, Strategic
Income, Investment Quality Bond and the National Municipal Bond Funds. In the
event that any of the initial shares of each of the Global Growth, Growth and
Income and Investment Quality Bond Funds are redeemed by NASL Financial during
the amortization period, the portfolios of the Fund will be reimbursed for any
unamortized organization expenses in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of such redemption. All costs incurred by the implemention of the
multiple class structure were borne by NASL Financial.
47
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 2 - CONTINUED
FEDERAL INCOME TAXES. The Fund's policy is for each portfolio to qualify as "a
regulated investment company" under Subchapter M of the Internal Revenue Code,
as amended, and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. Each portfolio is
treated as a separate taxpayer for federal income tax purposes.
DISTRIBUTIONS OF INCOME AND GAINS. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of business
each day and is paid monthly for U.S. Government Securities and Investment
Quality Bond Funds, semi-annually to shareholders of the Growth and Income and
International Growth and Income Funds, and annually to shareholders of the
Growth, Global Growth and Asset Allocation Funds. All of the net investment
income of the Money Market, National Municipal Bond and Strategic Income Funds
are declared as a dividend to shareholders of record as of the close of business
each day and is paid monthly. During any particular year, net realized gains
from investment transactions for each portfolio, in excess of available capital
loss carryforwards of each portfolio, would be taxable to the fund if not
distributed and, therefore, will be distributed to shareholders. An additional
distribution may be made to the extent necessary to avoid the payment of a four
percent federal excise tax.
Pursuant to Section 852 of the Internal Revenue Code, the distributions set
forth below have been designated as capital gains distributions for the fiscal
year ended October 31, 1995:
<TABLE>
<CAPTION>
PORTFOLIO CAPITAL GAIN DISTRIBUTION
- -------------------- -------------------------
<S> <C>
Growth........................ $8,946,244
Growth and Income............. 817,125
Asset Allocation.............. 2,804,494
</TABLE>
EXEMPT INTEREST DIVIDENDS. The National Municipal Bond Fund designates all
dividends paid during the fiscal year ended October 31, 1995 as 100% exempt
interest dividends. Accordingly, 100% of the distributions paid are tax-exempt
for federal income tax purposes. Shareholders will receive pertinent tax
information in January, 1996.
CAPITAL LOSS CARRYFORWARDS. At October 31, 1995, capital loss carryforwards
available to offset future realized gains were approximately:
<TABLE>
<CAPTION>
CAPITAL LOSS CARRYFORWARDS
EXPIRATION YEAR
--------------------------------
PORTFOLIO 2003 2002 2001
- ---------------------------------------- ---------- ---------- -------
<S> <C> <C> <C>
Global Growth........................... $3,967,000 -- --
Strategic Income........................ -- $ 400,000 --
Investment Quality Bond................. -- 641,000 --
U.S. Government Securities.............. -- 3,316,000 --
National Municipal Bond................. 451,000 10,000 $11,000
</TABLE>
To the extent that capital loss carryforwards are available to offset any future
realized gains, it is unlikely that such gains would be distributed to
shareholders since they may be taxable as ordinary income.
EQUALIZATION. The Fund follows the accounting practice known as equalization,
by which a portion of the proceeds from sales and costs of repurchases of the
Fund's shares are allocated, on a per share basis, to undistributed net
investment income. As a result, undistributed net investment income per share
is unaffected by sales or redemptions of the Fund's shares.
48
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 2 - CONTINUED
REPURCHASE AGREEMENTS. Each portfolio may enter into repurchase agreements and,
additionally, the U.S. Government Securities Fund may enter into reverse
repurchase agreements. When a portfolio enters into a repurchase agreement
through its custodian, it receives delivery of the underlying securities, the
amount of which at the time of purchase and each subsequent business day is
required to be maintained at such a level that the market value is equal to 102%
of the resale price, and such portfolio will take constructive receipt of all
securities underlying the repurchase agreements until such agreements expire.
If the seller defaults, a portfolio would suffer a loss to the extent that
proceeds from the sale of underlying securities were less than the repurchase
price. Under a reverse repurchase agreement, the U.S. Government Securities
Fund may sell a debt security and agree to repurchase it at an agreed upon time
and at an agreed upon price.
OTHER. Investment security transactions are accounted for on the trade date.
Interest income is accrued as earned. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. All original issue discounts
are accreted for financial and federal income tax reporting purposes. The Fund
uses the First In, First Out method for determining realized gain or loss on
investments for both financial and federal income tax reporting purposes.
