<PAGE>
[LOGO OF NORTH AMERICAN REPORT TO
FUNDS APPEARS HERE] SHAREHOLDERS
North American Funds(R) Semi-Annual Report April 30, 1998
Unaudited
Financial
Statements
<PAGE>
NORTH AMERICAN FUNDS
President's Message
- --------------------------------------------------------------------------------
June 15, 1998
Dear Shareholders:
The financial markets exhibited continued strength during the six-month period
ending April 30, 1998. Driving this performance was the strong U.S. economy.
Inflation, unemployment and interest rates remained at their lowest points in
years. All of this good news was tempered, however, by the continuing financial
uncertainty in Asia.
At North American Funds, we've developed two innovative mutual funds to leverage
the earnings growth potential of many companies in today's market. Therefore, we
are pleased to announce the launch of the Tax-Sensitive Equity Fund and the
Emerging Growth Fund. We believe these two new funds will expand your investment
choices to enable you to better diversify your portfolio and to take advantage
of current market opportunities. These funds are discussed in greater detail on
the following two pages.
The Tax-Sensitive Equity Fund seeks to maximize after-tax total returns while
continuing to emphasize long-term capital growth. Given the significant changes
to the capital gains structure and record distributions being paid out by many
mutual fund companies, North American Funds has responded with a fund that
focuses on the most important return results -- what's left after taxes.
Standish, Ayer & Wood, Inc., a premier manager of tax-sensitive accounts for
institutions and private clients, was selected by North American to manage this
Fund because of their specialized investment approach to maximizing after-tax
returns.
The Emerging Growth Fund seeks capital appreciation through investments in small
to mid-sized domestic companies with emerging or renewed growth potential. With
the record returns of the S&P 500 over the last three years, the relative
earnings growth of small cap companies versus large cap companies is beginning
to be recognized in the marketplace. Warburg Pincus Asset Management, a
well-known and experienced small-cap manager, was selected to manage the
Emerging Growth Fund because of their in-depth knowledge of new start-up
companies.
At North American Funds, we continually strive to be your first choice when it
comes to mutual fund investing. During the remainder of 1998, we plan to bring
you more exciting news on the product development front. Our mission is simple
and straightforward -- to provide you with exceptional, disciplined and varied
investment management expertise -- in one mutual fund family.
If you have questions regarding your investments or our two new funds, please
call your investment representative or our customer service team at
1-800-872-8037. Thank you for choosing North American Funds. We look forward to
serving your investment needs.
Sincerely,
/s/ Bradford K. Gallagher
Bradford K. Gallagher
President, North American Funds
<PAGE>
North American Funds
Emerging Growth Fund
- --------------------------------------------------------------------------------
- -------------------------
[PHOTO OF
ELIZABETH B. DATER
APPEARS HERE]
- -------------------------
Elizabeth B. Dater
Senior Managing Director
Emerging Growth Fund
What do Microsoft, Federal Express, and Wal-Mart have in common? They were all
once emerging growth companies. The North American Emerging Growth Fund provides
investors with the opportunity to invest in companies that could potentially
become the household names of the future.
Over the past ten years, small company growth funds have outperformed all other
domestic growth fund categories. /(1)/
In today's rising stock market, emerging growth stocks remain one of the few
remaining bargains. Small-cap companies' earnings are currently surpassing that
of large-cap stocks. And, small-cap valuations remain attractive especially when
compared to larger, blue chip stocks.
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
For the four months ended April 30, 1998, the Fund experienced, in general,
healthy gains for the small company stocks in which the Fund invests. Supporting
the group were small-caps' continued strong earnings gains vs. those of large
companies and their relatively attractive valuations. The Fund's performance was
impacted late in the period by investors' general preference for larger,
more-liquid issues, a result of renewed concerns regarding Asia's financial
crisis.
Some of the best performers for the Fund were financial stocks, which benefited
from a favorable interest-rate environment, strong earnings growth, and merger &
acquisition activity. Other areas of strength were business services,
technology, healthcare, leisure and entertainment.
Looking ahead, our outlook for emerging-growth companies through the remainder
of 1998 and beyond remains positive. Earnings growth for small-cap and
aggressive-growth companies continues to exceed that of larger companies, and
relative equity valuations (e.g., price-to-earnings multiples) for the group are
more attractive than they have been since 1990. Ms. Dater believes that some of
the best opportunities continue to be found among the business services,
healthcare, and financial sectors.
- --------------------------------------------------------------------------------
Top Ten Holdings
April 30, 1998
% of Portfolio
--------------
McLeod USA Inc. 2.80%
Avant Corp. 2.65%
Kroll O Gara Co. 2.59%
Interface Inc. 2.58%
Iron Mountain Inc. 2.55%
Transaction Sys. Architects 2.55%
Metro Networks Inc. 2.42%
Metals USA Inc. 2.37%
Staples Inc. 2.25%
National Instrs. Corp 2.16%
- --------------------------------------------------------------------------------
Sector Diversification
April 30, 1998
[PIE CHART APPEARS HERE]
Consumer Basics 12.13%
Cash 20.65%
Consumer Non-Durables 5.81%
Consumer Services 3.32%
Utilities 2.80%
Transportation 1.52%
Energy 3.24%
Finance 1.90%
Gen Business 14.31%
Technology 21.63%
Shelter 2.13%
Miscellaneous 10.56%
- --------------------------------------------------------------------------------
<PAGE>
North American Funds
Tax-Sensitive Equity Fund
- --------------------------------------------------------------------------------
- -------------------------
[PHOTO OF
LAURENCE A. MANCHESTER
APPEARS HERE]
- -------------------------
Laurence A. Manchester, CFA
Portfolio Manager
Tax-Sensitive Equity Fund
Are you tired of sacrificing a portion of your investment return to taxes? The
North American Tax-Sensitive Equity Fund is managed to maximize after-tax
returns while focusing on long-term growth.
It's estimated that in 1997, investors in the 10 largest growth funds
sacrificed, on average, about 16% of their total returns to taxes./(2)/
Given the high level of capital gains distributions currently being paid out, it
is more important than ever to take advantage of the recent changes made to our
tax laws. The North American Tax-Sensitive Equity Fund attempts to minimize
taxes by steering away from dividend and short-term capital gains and by keeping
portfolio turnover rates low.
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
For the four months ended April 30, 1998, the Fund experienced strong
performance that was aided by stocks in the capital goods, growth cyclical,
healthcare and financial sectors. Our exposure to real estate investment trusts
had a negative impact on performance. However, we continue to view this sector
as defensive. It was an important portfolio component during recent market
volatility given the higher yields of these stocks. The real estate industry is
a fragmented one with only a small percentage of real estate in public hands.
It is ripe for continued consolidation and the shares should have good price
appreciation.
Inflation, interest rates, and liquidity remain positive influences on the
stock market. However, slowing corporate profits and turmoil in Southeast Asia
could cause the stock market's returns to be weaker than they have been in the
recent past.
The Fund is strongly positioned for the future as it is built from a bottom-up
approach that has identified growing companies selling at below-market
price/earnings multiples. Given the increased volatility we expect in the
market, our lower P/E-diversified portfolio is one we believe positions us well
relative to the market over the long-term. As importantly, we feel the outlook
for the fund is positive and it will continue to pursue the objective of
minimizing capital gains to improve after-tax returns.
- --------------------------------------------------------------------------------
Top Ten Holdings
April 30, 1998
% of
Common Stocks
-------------
Cranc Company 3.0%
United Technologies 3.0%
Reliastar Financial 3.0%
Precision Castparts 3.0%
American Power Conv. 2.9%
Owens Illinois 2.9%
Belden 2.9%
SCI Systems 2.9%
Lancaster Colony Corp. 2.8%
Conseco 2.8%
- --------------------------------------------------------------------------------
Sector Diversification
April 30, 1998
[PIE CHART APPEARS HERE]
REITs 2.12%
Energy 6.35%
Basic Industry 2.36%
Financial 20.06%
Capital Goods 13.71%
Services 2.75%
Healthcare 5.23%
Technology 17.28%
Consumer Staple 15.86%
Early Cyclical 5.02%
Growth Cyclical 9.28%
- --------------------------------------------------------------------------------
<PAGE>
North American Funds
DISCLOSURE
Disclosure for Emerging Growth Fund and Tax-Sensitive Equity Fund
- -----------------------------------------------------------------
The investment return and principal value of an investment in a North American
Fund will fluctuate with market conditions so that shares, when redeemed, may be
worth more or less than the original cost. Past performance is no guarantee of
future results.
Top ten holdings and diversification are presented to illustrate the securities
in which the Fund is invested and may not be representative of future
investments. The holdings do not include the Fund's entire investment portfolio
and may change at any time.
Portfolio Manager commentary is the sole opinion of the portfolio manager and
not a guarantee of future events.
Additional Disclosure for Emerging Growth Fund
- ----------------------------------------------
/1/ Morningstar, Inc.(C) 1998. Although gathered by reliable sources, data
accuracy and completeness cannot be guaranteed. All rights reserved. Data for
the 10-year period ended 12/31/97. Morningstar Small Cap Growth Category
represents 212 funds.
Additional Disclosure for Tax-Sensitive Equity Fund
- ---------------------------------------------------
/2/ Morningstar, Inc.(C) 1998. Although gathered by reliable sources, data
accuracy and completeness cannot be guaranteed. All rights reserved. Average
returns for the 10 largest funds in terms of assets in the Growth Category as
defined by Morningstar.
<PAGE>
North American Funds
DISCLOSURE
Disclosure for both funds.
- --------------------------
The investment return and principal value of an investment in a North American
Fund will fluctuate with market conditions so that shares, when redeemed, may be
worth more or less than the original cost. Past performance is no guarantee of
future results.
Top ten holdings, sector weightings, and portfolio composition are presented to
illustrate the securities in which the Fund is invested and may not be
representative of future investments. The holdings do not include the Fund's
entire investment portfolio and may change at any time.
Portfolio Manager commentary is the sole opinion of the portfolio manager and
not a guarantee of future events.
Additional Disclosure for Emerging Growth
- -----------------------------------------
/1/Morningstar, Inc.(C) 1998. Although gathered by reliable sources, data
accuracy and completeness cannot be guaranteed. All rights reserved. Data for
the 10-year period ended 12/31/97. Morningstar Small Cap Growth category
represents 212 funds.
Additional Disclosure for Tax-Sensitive
- ---------------------------------------
/1/ Morningstar, Inc.(C) 1998. Although gathered by reliable sources, data
accuracy and completeness cannot be guaranteed. All rights reserved. Average
returns for the 10 largest funds in terms of assets in each category as defined
by Morningstar.
<PAGE>
NORTH AMERICAN FUNDS
INDEX TO SEMI-ANNUAL REPORT
April 30, 1998
- --------------------------------------------------------------------------------
Page
----
Statements of Assets and Liabilities ................................. 1
Statements of Operations ............................................. 7
Statements of Changes in Net Assets .................................. 10
Financial Highlights ................................................. 14
Portfolio of Investments:
International Small Cap Fund ..................................... 31
International Growth and Income Fund ............................. 32
Global Equity Fund ............................................... 34
Emerging Growth Fund ............................................. 36
Small/Mid Cap Fund ............................................... 37
Growth Equity Fund ............................................... 38
Tax-Sensitive Equity Fund ........................................ 39
Growth and Income Fund ........................................... 40
Equity-Income Fund ............................................... 42
Balanced Fund .................................................... 44
Strategic Income Fund ............................................ 46
Investment Quality Bond Fund ..................................... 49
National Municipal Bond Fund ..................................... 52
U.S. Government Securities Fund .................................. 53
Money Market Fund ................................................ 54
Notes to Financial Statements ........................................ 56
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 1998 -- (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International Global Emerging Small/Mid
Small Cap Growth and Equity Growth Cap
Fund Income Fund Fund Fund Fund
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
- -------
Investments in securities, at value*
(See accompanying Portfolio of Investments).......... $20,574,842 $34,498,055 $151,175,006 $260,884 $38,290,686
Receivable for forward foreign currency contracts
to sell (Notes 2 and 7).............................. --- 14,339,283 8,602,798 --- ---
Forward foreign currency contracts to buy, at value
(Cost: $3,366 and $7,183,328, respectively)
(Notes 2 and 7)...................................... 3,367 7,156,324 --- --- ---
Cash................................................... 497 --- --- 67,895 ---
Foreign currency (Cost: $181,142, $376,806, and
$153,068, respectively).............................. 181,506 375,089 153,134 -- ---
Receivables:
Investments sold.................................... 27,824 848,281 3,256,544 1,494 248,117
Fund shares sold.................................... 20,000 83,674 5,640 --- 96,877
Dividends........................................... 16,330 73,645 464,949 9 13,007
Interest............................................ 3,171 435 4 --- 3,058
Foreign tax withholding reclaims.................... 9,099 17,653 31,951 --- ---
From adviser........................................ 4,259 2,514 13,655 6,680 6,680
Other assets........................................... 34,612 29,065 42,417 5,042 37,146
----------- ----------- ------------ --------- -----------
Total assets.................................... 20,875,507 57,424,018 163,746,098 342,004 38,695,571
----------- ----------- ------------ --------- -----------
LIABILITIES:
- ------------
Forward foreign currency contracts to sell, at
value (Cost: $14,339,283 and $8,602,798,
respectively) (Notes 2 and 7)........................ --- 14,346,341 8,720,522 --- ---
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 7)................................... 3,366 7,183,328 --- --- 0
Investments purchased.............................. 24,617 --- 486,250 9,508 250,303
Fund shares redeemed............................... 5,067 --- 50,832 --- 18,407
Dividend and interest withholding tax.............. 3,207 6,638 37,829 --- ---
Investment adviser................................. 15,611 22,842 105,547 208 27,548
Custodian and transfer agent fees.................. 13,947 329 24,660 3,359 3,892
Securities lending................................. 2,717,979 5,428,098 11,214,867 --- 2,741,407
Distribution fee................................... 8,405 14,546 41,459 161 15,024
Due to custodian................................... --- 113,411 1,895,732 --- 1,000
Other accrued expenses............................. 13,623 35,495 113,113 --- 35,061
----------- ----------- ------------ --------- -----------
Total liabilities............................... 2,805,822 27,151,028 22,690,811 13,236 3,092,642
----------- ----------- ------------ --------- -----------
NET ASSETS............................................. $18,069,685 $30,272,990 $141,055,287 $328,768 $35,602,929
----------- ----------- ------------ --------- -----------
NET ASSETS CONSIST OF:
- ----------------------
Undistributed net investment income/(loss)
(Note 2)........................................ ($67,509) $151,126 ($281,877) ($683) ($236,758)
Accumulated undistributed net realized gain
(loss) on investments, foreign currency and
forward foreign currency contracts.............. (129,836) (470,729) 4,994,194 (1,919) 2,255,986
Unrealized appreciation (depreciation) on:
Investments..................................... 3,459,010 3,544,841 36,290,488 23,047 6,348,494
Foreign currency and forward foreign currency
contracts...................................... 288 (37,835) (125,963) --- ---
Capital shares at par value of $.001 (Note 3)...... 1,136 2,675 7,855 29 2,082
Additional paid-in capital......................... 14,806,596 27,082,912 100,170,590 308,294 27,233,125
----------- ----------- ------------ --------- -----------
Net assets...................................... $18,069,685 $30,272,990 $141,055,287 $328,768 $35,602,929
----------- ----------- ------------ --------- -----------
*Investments in securities, at identified cost
(Note 2)............................................ $17,115,832 $30,953,214 $114,884,518 $237,837 $31,942,192
----------- ----------- ------------ --------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 1998 (Unaudited) -- continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International Global Emerging Small/Mid
Small Cap Growth and Equity Growth Cap
Fund Income Fund Fund Fund Fund
------------- ------------- ----------- -------- ----------
NET ASSET VALUES:
- -----------------
<S> <C> <C> <C> <C> <C>
Class A Shares
Net assets at value ............................ $2,430,234 $ 4,290,277 $35,998,494 $127,007 $ 4,890,825
Shares outstanding ............................. 150,753 378,156 1,995,484 11,267 282,130
Net asset value (NAV) and redemption
price per share ................................. $ 16.12 $ 11.35 $ 18.04 $ 11.27 $ 17.34
---------- ----------- ----------- -------- -----------
