<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
[X] Preliminary information statement [_] Confidential, for use of the
Commission only (as permitted by
Rule 14c-5(d)(2))
[_] Definitive information statement
NORTH AMERICAN FUNDS
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: _________
(2) Aggregate number of securities to which transaction applies: ____________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): _______________
(4) Proposed maximum aggregate value of transaction: ________________________
(5) Total fee paid: _________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _______________________________________________
(2) Form, Schedule or Registration Statement No.: _________________________
(3) Filing Party: _________________________________________________________
(4) Date Filed: ___________________________________________________________
<PAGE>
January 30, 1998
Dear Shareholders:
Enclosed is an Information Statement regarding Salomon Brothers Asset
Management Inc. (SBAM), the subadviser to the North American U.S. Government
Securities Fund, the North American National Municipal Bond Fund and The North
American Strategic Income Fund. The statement details the recent merger of
SBAM's parent with Smith Barney Holdings, Inc., a wholly-owned subsidiary of
Travelers Group Inc.
This merger resulted in the review of the existing SBAM subadvisory agreement
and the SBAM Ltd. subadvisory consulting agreement. The North American Board
of Trustees has approved new agreements with SBAM and SBAM Ltd. on
substantially identical terms and with the same fees as the old agreements.
As always, please direct any inquiries to Shareholder Services at 1-800-872-
8037.
Sincerely,
Bradford K. Gallagher
<PAGE>
Salomon Brothers Asset Management Inc. ("SBAM") is the subadviser to the
U.S. Government Securities Fund, the Strategic Income Fund and the National
Municipal Bond Fund (the "Portfolios") of the North American Funds (the
"Fund"). Additionally SBAM has entered into a subadvisory consulting agreement
with Salomon Brothers Asset Management Limited ("SBAM Ltd.") with respect to
the Strategic Income Fund. On November 28, 1997, Salomon Inc. ("Salomon"), the
ultimate parent company of SBAM and SBAM Ltd., merged with and into Smith
Barney Holdings Inc., a wholly-owned subsidiary of Travelers Group Inc.
("Travelers"), to form a new company called Salomon Smith Barney Holdings Inc.
(the "Transaction"). Upon consummation of the Transaction, Travelers became
the ultimate parent of SBAM and SBAM Ltd.
Travelers is a diversified financial services company engaged in investment
services, asset management, consumer finance and life and property casualty
insurance services.
Under an order the Fund has received from the Securities and Exchange
Commission, the Fund is permitted to appoint a subadviser pursuant to a
subadvisory agreement with the Fund's Adviser, CypressTree Asset Management
Corporation, Inc. ("CAM"), that has not been approved by shareholders. The
Trustees of the Fund must approve such subadvisory agreements, and the Fund
must provide notice to shareholders within 60 days of such hiring of a new
subadviser or the implementation of any material change in a subadvisory
contract. This Information Statement is being supplied to shareholders to
fulfill the notice condition, and will be mailed on or about January , 1998.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
Under certain interpretations, the Transaction might be deemed to create an
"assignment," as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), of both the subadvisory agreement with SBAM and the
subadvisory consulting agreement between SBAM and SBAM Ltd., resulting in the
termination of the agreements. Therefore, on November 24, 1997 the Board of
Trustees approved new agreements which became effective on November 28, 1997
and which are identical, except for the date of execution, to the prior
agreements approved by shareholders on September 24, 1997.
APPROVAL OF A NEW SUBADVISORY AGREEMENT BETWEEN CAM AND SBAM WITH RESPECT TO
- ----------------------------------------------------------------------------
THE U.S. GOVERNMENT SECURITIES FUND
- -----------------------------------
Prior to November 28, 1997, SBAM served as the subadviser to the U.S.
Government Securities Fund pursuant to a subadvisory agreement with CAM (the
"Old U.S. Government Securities Fund Agreement"). On November 24, 1997 the
Board of Trustees approved a subadvisory agreement between CAM and SBAM
pursuant to which SBAM continues to serve as the subadviser following the
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Transaction (the "New U.S. Government Securities Fund Agreement"). The New
U.S. Government Securities Fund Agreement contains identical terms and
conditions, including identical subadvisory fee levels, as the Old U.S.
Government Securities Fund Agreement.