3. CAPITAL SHARES. Share activity for the year ended October 31, 1995 is as
follows:
<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAR VALUE PAID-IN CAPITAL
------------- --------- ---------------
<S> <C> <C> <C>
GLOBAL GROWTH FUND-CLASS A
Outstanding at October 31, 1994..................... 1,224,996 $ 1,225 $ 17,767,966
Sold................................................ 2,614,767 2,615 35,326,143
Reinvestment of distributions....................... 43,249 43 574,845
Redeemed............................................ (2,156,352) (2,156) (29,335,582)
---------- ------- ------------
Net increase....................................... 501,664 502 6,565,406
---------- ------- ------------
Outstanding at October 31, 1995..................... 1,726,660 $ 1,727 $ 24,333,372
========== ======= ============
GLOBAL GROWTH FUND-CLASS B
Outstanding at October 31, 1994..................... 939,958 $ 940 $ 13,753,105
Sold................................................ 1,084,531 1,084 14,547,925
Reinvestment of distributions....................... 33,028 33 436,438
Redeemed............................................ (359,266) (359) (4,857,365)
---------- ------- ------------
Net increase....................................... 758,293 758 10,126,998
---------- ------- ------------
Outstanding at October 31, 1995..................... 1,698,251 $ 1,698 $ 23,880,103
========== ======= ============
GLOBAL GROWTH FUND-CLASS C
Outstanding at October 31, 1994..................... 6,858,508 $ 6,859 $ 87,720,725
Sold................................................ 1,985,403 1,985 26,819,807
Reinvestment of distributions....................... 217,568 218 2,873,413
Redeemed............................................ (2,991,542) (2,992) (40,342,651)
---------- ------- ------------
Net decrease....................................... (788,571) (789) (10,649,431)
---------- ------- ------------
Outstanding at October 31, 1995..................... 6,069,937 $ 6,070 $ 77,071,294
========== ======= ============
GROWTH FUND-CLASS A
Outstanding at October 31, 1994..................... 1,104,310 $ 1,105 $ 16,160,250
Sold................................................ 2,787,050 2,787 41,410,939
Reinvestment of distributions....................... 66,087 66 882,884
Redeemed............................................ (2,575,493) (2,576) (38,344,281)
---------- ------- ------------
Net increase....................................... 277,644 277 3,949,542
---------- ------- ------------
Outstanding at October 31, 1995..................... 1,381,954 $ 1,382 $ 20,109,792
========== ======= ============
</TABLE>
49
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3 - CONTINUED
<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAR VALUE PAID-IN CAPITAL
------------- --------- ---------------
<S> <C> <C> <C>
GROWTH FUND-CLASS B
Outstanding at October 31, 1994..................... 342,170 $ 342 $ 5,057,636
Sold................................................ 1,105,241 1,105 16,739,875
Reinvestment of distributions....................... 22,061 22 295,151
Redeemed............................................ (215,051) (215) (3,170,839)
---------- -------- ------------
Net increase....................................... 912,251 912 13,864,187
---------- -------- ------------
Outstanding at October 31, 1995..................... 1,254,421 $ 1,254 $ 18,921,823
========== ======== ============
GROWTH FUND-CLASS C
Outstanding at October 31,1994...................... 4,821,130 $ 4,822 $ 60,566,636
Sold................................................ 1,959,707 1,960 29,146,831
Reinvestment of distributions....................... 268,435 268 3,591,716
Redeemed............................................ (1,764,770) (1,765) (26,251,253)
---------- -------- ------------
Net increase....................................... 463,372 463 6,487,294
---------- -------- ------------
Outstanding at October 31, 1995..................... 5,284,502 $ 5,285 $ 67,053,930
========== ======== ============
GROWTH AND INCOME FUND-CLASS A
Outstanding at October 31, 1994..................... 621,205 $ 620 $ 7,922,179
Sold................................................ 450,698 451 6,146,439
Reinvestment of distributions....................... 27,446 28 343,196
Redeemed............................................ (271,667) (271) (3,642,609)
---------- -------- ------------
Net increase....................................... 206,477 208 2,847,026
---------- -------- ------------
Outstanding at October 31, 1995..................... 827,682 $ 828 $ 10,769,205
========== ======== ============
GROWTH AND INCOME FUND-CLASS B
Outstanding at October 31, 1994..................... 297,011 $ 297 $ 3,788,970
Sold................................................ 1,059,205 1,059 14,494,136
Reinvestment of distributions....................... 15,257 15 194,994
Redeemed............................................ (74,117) (74) (1,015,224)
---------- -------- ------------
Net increase....................................... 1,000,345 1,000 13,673,906
---------- -------- ------------
Outstanding at October 31, 1995..................... 1,297,356 $ 1,297 $ 17,462,876