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering
price is reduced .............................. $ 16.92 $ 11.91 $ 18.94 $ 11.83 $ 18.20
---------- ----------- ----------- -------- -----------
Class B Shares
Net assets at value ............................ $8,134,240 $16,728,591 $37,704,152 $ 70,264 $14,669,796
Shares outstanding ............................. 512,144 1,478,685 2,107,375 6,237 859,584
Net asset value, offering price and redemption
price per share ................................. $ 15.88 $ 11.31 $ 17.89 $ 11.27 $ 17.07
---------- ----------- ----------- -------- -----------
Class C Shares
Net assets at value ............................ $7,505,211 $ 9,254,122 $67,352,641 $131,497 $16,042,308
Shares outstanding ............................. 472,330 816,901 3,751,236 11,671 938,675
Net asset value, offering price and redemption
price per share ................................. $ 15.89 $ 11.33 $ 17.95 $ 11.27 $ 17.09
---------- ----------- ----------- -------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 1998 (Unaudited) -- continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth Tax-Sensitive Growth and Equity-
Equity Equity Income Income Balanced
Fund Fund Fund Fund Fund
----------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
- -------
Investments in securities, at value* (Includes
a repurchase agreement of $275,000 in the
Tax-Sensitive Equity Fund) (See accompanying
Portfolio of Investments) ..................... $33,001,291 $2,479,418 $247,448,401 $202,167,624 $108,192,683
Cash ............................................. 807 204 182 545 52
Foreign currency (Cost: $10,081, $1,817,
$109, and $22,137, respectively) .............. 9,933 --- 1,456 109 22,109
Receivables:
Investments sold .............................. 250,722 --- 339,214 107,125 696,589
Fund shares sold .............................. 2,766 105,946 776,324 202,401 20,669
Dividends ..................................... 14,369 479 301,232 284,158 141,124
Interest ...................................... 107 38 793 60 368,493
Foreign tax withholding reclaims .............. 900 --- --- 3,884 21,587
From adviser .................................. 5,416 8,446 24,563 6,982 13,547
Other assets ..................................... 34,119 4,079 50,168 46,048 34,731
----------- ---------- ------------ ------------ ------------
Total assets .............................. 33,320,430 2,598,610 248,942,333 202,818,936 109,511,584
----------- ---------- ------------ ------------ ------------
LIABILITIES:
- ------------
Payables:
Investments purchased ........................ 372,108 192,175 1,185,134 --- 144,858
Fund shares redeemed ......................... --- --- 33,777 79,205 102,183
Dividend and interest withholding tax ........ 404 5 3,875 1,549 11,159
Investment adviser ........................... 22,328 1,206 131,978 114,820 62,774
Custodian and transfer agent fees ............ 3,029 3,466 26,348 25,776 25,126
Securities lending ........................... 2,544,356 --- 6,550,969 12,305,022 5,449,285
Distribution fee ............................. 13,074 976 72,203 49,234 22,274
Other accrued expenses ....................... 32,922 --- 175,576 150,806 84,310
----------- ---------- ------------ ------------ ------------
Total liabilities ......................... 2,988,221 197,828 8,179,860 12,726,412 5,901,969
----------- ---------- ------------ ------------ ------------
NET ASSETS ....................................... $30,332,209 $2,400,782 $240,762,473 $190,092,524 $103,609,615
----------- ---------- ------------ ------------ ------------
NET ASSETS CONSIST OF:
- ----------------------
Undistributed net investment income/(loss)
(Note 2) ................................... ($107,354) ($1,607) ($230,425) $591,781 $446,552
Accumulated undistributed net realized
gain (loss) on investments, foreign
currency and forward foreign currency
contracts.................................. 1,545,136 (14,177) 2,616,448 6,082,469 8,006,921
Unrealized appreciation (depreciation) on:
Investments ............................... 5,298,375 42,704 91,023,780 41,623,865 6,484,281
Foreign currency and forward foreign
currency contracts ...................... (137) --- (361) (35) (414)
Capital shares at par value of $.001 (Note 3). 1,663 218 9,916 10,344 9,053
Additional paid-in capital ................... 23,594,526 2,373,644 147,343,115 141,784,100 88,663,222
----------- ---------- ------------ ------------ ------------
Net assets ................................ $30,332,209 $2,400,782 $240,762,473 $190,092,524 $103,609,615
----------- ---------- ------------ ------------ ------------
*Investments in securities, at identified
cost (Note 2) ................................ $27,702,916 $2,436,715 $156,424,621 $160,543,759 $101,708,402
----------- ---------- ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 1998 (Unaudited) -- continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth Tax-Sensitive Growth and Equity-
Equity Equity Income Income Balanced
Fund Fund Fund Fund Fund
---------- ------------- ---------- ----------- ----------
NET ASSET VALUES:
- ----------------
<S> <C> <C> <C> <C> <C>
Class A Shares
Net assets at value .............................. $3,926,849 $1,013,984 $ 45,222,154 $41,449,261 $14,211,539
Shares outstanding ............................... 213,051 92,029 1,854,822 2,246,906 1,247,680
Net asset value (NAV) and redemption
price per share .................................. $ 18.43 $ 11.02 $ 24.38 $ 18.45 $ 11.39
---------- ---------- ------------ ----------- -----------
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering
price is reduced ............................... $ 19.35 $ 11.57 $ 25.60 $ 19.37 $ 11.96
---------- ---------- ------------ ----------- -----------
Class B Shares
Net assets at value .............................. $11,334,691 $1,057,034 $ 74,624,264 $42,125,898 $20,000,383
Shares outstanding ............................... 621,522 95,936 3,083,155 2,302,763 1,762,972
Net asset value, offering price and redemption
price per share .................................. $ 18.24 $ 11.02 $ 24.20 $ 18.29 $ 11.34
----------- ---------- ------------ ----------- -----------
Class C Shares
Net assets at value .............................. $15,070,669 $ 329,764 $120,916,055 $106,517,365 $69,397,693
Shares outstanding ............................... 826,966 29,928 4,975,663 5,791,006 6,041,194
Net asset value, offering price and redemption
price per share .................................. $ 18.22 $ 11.02 $ 24.30 $ 18.39 $ 11.49
----------- ---------- ------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - APRIL 30, 1998 (Unaudited) -- continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment National U. S.
Strategic Quality Municipal Government Money
Income Bond Bond Securities Market
Fund Fund Fund Fund Fund
------------ ----------- ----------- ------------ -----------
ASSETS:
- ------
<S> <C> <C> <C> <C> <C>
Investments in securities, at value* (Includes a
repurchase agreement of $16,274,000, $176,000,
and $23,433,000 in the Strategic Income Fund,
Investment Quality Bond Fund, and U.S. Government
Securities Fund, respectively) (See accompanying
Portfolio of Investments) ...................... $115,410,526 $17,211,070 $16,552,307 $111,178,645 $20,382,103
Receivable for forward foreign currency contracts
to sell (Notes 2 and 7) ........................ 10,307,253 --- --- --- ---
Forward foreign currency contracts to buy, at
value (Cost: $9,138,664) (Notes 2 and 7) ....... 9,082,339 --- --- --- ---
Cash .............................................. 382 223 --- 826 7,259
Foreign currency (cost: $1,048,903) ............... 1,051,434 -- --- --- ---
Receivables:
Investments sold ............................... 3,595,200 4,450 --- 1,739,705 ---
Fund shares sold ............................... 270,127 49,041 --- 21,247 ---
Dividends ...................................... 867 --- --- -- ---
Interest ....................................... 1,508,048 286,458 251,031 450,495 125,561
From adviser ................................... 4,531 4,763 2,571 46,942 5,799
Other assets ...................................... 41,078 31,163 28,798 42,753 39,477
------------ ----------- ----------- ------------ -----------
Total assets ............................... 141,271,785 17,587,168 16,834,707 113,480,613 20,560,199
------------ ----------- ----------- ------------ -----------
LIABILITIES:
- -----------
Forward foreign currency contracts to sell, at
value (Cost: $10,307,253) (Notes 2 and 7) ....... 10,287,744 --- --- --- ---
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 7) .............................. 9,138,664 --- --- --- ---
Investments purchased ......................... 20,315,555 --- --- 26,848,283 ---
Fund shares redeemed .......................... 67,742 --- 5,148 18,663 ---
Dividends ..................................... 441,459 97,210 62,002 459,777 77,854
Dividend and interest withholding tax ......... 1,361 -- --- -- ---
Investment adviser ............................ 52,254 8,118 8,337 45,950 4,056
Custodian and transfer agent fees ............. 11,319 13,107 8,219 16,403 11,536
Securities lending ............................ 13,751,685 1,059,925 0 9,293,178 ---
Distribution fee .............................. 39,625 4,294 0 17,394 ---
Due to custodian............................... --- --- 18,304 --- ---
Other accrued expenses ........................ 69,941 12,224 17,871 68,745 12,900
------------ ----------- ----------- ------------ -----------
Total liabilities .......................... 54,177,349 1,194,878 119,881 36,768,393 106,346
------------ ----------- ----------- ------------ -----------
NET ASSETS ........................................ $87,094,436 $16,392,290 $16,714,826 $76,712,220 $20,453,853
------------ ----------- ----------- ------------ -----------
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss)
(Note 2) ......................................... ($65,373) $1,188 ($474) ($258,268) ---
Accumulated undistributed net realized gain
(loss) on investments, foreign currency and
forward foreign currency contracts ......... 1,355,953 (455,908) (35,308) (1,523,722) ---
Unrealized appreciation (depreciation) on:
Investments ................................ 1,560,412 423,980 882,874 446,216 ---
Foreign currency and forward foreign currency
contracts ................................. (33,434) --- --- -- ---
Capital shares at par value of $.001 (Note 3) . 8,921 1,553 1,651 7,707 $20,454
Additional paid-in capital .................... 84,267,957 16,421,477 15,866,083 78,040,287 20,433,399
------------ ----------- ----------- ------------ -----------
Net assets ................................. $87,094,436 $16,392,290 $16,714,826 $76,712,220 $20,453,853
------------ ----------- ----------- ------------ -----------
*lnvestments in securities, at identified cost
(Note 2) ...................................... $113,850,114 $16,787,090 $15,669,433 $110,732,429 $20,382,103
------------ ----------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30,1998 (Unaudited) -- continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment National U.S.
Strategic Quality Municipal Government Money
Income Bond Bond Securities Market
Fund Fund Fund Fund Fund
----------- ---------- ---------- ----------- -----------
NET ASSET VALUES:
- ----------------
<S> <C> <C> <C> <C> <C>
Class A Shares
Net assets at value .............................. $16,927,941 $6,714,838 $5,937,213 $49,905,748 $10,210,118
Shares outstanding ............................... 1,733,740 635,098 586,318 5,015,585 10,210,119
Net asset value (NAV) and redemption
price per share .................................. $ 9.76 $ 10.57 $ 10.13 $ 9.95 $ 1.00
----------- ---------- ---------- ----------- -----------
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering
price is reduced ............................... $ 10.25 $ 11.10 $ 10.63 $ 10.45 $ 1.00
----------- ---------- ---------- ----------- -----------
Class B Shares
Net assets at value .............................. $33,809,405 $4,653,132 $5,554,147 $14,717,650 $ 3,904,608
Shares outstanding ............................... 3,462,959 440,304 548,571 1,480,230 3,904,608
Net asset value, offering price and redemption
price per share .................................. $ 9.76 $ 10.57 $ 10.12 $ 9.94 $ 1.00
----------- ---------- ---------- ----------- -----------
Class C Shares
Net assets at value .............................. $36,357,090 $5,024,320 $5,223,466 $12,088,822 $ 6,339,127
Shares outstanding ............................... 3,723,849 475,444 515,914 1,215,823 6,339,044
Net asset value, offering price and redemption
price per share .................................. $ 9.76 $ 10.57 $ 10.12 $ 9.94 $ 1.00
----------- ---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International Global Emerging Small/Mid
Small Cap Growth and Equity Growth Cap
Fund Income Fund Fund Fund** Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ------------------
Interest ...................................... $77,981 $484,408 $15,819 $331 $54,744
Dividends (Net of $7,749, $26,664 and $65,771
foreign withholding tax in the International
Small Cap, International Growth and Income and
Global Equity Funds, respectively) ........... 64,011 231,484 1,874,942 43 67,163
------------ ------------ ------------ ------------ ------------
Total income ................................ 141,992 715,892 1,890,761 374 121,907
------------ ------------ ------------ ------------ ------------
EXPENSES:
- ---------
Distribution for Class A ..................... 4,943 7,887 58,015 118 8,301
Distribution for Class B ..................... 37,266 80,477 169,472 91 64,940
Distribution for Class C ..................... 35,155 43,377 314,816 115 72,237
Investment adviser fee (Note 5) .............. 90,871 131,749 585,041 516 148,828
Custodian fee ................................ 17,852 10,260 52,457 8,778 17,852
Transfer agent fee ........................... 23,904 31,238 91,051 -- 36,964
Accounting/administration .................... 13,530 22,885 100,199 58 24,609
Audit and legal fees ......................... 4,509 7,627 33,387 20 8,200
Miscellaneous ................................ 7,450 14,093 55,135 27 13,536
------------ ------------ ------------ ------------ ------------
Expenses before reimbursement by investment
adviser .................................... 235,480 349,593 1,459,573 9,723 395,467
Reimbursement of expenses by investment
adviser (Note 5) ........................... 23,974 11,413 7,216 8,666 36,802
------------ ------------ ------------ ------------ ------------
Net expenses .......................... 211,506 338,180 1,452,357 1,057 358,665
------------ ------------ ------------ ------------ ------------
Net investment income ................. (69,514) 377,712 438,404 (683) (236,758)
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN/(LOSS)
- -----------------------------------
Net realized gain (loss) on:
Investment transactions ..................... 471,148 (76,452) 4,996,948 (1,919) 2,260,241
Foreign currency and forward foreign currency
contracts ................................. (13,536) (271,510) (4,447) -- --
Change in unrealized appreciation
(depreciation) on:
Investments ................................. 2,157,034 4,584,196 18,430,512 23,047 2,280,249
Translation of foreign currency and forward
foreign currency contracts ................ 3,171 (247,291) (606,051) -- --
------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain: ..... 2,617,817 3,988,943 22,816,962 21,128 4,540,490
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations .................................... $2,548,303 $4,366,655 $23,255,366 $20,445 $4,303,732
------------ ------------ ------------ ------------ ------------
</TABLE>
** for the period from January 6, 1998 (Commencement of Operations) through
April 30, 1998.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth Tax-Sensitive Growth and Equity-
Equity Equity Income Income Balanced
Fund Fund** Fund Fund Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ------------------
Interest .......................................... $81,933 $1,030 $109,402 375,043 $1,175,287
Dividends (Net of $989, $5, $2,111, $11,751 and
$20,305 foreign withholding tax, respectively) ... 112,633 1,617 1,667,975 2,295,520 574,006
------------ ------------ ------------ ------------ ------------
Total income ................................... 194,566 2,647 1,777,377 2,670,563 1,749,293
------------ ------------ ------------ ------------ ------------
EXPENSES:
Distribution for Class A .......................... 5,950 482 68,291 69,528 22,782
Distribution for Class B .......................... 50,956 741 317,175 196,898 90,169
Distribution for Class C .......................... 68,118 171 538,382 502,548 341,741
Investment adviser fee (Note 5) ................... 122,468 1,945 718,210 653,461 372,723
Custodian fee ..................................... 17,852 8,778 42,027 35,924 19,880
Transfer agent fee ................................ 28,452 -- 114,072 110,897 61,367
Accounting/administration ......................... 20,771 165 158,576 136,574 76,181
Audit and legal fees .............................. 6,920 55 52,812 45,489 25,379
Miscellaneous ..................................... 11,423 105 87,226 75,119 42,083
------------ ------------ ------------ ------------ ------------
Expenses before reimbursement by investment
adviser.......................................... 332,910 12,442 2,096,771 1,826,438 1,052,305
Reimbursement of expenses by investment adviser
(Note 5) ......................................... 30,990 8,188 132,685 89,990 76,335
------------ ------------ ------------ ------------ ------------
Net expenses .............................. 301,920 4,254 1,964,086 1,736,448 975,970
------------ ------------ ------------ ------------ ------------
Net investment income ..................... (107,354) (1,607) (186,709) 934,115 773,323
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN/(LOSS)
- -----------------------------------
Net realized gain (loss) on:
Investment transactions .......................... 1,584,816 (14,177) 2,581,741 6,838,619 8,035,851
Foreign currency and forward foreign currency
contracts ....................................... 21 -- -- (94) (11,394)
Change in unrealized appreciation
(depreciation) on:
Investments ...................................... 3,117,498 42,704 38,221,300 17,771,732 1,802,919
Translation of foreign currency and forward
foreign currency contracts ...................... (411) -- (143) (722) (508)
------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain: ......... 4,701,924 28,527 40,802,898 24,609,535 9,826,868
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from operations. $4,594,570 $26,920 $40,616,189 $25,543,650 $10,600,191
------------ ------------ ------------ ------------ ------------
</TABLE>
** for the period from January 6, 1998 (Commencement of Operations) through
April 30, 1998.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment National U.S.