Under the terms of the New U.S. Government Securities Fund Agreement, SBAM
will continue to manage the investment and reinvestment of the assets of the
U.S. Government Securities Fund, subject to the supervision of CAM and the
Board of Trustees. SBAM formulates and executes an investment program for the
portfolio consistent with the portfolio's investment objectives and policies
as outlined in the Fund's Prospectus. SBAM, at its expense, furnishes
necessary investment and management facilities for conducting the investment
activities of the portfolio, and pays the salaries of its personnel.
Subadvisory Fee Rates
As compensation for its services, SBAM receives a fee from CAM calculated as
an annual percentage of the current value of the net assets of the U.S.
Government Securities Fund. The fee, which is accrued daily and payable
monthly in arrears, is calculated for each day by multiplying the fraction of
one over the number of calendar days in the year by the annual percentage
prescribed for the Portfolio, and multiplying this product by the value of the
net assets of the U.S. Government Securities Fund at the close of business on
the previous business day of the Trust.
Under both the Old and New U.S. Government Securities Fund Agreements, SBAM
receives a fee equal to .225% of the first $200 million of the portfolio's
average daily net assets, .150% of the portfolio's average daily net assets
between $200 million and $500 million and .100% of the portfolio's average
daily net assets in excess of $500 million.
Subadvisory Fees Paid
For the fiscal year ended October 31, 1997, CAM and the Fund's former
Adviser paid $260,027 in subadvisory fees to SBAM for management of the U.S.
Government Securities Fund. THESE FEES ARE PAID BY THE ADVISER OUT OF THE
ADVISORY FEE IT RECEIVES FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO
THE PORTFOLIO.
2
<PAGE>
Other Investment Companies Advised by SBAM
SBAM manages three other funds with investment objectives similar to the
U.S. Government Securities Fund. They are:
<TABLE>
<CAPTION>
NET ASSETS
FUND INVESTMENT OBJECTIVE ADVISORY/SUBADVISORY FEE (9/30/97)
---- -------------------- ------------------------ ------------
<C> <S> <C> <C>
Salomon Seeks a high Advisory fee $ 13,084,920
Brothers U.S. level of of .60% of
Government current income average daily
Income Fund net assets
Salomon Provide a high Subadvisory $ 17,773,533
Brothers U.S. level of fee of .225%
Government current income on the first
Series consistent $200 million
(Advised by with of net assets;
TNE Advisers, preservation .15% on the
subadvised by of capital and next $300
SBAM) maintenance of million of net
liquidity assets; and
.10% on all
assets over
$500 million
NASL Series Seeks a high Subadvisory $227,997,438
Trust U.S. level of fee of .225%
Government current income on the first
Securities consistent $200 million
Trust with of net assets;
preservation .15% on the
of capital and next $300
maintenance of million of net
liquidity assets; and
.10% on all
assets over
$500 million
</TABLE>
Shareholder and Board Approval of the Old U.S. Government Securities Fund
Agreement
The Old U.S. Government Securities Fund Agreement was initially approved by
the Board of Trustees on June 27, 1997 and by the shareholders of the U.S.
Government Securities Fund on September 24, 1997.
Board Considerations
At a meeting held on November 24, 1997 the Board of Trustees approved the
New U.S. Government Securities Fund Agreement.
The Board of Trustees believes that the agreement will enable the portfolio
to continue to obtain high quality services at costs which it deems
appropriate and reasonable. In connection with its review, the Board of
Trustees considered materials furnished by SBAM including information
regarding the personnel, operations and financial condition of SBAM and
Travelers.
The Board focused primarily on the nature and quality of the services
provided by SBAM to the portfolio, and the fact that the terms and conditions
of the Old U.S. Government Securities Fund Agreement and the New U.S.
Government Securities Fund Agreement, including the terms relating to the
services to be performed and to
3
<PAGE>
expenses and fees, are substantially identical. In connection with these
considerations, the Board of Trustees also considered possible alternatives to
approval of the New U.S. Government Securities Fund Agreement.
Based upon its review of the above factors, the Board of Trustees concluded
that the New U.S. Government Securities Agreement is in the best interests of
the portfolio and its shareholders.
APPROVAL OF A SUBADVISORY AGREEMENT BETWEEN CAM AND SBAM WITH RESPECT TO THE
- ----------------------------------------------------------------------------
NATIONAL MUNICIPAL BOND FUND
- ----------------------------
Prior to November 28 1997, SBAM served as the subadviser to the National
Municipal Bond Fund pursuant to a subadvisory agreement with CAM, the Fund's
Advisor (the "Old National Municipal Bond Fund Agreement"). On November 24,
1997, the Board approved a subadvisory agreement between CAM and SBAM,
pursuant to which SBAM continues to serve as the subadviser following the
Transaction (the "New National Municipal Bond Fund Agreement").