========== ======== ============
GROWTH AND INCOME FUND-CLASS C
Outstanding at October 31, 1994..................... 3,522,165 $ 3,523 $ 41,387,557
Sold................................................ 1,620,500 1,621 21,672,427
Reinvestment of distributions....................... 119,698 119 1,490,015
Redeemed............................................ (969,569) (970) (13,035,735)
---------- -------- ------------
Net increase....................................... 770,629 770 10,126,707
---------- -------- ------------
Outstanding at October 31, 1995..................... 4,292,794 $ 4,293 $ 51,514,264
========== ======== ============
INTERNATIONAL GROWTH & INCOME FUND-CLASS A
Outstanding at January 9, 1995 (commencement
of operations).................................... -- -- --
Sold................................................ 716,949 $ 717 $ 7,247,460
Reinvestment of distributions....................... 1,421 1 14,280
Redeemed............................................ (36,118) (36) (372,621)
---------- -------- ------------
Net increase....................................... 682,252 682 6,889,119
---------- -------- ------------
Outstanding at October 31, 1995..................... 682,252 $ 682 $ 6,889,119
========== ======== ============
</TABLE>
50
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3 - CONTINUED
<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAR VALUE PAID-IN CAPITAL
------------- --------- ---------------
<S> <C> <C> <C>
INTERNATIONAL GROWTH & INCOME FUND-CLASS B
Outstanding at January 9, 1995 (commencement
of operations)..................................... -- -- --
Sold................................................. 884,328 $ 884 $ 8,904,323
Reinvestment of distributions........................ 1,333 1 13,391
Redeemed............................................. (51,644) (51) (531,844)
----------- -------- ------------
Net increase........................................ 834,017 834 8,385,870
----------- -------- ------------
Outstanding at October 31, 1995...................... 834,017 $ 834 $ 8,385,870
=========== ======== ============
INTERNATIONAL GROWTH & INCOME FUND-CLASS C
Outstanding at January 9, 1995 (commencement
of operations)..................................... -- -- --
Sold................................................. 715,656 $ 716 $ 7,212,058
Reinvestment of distributions........................ 1,205 1 12,110
Redeemed............................................. (90,626) (91) (922,023)
----------- -------- ------------
Net increase........................................ 626,235 626 6,302,145
----------- -------- ------------
Outstanding at October 31, 1995...................... 626,235 $ 626 $ 6,302,145
=========== ======== ============
ASSET ALLOCATION FUND-CLASS A
Outstanding at October 31, 1994...................... 703,762 $ 704 $ 7,788,441
Sold................................................. 395,929 396 4,381,529
Reinvestment of distributions........................ 58,811 59 581,460
Redeemed............................................. (323,788) (324) (3,544,361)
----------- -------- ------------
Net increase........................................ 130,952 131 1,418,628
----------- -------- ------------
Outstanding at October 31, 1995...................... 834,714 $ 835 $ 9,207,069
=========== ======== ============
ASSET ALLOCATION FUND-CLASS B
Outstanding at October 31, 1994...................... 428,233 $ 428 $ 4,723,308
Sold................................................. 553,227 553 6,154,105
Reinvestment of distributions........................ 32,102 32 318,497
Redeemed............................................. (189,119) (189) (2,134,397)
----------- -------- ------------
Net increase........................................ 396,210 396 4,338,205
----------- -------- ------------
Outstanding at October 31, 1995...................... 824,443 $ 824 $ 9,061,513
=========== ======== ============
ASSET ALLOCATION FUND-CLASS C
Outstanding at October 31, 1994...................... 7,817,975 $ 7,818 $ 78,582,597
Sold................................................. 679,384 679 7,452,549
Reinvestment of distributions........................ 533,978 534 5,274,850
Redeemed............................................. (2,325,312) (2,325) (25,448,909)
----------- -------- ------------
Net decrease........................................ (1,111,950) (1,112) (12,721,510)
----------- -------- ------------
Outstanding at October 31, 1995...................... 6,706,025 $ 6,706 $ 65,861,087
=========== ======== ============
STRATEGIC INCOME FUND-CLASS A
Outstanding at October 31, 1994...................... 1,742,569 $ 1,742 $ 17,465,582
Sold................................................. 259,399 259 2,298,835
Reinvestment of distributions........................ 74,276 74 654,611
Redeemed............................................. (968,677) (968) (8,454,458)
----------- -------- ------------
Net decrease........................................ (635,002) (635) (5,501,012)
----------- -------- ------------
Outstanding at October 31, 1995...................... 1,107,567 $ 1,107 $ 11,964,570
=========== ======== ============