Strategic Quality Municipal Government Money
Income Bond Bond Securities Market
Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ------------------
Interest (Net of $1,293 foreign withholding
tax in the Strategic Income Fund) ...................... $3,631,545 $662,255 $498,879 $2,835,049 $513,766
Dividends ............................................... 49 1,406 --- --- ---
----------- ----------- ----------- ----------- -----------
Total income .......................................... 3,631,594 663,661 498,879 2,835,049 513,766
----------- ----------- ----------- ----------- -----------
EXPENSES:
- ---------
Distribution for Class A ................................ 28,038 11,920 4,667 89,703 ---
Distribution for Class B ................................ 171,700 23,684 30,613 79,992 ---
Distribution for Class C ................................ 173,899 27,802 26,481 69,355 ---
Investment adviser fee (Note 5) ......................... 310,394 51,326 52,925 242,788 18,166
Custodian fee ........................................... 34,057 5,039 3,528 16,186 3,633
Transfer agent fee ...................................... 46,217 16,472 6,909 48,033 27,024
Accounting/administration ............................... 65,199 13,193 13,583 62,522 13,668
Audit and legal fees .................................... 21,719 4,396 4,525 20,832 4,556
Miscellaneous ........................................... 36,901 7,278 7,476 33,422 7,560
----------- ----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ..... 888,124 161,110 150,707 662,833 74,607
Reimbursement of expenses by investment adviser
(Note 5) ............................................... 24,755 20,751 13,714 60,577 29,162
----------- ----------- ----------- ----------- -----------
Net expenses .................................... 863,369 140,359 136,993 602,256 45,445
----------- ----------- ----------- ----------- -----------
Net investment income ........................... 2,768,225 523,302 361,886 2,232,793 468,321
------------ ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS)
- -----------------------------------
Net realized gain (loss) on:
Investment transactions ................................ 1,165,517 70,512 178,305 467,813 ---
Foreign currency and forward foreign currency
contracts ............................................. 86,195 --- --- --- ---
Change in unrealized appreciation (depreciation) on:
Investments ............................................ (54,148) 15,679 (90,775) (312,630) ---
Translation of foreign currency and forward
foreign currency contracts ........................... 8,041 --- --- --- ---
----------- ----------- ----------- ----------- -----------
Net realized and unrealized gain: ............... 1,205,605 86,191 87,530 155,183 ---
----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ...... $3,973,830 $609,493 $449,416 $2,387,976 $468,321
----------- ----------- ----------- ----------- -----------
</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>
International International Growth
Small Cap Fund and Income Fund
------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Year
4/30/98 Ended 4/30/98 Ended
(Unaudited) 10/31/91 (Unaudited) 10/31/91
------------ ---------- ----------- ---------
OPERATIONS:
- ----------
<S> <C> <C> <C> <C>
Net investment income (loss) ......... ($69,514) ($120,495) $377,712 $131,377
Net realized gain (loss) on:
lnvestment transactions ............. 471,148 (529,214) (76,452) 2,452,134
Foreign currency and forward
foreign currency contracts ......... (13,536) (39,336) (271,510) (148,990)
Change in unrealized appreciation
(depreciation) on:
Investments ......................... 2,157,034 942,729 4,584,196 (1,660,231)
Foreign currency and forward foreign
currency contracts ................. 3,171 (3,105) (247,291) 118,437
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ........... 2,548,303 250,579 4,366,655 892,727
Net equalization credits (charges)
(Note 2) ............................ -- 1,803 -- (9,971)
DISTRIBUTIONS FROM:
------------------
Net investment income
Class A ........................... -- -- (54,479) (83,820)
Class B ........................... -- -- (82,187) (180,641)
Class C ........................... -- -- (43,380) (105,721)
Net realized gains on investments and
foreign currency transactions
Class A ........................... -- -- (387,315) (332,915)
Class B ........................... -- -- (1,343,452) (1,034,399)
Class C ........................... -- -- (715,494) (616,566)
In excess of net investment income
Class A ........................... -- -- -- --
Increase (decrease) in net assets from
capital share transactions (Note 3) . (2,097,089) 4,661,417 (722,713) 1,701,507
------------- ------------- ------------- -------------
Increase (decrease) in net assets .... 451,214 4,913,799 1,017,635 230,201
Net assets at beginning of period .... 17,618,471 12,704,672 29,255,355 29,025,154
------------- ------------- ------------- -------------
Net assets at end of period ........... $18,069,685 $17,618,471 $30,272,990 $29,255,355
------------- ------------- ------------- -------------
Undistributed net investment
income (loss) ....................... ($67,509) $2,005) $151,126 ($46,540)
------------- ------------- ------------- -------------
<CAPTION>
Emerging
Growth
Global Equity Fund Fund
-------------------------- ----------
Six Months 1/06/98*
Ended Year to
4/30/98 Ended 4/30/98
(Unaudited) 10/31/91 (Unaudited)
----------- ---------- -----------
OPERATIONS:
- ----------
<S> <C> <C> <C>
Net investment income (loss) ......... $438,404 ($181,899) ($683)
Net realized gain (loss) on:
lnvestment transactions ............. 4,996,948 7,964,844 (1,919)
Foreign currency and forward
foreign currency contracts ......... (4,447) 559,899 --
Change in unrealized appreciation
(depreciation) on:
Investments ......................... 18,430,512 18,658,707 23,047
Foreign currency and forward foreign
currency contracts ................. (606,051) 560,153 --
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ........... 23,255,366 27,561,704 20,445
Net equalization credits (charges)
(Note 2) ............................ -- (134,022) --
DISTRIBUTIONS FROM:
Net investment income
Class A ........................... (417,000) -- --
Class B ........................... (215,229) -- --
Class C ........................... (376,419) -- --
Net realized gains on investments and
foreign currency transactions
Class A ........................... (1,961,256) (2,895,690) --
Class B ........................... (2,005,883) (2,872,442) --
Class C ........................... (3,811,416) (7,051,972) --
In excess of net investment income
Class A ........................... -- (89,634) --
Increase (decrease) in net assets from
capital share transactions (Note 3) . 2,548,665 (6,894,415) 308,323
------------- ------------- -------------
Increase (decrease) in net assets .... 17,016,828 7,623,529 328,768
Net assets at beginning of period .... 124,038,455 116,414,926 --
------------- ------------- -------------
Net assets at end of period ........... $141,055,283 $124,038,455 $328,768
------------- ------------- -------------
Undistributed net investment
income (loss) ....................... ($281,877) $288,367 ($683)
------------- ------------- -------------
</TABLE>
- ---------------------------------
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small/Mid Cap Fund Growth Equity Fund
------------------------------ ------------------------------
Six Months Six Months
Ended Year Ended Year
4/30/98 Ended 4/30/98 Ended
(Unaudited) 10/31/97 (Unaudited) 10/31/97
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
- ----------
Net investment income (loss) ........ ($236,758) ($367,126) ($107,354) ($144,868)
Net realized gain (loss) on:
Investment transactions ............ 2,260,241 1,592,142 1,584,816 2,705,613
Futures contracts .................. -- -- 21 (6,483)
Change in unrealized appreciation
(Depreciation) on:
Investments ........................ 2,280,249 3,472,083 3,117,498 1,477,592
Foreign currency and forward
foreign currency contracts ......... -- -- (411) 262
------------- ------------- ------------- -------------
Net increase (decrease) in net
assets resulting from operations .. 4,303,732 4,697,099 4,594,570 4,032,116
Net equalization credits (charges)
(Note 2) .......................... -- -- -- 33,219
DISTRIBUTIONS FROM:
Net investment income
Class A ......................... -- -- -- (33,593)
Class B ......................... -- -- -- (63,216)
Class C ......................... -- -- -- (90,077)
Net realized gains on investments
and foreign currency transactions
Class A ......................... (73,543) -- (262,993) --
Class B ......................... (196,356) -- (813,173) --
Class C ......................... (216,300) -- (1,090,302) --
In excess of net investment income
Class A ......................... -- -- -- --
Class B ......................... -- -- -- --
Class C ......................... -- -- -- --
lncrease (decrease) in net assets
from capital share transactions
(Note 3) .......................... 2,342,360 6,879,852 3,044,183 7,494,842
------------- ------------- ------------- -------------
Increase (decrease) in net assets ... 6,159,893 11,576,951 5,472,285 11,373,291
Net assets at beginning of period ... 29,443,036 17,866,085 24,859,337 13,486,046
------------- ------------- ------------- -------------
Net assets at end of period ......... $35,602,929 $29,443,036 $30,331,622 $24,859,337
------------- ------------- ------------- -------------
Undistributed net investment
income (loss) ...................... ($236,758) -- ($107,354) --
------------- ------------- ------------- -------------
<CAPTION>
Tax-
Sensitive
Equity
Growth and Income Fund Fund
------------------------------ -------------
Six Months 1/06/98*
Ended Year to
4/30/98 Ended 4/30/98
(Unaudited) 10/31/91 (Unaudited)
------------- ------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ........ ($186,709) $182,168 ($1,607)
Net realized gain (loss) on:
Investment transactions ............ 2,581,741 15,043,013 (14,177)
Futures contracts .................. -- 164 --
Change in unrealized appreciation
(Depreciation) on:
Investments ........................ 38,221,300 26,450,524 42,704
Foreign currency and forward
foreign currency contracts ......... (143) (93) --
------------- ------------- -------------
Net increase (decrease) in net
assets resulting from operations .. 40,616,189 41,675,776 26,920
Net equalization credits (charges)
(Note 2) .......................... -- 21,811 --
DISTRIBUTIONS FROM:
Net investment income
Class A ......................... (40,949) (176,486) --
Class B ......................... (1,876) (73,463) --
Class C ......................... (891) (113,463) --
Net realized gains on investments
and foreign currency transactions
Class A ......................... (2,745,645) (1,114,556) --
Class B ......................... (4,506,826) (2,130,500) --
Class C ......................... (7,695,032) (4,448,214) --
In excess of net investment income
Class A ......................... (80)
Class B ......................... (33)
Class C ......................... (51)
lncrease (decrease) in net assets
from capital share transactions
(Note 3) .......................... 27,827,283 25,829,943 2,373,862
------------- ------------- -------------
Increase (decrease) in net assets ... 53,455,020 59,470,684 2,400,782
Net assets at beginning of period ... 187,307,453 127,836,769 --
------------- ------------- -------------
Net assets at end of period ......... $240,762,473 $187,307,453 $2,400,782
------------- ------------- -------------
Undistributed net investment
income (loss) ...................... ($230,425) -- ($1,607)
------------- ------------- -------------
</TABLE>
- -------------------------------
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity-Income Fund Balanced Fund
------------------------------ ------------------------------
Six Months Six Months
Ended Year Ended Year
4/30/98 Ended 4/30/98 Ended
(Unaudited) 10/31/91 (Unaudited) 10/31/97
------------- ------------- ------------- ------------
OPERATIONS:
- ----------
<S> <C> <C> <C> <C>
Net investment income (loss) .......... $934,115 $2,333,310 $773,323 $2,156,616
Net realized gain (loss) on:
Investment transactions .............. 6,838,619 11,805,051 8,035,851 15,803,775
Foreign currency and forward
foreign currency contracts ......... (94) (16,134) (11,394) (74,875)
Change in unrealized appreciation
(depreciation) on:
Investments .......................... 17,771,732 21,707,197 1,802,919 (2,893,993)
Foreign currency and forward
foreign currency contracts ......... (722) 687 (508) (59)
------------- ------------- ------------- ------------
Net increase (decrease) in net assets
resulting from operations ........... 25,543,650 35,830,111 10,600,191 14,991,464
Net equalization credits (charges)
(Note 2) ............................ -- 28,169 -- (205,430)
DISTRIBUTIONS FROM:
- ------------------
Net investment income
Class A ........................... (701,503) (307,637) (317,345) (392,396)
Class B ........................... (442,161) (123,036) (320,086) (509,836)
Class C ........................... (1,133,374) (297,921) (1,278,950) (2,058,773)
Net realized gains on investments and
foreign currency transactions
Class A ........................... (2,593,550) (6,143,038) (2,023,888) (219,321)
Class B ........................... (2,589,634) (5,815,447) (2,767,331) (1,534,515)
Class C ........................... (6,612,228) (17,766,496) (11,012,231) (6,683,658)
In excess of net investment income
Class A ........................... -- -- -- --
Class B ........................... -- -- -- --
Class C ........................... -- -- -- --
Increase (decrease) in net assets from
capital share transactions (Note 3) .. 11,447,721 22,385,712 13,034,535 (4,810,436)
------------- ------------- ------------- ------------
lncrease (decrease) in net assets ..... 22,918,921 27,790,417 5,914,895 (2,218,749)
------------- ------------- ------------- ------------
Net assets at beginning of period ..... 167,173,603 139,383,186 97,694,720 99,913,469
------------- ------------- ------------- ------------
Net assets at end of period ........... $190,092,524 $167,173,603 $103,609,615 $97,694,720
------------- ------------- ------------- ------------
Undistributed net investment
income (loss) ....................... $591,781 $1,934,704 $446,552 $1,589,610
------------- ------------- ------------- ------------
<CAPTION>
Investment Quality
Strategic Income Fund Bond Fund
----------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Year
4/30/98 Ended 4/30/98 Ended
(Unaudited) 10/31/91 (Unaudited) 10/31/97
----------- ------------ ----------- ------------
OPERATIONS:
- ----------
<S> <C> <C> <C> <C>
Net investment income (loss) .......... $2,768,225 $5,132,176 $523,302 $1,169,184
Net realized gain (loss) on:
Investment transactions .............. 1,165,517 1,433,455 70,512 42,588
Foreign currency and forward
foreign currency contracts ......... (6,195) 91,730 -- --
Change in unrealized appreciation
(depreciation) on:
Investments .......................... (54,148) 506,946 15,679 249,233
Foreign currency and forward
foreign currency contracts ......... 8,041 10,764 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........... 3,973,830 7,175,071 609,493 1,461,005
Net equalization credits (charges)
(Note 2) ............................ -- 471 -- (2,133)
DISTRIBUTIONS FROM:
Net investment income
Class A ........................... (560,239) (1,303,877) (219,117) (506,971)
Class B ........................... (1,089,665) (2,551,456) (139,260) (273,774)
Class C ........................... (1,102,262) (2,097,399) (165,247) (401,143)
Net realized gains on investments and
foreign currency transactions
Class A ........................... (219,321) (272,850) -- --
Class B ........................... (478,774) (599,725) -- --
Class C ........................... (472,034) (442,077) -- --
In excess of net investment income
Class A ........................... -- (33,959) -- --
Class B ........................... -- (66,452) -- --
Class C ........................... -- (54,626) -- --
Increase (decrease) in net assets from
capital share transactions (Note 3) .. 3,846,150 16,388,157 (1,525,164) (3,722,153)
------------ ------------ ------------ ------------
lncrease (decrease) in net assets ..... 3,897,685 16,141,278 (1,439,295) (3,445,169)
------------ ------------ ------------ ------------
Net assets at beginning of period ..... 83,196,751 67,055,473 17,831,585 21,276,754
------------ ------------ ------------ ------------
Net assets at end of period ........... $87,094,436 $83,196,751 $16,392,290 $17,831,585
------------ ------------ ------------ ------------
Undistributed net investment
income (loss) ....................... ($65,373) ($81,432) $1,188 $1,508
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NORTH AMERICAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Municipal U.S. Government
Bond Fund Securities Fund Money Market Fund
------------------------ --------------------------- --------------------------
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
4/30/98 Ended 4/30/98 Ended 4/30/98 Ended
(Unaudited) 10/31/97 (Unaudited) 10/31/97 (Unaudited) 10/31/97
----------- --------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
- -----------
Net investment income (loss) ............. $361,886 $791,360 $2,232,793 $5,648,449 $468,321 $1,005,461
Net realized gain (loss) on:
Investment transactions ................. 178,305 211,627 467,813 (120,702) -- --
Change in unrealized appreciation
(depreciation) on:
Investments ............................. (90,775) 441,613 (312,630) 977,025 -- --
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations .............. 449,416 1,444,600 2,387,976 6,504,772 468,321 1,005,461
Net equalization credits (charges)
(Note 2) ................................ -- -- -- (90) -- --
DISTRIBUTIONS FROM:
- -------------------
Net investment income
Class A .............................. (144,715) (318,542) (1,504,015) (3,692,246) (231,457) (398,539)
Class B .............................. (116,415) (254,666) (417,855) (925,591) (61,870) (158,672)