Under the terms of the New National Municipal Bond Fund Agreement, SBAM will
continue to manage the investment and reinvestment of the assets of the
National Municipal Bond Fund, subject to the supervision of CAM and the Board
of Trustees. The New National Municipal Bond Agreement contains similar terms
and conditions, including identical subadvisory fee levels, as the Old
National Municipal Bond Agreement.
Subadvisory Fee Rates
Under both the Old and New National Municipal Bond Fund Agreements, SBAM
receives a fee equal to .250% of the portfolio's average daily net assets. For
a description of how the fee is calculated, see the U.S. Government Securities
Fund section of this information statement.
Subadvisory Fees Paid
For the fiscal year ended October 31, 1997, CAM and the Fund's former
Adviser paid $50,586 in subadvisory fees to SBAM for management of the
National Municipal Bond Fund. THESE FEES ARE PAID BY THE ADVISER OUT OF THE
ADVISORY FEE IT RECEIVES FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO
THE PORTFOLIO.
4
<PAGE>
Other Investment Companies Advised by SBAM
SBAM manages one other fund with investment objectives similar to the
National Municipal Bond Fund as follows:
<TABLE>
<CAPTION>
NET ASSETS
FUND INVESTMENT OBJECTIVE ADVISORY FEE (9/30/97)
---- -------------------- ------------ -----------
<S> <C> <C> <C>
Salomon Brothers Achieve a high level .0% of average daily $13,767,023
National Intermediate of current income net assets
Municipal Fund which is exempt from
regular federal
income taxes
</TABLE>
Shareholder and Board Approval of the Old National Municipal Bond Fund
Agreement
The Old National Municipal Bond Fund Agreement was initially approved by the
Board of Trustees on June 27, 1997 and by the shareholders of the National
Municipal Bond Fund on September 24, 1997.
Board Considerations
At a meeting held on November 24, 1997, the Board of Trustees approved the
New National Municipal Bond Agreement.
The Board believes that the agreement will enable the portfolio to continue
to obtain high quality services at costs which it deems appropriate and
reasonable and which are substantially identical to the existing agreement. In
connection with its review, the Board of Trustees considered materials
furnished by SBAM, including information regarding the personnel, operations
and financial condition of SBAM and Travelers.
Based upon its review of the above factors, the Board of Trustees concluded
that the New National Municipal Bond Fund Agreement is in the best interests
of the portfolio and its shareholders. In this regard, the Board of Trustees
placed emphasis on the continuity provided by maintaining the same investment
subadviser for the portfolio following the Transaction. The Board of Trustees
also considered the overall experience and reputation of SBAM, as well as the
cost and profitability to SBAM of acting as subadviser to the portfolio. In
connection with these considerations, the Board of Trustees was provided with
information regarding fees payable by similar investment companies, as well as
services provided to such companies and their performance records, and
information regarding SBAM's management of another investment company with
objectives and policies similar to the portfolio.
5
<PAGE>
APPROVAL OF A SUBADVISORY AGREEMENT BETWEEN CAM AND SBAM WITH RESPECT TO THE
- ----------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ---------------------
Prior to November 28, 1997, SBAM served as the subadviser to the Strategic
Income Fund pursuant to a subadvisory agreement with CAM (the "Old Strategic
Income Agreement"). On November 24, 1997, the Board of Trustees approved a
subadvisory agreement between CAM and SBAM pursuant to which SBAM continues to
serve as the subadviser following the Transaction (the "New Strategic Income
Fund Agreement"). The New Strategic Income Fund Agreement contains identical
terms and conditions, including identical subadvisory fee levels, as the Old
Strategic Income Fund Agreement
Under the terms of the New Strategic Income Fund Agreement, SBAM will
continue to manage the investment and reinvestment of the assets of the
Strategic Income Fund, subject to the supervision of CAM and the Board of
Trustees. The New Strategic Income Agreement contains substantially identical
terms and conditions, including identical subadvisory fee levels, as the Old
Strategic Income Agreement.