STRATEGIC INCOME FUND-CLASS B
Outstanding at October 31, 1994...................... 611,434 $ 611 $ 5,531,932
Sold................................................. 1,761,381 1,761 15,421,853
Reinvestment of distributions........................ 58,903 59 522,672
Redeemed............................................. (151,535) (151) (1,346,797)
----------- -------- ------------
Net increase........................................ 1,668,749 1,669 14,597,728
----------- -------- ------------
Outstanding at October 31, 1995...................... 2,280,183 $ 2,280 $ 20,129,660
=========== ======== ============
</TABLE>
51
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3 - CONTINUED
<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAR VALUE PAID-IN CAPITAL
------------- --------- ---------------
<S> <C> <C> <C>
STRATEGIC INCOME FUND-CLASS C
Outstanding at October 31, 1994....................... 948,389 $ 948 $ 8,561,907
Sold.................................................. 1,202,918 1,203 10,587,243
Reinvestment of distributions......................... 85,797 86 757,709
Redeemed.............................................. (662,761) (663) (5,838,101)
----------- -------- ------------
Net increase......................................... 625,954 626 5,506,851
----------- -------- ------------
Outstanding at October 31, 1995....................... 1,574,343 $ 1,574 $ 14,068,758
=========== ======== ============
INVESTMENT QUALITY BOND FUND-CLASS A
Outstanding at October 31, 1994....................... 1,144,475 $ 1,145 $ 12,371,914
Sold.................................................. 218,517 219 2,182,522
Reinvestment of distributions......................... 56,483 56 568,009
Redeemed.............................................. (439,949) (440) (4,383,544)
----------- -------- ------------
Net decrease......................................... (164,949) (165) (1,633,013)
----------- -------- ------------
Outstanding at October 31, 1995....................... 979,526 $ 980 $ 10,738,901
=========== ======== ============
INVESTMENT QUALITY BOND FUND-CLASS B
Outstanding at October 31, 1994....................... 50,263 $ 50 $ 505,884
Sold.................................................. 303,991 304 3,067,899
Reinvestment of distributions......................... 9,051 9 92,574
Redeemed.............................................. (34,335) (34) (353,550)
----------- -------- ------------
Net increase......................................... 278,707 279 2,806,923
----------- -------- ------------
Outstanding at October 31, 1995....................... 328,970 $ 329 $ 3,312,807
=========== ======== ============
INVESTMENT QUALITY BOND FUND-CLASS C
Outstanding at October 31, 1994....................... 247,124 $ 247 $ 2,475,051
Sold.................................................. 621,445 622 6,308,571
Reinvestment of distributions......................... 23,438 23 237,877
Redeemed.............................................. (208,994) (209) (2,106,429)
----------- -------- ------------
Net increase......................................... 435,889 436 4,440,019
----------- -------- ------------
Outstanding at October 31, 1995....................... 683,013 $ 683 $ 6,915,070
=========== ======== ============
U.S. GOVERNMENT SECURITIES FUND-CLASS A
Outstanding at October 31, 1994....................... 10,649,175 $ 10,646 $107,971,485
Sold.................................................. 1,084,823 1,086 10,528,395
Reinvestment of distributions......................... 417,271 418 4,033,739
Redeemed.............................................. (4,020,456) (4,020) (38,497,169)
----------- -------- ------------
Net decrease......................................... (2,518,362) (2,516) (23,935,035)
----------- -------- ------------
Outstanding at October 31, 1995....................... 8,130,813 $ 8,130 $ 84,036,450
=========== ======== ============
U.S. GOVERNMENT SECURITIES FUND-CLASS B
Outstanding at October 31, 1994....................... 290,668 $ 291 $ 2,785,075
Sold.................................................. 1,299,105 1,299 12,686,906
Reinvestment of distributions......................... 35,827 36 350,711
Redeemed.............................................. (223,531) (224) (2,172,937)
----------- -------- ------------
Net increase......................................... 1,111,401 1,111 10,864,680
----------- -------- ------------
Outstanding at October 31, 1995....................... 1,402,069 $ 1,402 $ 13,649,755
=========== ======== ============
U.S. GOVERNMENT SECURITIES FUND-CLASS C
Outstanding at October 31, 1994....................... 1,139,603 $ 1,140 $ 10,991,693
Sold.................................................. 2,142,383 2,142 20,669,554
Reinvestment of distributions......................... 87,554 88 852,730
Redeemed.............................................. (1,346,861) (1,347) (13,039,618)
----------- -------- ------------
Net increase......................................... 883,076 883 8,482,666
----------- -------- ------------
Outstanding at October 31, 1995....................... 2,022,679 $ 2,023 $ 19,474,359
=========== ======== ============
</TABLE>