Class C .............................. (100,755) (218,057) (357,608) (811,000) (174,994) (448,250)
Increase (decrease) in net assets from
capital share transactions (Note 3) .... (1,556,376) (2,003,116) (8,006,677) (28,692,600) (1,474,009) 938,733
----------- ----------- ----------- ------------ ----------- -----------
Increase (decrease) in net assets ........ (1,468,845) (1,349,781) (7,898,179) (27,616,755) (1,474,009) 938,733
Net assets at beginning of period ........ 18,183,672 19,533,453 84,610,399 112,227,154 21,927,862 20,989,129
----------- ----------- ----------- ------------ ----------- -----------
Net assets at end of period .............. $16,714,827 $18,183,672 $76,712,220 $84,610,399 $20,453,853 $21,927,862
=========== =========== =========== ============ =========== ===========
Undistributed net investment income (loss) ($474) ($474) ($258,268) ($211,584) -- --
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
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>
International Small Cap Fund
--------------------------------------------------------------------------------------------
Class A Class B Class C
----------------------------- ----------------------------- --------------------------------
Six Months Six Months Six Months
Ended Year 3/04/96* Ended Year 3/04/96* Ended Year 3/04/96*
4/30/98** Ended to 4/30/98 Ended to 4/30/98 Ended to
(Unaudited) 10/31/97 10/31/96 (Unaudited) 10/31/97 10/31/96 (Unaudited) 10/31/97 10/31/98
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $13.86 $13.43 $12.50 $13.71 $13.37 $12.50 $13.71 $13.37 $12.50
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.00 (0.03) 0.05 (0.07) (0.11) (0.01) (0.07) (0.11) (0.01)
Net realized and unrealized gain on
investments and foreign currency 2.26 0.46 0.88 2.24 0.45 0.88 2.25 0.45 0.88
--------------------------------------------------------------------------------------------
Total from investment operations 2.26 0.43 .93 2.17 .34 0.87 2.18 .34 0..87
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $16.12 $13.86 $13.43 $15.88 $13.71 $13.37 $15.89 $13.71 $13.37
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 16.31%+ 320% 7.44%+ 15.83%+ 2.54% 6.96%+ 15.90%+ 2.54% 6.96%+
=================================================================================================================================
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $2,430 $3,225 $2,120 $8,134 $7,369 $5,068 $7,705 $7,025 $5,517
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average
net assets 1.90%# 1.90% 1.90%# 2.55%# 2.55% 2.55%# 2.55%# 2.55% 2.55%#
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (0.23%)# (0.19%) (0.50%)# (0.92%)# (0.84%) (0.15%) (0.91%)# (0.84%) (0.15%)#
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 31%+ 75% 67%# 31%+ 75% 67%# 31%+ 75% 67%#
- ---------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.17%# 2.46% 3.07%# 2.83%# 2.98% 3.27%# 2.83%# 2.96% 3.25%#
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
<CAPTION>
International Growth and Income Fund
----------------------------------------------------
Class A
----------------------------------------------------
Six Months
Ended Year Year 1/09/95*
4/30/98 Ended Ended to
(Unaudited) 10/31/91 10/31/96** 10/31/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.81 $11.35 $10.11 $10.00
- -------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.17 0.06 0.09 0.06
Net realized and unrealized gain on investments
and foreign currency 1.40 0.35 1.33 0.08
----------------------------------------------------
Total from investment operations 1.57 0.41 1.42 0.14
----------------------------------------------------
Distributions
Dividends from net investment income (0.13) (0.19) (0.08) (0.03)
Distributions from realized capital gains (0.90) (0.76) (0.10) ---
----------------------------------------------------
Total distributions (1.03) (0.95) (0.18) (0.03)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.35 $10.81 $11.35 $10.11
- -------------------------------------------------------------------------------------------------------
Total Return 16.24%+ 3.55% 14.25% 1.37%+
=======================================================================================================
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $4,290 $4,461 $4,732 $6,897
- -------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.75%# 1.75% 1.75% 1.75%#
- -------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 3.12%# 0.97% 0.84% 0.70%#
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 109%+ 146% 170% 69%#
- -------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.84%# 1.96% 1.97% 2.18%#
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Class B
----------------------------------------------------
Six Months
Ended Year Year 1/09/95*
4/30/98 Ended Ended to
(Unaudited) 10/31/91** 10/31/96** 10/31/95
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.75 $11.30 $10.10 $10.00
- -----------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.14 0.03 0.06 0.01
Net realized and unrealized gain on investments
and foreign currency 1.38 0.31 1.30 0.12
----------------------------------------------------
Total from investment operations 1.52 0.34 1.36 0.13
----------------------------------------------------
Distributions
Dividends from net investment income (0.06) (0.13) (0.05) (0.03)
Distributions from realized capital gains (0.90) (0.76) (0.11) ---
----------------------------------------------------
Total distributions (0.96) (0.89) (0.16) (0.03)
- -----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.31 $10.75 $11.30 $10.10
- -----------------------------------------------------------------------------------------------------------
Total Return 15.72%+ 2.92% 13.58% 1.28%+
===========================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $16,729 $16,334 $15,217 $8,421
- -----------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.40%# 2.40% 2.40% 2.40%#
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 2.51%# 0.32% 0.57% 0.15%#
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 109%+ 146% 170% 69%#
- -----------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.48%# 2.54% 2.60% 2.93%#
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Net investment income per share has been calculated using the average share
method
# Annualized
+ Non-annualized
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
-----------------------------------------------------
Class C
-----------------------------------------------------
Six Months
Ended Year Year 1/09/95*
4/30/98 Ended Ended to
(Unaudited) 10/31/97** 10/31/96** 10/31/95
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.76 $11.31 $10.10 $10.00
- ----------------------------------------------------------------------------------------------------------
Investment Operations:
Net Investment income 0.14 0.03 0.06 0.01
Net realized and unrealized gain on investments
and foreign currency 1.39 0.31 1.30 0.12
-----------------------------------------------------
Total from Investment operations 1.53 0.34 1.36 0.13
-----------------------------------------------------
Distributions
Dividends from net investment income (0.06) (0.13) (0.05) (0.03)
Distributions from realized capital gains (0.90) (0.76) (0.10) --
-----------------------------------------------------
Total distributions (0.96) (0.89) (0.15) (0.03)
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.33 $10.76 $11.31 $10.10
- ----------------------------------------------------------------------------------------------------------
Total Return 15.81%+ 2.91% 13.63% 12.8%+
==========================================================================================================
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $9,254 $8,460 $9,076 $6,324
- ----------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.40%# 2.40% 2.40% 2.40%#
- ----------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 2.44%# 0.32% 0.51% 0.13%#
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 109%+ 146% 170% 69%#
- ----------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.48%# 2.57% 2.60% 2.93%#
- ----------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Global Equity Fund
-----------------------------------------------------------------------
Class A
------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96** 10/31/95 10/31/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.32 $14.50 $13.84 $14.82 $14.13
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.09 0.06 (0.04) -- (0.01)
Net realized and unrealized gain on Investments
and foreign currency 2.88 3.45 0.91 (0.54) 0.70
------------------------------------------------------------------------
Total from investment operations 2.97 3.51 0.87 (0.54) 0.69
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.22) (0.05) (0.21) --
Distributions from realized capital gains (1.03) (1.64) -- (0.44) --
------------------------------------------------------------------------
Total distributions (1.25) (1.69) (0.21) (0.44) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.04 $16.32 $14.50 $13.84 $14.82
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 19.57%+ 26.10% 6.33% (3.52%) 9.16%@
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $35,998 $30,960 $25,924 $23,894 $18,152
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.75%# 1.75% 1.75% 1.75% 1.75%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 1.13%# 0.33% (0.30%) 0.03% (0.12%)#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%+ 28% 165% 57% 54%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.76%# 1.81% 1.83% 1.92% 1.97%#
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Global Equity Fund
-----------------------------------------------------------------------
Class B
-----------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97** 10/31/96** 10/31/95** 10/31/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.14 $14.36 $13.73 $14.79 $14.13
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.04 (0.05) (0.14) (0.09) (0.03)
Net realized and unrealized gain on Investments
and foreign currency 2.85 3.47 0.91 (0.53) 0.69
-----------------------------------------------------------------------
Total from investment operations 2.89 3.42 0.77 (0.62) 0.66
-----------------------------------------------------------------------
Distributions
Dividends from net investment income (0.11) -- (0.14) -- --
Distributions from realized capital gains (1.03) (1.64) -- (0.44) --
-----------------------------------------------------------------------
Total distributions (1.14) (1.64) (0.14) (0.44) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.89 $16.14 $14.36 $13.73 $14.79
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 19.16%+ 25.63% 5.64% (4.09%) 8.94%@
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $37,704 $31,833 $25,661 $23,317 $13,903
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.40%# 2.40% 2.40% 2.40% 2.40%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 0.51%# (0.32%) (0.95%) (0.61%) (9.77%)#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%+ 28% 165% 57% 54%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement by
adviser 2.41%# 2.47% 2.48% 2.58% 2.71%#
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Global Equity Fund
--------------------------------------------------------
Class C
--------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 ------------------------------------------
(Unaudited) 1997** 1996** 1995**
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.19 $14.41 $13.73 $14.79
- ---------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.05 (0.05) (0.14) (0.09)
Net realized and unrealized gain on investments
and foreign currency 2.85 3.47 0.92 (0.53)
---------------------------------------------------------
Total from investment operations 2.90 3.42 0.78 (0.62)
---------------------------------------------------------
Distributions
Dividends from net investment income (0.11) -- (0.10) --
Distributions from realized capital gains (1.03) (1.64) -- (0.44)
Distributions from capital -- -- -- --
---------------------------------------------------------
Total distributions (1.14) (1.64) (0.10) (0.44)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.95 $16.19 $14.41 $13.73
- ---------------------------------------------------------------------------------------------------------------
Total Return 19.16%+ 25.54% 5.70% (4.09%)
===============================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $67,353 $61,245 $64,830 $83,340
- ---------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.40%# 2.40% 2.40% 2.40%
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 0.52%# (0.32%) (0.95%) (0.64%)
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10%+ 28% 165% 57%
- ---------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.41%# 2.46% 2.48% 2.53%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Global Equity Fund
------------------------------------------------------
Class C
------------------------------------------------------
Year Ended October 31,
------------------------------------------------------
1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.74 $10.33 $10.76 $10.12
- ---------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.10) (0.01) (0.02) 0.25
Net realized and unrealized gain on investments
and foreign currency 1.15 3.43 (0.37) 0.63
------------------------------------------------------
Total from investment operations 1.05 3.42 (0.39) 0.88
------------------------------------------------------
Distributions
Dividends from net investment income -- (0.01) -- (0.24)
Distributions from realized capital gains -- -- -- --
Distributions from capital -- -- (0.04) --
------------------------------------------------------
Total distributions -- (0.01) (0.04) (0.24)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.79 $13.74 $10.33 $10.76
- ---------------------------------------------------------------------------------------------------------------
Total Return 8.94% 33.06% (3.57%) 8.80%
===============================================================================================================
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $101,443 $63,503 $14,291 $8,828
- ---------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.40% 2.40% 2.52% 1.47%
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets (0.91%) (0.40%) (0.27%) 1.41%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 54% 57% 69% 70%
- ---------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.52% 2.72% 2.78% 4.37%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Emerging Growth Fund Tax-Sensitive Equity Fund
------------------------------ ----------------------------------
01/06/98* to 4/30/98 01/06/98* to 4/30/98
------------------------------ ----------------------------------
Class A Class B Class C Class A Class B Class C
- ------------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
- ------------------------------------------------------------------------------------- ----------------------------------
Investment Operations:
Net investment income (0.03) (0.03) (0.03) (0.01) (0.01) (0.01)
Net realized and unrealized gain on
investments 1.30 1.30 1.30 1.03 1.03 1.03
------------------------------ ----------------------------------
Total from investment operations 1.27 1.27 1.27 1.02 1.02 1.02
- ------------------------------------------------------------------------------------- ----------------------------------
Net Asset Value, End of Period $11.27 $11.27 $11.27 $11.02 $11.02 $11.02
- ------------------------------------------------------------------------------------- ----------------------------------
Total Return 12.70%+ 12.70%+ 12.70%+ 10.20%+ 10.20%+ 10.20%+
===================================================================================== ==================================
Ratios/Supplemental Data
Net assets, end of period (000's) $127 $70 $131 $1,014 $1,057 $330
- ------------------------------------------------------------------------------------- ----------------------------------
Ratio of total expenses to average net assets 1.70%# 2.35%# 2.35%# 1.60%# 2.25%# 2.25%#
- ------------------------------------------------------------------------------------- ----------------------------------
Ratio of net investment income to average
net assets (0.65%)# (1.09%)# (1.00%)# (0.24%)# (0.79%)# (0.84%)#
- ------------------------------------------------------------------------------------- ----------------------------------
Portfolio turnover rate 22%+ 22%+ 22%+ 15%+ 15%+ 15%+
- ------------------------------------------------------------------------------------- ----------------------------------
Expense ratio before expense
reimbursement by adviser 5.73%# 9.11%# 11.03%# 5.57%# 5.44%# 4.39%#
- ------------------------------------------------------------------------------------- ----------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Small/Mid Cap Fund
---------------------------------------------------------------------------------
Class A Class B
-------------------------------------- ---------------------------------------
Six Months Six Months
Ended Year 3/04/96* Ended Year 3/04/96*
4/30/98 Ended to 4/30/98 Ended to
(Unaudited) 10/31/91 10/31/96 (Unaudited) 10/31/97** 10/31/96
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $15.51 $12.62 $12.50 $15.33 $12.58 $12.50
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.08) (0.14) (0.02) (0.12) (0.23) (0.05)
Net realized and unrealized gain on
investments 2.15 3.03 0.14 2.10 2.98 0.13
---------------------------------------------------------------------------------
Total from investment operations 2.07 2.89 0.12 1.98 2.75 0.08
Distributions
Distributions from capital gains (0.24) -- -- (0.24) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.34 $15.51 $12.62 $17.07 $15.33 $12.58
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 13.71%+ 22.90% 0.96%+ 13.28%+ 21.86% 0.64%+
==================================================================================================================================
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $4,891 $4,170 $2,966 $14,670 $11,802 $6,659