Subadvisory Fee Rates
Under the Old and New Strategic Income Fund Agreements, SBAM receives a fee
equal to .350% of the first $50 million of the portfolio's average daily net
assets, .300% of the portfolio's average daily net assets between $50 million
and $200 million, .250% of the portfolio's average daily net assets between
$200 million and $500 million and .200% of the portfolio's average daily net
assets in excess of $500 million. For a description of how the fee is
calculated, see the U.S. Government Securities Fund section of this
information statement.
Subadvisory Fees Paid
For the fiscal year ended October 31, 1997, CAM and the Fund's former
Adviser paid $192,079 in subadvisory fees to SBAM for management of the
Strategic Income Fund. A portion of this amount was paid by SBAM to SBAM Ltd.,
as described below.
6
<PAGE>
Other Investment Companies Advised by SBAM
SBAM manages four other funds with investment objectives similar to the
Strategic Income Fund, as follows:
<TABLE>
<CAPTION>
NET ASSETS
FUND INVESTMENT OBJECTIVE ADVISORY/SUBADVISORY FEE (9/30/97)
- ---- -------------------- ------------------------ ------------
<S> <C> <C> <C>
Salomon Brothers Seeks a high level of Advisory fee of .75% of average $ 77,633,704
Strategic Current income daily net assets
Bond Fund
Salomon Brothers Seeks a high level of total Advisory fee of .35% on the first $ 64,493,077
Strategic return consistent with the $50 million of net assets; .35% of the next
Bond Opportunities preservation of capital $150 million; .30% on the next $300
Series million; and .25% over $500 million
Salomon Brothers/JNL: Obtain a high level of Current Subadvisory fee of .375% on $ 32,170,924
Global Bond Series income the first $50 million of net assets; .35% on the
(Advised by JNL, next $100 million of net assets;
subadvised by SBAM) .30% of the next $350 million of net
assets; and .25% on all assets over $500 million
NASL Series Trust Seeks a high level of total return Subadvisory fee of .35% on the first $50 million $331,559,951
Strategic consistent with preservation of capital of net assets; .30% on the next $150 million of
Bond Trust net assets; .25% on the next $300 million of net
assets; and .20% on all assets over $500 million
</TABLE>
Shareholder and Board Approval of the Old Strategic Income Fund Agreement
The Old Strategic Income Agreement was initially approved by the Board of
Trustees on June 27, 1997 and by the shareholders of the Strategic Income Fund
on September 24, 1997.
Board Considerations
At a meeting held on November 24, 1997, the Board of Trustees, approved the
New Strategic Income Fund Agreement.
The Board of Trustees believes that the agreement will enable the portfolio
to obtain high quality services at costs which it deems appropriate and
reasonable. In connection with its review, the Board of Trustees considered
materials furnished by SBAM including information regarding the personnel,
operations and financial condition of SBAM.
Based upon its review of the above factors, the Board of Trustees concluded
that the New Strategic Income Fund Agreement is in the best interests of the
portfolio and its shareholders.
7
<PAGE>
APPROVAL OF A SUBADVISORY CONSULTING AGREEMENT BETWEEN SBAM AND SBAM LTD. WITH
- ------------------------------------------------------------------------------
RESPECT TO THE STRATEGIC INCOME FUND
- ------------------------------------
In connection with SBAM's service as subadviser to the Strategic Income
Fund, SBAM's London-based affiliate, SBAM Ltd. provides certain subadvisory
consulting services to SBAM with regard to currency transactions and
investments in non-dollar denominated debt securities ("Foreign Securities")
for the benefit of the Strategic Income Fund. These services were provided,
prior to November 28, 1997, pursuant to a subadvisory consulting agreement
between SBAM and SBAM Ltd. (the "Old Consulting Agreement"). On November [ ],
1997, a consulting agreement (the "New Consulting Agreement") substantially
similar to the Old Consulting Agreement was signed by SBAM and SBAM Ltd.
Under the terms of the New Consulting Agreement, SBAM Ltd. will continue to
provide advisory services to SBAM relating to currency transactions and
investments in Foreign Securities for the Portfolio. The New Consulting
Agreement contains identical terms and conditions, including identical fee
levels, as the Old Consulting Agreement, and SBAM Ltd. is compensated by SBAM
at no additional expense to the Strategic Income Fund.
Subadvisory Fee Rates
As full compensation for all services provided by SBAM Ltd. under both the
Old and New Consulting Agreements, SBAM pays SBAM Ltd. a portion of its
subadvisory fee equal to the fee payable under SBAM's subadvisory agreement
with respect to the portfolio multiplied by the percentage of the Strategic
Income Fund's assets that SBAM Ltd. has been delegated to manage, divided by
the current value of the net assets of the portfolio.