52
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3 - CONTINUED
<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAR VALUE PAID-IN CAPITAL
------------- --------- ---------------
<S> <C> <C> <C>
NATIONAL MUNICIPAL BOND FUND-CLASS A
Outstanding at October 31, 1994..................... 869,228 $ 869 $ 8,902,401
Sold................................................ 233,842 234 2,094,232
Reinvestment of distributions....................... 27,394 27 252,092
Redeemed............................................ (338,547) (338) (3,066,286)
----------- -------- ------------
Net decrease....................................... (77,311) (77) (719,962)
----------- -------- ------------
Outstanding at October 31, 1995..................... 791,917 $ 792 $ 8,182,439
=========== ======== ============
NATIONAL MUNICIPAL BOND FUND-CLASS B
Outstanding at October 31, 1994..................... 231,085 $ 231 $ 2,146,996
Sold................................................ 455,386 455 4,165,822
Reinvestment of distributions....................... 13,084 13 121,755
Redeemed............................................ (88,583) (88) (824,605)
----------- -------- ------------
Net increase....................................... 379,887 380 3,462,972
----------- -------- ------------
Outstanding at October 31, 1995..................... 610,972 $ 611 $ 5,609,968
=========== ======== ============
NATIONAL MUNICIPAL BOND FUND-CLASS C
Outstanding at October 31, 1994..................... 216,811 $ 217 $ 2,013,763
Sold................................................ 668,235 668 6,225,555
Reinvestment of distributions....................... 15,104 15 140,593
Redeemed............................................ (189,643) (189) (1,770,361)
----------- -------- ------------
Net increase....................................... 493,696 494 4,595,787
----------- -------- ------------
Outstanding at October 31, 1995..................... 710,507 $ 711 $ 6,609,550
=========== ======== ============
MONEY MARKET FUND-CLASS A
Outstanding at October 31, 1994..................... 8,498,879 $ 8,499 $ 8,490,380
Sold................................................ 73,826,098 73,826 73,752,272
Reinvestment of distributions....................... 434,750 435 434,315
Redeemed............................................ (71,380,879) (71,381) (71,309,497)
----------- -------- ------------
Net increase....................................... 2,879,969 2,880 2,877,090
----------- -------- ------------
Outstanding at October 31, 1995..................... 11,378,848 $ 11,379 $ 11,367,470
=========== ======== ============
MONEY MARKET FUND-CLASS B
Outstanding at October 31, 1994..................... 312,188 $ 312 $ 311,876
Sold................................................ 8,873,001 8,873 8,864,128
Reinvestment of distributions....................... 78,497 79 78,418
Redeemed............................................ (7,699,582) (7,700) (7,691,883)
----------- -------- ------------
Net increase....................................... 1,251,916 1,252 1,250,663
----------- -------- ------------
Outstanding at October 31, 1995..................... 1,564,104 $ 1,564 $ 1,562,539
=========== ======== ============
MONEY MARKET FUND-CLASS C
Outstanding at October 31, 1994..................... 12,169,980 $ 12,170 $ 12,157,810
Sold................................................ 27,470,721 27,471 27,443,250
Reinvestment of distributions....................... 592,451 593 591,858
Redeemed............................................ (30,838,656) (30,839) (30,807,817)
----------- -------- ------------
Net decrease....................................... (2,775,484) (2,775) (2,772,709)
----------- -------- ------------
Outstanding at October 31, 1995..................... 9,394,496 $ 9,395 $ 9,385,101
=========== ======== ============
</TABLE>
53
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES. The following table summarizes the
securities transactions (excluding short-term investments) for all portfolios,
excluding the Money Market Fund, for the year ended October 31, 1995:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------- ----------------------------
PORTFOLIO GOVERNMENT OTHER ISSUES GOVERNMENT OTHER ISSUES
- ------------------------------------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Global Growth............................. -- $82,677,286 -- $71,855,411
Growth.................................... -- 71,917,604 -- 51,179,364
Growth and Income......................... -- 53,580,404 -- 28,097,144
International Growth & Income............. -- 27,613,748 -- 7,730,130
Asset Allocation.......................... $150,607,897 66,985,457 $159,571,211 68,609,453
Strategic Income.......................... 32,350,588 41,627,120 30,579,760 28,589,655
Investment Quality Bond................... 20,563,067 5,941,407 15,521,396 5,760,100
U.S. Government Securities................ 499,334,976 -- 502,789,359 8,253,261
National Municipal Bond................... -- 14,228,804 -- 6,725,332
</TABLE>
Purchases and sales (maturities) for the Money Market Fund for the year ended
October 31, 1995 were $340,804,669 and $343,732,701, respectively.