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net
assets 1.675%# 1.675% 1.675%# 2.325%# 2.325% 2.325%#
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (0.92%)# (1.02%) (0.40%)# (1.57%)# (1.67%) (1.05%)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%+ 145% 92%# 79%+ 145% 92%#
- ----------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement and fee waiver by adviser 1.90%# 2.24% 2.69%# 2.55%# 2.79% 3.05%#
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------
Class C
-------------------------------------------
Six Months
Ended Year 3/04/96*
4/30/98 Ended to
(Unaudited) 10/31/97** 10/31/96
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $15.35 $12.59 $12.50
- --------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.12) (0.23) (0.05)
Net realized and unrealized gain on
investments 2.10 2.99 0.14
-------------------------------------------
Total from investment operations 1.98 2.76 0.09
Distributions
Distributions from capital gains (0.24) -- --
- --------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.09 $15.35 $12.59
- --------------------------------------------------------------------------------------------------
Total Return 13.26%+ 21.92% 0.72%+
==================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $16,042 $13,471 $8,241
- --------------------------------------------------------------------------------------------------
Ratio of total expenses to average net
assets 2.325%# 2.325% 2.325%#
- --------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (1.57%)# (1.67%) (1.05%)#
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 79%+ 145% 92%#
- --------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement and fee waiver by adviser 2.55%# 2.78% 3.04%#
- --------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Net investment income per share has been calculated using the average shares
method
+ Non-annualized
# Annualized
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>
Growth Equity Fund
---------------------------------------------------------------------
Class A Class B
--------------------------------- ---------------------------------
Six Months Six Months
Ended Year 3/04/96* Ended Year 3/04/96*
4/30/98 Ended to 4/30/98 Ended to
(Unaudited) 10/31/97 10/31/96 (Unaudited) 10/31/97 10/31/96
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.01 $13.78 $12.50 $16.90 $13.73 $12.50
- -----------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.04) (0.03) 0.28 (0.08) (0.13) 0.24
Net realized and unrealized gain on
investments and foreign currency 2.62 3.45 1.00 2.58 3.46 0.99
---------------------------------------------------------------------
Total from investment operations 2.58 3.42 1.28 2.50 3.33 1.23
---------------------------------------------------------------------
Distributions
Dividends from net investment income.... -- (0.19) -- -- (0.16) --
Distributions from realized capital
gains................................... (1.16) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.43 $17.01 $13.78 $18.24 $16.90 $13.73
- -----------------------------------------------------------------------------------------------------------------
Total Return 18.35%+ 25.13% 10.24%+ 17.97%+ 24.50% 9.84%+
=================================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $3,927 $3,053 $2,244 $11,335 $9,040 $4,748
- -----------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average
net assets 1.65%# 1.65% 1.65% 2.30%# 2.30% 2.30%#
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (0.23%)# (0.17%) 4.11%# (0.87%)# (0.82%) 4.18%#
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 72%+ 181% 450%# 72%+ 181% 450%#
- -----------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.88%# 2.28% 2.71%# 2.52%# 2.78% 3.06%#
- -----------------------------------------------------------------------------------------------------------------
=================================================================================================================
<CAPTION>
--------------------------------
Class C
--------------------------------
Six Months
Ended Year 3/04/96*
4/30/98 Ended to
(Unaudited) 10/31/97 10/31/96
--------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $16.89 $13.37 $12.50
- -----------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.08) (0.13) 0.24
Net realized and unrealized gain on
investments and foreign currency 2.57 3.46 0.99
--------------------------------
Total from investment operations 2.49 3.33 1.23
--------------------------------
Distributions
Dividends from net investment income -- (0.17) --
Distributions from realized capital gains (1.16) -- --
- -----------------------------------------------------------------------------------
Net Asset Value, End of Period $18.22 $16.89 $13.73
- -----------------------------------------------------------------------------------
Total Return 17.92%+ 24.50% 9.84%+
===================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------
Net assets, end of period (000's) $15,071 $12,766 $6,494
- -----------------------------------------------------------------------------------
Ratio of total expenses to average
net assets 2.30%# 2.30% 2.30%#
- -----------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (0.87%)# (0.82%) 4.13%#
- -----------------------------------------------------------------------------------
Portfolio turnover rate 72%+ 181% 450%#
- -----------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.52%# 2.75% 2.96%#
- -----------------------------------------------------------------------------------
===================================================================================
<CAPTION>
Growth and Income Fund
----------------------------------------------------------------------
Class A
----------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95** 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.77 $17.56 $14.72 $13.09 $12.29
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.04 0.14 0.18 0.26 0.12
Net realized and unrealized gain on investments
and foreign currency 4.30 5.26 2.99 1.90 0.76
----------------------------------------------------------------------
Total from investment operations 4.34 5.40 3.17 2.16 0.88
----------------------------------------------------------------------
Distributions
Dividends from net investment income (0.03) (0.15) (0.21) (0.23) (0.08)
Distributions from realized capital gains (1.70) (1.04) (0.12) (0.30) --
----------------------------------------------------------------------
Total distributions (1.73) (1.19) (0.33) (0.53) (0.08)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $24.38 $21.77 $17.56 $14.72 $13.09
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 21.42%+ 31.95% 21.84% 17.28% 5.06%@
=============================================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $45,222 $34,186 $18,272 $12,180 $8,134
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.34%# 1.34% 1.34% 1.34% 1.34%#
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 0.35%# 0.66% 1.10% 1.91% 1.72%#
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 7%+ 39% 49% 40% 45%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.46%# 1.50% 1.56% 1.69% 2.08%#
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Growth and Income Fund
----------------------------------------------------------------------
Class B
----------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96** 10/31/95** 10/31/94
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.67 $17.50 $14.69 $13.08 $12.29
- ----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.03) 0.01 0.07 0.16 0.10
Net realized and unrealized gain on investments
and foreign currency 4.26 5.23 2.99 1.94 0.77
----------------------------------------------------------------------
Total from investment operations 4.23 5.24 3.06 2.10 0.87
----------------------------------------------------------------------
Distributions
Dividends from net investment income -- (0.03) (0.13) (0.19) (0.08)
Distributions from realized capital gains (1.70) (1.04) (0.12) (0.30) --
----------------------------------------------------------------------
Total distributions (1.70) (1.07) (0.25) (0.49) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $24.20 $21.67 $17.50 $14.69 $13.08
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 20.99%+ 31.40% 21.08% 16.73% 4.98%@
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $74,624 $54,871 $34,740 $19,052 $3,885
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.99%# 1.99% 1.99% 1.99% 1.99%#
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (0.30%)# 0.01% 0.45% 1.14% 1.07%#
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 7%+ 39% 49% 40% 45%
- ----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.11%# 2.15% 2.20% 2.33%# 3.12%#
- ----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
<CAPTION>
Growth and Income Fund
-------------------------------------------------------
Class C
-------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 ------------------------------------
(Unaudited) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.75 $17.56 $14.71 $13.08
- --------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income (0.03) 0.01 0.07 0.18
Net realized and unrealized gain on investments
and foreign currency 4.28 5.25 3.00 1.90
-------------------------------------------------------
Total from investment operations 4.25 5.26 3.07 2.08
-------------------------------------------------------
Distributions
Dividends from net investment income -- (0.03) (0.10) (0.15)
Distributions from realized capital gains (1.70) (1.04) (0.12) (0.30)
-------------------------------------------------------
Total distributions (1.70) (1.07) (0.22) (0.45)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $24.30 $21.75 $17.56 $14.71
- --------------------------------------------------------------------------------------------------------------
Total Return 21.00%+ 31.37% 21.12% 16.56%
==============================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $120,916 $98,250 $74,825 $63,154
- --------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.99%# 1.99% 1.99% 1.99%
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets (0.30%)# 0.01% 0.45% 1.26%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 7%+ 39% 49% 40%
- --------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.11%# 2.13% 2.20% 2.26%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Growth and Income Fund
-------------------------------------------------------
Class C
-------------------------------------------------------
Year Ended October 31, 5/01/91*
-------------------------------------- to
1994 1993 1992 10/31/91
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.71 $11.21 $10.51 $10.00
- --------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.15 0.14 0.18 0.11
Net realized and unrealized gain on investments
and foreign currency 0.46 1.48 0.70 0.47
-------------------------------------------------------
Total from investment operations 0.61 1.62 0.88 0.58
-------------------------------------------------------
Distributions
Dividends from net investment income (0.13) (0.12) (0.18) (0.07)
Distributions from realized capital gains (0.11) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (0.24) (0.12) (0.18) (0.07)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.08 $12.71 $11.21 $10.51
- --------------------------------------------------------------------------------------------------------------
Total Return 4.85% 14.57% 8.42% 5.88%+
==============================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $46,078 $37,483 $10,821 $2,090
- --------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.99% 1.99% 1.94% 1.85%#
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.11% 1.12% 1.51% 2.05%#
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 37% 48% 111%#
- --------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.38% 2.46% 3.18% 10.69%#
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Equity--Income Fund
----------------------------------------------------------------------
Class A
----------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95** 10/31/94
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.44 $17.37 $15.94 $14.78 $14.59
- ----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.13 0.33 0.16 0.12 0.02
Net realized and unrealized gain on investments
and foreign currency 2.37 3.59 2.69 1.83 0.17
----------------------------------------------------------------------
Total from investment operations 2.50 3.92 2.85 1.95 0.19
----------------------------------------------------------------------
Distributions
Dividends from net investment income (0.33) (0.18) (0.14) -- --
Distributions from realized capital gains (1.16) (3.67) (1.28) (0.79) --
----------------------------------------------------------------------
Total distributions (1.49) (3.85) (1.42) (0.79) --
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.45 $17.44 $17.37 $15.94 $14.78
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 15.62%+ 27.24% 19.23% 14.22% 4.82%@
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $41,449 $36,334 $28,470 $22,026 $16,326
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.415%# 1.34% 1.34% 1.34% 1.34%#
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 1.54%# 2.01% 0.98% 0.79% 0.13%#
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 12%+ 36% 169% 54% 39%
- ----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.53%# 1.55% 1.55% 1.62% 1.79%#
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Equity--Income Fund
---------------------------------------------------------------------
Class B
---------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95** 10/31/94
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.24 $17.22 $15.84 $14.77 $14.59
- ----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.08 0.23 0.06 0.02 (0.02)
Net realized and unrealized gain on investments
and foreign currency 2.34 3.54 2.69 1.84 0.20
---------------------------------------------------------------------
Total from investment operations 2.42 3.77 2.75 1.86 0.18
---------------------------------------------------------------------
Distributions
Dividends from net investment income (0.21) (0.08) (0.09) -- --
Distributions from realized capital gains (1.16) (3.67) (1.28) (0.79) --
---------------------------------------------------------------------
Total distributions (1.37) (3.75) (1.37) (0.79) --
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.29 $17.24 $17.22 $15.84 $14.77
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 15.23%+ 26.29% 18.59% 13.58% 4.75%@
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $42,126 $36,191 $27,058 $19,874 $5,054
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.065%# 1.99% 1.99% 1.99% 1.99%#
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 0.90%# 1.36% 0.33% 0.13% (0.52%)#
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 12%+ 36% 169% 54% 39%
- ----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.18%# 2.21% 2.20% 2.32% 2.82%#
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Equity--Income Fund
------------------------------------------------------------------------
Class C
------------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 ----------------------------------------------------------
(Unaudited) 1997 1996 1995** 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.33 $17.27 $15.84 $14.77 $14.21
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.08 0.23 0.06 0.02 (0.07)
Net realized and unrealized gain on investments
and foreign currency 2.35 3.56 2.69 1.84 0.74
------------------------------------------------------------------------
Total from investment operations 2.43 3.79 2.75 1.86 0.67
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.21) (0.06) (0.04) -- (0.03)
Distributions from realized capital gains (1.16) (3.67) (1.28) (0.79) (0.08)
Distributions from capital -- -- -- -- --
------------------------------------------------------------------------
Total distributions (1.37) (3.73) (1.32) (0.79) (0.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.39 $17.33 $17.27 $15.84 $14.77
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 15.22%+ 26.33% 18.53% 13.58% 4.75%
================================================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $106,517 $94,649 $83,855 $83,719 $71,219
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.065%# 1.99% 1.99% 1.99% 1.99%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 0.90%# 1.36% 0.33% 0.15% (0.49%)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 12%+ 36% 169% 54% 39%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.18%# 2.19% 2.20% 2.23% 2.29%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Equity--Income Fund
---------------------------------------------------------------------
Class C
---------------------------------------------------------------------
Year Ended October 31, 8/28/89*
----------------------------------------------------- to
1993 1992 1991 1990 10/31/89
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.05 $10.70 $8.22 $11.19 $12.25
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.01 (0.01) 0.02 0.05 0.01
Net realized and unrealized gain on investments
and foreign currency 2.15 1.37 2.54 (2.39) (1.07)
---------------------------------------------------------------------
Total from investment operations 2.16 1.36 2.56 (2.34) (1.06)
---------------------------------------------------------------------
Distributions
Dividends from net investment income -- -- (0.03) (0.05) --
Distributions from realized capital gains -- -- -- (0.58) --
Distributions from capital -- (0.01) (0.05 -- --
---------------------------------------------------------------------
Total distributions -- (0.01) (0.08) (0.63) --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.21 $12.05 $10.70 $8.22 $11.19
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 17.93% 12.75% 31.32% (22.16%) (8.65%)+
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $64,223 $24,291 $15,354 $19,370 $30,627
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.99% 2.47% 2.97% 2.85% 2.57%#