Subadvisory Fees Paid
For the fiscal year ended October 31, 1997, SBAM paid $48,020 to SBAM Ltd.
under the Existing Consulting Agreement for subadvisory consulting services
rendered in connection with the Strategic Income Fund.
Management and Control of SBAM Limited
SBAM Ltd. is located at Victoria Plaza, 111 Buckingham Palace Road, London
SW1W OSB, England. SBAM Ltd. is a subsidiary of Salomon Smith Barney Holdings
Inc.
Shareholder and Board Approval of the Old Consulting Agreement
The Old Consulting Agreement was initially approved by the Board of Trustees
on June 27, 1997 and by the shareholders of the Strategic Income Fund on
September 24, 1997.
8
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BOARD CONSIDERATIONS
At a meeting held on November 24, 1997, the Board of Trustees approved the
New Consulting Agreement.
In approving the New Consulting Agreement the Board of Trustees has
determined that the agreement is in the best interests of the portfolio and
its shareholders. The Board of Trustees believes that the New Consulting
Agreement will enable the portfolio to obtain high-quality services at costs
which it deems appropriate and reasonable. In connection with its review of
the New Consulting Agreement, the Board of Trustees reviewed materials
furnished by SBAM Ltd., including information regarding the personnel,
operations and financial condition of SBAM Ltd.
Based upon its review of the above factors, the Board of Trustees concluded
that the New Consulting Agreement is in the best interests of the Portfolio
and its shareholders.
DURATION AND TERMINATION OF ALL AGREEMENTS
The agreements will have initial terms of two years, and thereafter will
continue in effect for successive annual periods provided such continuance is
approved at least annually by (i) a majority of the Trustees not parties to
the agreements, and who are not "interested persons"(as defined in the 1940
Act) of any such party and (ii) a majority of the Board of Trustees as a whole
or the holders of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund. All agreements will terminate automatically in
the event of their "assignment".
GENERAL INFORMATION CONCERNING SBAM AND SBAM LTD.
-------------------------------------------------
INFORMATION CONCERNING SBAM
The names, titles and principal occupations of the current directors and
executive officers of SBAM are set forth in the following table.
<TABLE>
<CAPTION>
TITLE AND
NAME PRINCIPAL OCCUPATION
---- ----------------------------------------------------------
<C> <S>
Thomas W. Brock Chairman, Chief Executive Officer and Managing Director of
SBAM and Managing Director and Member of the Management
Board of Salomon Brothers Inc.
Michael S. Holland President, Managing Director and Member of the Board of
SBAM and Managing Director of Salomon Brothers Inc.
Rodney B. Berens Managing Director and Member of the Board of SBAM and
Managing Director and Member of the Management Board of
Salomon Brothers Inc.
Vilas V. Gadkari Managing Director and Member of the Board of SBAM and
Managing Director of Salomon Brothers Inc.
Zachary Snow Secretary of SBAM and Managing Director and Counsel of
Salomon Brothers Inc.
</TABLE>
9
<PAGE>
The business address of each person listed above other than Mr. Gadkari is 7
World Trade Center, New York, New York 10048 and the business address of Mr.
Gadkari is Victoria Plaza, 111 Buckingham Palace Road, London, England SW1W
OSB.
Management and Control of SBAM
SBAM is located at 7 World Trade Center, New York, New York 10048. SBAM is a
wholly-owned subsidiary of Salomon Smith Barney Holdings Inc, which is in turn
owned by Travelers Inc. For information on the principal executive officers
and directors of SBAM, see below.
Information Concerning SBAM Limited
SBAM Ltd. is a company organized under the laws of England. SBAM Ltd.
provides certain advisory services to SBAM relating to currency transactions
and investments in non-dollar denominated debt securities for the benefit of
the Strategic Income Fund. SBAM Ltd. is a wholly-owned subsidiary of Salomon
Brothers Europe Ltd., which in turn is a wholly-owned subsidiary of Salomon
(International) [Finanz] AG, which in turn is a wholly-owned subsidiary of
SBHC, which is a wholly-owned subsidiary of Salomon, and therefore is an
affiliate of SBAM. SBAM Ltd. is a member of the Investment Management
Regulatory Organization Ltd. in the United Kingdom and is registered as an
investment adviser pursuant to the Advisers Act. The principal business
address of SBAM Ltd. is Victoria Plaza, 111 Buckingham Palace Road, London
SW1W OSB, England.