At October 31, 1995, tax basis net unrealized appreciation was equal to the
aggregate gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market value as
follows:
<TABLE>
<CAPTION>
TAX BASIS NET
UNREALIZED TAX BASIS TAX BASIS
TAX BASIS APPRECIATION UNREALIZED UNREALIZED
PORTFOLIO COST (DEPRECIATION) APPRECIATION DEPRECIATION
- ---------------------------------------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Global Growth............................ $123,079,642 $ 8,015,387 $13,675,611 $5,660,224
Growth................................... 116,852,977 8,988,165 15,821,938 6,833,773
Growth and Income........................ 81,667,290 13,363,018 14,400,108 1,037,090
International Growth and Income.......... 20,859,290 (334,039) 929,484 1,263,523
Asset Allocation......................... 102,258,977 7,918,990 8,820,852 901,862
Strategic Income......................... 49,213,534 (636,572) 1,391,104 2,027,676
Investment Quality Bond.................. 20,456,212 648,141 669,212 21,071
U.S. Government Securities............... 125,790,742 1,926,082 2,083,838 157,756
National Municipal Bond.................. 20,319,090 397,080 508,153 111,073
</TABLE>
The following is a summary of futures contracts activity for the year ended
October 31, 1995:
<TABLE>
<CAPTION>
SALES OF FUTURES CONTRACTS PURCHASES OF FUTURES CONTRACTS
------------------------------------------ ---------------------------------------------
AGGREGATE AGGREGATE
NUMBER OF FACE VALUE OF UNREALIZED NUMBER OF FACE VALUE OF UNREALIZED
CONTRACTS CONTRACTS LOSS CONTRACTS CONTRACTS GAIN
--------- ------------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION FUND:
U.S. TREASURY BOND FUTURES:
Outstanding, October 31, 1994.... -- -- -- --
Contracts opened................. 28 $ 3,600,000 94 $ 9,400,000
Contracts closed................. (21) (2,900,000) (56) (5,600,000)
--- ----------- --- ----------
Outstanding, October 31, 1995.... 7 $ 700,000 ($38,178) 38 $ 3,800,000 $33,806
=== =========== ======== === ========== =======
</TABLE>
54
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
5. INVESTMENT ADVISORY AGREEMENTS. The Fund maintains an Investment Advisory
Agreement with NASL Financial ("the Adviser"). The Adviser is responsible for
managing the corporate and business affairs of the Fund and for selecting and
compensating subadvisers to handle the investment and reinvestment of the assets
of each portfolio, subject to the supervision of the Trustees of the Fund. As
compensation for its services, the Adviser receives a fee from the Fund computed
separately for each portfolio at an annual percentage of average net assets as
follows:
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ---------------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Global Growth..................... .900% .900% .700% .700%
Growth............................ .725% .675% .625% .550%
Growth and Income................. .725% .675% .625% .550%
International Growth and Income... .900% .850% .800% .750%
Asset Allocation.................. .725% .675% .625% .550%
Strategic Income.................. .750% .700% .650% .600%
Investment Quality Bond........... .600% .600% .525% .475%
U.S. Government Securities........ .600% .600% .525% .475%
National Municipal Bond........... .600% .600% .600% .600%
Money Market...................... .200% .200% .200% .145%
</TABLE>
DISTRIBUTION PLAN AND EXPENSE REIMBURSEMENT. Pursuant to the Investment
Advisory Agreement, NASL Financial will reduce the advisory fee or if necessary
reimburse each portfolio of the Fund (excluding taxes, portfolio brokerage
commissions, interest, certain litigation and indemnification expenses,
extraordinary expenses and all of the portfolio's distribution fees) for
expenses incurred in excess (Expense limitation) of the following annual
percentages of average net assets as highlighted in the table below.