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 0.27% (0.15%) 0.27% 0.43% 0.37%#
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 37% 58% 65%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.35% 3.00% 3.12% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Balanced Fund
------------------------------------------------------------------------
Class A
------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96** 10/31/95** 10/31/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.58 $12.33 $12.02 $11.13 $11.06
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.13 0.34 0.39 0.38 0.17
Net realized and unrealized gain on investments
and foreign currency 1.07 1.52 1.07 1.35 (0.10)
------------------------------------------------------------------------
Total from investment operations 1.20 1.86 1.46 1.73 0.07
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.32) (0.45) (0.40) (0.32) --
Distributions from realized capital gains (2.07) (1.16) (0.75) (0.52) --
------------------------------------------------------------------------
Total distributions (2.39) (1.61) (1.15) (0.84) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.39 $12.58 $12.33 $12.02 $11.13
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 11.54%+ 17.01% 13.10% 16.95% 0.76%@
===============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $14,212 $12,294 $10,873 $10,033 $7,830
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.39%# 1.34% 1.34% 1.34% 1.34%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 2.12%# 2.74% 3.32% 3.39% 2.72%#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 93%+ 211% 253% 226% 246%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.55%# 1.59% 1.55% 1.69% 1.86%#
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
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>
Balanced Fund
------------------------------------------------------------------------
Class B
------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97** 10/31/96** 10/31/95** 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.49 $12.26 $11.98 $11.12 $11.06
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.11 0.25 0.31 0.30 0.12
Net realized and unrealized gain on investments
and foreign currency 1.05 1.53 1.07 1.36 (0.06)
------------------------------------------------------------------------
Total from investment operations 1.16 1.78 1.38 1.66 0.06
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.24) (0.39) (0.35) (0.28) --
Distributions from realized capital gains (2.07) (1.16) (0.75) (0.52) --
------------------------------------------------------------------------
Total distributions (2.31) (1.55) (1.10) (0.80) --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.34 $12.49 $12.26 $11.98 $11.12
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 11.12%+ 16.27% 12.35% 16.31% 0.67%@
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $20,000 $17,140 $16,219 $9,875 $4,760
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.04%# 1.99% 1.99% 1.99% 1.99%#
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 1.47%# 2.09% 2.67% 2.69% 2.07%#
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 93%+ 211% 253% 226% 246%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.20%# 2.23% 2.20% 2.37% 2.73%#
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Balanced Fund
------------------------------------------------------------------------
Class C
------------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 -------------------------------------------------------
(Unaudited) 1997** 1996** 1995** 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.62 $12.35 $12.02 $11.12 $11.52
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.11 0.25 0.32 0.31 0.22
Net realized and unrealized gain on investments
and foreign currency 1.07 1.54 1.07 1.35 (0.15)
------------------------------------------------------------------------
Total from investment operations 1.18 1.79 1.39 1.66 0.07
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.24) (0.36) (0.31) (0.24) (0.18)
Distributions from realized capital gains (2.07) (1.16) (0.75) (0.52) (0.29)
Distributions from capital -- -- -- -- --
------------------------------------------------------------------------
Total distributions (2.31) (1.52) (1.06) (0.76) (0.47)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.49 $12.62 $12.35 $12.02 $11.12
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 11.20%+ 16.21% 12.41% 16.25% 0.67%
=============================================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $69,398 $68,261 $72,821 $80,626 $86,902
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.04%# 1.99% 1.99% 1.99% 1.99%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.47%# 2.09% 2.67% 2.76% 1.93%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 93%+ 211% 253% 226% 246%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.20%# 2.20% 2.20% 2.24% 2.22%
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Balanced Fund
-----------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------
Year Ended October 31,
------------------------------------------------------------- 8/28/89*
to
1993 1992 1991 1990 10/31/89
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.20 $9.76 $8.12 $9.84 $10.17
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.21 0.20 0.27 0.32 0.05
Net realized and unrealized gain on investments
and foreign currency 1.30 0.87 1.70 (1.66) (0.38)
---------------------------------------------------------------------------
Total from investment operations 1.51 1.07 1.97 (1.34) (0.33)
---------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.09) (0.19) (0.33) (0.26) --
Distributions from realized capital gains (0.10) (0.44) -- -- --
Distributions from capital -- -- -- (0.12) --
---------------------------------------------------------------------------
Total distributions (0.19) (0.63) (0.33) (0.38) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.52 $10.20 $9.76 $8.12 $9.84
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 15.02% 11.25% 24.53% (13.97%) (3.24%)+
==================================================================================================================================
Ratios/Supplemental Data $96,105 $48,160 $30,724 $34,713 $43,915
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.99% 2.40% 2.88% 2.63% 2.13%#
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.96% 1.93% 2.77% 3.34% 3.09%#
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 196% 171% 84% 73% 84%#
- ----------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 2.28% 2.89% N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Income Fund
------------------------------------------------------------------------
Class A
------------------------------------------------------------------------
Six Months
Ended Year Year Year 11/01/93*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.76 $9.80 $9.07 $8.90 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.29 0.70 0.80 0.78 0.65
Net realized and unrealized gain on investments
and foreign currency 0.13 0.28 0.72 0.18 (1.10)
------------------------------------------------------------------------
Total from investment operations 0.42 0.98 1.52 0.96 (0.45)
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.29) (0.84) (0.79) (0.79) (0.65)
Distributions from realized capital gains (0.13) (0.18) -- -- --
------------------------------------------------------------------------
Total distributions (0.42) (1.02) (0.79) (0.79) (0.65)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.76 $9.76 $9.80 $9.07 $8.90
- -------------------------------------------------------------------------------------------------------------------------------
Total Return 4.98%+ 10.57% 17.35% 11.43% (3.79%)
===============================================================================================================================
Ratios/Supplemental Data
Net assets, end of (000's) $16,928 $15,924 $13,382 $10,041 $15,507
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.50%# 1.50% 1.50% 1.07% 0.41%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 7.03%# 7.25% 8.28% 9.08% 8.26%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 62%+ 193% 68% 180% 136%
- -------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.56%# 1.61% 1.65% 1.69% .96%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Strategic Income Fund
--------------------------------------------------------------------------
Class B
--------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.76 $9.80 $9.07 $8.90 $9.31
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.26 0.64 0.73 0.73 0.38
Net realized and unrealized gain on investments
and foreign currency 0.13 0.28 0.73 0.17 (0.41)
--------------------------------------------------------------------------
Total from investment operations 0.39 0.92 1.46 0.90 (0.03)
--------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.26) (0.78) (0.73) (0.73) (0.38)
Distributions from realized capital gains (0.13) (0.18) -- -- --
--------------------------------------------------------------------------
Total distributions (0.39) (0.96) (0.73) (0.73) (0.38)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.76 $9.76 $9.80 $9.07 $8.90
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 4.64% + 9.86% 16.59% 10.72% (4.18%)@
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $33,809 $34,590 $30,890 $20,672 $5,440
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.15%# 2.15% 2.15% 1.95% 1.00%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 6.39%# 6.60% 7.63% 8.10% 8.59%#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 62%+ 193% 68% 180% 136%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.21%# 2.23% 2.27% 2.38% 2.04%#
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
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>
Strategic Income Fund
---------------------------------------------------------------------------
Class C
---------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.76 $9.80 $9.07 $8.90 $9.31
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.26 0.64 0.73 0.73 0.38
Net realized and unrealized gain on investments
and foreign currency 0.13 0.28 0.73 0.17 (0.41)
---------------------------------------------------------------------------
Total from investment operations 0.39 0.92 1.46 0.90 (0.03)
---------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.26) (0.78) (0.73) (0.73) (0.38)
Distributions from realized capital gains (0.13) (0.18) -- -- --
---------------------------------------------------------------------------
Total distributions (0.39) (0.96) (0.73) (0.73) (0.38)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.76 $9.76 $9.80 $9.07 $8.90
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 4.64%+ 9.86% 16.59% 10.72% 4.20%@
================================================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $36,357 $32,683 $22,783 $14,273 $8,439
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 2.15%# 2.15% 2.15% 1.95% 1.00%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 6.37%# 6.60% 7.63% 8.25% 8.59%#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 62%+ 193% 68% 180% 136%
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.21% 2.24% 2.28% 2.37% 1.96%#
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
<TABLE>
<CAPTION>
Investment Quality Bond Fund
-------------------------------------------------------
Class A
-------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 ---------------------------------------
(Unaudited) 1997 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.52 $10.34 $10.56 $9.74
- ------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.29 0.67 0.66 0.68
Net realized and unrealized gain on investments 0.04 0.18 (0.20) 0.82
-------------------------------------------------------
Total from investment operations 0.33 0.85 0.46 1.50
-------------------------------------------------------
Distributions
Dividends from net investment income (0.28) (0.67) (0.68) (0.68)
Distributions from realized capital gains -- -- -- --
Distributions from capital -- -- -- --
-------------------------------------------------------
Total distributions (0.28) (0.67) (0.68) (0.68)
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.57 $10.52 $10.34 $10.56
- ------------------------------------------------------------------------------------------------------------
Total Return 3.71%+ 8.57% 4.52% 15.91%
============================================================================================================
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period_(000's) $6,715 $7,110 $9,056 $10,345
- ------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.25%# 1.25% 1.25% 1.25%
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 6.52%# 6.54% 6.37% 6.72%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 19%+ 65% 56% 132%
- ------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.49%# 1.62% 1.55% 1.73%
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended October 31, 5/01/91*
------------------------------------------ to
1994 1993 1992 10/31/91
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.16 $10.56 $10.26 $10.00
- ------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.60 0.66 0.82 0.40
Net realized and unrealized gain on investments (1.37) 0.64 0.27 0.30
--------------------------------------------------------
Total from investment operations (0.77) 1.30 1.09 0.70
--------------------------------------------------------
Distributions
Dividends from net investment income (0.56) (0.64) (0.79) (0.40)
Distributions from realized capital gains (0.09) (0.06) -- --
Distributions from capital -- -- -- (0.04)
--------------------------------------------------------
Total distributions (0.65) (0.70) (0.79) (0.44)
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.74 $11.16 $10.56 $10.26
- ------------------------------------------------------------------------------------------------------------
Total Return (7.08%) 12.66% 11.00% 7.21%+
============================================================================================================
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period_(000's) $11,150 $14,674 $6,773 $2,713
- ------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.25% 0.98% 0.00% 0.00%#
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.86% 5.82% 7.76% 7.08%#
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 186% 41% 44% 39%#
- ------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.74% 1.57% 2.56% 3.37%#
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
================================================================================
<TABLE>
<CAPTION>
Investment Quality Bond Fund
------------------------------------------------------------------------
Class B
------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.52 $10.33 $10.55 $9.74 $10.21
- ---------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.26 0.60 0.60 0.61 0.33
Net realized and unrealized gain on investments 0.05 0.20 (0.20) 0.82 (0.51)
------------------------------------------------------------------------
Total from investment operations 0.31 0.80 0.40 1.43 (0.18)
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.26) (0.61) (0.62) (0.62) (0.29)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.57 $10.52 $10.33 $10.55 $9.74
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 3.42%+ 8.05% 3.92% 15.12% (7.34%)@
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $4,653 $4,613 $4,678 $3,472 $489
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.90%# 1.90% 1.90% 1.90% 1.90%#
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.86%# 5.89% 5.72% 5.95% 5.70%#
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 19%+ 65% 56% 132% 186%
- ---------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.14%# 2.33% 2.27% 2.69% 4.88%#
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Investment Quality Bond Fund
------------------------------------------------------------------------
Class C
------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.52 $10.33 $10.55 $9.74 $10.21
- ---------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.26 0.60 0.60 0.61 0.33
Net realized and unrealized gain on investments 0.05 0.20 (0.20) 0.82 (0.51)
------------------------------------------------------------------------
Total from investment operations 0.31 0.80 0.40 1.43 (0.18)
------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.26) (0.61) (0.62) (0.62) (0.29)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.57 $10.52 $10.33 $10.55 $9.74
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 3.42%+ 8.05% 3.92% 15.12% (7.34%)@
===========================================================================================================================
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $5,024 $6,109 $7,543 $7,206 $2,406
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.90%# 1.90% 1.90% 1.90% 1.90%#
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.85%# 5.89% 5.72% 6.00% 5.70%#
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 19%+ 65% 56% 132% 186%
- ---------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.14%# 2.29% 2.22% 2.50% 3.05%#
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
================================================================================
<TABLE>
<CAPTION>
National Municipal Bond Fund
-----------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------
Six Months
Ended Year Ended October 31, 1/06/93*
4/30/98 -------------------------------------------- to
(Unaudited) 1997 1996 1995 1994 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.09 $9.73 $9.62 $8.82 $10.25 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.20 0.48 0.48 0.51 0.51 0.17
Net realized and unrealized gain on investments 0.04 0.36 0.11 0.80 (1.43) 0.24
-----------------------------------------------------------------------------
Total from investment operations 0.24 0.84 0.59 1.31 (0.92) 0.41
-----------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.20) (0.48) (0.48) (0.51) (0.51) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.13 $10.09 $9.73 $9.62 $8.82 $10.25