The names, titles and principal occupations of the current directors and
executive officers of SBAM Ltd. are set forth in the following table. The
business address of each person listed below except for Messrs. Hyland and
Brock is Victoria Plaza, 111 Buckingham Palace Road, London SW1W OSB, England.
The business address of Messrs. Hyland and Brock is 7 World Trade Center, New
York, New York 10048.
<TABLE>
<CAPTION>
TITLE AND
NAME PRINCIPAL OCCUPATION
---- ---------------------------------------------------------
<C> <S>
Michael S. Hyland Director/Chairman of SBAM Ltd. and Managing Director of
Salomon Brothers Inc.
Thomas W. Brock Director of SBAM Ltd. and Managing Director and Member of
the Management Board of Salomon Brothers Inc.
Vilas V. Gadkari Chief Investment Officer and Director of SBAM Ltd. and
Managing Director of Salomon Brothers Inc.
Joseph V. McDevitt Chief Operating Officer and Director of SBAM Ltd.
Susan H. Dean Finance Officer of SBAM Ltd.
Beatrice J. Doran Vice President and Counsel of SBAM Ltd.
</TABLE>
10
<PAGE>
Brokerage Transactions
Pursuant to the agreements, SBAM and SBAM Ltd. (hereafter collectively
referred to as the "Subadvisers") are responsible for placing all orders for
the purchase and sale of portfolio securities of the Portfolios. The
Subadvisers have no formula for the distribution of the Portfolios' brokerage
business, and place orders for the purchase and sale of securities with the
primary objective of obtaining the most favorable overall results for the
Portfolios.
In selecting brokers or dealers through whom to effect transactions, the
Subadvisers give consideration to a number of factors, including price, dealer
spread or commission (if any), the reliability, integrity and financial
condition of the broker-dealer, size of the transaction and difficulty of
execution. In selecting brokers and dealers, the Subadvisers also give
consideration to the value and quality of any research, statistical, quotation
or valuation services provided by the broker or dealer. In placing a purchase
or sale order, the Subadvisers may use a broker whose commission in effecting
the transaction is higher than that of some other broker if the Subadvisers
determine in good faith that the amount of the higher commission is reasonable
in relation to the value of the brokerage and research services provided by
such broker, viewed in terms of either the particular transaction or the
Subadvisers' overall responsibilities with respect to the Portfolios and other
accounts managed by the Subadvisers.
To the extent research services are used by the Subadvisers in rendering
investment advice to the Portfolios, such services would tend to reduce the
Subadvisers expenses. However, the Subadvisers do not believe that an exact
dollar value can be assigned to these services. Research services received by
the Subadvisers from brokers or dealers executing transactions for the
Portfolios will also be available for the benefit of other portfolios managed
by the Subadvisers.
For the year ended October 31, 1997, the Fund as a whole paid brokerage
commissions of $1,102,121, although no commissions were paid in connection
with the Strategic Income, U.S. Government Securities or National Municipal
Bond portfolios.
Salomon Brothers Inc. is an affiliated broker of the Portfolios due to
SBAM's position as subadviser to the Portfolios and due to the position of
SBAM Ltd. as subadviser to the Strategic Bond portfolio. For the fiscal year
ended October 31, 1997, no brokerage commissions were paid to Salomon Brothers
Inc. by the Portfolios.
Other Matters
The Fund will furnish, without charge, a copy of the Fund's annual report
for the fiscal year ended October 31, 1997 to a shareholder upon request. To
obtain a report, please contact the Fund by calling (800) 872-8037 or by
writing to P.O. Box 8505, Boston, Massachusetts 02266.
11
<PAGE>
CAM, the adviser to the Fund, is located at 286 Congress Street, Boston,
Massachusetts 02210.
The Fund is not required to hold annual meetings of shareholders, and
therefore it cannot be determine when the next meeting of shareholders will be
held. Shareholder proposals to be presented at any future meeting of
shareholders of the Fund must be received by the Fund a reasonable time before
the Fund's solicitation of proxies for that meeting in order for such
proposals to be considered for inclusion in the proxy materials related to
that meeting. The cost of the preparation, printing and distribution of this
Information Statement is an expense of CAM which expects to receive
reimbursement from Travelers for such expense.
12