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940 to use its assets to finance certain
activities relating to the distribution of its shares to investors. The Plan is
a "compensation" plan providing for the payment by each fund, other than the
Money Market Fund, of a monthly distribution fee to NASL Financial, as principal
underwriter for the Fund as highlighted in the table below:
<TABLE>
<CAPTION>
PORTFOLIO CLASS A CLASS B CLASS C
- ---------------------------------- ------- ------- -------
<S> <C> <C> <C>
GLOBAL GROWTH
Management fees................. 0.900% 0.900% 0.900%
Other expenses.................. 0.500% 0.500% 0.500%
----- ----- -----
Expense limitation.............. 1.400% 1.400% 1.400%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
GROWTH
Management fees................. 0.725% 0.725% 0.725%
Other expenses.................. 0.265% 0.265% 0.265%
----- ----- -----
Expense limitation.............. 0.990% 0.990% 0.990%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
GROWTH AND INCOME
Management fees................. 0.725% 0.725% 0.725%
Other expenses.................. 0.265% 0.265% 0.265%
----- ----- -----
Expense limitation.............. 0.990% 0.990% 0.990%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
</TABLE>
55
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
NOTE 5 - CONTINUED
<TABLE>
<CAPTION>
PORTFOLIO CLASS A CLASS B CLASS C
- ---------------------------------- ------- ------- -------
<S> <C> <C> <C>
INTERNATIONAL GROWTH AND INCOME
Management fees................. 0.900% 0.900% 0.900%
Other expenses.................. 0.500% 0.500% 0.500%
----- ----- -----
Expense limitation.............. 1.400% 1.400% 1.400%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
ASSET ALLOCATION
Management fees................. 0.725% 0.725% 0.725%
Other expenses.................. 0.265% 0.265% 0.265%
----- ----- -----
Expense limitation.............. 0.990% 0.990% 0.990%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
STRATEGIC INCOME
Management fees**............... 0.750% 0.750% 0.750%
Other expenses.................. 0.400% 0.400% 0.400%
----- ----- -----
Expense limitation.............. 1.150% 1.150% 1.150%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
INVESTMENT QUALITY BOND
Management fees................. 0.600% 0.600% 0.600%
Other expenses.................. 0.300% 0.300% 0.300%
----- ----- -----
Expense limitation.............. 0.900% 0.900% 0.900%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
U.S. GOVERNMENT SECURITIES
Management fees................. 0.600% 0.600% 0.600%
Other expenses.................. 0.300% 0.300% 0.300%
----- ----- -----
Expense limitation.............. 0.900% 0.900% 0.900%
===== ===== =====
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
===== ===== =====
NATIONAL MUNICIPAL BOND
Management fees *............... 0.600% 0.600% 0.600%
Other expenses.................. 0.240% 0.240% 0.240%
----- ----- -----
Expense limitation.............. 0.840% 0.840% 0.840%
===== ===== =====
Rule 12b-1 fees................. 0.150% 1.000% 1.000%
===== ===== =====
MONEY MARKET
Management fees................. 0.200% 0.200% 0.200%
Other expenses.................. 0.300% 0.300% 0.300%
----- ----- -----
Expense limitation.............. 0.500% 0.500% 0.500%
===== ===== =====
</TABLE>
56
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
NOTE 5 - CONTINUED
* Through July 31, 1995, the Adviser voluntarily waived 0.250% of its 0.600%
management fee for the National Municipal Bond Fund. As of August 1, 1995, the
Adviser ended the waiver.
** Through February 28, 1995, the Adviser voluntarily waived its management fee
of 0.750% for the Strategic Income Fund, and the Subadviser voluntarily waived
all of its subadvisory fee. As of March 1, 1995, the Adviser and Subadviser
ended the waiver.
In accordance with the advisory agreement, NASL Financial, in addition to
providing advisory services, provides accounting and administrative services for
which NASL Financial charged $903,188 to the Fund, before reimbursement based on
expense limitations, for the year ended October 31, 1995.
6. TRUSTEE'S FEES. The Fund pays each Trustee who is not an employee or a
director of the Adviser or its affiliates a fee of $1,000 plus travel expenses
for each Board of Trustees meeting attended and an annual retainer of $4,000.