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 2.74%+ 8.85% 6.31% 15.26% (9.24%) 4.17%+
====================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (900's) $5,937 $6,347 $7,710 $7,618 $7,663 $9,131
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 0.99%# 0.99% 0.99% 0.80% 0.57% 0.23%#
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 4.65%# 4.87% 4.99% 5.55% 5.28% 4.86%#
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 31%+ 29% 49% 44% 6% 150%#
- ------------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 1.15%# 1.23% 1.25% 1.34% 1.26% 1.10%#
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
National Municipal Bond Fund
---------------------------------------------------------------
Class B
---------------------------------------------------------------
Year Ended October 31,
Six Months -----------------------------------------------
Ended Year Year Year 1/06/93*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/97 10/31/97 10/31/93
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.09 $9.73 $9.62 $8.81 $9.30
Investment Operations:
Net investment income 0.16 0.40 0.40 0.43 0.25
Net realized and unrealized gain on investments 0.03 0.36 0.11 0.81 (0.49)
---------------------------------------------------------------
Total from investment operations 0.19 0.76 0.51 1.24 (0.24)
---------------------------------------------------------------
Distributions
Dividends from net investment income (0.16) (0.40) (0.40) (0.43) (0.25)
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.12 $10.09 $9.73 $9.62 $8.81
- ----------------------------------------------------------------------------------------------------------------------
Total Return 2.20%+ 7.94% 5.41% 14.42% (9.71%)@
======================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $5,554 $6,532 $6,130 $5,876 $2,036
- ----------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.85%# 1.84% 1.84% 1.70% 1.24%#
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 3.81%# 4.02% 4.14% 4.59% 4.62%#
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 31%+ 29% 49% 44% 6%#
- ----------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.01%# 2.15% 2.11% 2.41% 2.81%#
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
@ Historical Total Return is the one-year performance return which includes
Class Aperformance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
================================================================================
<TABLE>
<CAPTION>
National Municipal Bond Fund
-------------------------------------------------------------------------
Class C
-------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/91 10/31/96 10/31/95 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.09 $9.73 $9.62 $8.81 $9.30
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.16 0.40 0.40 0.43 0.25
Net realized and unrealized gain on investment 0.03 0.36 0.11 0.81 (0.49)
Total from investment operations 0.19 0.76 0.51 1.24 (0.24)
Distributions
Dividends from net investment income (0.16) (0.40) (0.40) (0.43) (0.25)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.12 $10.09 $9.73 $9.62 $8.81
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 2.20%+ 7.94% 5.41% 14.42% (9.71%)@
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $5,223 $5,305 $5,693 $6,834 $1,911
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.85%# 1.84% 1.84% 1.70% 1.24%#
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 3.80%# 4.02% 4.14% 4.53% 4.62%#
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 31%+ 29% 49% 44% 6%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.01%# 2.15% 2.25% 2.63% 2.78%#
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. Government Securities Fund Class A
--------------------------------------------------------------------------
Class A
--------------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 -------------------------------------------------------
(Unaudited) 1997 1996** 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.94 $9.80 $9.98 $9.45 $10.35
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.23 0.59 0.56 0.63 0.53
Net realized and unrealized gain on
investments 0.02 0.13 (0.12) 0.57 (0.74)
--------------------------------------------------------------------------
Total from investment operations 0.25 0.72 0.44 1.20 (0.21)
--------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.24) (0.58) (0.56) (0.67) (0.50)
Dividends in excess of net investment income -- -- (0.06) -- --
Distributions from realized capital gains -- -- -- -- (0.19)
Distributions from capital -- -- -- -- --
--------------------------------------------------------------------------
Total distributions (0.24) (0.58) (0.62) (0.67) (0.69)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95 $9.94 $9.80 $9.98 $9.45
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 3.03%+ 7.56% 4.64% 13.15% (2.13%)
=============================================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $49,906 $53,235 $72,774 $81,179 $100,622
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.25%# 1.25% 1.25% 1.25% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.76%# 6.20% 5.71% 6.54% 5.39%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58%+ 364% 477% 469% 279%
- -----------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.39%# 1.42% 1.41% 1.45% 1.47%
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. Government Securities Fund
---------------------------------------------------------------
Class A
---------------------------------------------------------------
Year Ended October 31, 8/28/89*
--------------------------------------------------------------- to
1993 1992 1991 1990 10/31/89
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.04 $9.89 $9.47 $9.74 $9.73
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.51 0.74 0.84 0.75 0.15
Net realized and unrealized gain on
investments 0.34 0.13 0.42 (0.20) 0.01
------------------------------------------------------------------------------
Total from investment operations 0.85 0.87 1.26 (0.55) 0.16
------------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.50) (0.72) (0.84) (0.75) (0.15)
Dividends in excess of net investment income -- -- -- -- --
Distributions from realized capital gains (0.04) -- -- -- --
Distributions from capital -- -- -- (0.07) --
------------------------------------------------------------------------------
Total distributions (0.54) (0.72) (0.84) (0.82) (0.15)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.35 $10.04 $9.89 $9.47 $9.74
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 8.64% 9.15% 13.86% 5.90% 1.66%+
================================================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $163,296 $118,543 $45,662 $43,299 $56,069
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.07% 0.24% 0.68% 2.28% 2.18%#
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 4.97% 7.21% 8.65% 7.89% 8.54%#
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 208% 108% 195% 71% 93%#
- --------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by adviser 1.42% 2.13% 2.61% 2.57% N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
+ Non-annualized
# Annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class C performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
================================================================================
<TABLE>
<CAPTION>
U.S. Government Securities Fund
----------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96** 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.94 $9.80 $9.98 $9.45 $9.77
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.20 0.54 0.50 0.56 0.29
Net realized and unrealized gain on investments 0.01 0.11 (0.12) 0.58 (0.35)
-----------------------------------------------------------------------------
Total from investment operations 0.21 0.65 0.38 1.14 (0.06)
-----------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.21) (0.51) (0.50) (0.61) (0.26)
Distributions in excess of net investment income -- -- (0.06) -- --
-----------------------------------------------------------------------------
Total distribution (0.21) (0.51) (0.56) (0.61) (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.94 $9.94 $9.80 $9.98 $9.45
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.59%+ 6.84% 3.97% 12.45% (2.44%)@
=================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $41,718 $16,659 $19,444 $13,993 $2,746
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.90%# 1.90% 1.90% 1.90% 1.90%#
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.11%# 5.55% 5.06% 5.53% 5.06%#
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58%+ 364% 477% 469% 279%
- ---------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.05%# 2.09% 2.06% 2.28% 3.40%#
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. Government Securities Fund
----------------------------------------------------------------------------
Class C
----------------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97** 10/31/96 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.94 $9.80 $9.98 $9.45 $9.77
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.20 0.54 0.50 0.56 0.26
Net realized and unrealized gain on investments 0.01 0.11 (0.12) 0.58 (0.32)
-----------------------------------------------------------------------------
Total from investment operations 0.21 0.65 0.38 1.14 (0.06)
-----------------------------------------------------------------------------
Distributions
Dividends from net investment income (0.21) (0.51) (0.50) (0.61) (0.26)
Distributions in excess of net investment income -- -- (0.06) -- --
-----------------------------------------------------------------------------
Total distributions (0.21) (0.51) (0.56) (0.61) (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.94 $9.94 $9.80 $9.98 $9.45
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.59%+ 6.84% 3.97% 12.45% (2.44%)@
=================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $12,089 $14,716 $20,009 $20,186 $10,766
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 1.90%# 1.90% 1.90% 1.90% 1.90%#
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.11%# 5.55% 5.06% 5.74% 5.06%#
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58%+ 364% 477% 469% 279%
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) before expense
reimbursement by adviser 0.19 0.52 0.48 0.53 0.23
- ---------------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.05%# 2.09% 2.06% 2.15% 2.44%#
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
+ Non-annualized
# Annualized
** Net investment income per share has been calculated using the average share
method
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
--------------------------------------------------------------------------
Class A
--------------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
4/30/98 ---------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.02 0.05 0.05 0.05 0.03 0.03
Distributions
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Total Return 2.58%+ 5.13% 5.16% 5.60% 3.48% 2.80%
==========================================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $10,210 $11,057 $8,087 $11,379 $8,499 $18,109
- --------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 0.50%# 0.50% 0.50% 0.50% 0.50% 0.50%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.15%# 5.02% 5.02% 5.45% 3.40% 2.75%
- --------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 0.82%# 0.96% 0.95% 0.96% 0.95% 1.32%
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Money Market Fund
--------------------------------------------------
Class A
--------------------------------------------------
Year Ended October 31, 8/28/89*
----------------------------------- to
1992 1991 1990 10/31/89
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.04 0.06 0.06 0.01
Distributions
Dividends from net investment income (0.04) (0.06) (0.06) (0.01)
- --------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------
Total Return 3.69% 6.22% 5.76% 0.53%+
==================================================================================================
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $2,244 $3,421 $4,526 $7,781
- --------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 0.50% 1.00% 2.45% 1.96%#
- --------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 3.77% 6.01% 5.52% 6.59%#
- --------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement
by adviser 2.71% 2.68% 2.47% N/A
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Money Market Fund
-------------------------------------------------------------
Class B
-------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/91 10/31/96 10/31/95 10/31/94
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.02 0.05 0.05 0.05 0.02
Distributions
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.02)
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Total Return 2.58%+ 5.13% 5.16% 5.60% 3.48%@
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $3,905 $3,332 $3,062 $1,564 $312
- -------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 0.50%# 0.50% 0.50% 0.50% 0.50%#
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.16%# 5.02% 5.02% 5.52% 3.96%#
- -------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement by
adviser 0.82%# 1.05% 1.18% 1.41% 4.83%#
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
+ Non-annualized
# Annualized
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
------------------------------------------------------------------
Class C
------------------------------------------------------------------
Six Months
Ended Year Year Year 4/01/94*
4/30/98 Ended Ended Ended to
(Unaudited) 10/31/97 10/31/96 10/31/95 10/31/94
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income 0.02 0.05 0.05 0.05 0.02
Distributions
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.02)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Total Return 2.58%+ 5.13% 5.16% 5.60% 3.48%@
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (000's) $6,339 $7,539 $9,840 $9,394 $12,170
- --------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses to average net assets 0.50%# 0.50% 0.50% 0.50% 0.50%#
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets 5.16%# 5.01% 5.02% 5.46% 3.96%#
- --------------------------------------------------------------------------------------------------------------------------
Expense ratio before expense reimbursement by
adviser 0.83%# 1.00% 0.98% 0.95% 1.18%#
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
+ Non-annualized
# Annualized
@ Historical Total Return is the one-year performance return which includes
Class A performance prior to commencement of operations.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)
(showing percentage of total value of investments)
================================================================================
International Small Cap Fund
- ----------------------------
Shares Value
------ -----
COMMON STOCKS - 72.41%
Agricultural Machinery - 0.49%
Kverneland AS 3,875 $100,298
--------
Agriculture - 0.71%
Nutreco Holding N.V 4,125 147,227
-------
Air Travel - 2.53%
Ryanair Holdings PLC, ADR* 7,325 281,097
Virgin Express Holdings, Ltd.* 10,650 239,625
-------
520,722
Apparel & Textiles - 1.06%
Tefron, Ltd.* 8,125 217,852
-------
Auto Parts & Service - 1.11%
Haldex 5,725 95,392
Sixt AG 1,050 133,404
-------
228,796
Broadcasting - 0.39%
Editoriale L'Espresso SPA 9,650 80,083
------
Business Services - 6.42%
Altran Technologies SA 3,500 558,393
Brunel International* 4,250 138,855
BTG PLC 10,725 117,326
Kobenhavns Lufthavne 2,175 258,782
Select Appointments Holdings PLC 17,775 247670
------
1,321,026
Computers & Business Equipment - 1.76%
Fuji Software ABC, Incorporated 3,600 128,125
Psion PLC 51,050 233,118
-------
361,243
Conglomerates - 1.20%
Misys 5,157 248,001
-------
Containers & Glass - 3.92%
Compania Cervecerias Unidas SA, ADR 11,125 307,328
Schmalbach Lubeca AG 2,025 498,534
-------
805,862
Drugs & Health Care - 2.54%
Ortivus AB* 7,350 123,418
Schwarz Pharma AG 4,950 399,409
-------
522,827
Electronics - 4.40%
ARM Holdings, PLC* 1,250 17,354
Rofin-Sinar Technologies, Inc.* 9,075 203,620
Toolex-Alpha NV* 10,000 196,525
VTech Holdings, Ltd. 138,800 487,395
-------
904,894
Financial Services - 1.19%
JBA Holdings PLC 27,625 244,904
------
Food & Beverages - 3.08%
Raisio Tehtaat Oy PLC 3,450 633,423
-------
Homebuilders - 1.24%
IHC Caland NV 4,375 254,690
-------
Hotels & Restaurants - 9.63%
Doutor Coffee Company 4,000 108,811
Grupo Posadas SA* 200,000 146,226
J.D. Wetherspoon PLC 56,515 305,813
Pizza Express 38,275 500,176
Regent Inns PLC 36,650 232,957
Tele Pizza* 4,775 686,622
-------
1,980,605
Household Appliances Furnishing - 2.86%
Hunter Douglas 6,900 336,444
Industrie Natuzzi SPA, ADR 9,825 252,380
-------
588,824
Industrial Machinery - 3.49%
KCI Konecranes International PLC 4,525 216,006
Noritsu Koki Co. 7,200 214,901
Tomra Systems AS 8,950 288,069
-------
718,976
International Oil - 1.91%
British-Borneo Petroleum
Syndicate PLC 39,716 230,854
Cairn Energy PLC* 31,150 162,566
-------
393,420
Leisure Time - 5.69%
Capital Radio 24,575 261,027
Cinar Films, Inc., Class B* 15,950 307,038
Flextech PLC* 36,150 299,317
Metromedia International Group, Inc.* 10,300 171,237
Village Roadshow 60,375 131,528
-------
1,170,147
Office Furnishings & Supplies - 1.00%
Turbon International AG 7,050 206,249
-------
Petroleum Services - 2.42%
Coflexip SA, ADR* 4,600 327,750
Petroleum Geological Services AS, ADR* 2,600 170,950
-------
498,700
Retail Grocery - 0.87%
Distribucion Y Servicio* 10,125 178,453
-------
Retail Trade - 2.91%
Beter Bed Holdings NV 2,950 99,010
Bulgari SPA 48,925 298,574
Ceteco Holdings NV 550 30,738
Douglas Holdings AG 2,700 119,462
Narvesen ASA 2,300 51,820
-------
599,604
Software - 3.41%
Dassault Systems SA 8,900 349,426
Eidos PLC ADR* 6,775 108,400
Nippon System Development 6,000 149,615
Smallworldwide PLC* 3,275 93,337
-------
700,778
Telecommunication Equipment - 0.52%
Nice Systems, Ltd.* 2,500 107,500
-------
Telecommunication Services - 4.08%