7. COMMITMENTS. At October 31, 1995, the Global Growth, International Growth
and Income and Strategic Income Funds had entered into forward foreign currency
contracts which contractually obligate the fund to deliver currencies at future
dates. Open sale and purchase contracts at October 31, 1995 were as follows:
<TABLE>
<CAPTION>
NET
CONTRACTS UNREALIZED
TO IN EXCHANGE SETTLEMENT APPRECIATION
DELIVER FOR DATE VALUE (DEPRECIATION)
----------- ----------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
GLOBAL GROWTH
SALES
German Deutsche Mark........ 65,134 $ 46,341 11/01/95 $ 46,272 $ 69
Japanese Yen................ 54,020,986 534,004 11/01/95 528,407 5,597
German Deutsche Mark........ 11,154,000 7,582,433 12/20/95 7,928,543 (346,110)
French Franc................ 33,730,000 6,552,059 12/20/95 6,878,220 (326,161)
Japanese Yen................ 836,076,159 9,100,201 12/20/95 8,837,799 262,402
Netherland Guilder.......... 2,600,000 1,559,754 12/20/95 1,648,571 (88,817)
----------- ----------- ----------
$25,374,792 $25,867,812 $ (493,020)
=========== =========== ----------
PURCHASES
$ 1,671,545 DEM 2,370,000 12/20/95 $ 1,684,655 $ 13,110
============ =========== ----------
$ (479,910)
==========
INTERNATIONAL GROWTH AND
INCOME
SALES
Japanese Yen................ 347,174,530 $ 3,825,563 11/21/95 $ 3,406,848 418,715
Norwegian Krone............. 344,731 55,290 11/21/95 55,303 (13)
----------- ----------- ----------
$ 3,880,853 $ 3,462,151 $ 418,702
=========== =========== ----------
PURCHASES
$ 118,065 GBP 74,986 11/01/95 $ 118,555 $ 490
954,000 JPY 92,673,900 11/21/95 909,415 (44,585)
----------- ----------- ----------
$ 1,072,065 $1,027,970 $ (44,095)
============ ========== ----------
$ 374,607
==========
</TABLE>
57
<PAGE>
NORTH AMERICAN FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
NOTE 7- CONTINUED
<TABLE>
<CAPTION>
NET
CONTRACTS UNREALIZED
TO IN EXCHANGE SETTLEMENT APPRECIATION
DELIVER FOR DATE VALUE (DEPRECIATION)
----------- ----------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
STRATEGIC INCOME
SALES
French Franc................ 895,764 $ 182,660 11/02/95 $ 183,179 $ (519)
Belgian Franc............... 2,828,536 93,412 01/22/96 98,132 (4,720)
Canadian Dollar............. 235,479 172,033 01/22/96 175,676 (3,643)
Danish Krone................ 501,949 87,703 01/22/96 91,916 (4,213)
German Deutsche Mark........ 2,771,542 1,917,325 01/22/96 1,975,237 (57,912)
Spanish Peseta.............. 16,135,728 126,080 01/22/96 131,081 (5,001)
French Franc................ 1,930,916 379,728 01/22/96 394,283 (14,555)
Great British Pound......... 520,924 812,027 01/22/96 822,211 (10,184)
Italian Lira................ 933,150,236 571,633 01/22/96 578,987 (7,354)
Netherland Guilder.......... 318,004 193,257 01/22/96 202,466 (9,209)
------------ ---------- ----------
$ 4,535,858 $4,653,168 $ (117,310)
============ ========== ----------
PURCHASES
$ 169,666 GBP 107,738 11/01/95 $ 170,337 $ 671
182,218 DEM 257,566 11/02/95 182,982 764
395,354 DEM 553,762 01/22/96 394,650 (704)
601,301 FRF 2,971,384 01/22/96 606,740 5,439
244,696 ITL 394,865,646 01/22/96 245,000 304
72,229 NLG 115,278 01/22/96 73,395 1,166
------------ ---------- ----------
$ 1,665,464 $1,673,104 $ 7,640
============ ========== ----------
$ (109,670)
==========
</TABLE>
8. RECLASSIFICATIONS. Certain reclassifications have been made to the components
of capital in the statement of net assets and liabilities to conform with the
accounting and reporting guidelines of the Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies" (SOP)
issued on February 1, 1993. The SOP requires the Funds to report the accumulated
net realized capital gain (loss) account in such a manner as to approximate
amounts available for future tax distributions (or to offset future taxable
realized capital gains) and to achieve uniformity in the presentation of
distributions by investment companies. Certain distributions in excess of
accumulated net investment income, and/or accumulated realized gains or losses,
which resulted from differences between income tax regulations and generally
accepted accounting principles, have been reclassified to undistributed net
investment income. Distributions which were the result of permanent differences
between book and tax rules have been reclassified to paid-in-capital. The
following amounts represent the cumulative reclassifications as of October 31,
1995:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED ADDITIONAL
NET REALIZED NET INVESTMENT PAID-IN
PORTFOLIO GAINS (LOSSES) INCOME (LOSS) CAPITAL
- ---------------------------------- --------------- -------------- -------------
<S> <C> <C> <C>
Global Growth..................... $(3,270,597) $3,384,106 $(113,509)
Growth............................ (355,700) 353,839 1,861
Growth and Income................. (18,935) 2,530 16,405
International Growth and Income... 229,480 (229,480) --
Asset Allocation.................. (11,955) 5,236 6,719
Strategic Income.................. 101,170 (35,660) (65,510)
Investment Quality Bond........... 5,542 (19,157) 13,615
U. S. Government Securities....... 448,966 (262,538) (186,428)
National Municipal Bond........... (167) 228 (61)
</TABLE>
The Statement of Changes in Net Assets and Financial Highlights for previous
periods have not been restated to reflect this change in presentation. Net
investment income, net realized gains and net assets were not affected by this
change.
58