Asia Satellite Telecommunications
Holdings, ADR 12,825 236,461
Energis PLC* 8,000 87,649
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Telecommunication Services - continued
Global Telesystems Group, Inc.* 4,550 $213,850
Grupo Iusacell SA, ADR* 15,575 301,766
-------
839,726
Telephone - 1.58%
Netcom Systems AB, Class B* 9,550 324,419
-------
TOTAL COMMON STOCKS
(Cost $12,123,499) $14,899,249
-----------
PREFERRED STOCKS - 6.11%
Automobiles - 3.28%
Porsche AG 270 $675,545
Financial Services - 2.83%
Marschollek, Lautenschlaeger und
Partner AG 1,490 580,789
-------
TOTAL PREFERRED STOCKS
(Cost $574,933) $1,256,334
----------
WARRANTS - 0.01%
Gold Peak Industries (Expiration
date 08/06/00; strike price HKD 5.25) 36,000 $1,859
TOTAL WARRANTS (Cost $0) $1,859
------
Principal Value
--------- -----
SHORT TERM INVESTMENTS - 16.63%
Navigator Securities Lending Trust $2,717,979 $2,717,979
SSGA Money Market Fund 704,421 704,421
-------
$3,422,400
----------
REPURCHASE AGREEMENT - 4.84%
Repurchase Agreement with State
Street Bank & Trust Company dated
04/30/98 at 5.00%, to be repurchased
at $995,138 on 05/01/98,
collateralized by $985,000 U.S.
Treasury Bonds, 6.25% due 08/15/23
(valued at $1,029,597 including
interest) $995,000 $995,000
--------
TOTAL INVESTMENTS (International
Small Cap Fund) (Cost $17,115,832) $20,574,842
-----------
International Growth and Income Fund
- ------------------------------------
Shares Value
------ -----
COMMON STOCKS - 81.02%
Aerospace - 0.63%
Lucas Varity PLC, ADS 48,200 $215,468
--------
Agricultural Machinery - 0.28%
Kvaerner ASA 2,400 97,847
------
Air Travel - 1.30%
British Airways PLC 13,000 135,472
Deutsche Lufthansa AG 9,600 228,425
Singapore Airlines, Ltd. 13,000 84,613
------
448,510
Auto Parts - 0.43%
Autoliv, Inc. 4,900 $148,734
--------
Automobiles - 0.50%
Peugeot SA 1,000 173,682
-------
Banking - 13.52%
Bk Austria AG 1,800 112,763
Cie Fin Paribas 3,700 393,945
Dao Heng Bank Group 123,000 363,633
Deutsche Bank AG 4,400 338,603
Dresdner Bank AG 8,100 438,277
Bank of Fukuoka 57,000 215,354
Gpo Fin Banamex AC 136,000 425,000
Lloyds TSB Group 23,700 355,003
Societe Generale 2,244 467,391
Suez Lyonn Eaux 1,100 186,658
UBS (Schw Bkgesell) 400 644,052
Unibance Uniao De Barncos 9,200 365,700
Westpac Banking Corp., Ltd. 34,000 228,418
Yapi ve Kredi Bankasi AS* 2,605,080 127,675
-------
4,662,472
Broadcasting - 1.99%
Brit Sky Broadcast 11,000 80,039
Central European Media Enterprises, Ltd. 5,300 148,069
Grupo Television SA 3,400 139,400
MATAV Cable Sys Media Ltd 6,700 129,812
Singapore Press HD 5,104 56,442
Wolters Kluwer NV 1,000 130,934
-------
684,696
Business Services - 2.30%
Eaux (Cie Generale Des) 3,345 622,145
Wessex Water PLC 20,600 170,565
-------
792,710
Chemicals - 3.31%
Air Liquide 1,400 258,526
Bayer AG 3,600 160,085
Fauji Fertilizer Company, Ltd. 59,700 117,720
Henkel KGAA 2,240 156,652
Quimica Minera de Chile SA, ADR 1,725 74,930
Sekisui Chemical 4,000 21,974
SGL Carbon 1,700 179,137
Shin Etsu Chemical Co. 3,000 58,486
SKW Trostberg AG 3,300 113,920
-------
1,141,430
Computers & Business Equipment - 0.91%
Fujitsu, Ltd. 13,000 151,768
Ricoh Company, Ltd. 9,000 93,237
Shinawatra 11,000 68,875
------
313,880
Conglomerates - 0.86%
ABSA Group Ltd. 16,700 144,564
First Philippine Holdings Corp. 98,000 72,005
Hutchison Whampoa, Ltd. 13,000 80,390
------
296,959
Construction Materials & Building - 1.62%
Bilfinger & Berger 2,072 69,854
Hanson 12,000 70,805
Pioneer International Ltd. 55,000 157,127
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)-- continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Shares Value
------ -----
Construction Materials & Building - continued
Siam Cement Co. 4,100 $57,920
Tata Engineering 300 2,098
Tostem Corporation 16,000 201,904
-------
559,708
Containers & Glass - 0.53%
Cie de St. Gobain 1,100 183,364
-------
Crude Petroleum & Natural Gas - 1.14%
Elf Aquitaine 2,997 393,384
-------
Drugs & Health Care - 7.79%
Astra AB 7,000 143,761
Glaxo Wellcome 11,000 310,955
Incentive AB 1,800 174,374
Novartis AG 150 247,917
Ranbaxy Laboratories, Ltd. 3,500 86,625
Roche Holdings AG 57 577,598
Sanofi SA 1,780 215,874
Schering AG 2,590 277,827
Takeda Chem Inds 5,000 142,814
Teva Pharmaceutical Inds., Ltd. 1,300 55,575
Yamanouchi Pharmaceutical
Company, Ltd. 5,000 118,256
Zeneca Group PLC 7,800 336,092
-------
2,687,668
Electric Utilities - 3.31%
Companhia Paranaense de Energ 13,300 189,525
Hub Power Co. 1,900 48,925
Iberdrola SA 28,000 450,427
Powergen 10,000 135,154
VEBA AG 4,800 317,227
-------
1,141,258
Electrical Equipment - 1.11%
Elektrim 4,021 57,418
Siemens AG 5,550 324,733
-------
382,151
Electronics - 1.90%
ASM Lithography HL 1,600 145,181
Fanuc, Ltd. 2,000 73,750
Racal Electronics 12,300 68,409
Samsung Electronics, Ltd., ADR 3,998 110,944
SGS Thomson Microelectronics* 3,000 256,530
-------
654,814
Financial Services - 1.61%
Almanij 2,800 186,172
Credicorp Ltd. 340 5,695
ING Groep NV 5,600 363,982
-------
555,849
Food & Beverages - 2.57%
Danisco 1,700 106,822
Lion Nathan, Ltd. 18,000 47,795
Nestle SA 320 620,593
Pan American Beverages, Inc. 1,800 71,775
Zywlec 384 38,213
------
885,198
Forest Products - 0.53%
Fletcher Challenge 123,000 181,065
-------
Household Appliances Furnishing - 1.40%
Philips Electronics 3,860 $340,122
Sony Corp. 1,700 141,431
-------
481,553
Household Products - 1.85%
Unilever 33,000 351,618
Unilever NV 4,000 284,738
-------
636,356
Industrial Machinery - 0.36%
Ebara Corp. 6,000 58,486
Vickers 17,000 67,109
------
125,595
Insurance - 4.96%
Allianz AG 800 246,078
Axa-UAP 2,100 246,648
INA (1st Naz Ass) 35,700 106,716
Irish Life PLC 18,000 167,024
Prudential Corp. 7,000 99,174
Royal Sun Alliance 10,000 111,736
Skandia Foersaekrings AB 5,300 368,987
Zurich Versicherun 600 365,478
-------
1,711,841
International Oil - 3.60%
Oil Co. Lukoil 2,300 151,586
Pakistan State Oil 2,446 12,344
RWE AG 8,700 442,624
Shell Trnspt+Trdg 58,200 433,213
YPF Sociedad Anonima 5,830 203,321
-------
1,243,088
Leisure Time - 0.57%
Compass Group 11,400 197,362
-------
Liquor- 0.59%
Diaego 17,216 205,036
-------
Miscellaneous - 4.94%
ABB AG 150 245,918
ACS Actividades 3,200 105,056
De Boer Unigro 3,400 166,625
Gn Store Nord 4,600 115,505
Hannover Ruckversi 947 120,318
Munchener Ruckvers 1,520 694,547
Nokia (AB) OY 3,800 255,352
-------
1,703,321
Non-ferrous Metal - .79%
Billiton GBP 59,600 170,475
Billiton ZAR 36,400 102,992
-------
273,467
Other Utilities - 0.25%
Nycomed Amersham 2,700 87,628
------
Paper - 0.65%
UPM Kymmene OY 7,500 225,140
-------
Petroleum Services - 1.37%
Petroleo Brasileiro S/A-Petrobras, ADR 3,500 88,569
Total 3,223 383,371
-------
471,940
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)-- continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Shares Value
------ -----
Photography - 0.21%
Fuji Photo Film Co. 2,000 $71,180
-------
Publishing - 0.63%
Lagardere S.C.A 5,700 218,100
-------
Real Estate - 1.03%
City Developments 18,000 77,915
Mitsubishi Estate Company, Ltd. 9,000 87,049
Sun Hung Kai Properties 14,000 83,140
Vallehermoso SA 2,800 108,470
-------
356,574
Retail Grocery - 0.81%
J. Sainsbury PLC 22,475 176,128
Ito-Yokado Co., Ltd. 2,000 103,521
-------
279,649
Retail Trade - 2.07%
Carrefour SA 359 205,749
Great Universal Stores PLC 14,000 213,336
Karstadt AG 500 225,683
Mitsubishi Corp. 9,000 68,006
------
712,774
Software - 0.78%
SAP AG 570 269,984
-------
Steel - 0.43%
Acerinox SA 800 129,744
Tokyo Steel Manufacturing Co., Ltd. 4,000 17,621
------
147,365
Telecommunication Services - 1.24%
Cable & Wireless 10,000 114,580
Telecom Italia SPA 59,438 313,406
-------
427,986
Telephone - 3.15%
Mahanagar Telep NI 6,100 96,685
Philippine Long Distance
Telephone Co. 3,984 107,568
Telecomunicacoes Brasileiras
S/A-Telebras, ADR 2,250 274,078
Telefonica de Argentina SA 3,300 127,256
Telefonica del Peru SA 6,800 150,450
Telefonos de Mexico SA 2,300 130,237
Vodafone Group, ADR 18,600 203,785
-------
1,090,059
Tobacco - 0.31%
ITC Corp. 4600 105,800
-------
Toys, Amusements & Sporting Goods - 0.29%
Nintendo Co. 1,100 l00,907
-------
Trucking & Freight - 0.60%
Evergreen Marine Corp. 10,000 100,077
Mayne Nickless Ltd. 20,000 108,039
-------
208,116
-------
TOTAL COMMON STOCKS
(Cost $24,550,578) $27,951,668
-----------
PREFERRED STOCKS - 2.53%
Miscellaneous - 1.66%
Sanwa International 18,000,000 $125,812
BK Austria AG 4,200 323,653
WBK STRYPES Trust 3,600 122,850
-------
Newspapers - 0.87%
News Corporation, Ltd., ADS 53,000 298,678
-------
TOTAL PREFERRED STOCKS
(Cost $732,925) $870,993
--------
Principal Value
--------- -----
CONVERTIBLE BONDS - 0.26%
Elektrim SA,
2.00% due 05/30/04 DEM $81,000 $57,211
MTI Capital Cayman, Ltd,
0.50% due 10/01/07 JPY 7,000,000 33,455
------
TOTAL CONVERTIBLE BONDS
(Cost $83,979) $90,666
-------
CORPORATE BONDS - 0.45%
Beijing Enterprises
0.50% due 03/31/03 $158,000 $155,630
TOTAL CORPORATE BONDS
(Cost $156,634) $155,630
--------
SHORT TERM INVESTMENTS - 15.74%
Navigator Securities Lending Trust $5,428,098 $5,428,098
SSGA Money Market Fund 1,000 1,000
-----
$5,429,098
----------
TOTAL INVESTMENTS
(International Growth & Income Fund)
(Cost $30,953,214) $34,498,055
===========
Global Equity Fund
- ------------------
Shares Value
------ -----
COMMON STOCKS - 92.55%
Aluminum - 1.02%
Aluminum Company of America 19,800 $1,534,500
----------
Auto Parts - 1.32%
Borg-Warner Automotive, Inc. 32,200 2,002,438
---------
Automobiles - 1.57%
Volkswagen AG 2,983 2,375,363
---------
Banking - 8.31%
ABN AMRO Holdings NV* 84,400 2,055,581
Bank of Ireland 96,253 1,965,843
Chase Manhattan Corp.* 6,400 886,800
First Chicago NBD Corp. 25,900 2,405,462
Jardine Strategic Holdings, Ltd. 549,000 1,421,910
Mellon Bank Corp. 29,200 2,102,400
Nordbanken AB 234,800 1,728,701
---------
12,566,697
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Broadcasting - 0.86%
Mediaset* 198,700 $1,301,222
---------
Business Services - 1.68%
Intelidata Technologies Corp.* 119,200 298,000
WPP Group PLC, ADR 353,600 2,244,616
---------
2,542,616
Chemicals - 6.31%
Akzo Nobel NV, ADS 8,100 1,645,983
BASF AG* 38,600 1,718,615
Bayer AG* 49,600 2,205,611
Kao Corp. 108,000 1,587,275
Potash Corporation of Saskatchewan, Inc. 26,700 2,378,811
---------
9,536,295
Computers & Business Equipment - 1.79%
Data General Corp.* 109,500 1,669,875
NCR Corp.* 28,050 1,029,084
---------
2,698,959
Conglomerates - 1.96%
B.A.T. Industries PLC 89,040 840,006
BTR 134,300 446,479
CSR, Ltd. 344,000 1,099,433
Richemont Cie* 400 573,142
---------
2,959,060
Construction Materials - 1.44%
Cimpor-Cimentos de Portugal SA * 8,950 330,997
Holderbank Financier Glarus AG* 1,600 1,693,302
Wolseley* 22,800 159,987
---------
2,184,286
Containers & Glass - 0.34%
Toyo Seikan Kaisha 39,600 510,186
---------
Crude Petroleum & Natural Gas - 1.30%
Elf Aquitaine * 15,000 1,968,890
---------
Domestic Oil - 0.91%
Tenneco, Inc. 32,000 1,378,000
---------
Drugs & Health Care - 2.49%
Fujisawa Pharmaceutical Company, Ltd. 87,000 847,386
Pharmacia & Upjohn, Inc. 69,400 2,919,137
---------
3,766,523
Electric Utilities - 2.90%
Iberdrola SA 112,300 1,806,533
Southern Electric PLC 102,107 952,178
VEBA AG 24,500 1,619,180
---------
4,377,891
Electrical Equipment - 0.99%
General Signal Corp. 14,400 633,600
Hitachi, Ltd. 121,000 867,682
---------
1,501,282
Electronics - 4.32%
ABB AG 350 573,809
Ascom Holdings AG* 560 1,067,378
GenRad, Inc.* 75,400 1,512,712
Premier Farnell PLC, ADS 138,450 830,812
SGS Thomson Microelectronics, Inc.* 12,200 1,043,221
TDK Corporation 19,000 1,501,738
---------
6,529,670
Financial Services - 6.15%
Enhance Financial Services Group, Inc. 22,450 1,540,631
Internationale Nederlanden Groep NV* 43,300 2,814,361
PennCorp Financial Group, Inc. 77,200 2,007,200
UST Corp. 104,000 2,931,500
---------
9,293,692
Food & Beverages - 7.44%
Bass ADS 65,446 1,242,501
Danone* 6,700 1,582,765
IBP, Inc. 25,450 524,906
Lion Nathan, Ltd. 279,250 741,490
Nestle SA* 1,600 3,102,966
Reckitt & Colman PLC 200,897 4,049,286
---------
11,243,914
Household Appliances Furnishing - 1.86%
HomeBase, Inc.* 82,500 690,937
Matsushita Electric Industrial Co., Ltd. 72,000 1,153,393
Philips Electronics NV 11,000 969,259
---------
2,813,589
Household Products - 2.12%
Bensicker* 14,900 869,615
Unilever PLC 208,900 2,225,850
Tupperware Corp.* 4,150 112,309
---------
3,207,774
Industrial Machinery - 2.96%
B.F. Goodrich Co. 31,100 1,673,569
Bobst AG * 400 717,094
Sumitomo Rubber Industries 50,000 294,696
Tecumseh Products Co. 21,600 1,088,100
United Dominion Industries, Ltd. 2,900 99,144
Valmet Corp 36,050 597,678
---------
4,470,281
Insurance - 5.40%
MBIA, Inc. 41,000 3,059,625
Royal Sun Alliance Insurance Grp. PLC* 155,000 1,731,913
SCOR, ADS* 16,550 1,020,918
Sumitomo Marine & Fire 148,000 882,364
Terra Nova Bermuda Holdings, Ltd. 48,100 1,473,063
---------
8,167,883
Mining - 0.36%
English China Clay 132,400 545,912
---------
Miscellaneous - 0.55%
Clondalkin Group PLC * 85,700 824,265
---------
Paper - 1.47%
Boise Cascade Corporation 51,600 1,938,225
Georgia Pacific Corp.* 3,700 285,594
---------
2,223,819
Petroleum Services - 1.56%
Burmah Castrol PLC 5,000 103,456
Noble Drilling Corp.* 35,910 1,160,342
Ocean Energy, Inc.* 44,915 1,100,417
---------
2,364,215
Photography - 1.81%
Fuji Photo Film Co. 77,000 2,740,441
---------
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
========================================================================
Shares Value
------ -----
Publishing - 2.59%
Aegis Group* 357,100 $ 549,535
Houghton Mifflin Co. 103,200 3,360,450
------------
3,909,985
Retail Grocery - 1.72%
Albertsons, Inc. 36,600 1,830,000
American Stores Co. 31,800 763,200
------------
2,593,200
Retail Trade - 5.35%
BJ's Wholesale Club, Inc. 82,500 3,305,156
Delhaize-Le Lion SA* 21,100 1,397,238
G.I.B. Holdings, Ltd.* 14,100 693,605
Karstadt AG 4,500 2,031,150
Toys R Us, Inc.* 23,800 655,988
------------
8,083,137
Steel - 0.16%
NKK Corp. 283,000 245,920
------------
Telecommunication Services - 5.21%
Comsat Corp. 103,920 4,195,770
France Telecom, ADS* 9,900 539,057
Telefonica de Espana SA 62,700 2,618,332
Telstra Corp. 220,600 517,991
------------
7,871,150
Telephone - 2.47%
Telecom Italia SPA* 564,000 2,973,867
Telus Corporation 28,450 766,983
------------
3,740,850
Tobacco - 2.60%
Imperial Tobacco, Ltd. 77,500 558,724
Philip Morris Companies, Inc. 90,300 3,369,319
------------
3,928,043
Trucking & Freight - 1.26%
Peninsular & Oriental Steam
Navigation Company 129,296 1,908,612
------------
TOTAL COMMON STOCKS
(Cost $103,668,651) $139,910,560
------------
RIGHTS - 0.03%
Telephone - 0.03%
Telefonica de Espana SA 62,700 $48,579
------------
TOTAL RIGHTS (Cost $0) $48,579
------------
WARRANTS - 0%
Real Estate - 0.00%
Hysan Development 31,900 $ 0
------------
TOTAL WARRANTS (Cost $0) $ 0
------------
Principal Value
--------- -----
SHORT TERM INVESTMENTS - 7.42%
Navigator Securities Lending Trust $ 11,214,867 $ 11,214,867
SSGA Money Market Fund 1,000 1,000
------------
$ 11,215,867
------------
TOTAL INVESTMENTS
(Global Equity Fund)(Cost $114,884,518) $151,175,006
============
Emerging Growth Fund
- --------------------
Shares Value
------ -----
COMMON STOCKS - 100%
Apparel & Textiles - 3.25%
Interface, Inc. 200 $ 8,488
------------
Broadcasting - 2.23%
Granite Broadcasting Corp.* 500 5,813
------------
Building & Building Materials - 1.79%
Comfort Systems USA, Inc.* 200 4,675
------------
Business Services - 13.71%
Iron Mountain, Inc.* 200 8,400
Kroll-O'Gara Co.* 400 8,525
Outdoor Systems, Inc. 200 6,350
PMT Services, Inc.* 300 5,850
Protection One, Inc.* 100 1,222
Robert Half International, Inc.* 100 5,412
------------
35,759
Computers & Business Equipment - 9.98%
Avant Corp.* 300 8,700
Mobius Management Systems, Inc.* 100 1,850
National Instruments Corp.* 200 7,100
Transaction Systems Architects, Inc.* 200 8,400
------------
26,050
Domestic Oil - 0.59%
KCS Energy, Inc. 100 1,550
------------
Drugs & HealthCare - 14.40%
Gilead Sciences, Inc.* 100 3,800
Mid Atlantic Medical Servics, Inc.* 500 6,406
National Surgery Centers, Inc.* 200 5,675
Novacare, Inc.* 400 5,575
Pharmerica, Inc.* 400 5,550
Sangstat Medical Corp.* 200 6,762
TREX Medical Corp.* 200 3,800
------------
37,568
Electronics - 10.84%
Etec Systems, Inc.* 100 5,675
REMEC, Inc.* 200 4,975
Technology Solutions Co.* 200 6,425
Uniphase Corp.* 100 5,425
Vitesse Semiconductor Corp.* 100 5,769
------------
28,269
Financial Services - 2.40%
Allmerica Financial Group* 100 6,262
------------
Food & Beverages - 2.34%
Bob Evans Farms, Inc. 300 6,113
------------
Gas Exploration - 3.48%
Chieftain International, Inc.* 200 4,475
Forcenergy, Inc.* 200 4,613
------------
9,088
Homebuilders - 2.69%
Fairfield Community, Inc.* 300 7,012
------------
Hotels & Restaurants - 2.06%
Signature Resorts, Inc.* 300 5,362
------------
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) -- continued
(showing percentage of total value of investments)
========================================================================
Shares Value
------ -----
Leisure Time - 4.07%
Premier Parks, Inc.* 100 $ 5,563
Vistana, Inc.* 200 5,050
----------
10,613
Metals & Mining - 2.99%
Metals USA, Inc.* 400 7,800
----------
Office Furnishings & Supplies - 2.31%
Miller Herman, Inc. 200 6,037
----------
Oil Services - 1.66%
Pride International, Inc.* 200 4,862
----------
Retail Trade - 4.07%
Borders Group, Inc.* 100 3,213
Staples, Inc. 300 7,406
----------
10,619
Software - 6.44%
JDA Software Group, Inc.* 100 5,056
Micrografx, Inc.* 300 3,488
Object Design, Inc.* 800 5,050
Vantive Corp.* 100 3,200
----------
16,794
Telecommunication Services - 3.05%
Metro Networks, Inc.* 200 7,950
----------
Telephone - 3.53%
McLeod USA, Inc.* 200 9,200
----------
Trucking & Freight Forwarding - 1.92%
Greyhound Lines, Inc.* 1,000 5,000
----------
TOTAL INVESTMENTS (Emerging Growth Fund)
(Cost $237,837) $ 260,884
==========
Small/Mid Cap Fund
- ------------------
Shares Value
------ -----
COMMON STOCKS - 88.91%
Air Travel - 5.14%
Alaska Air Group, Inc.* 8,000 $ 449,000
AMR Corp.* 4,100 624,737
Continental Airlines, Inc.* 15,200 894,900
----------
1,968,637
Apparel & Textiles - 0.99%
Tommy Hilfiger Corp.* 3,000 183,000
Pillowtex Corp. 3,900 195,731
----------
378,731
Automobiles - 0.46%
Wabash National Corp. 5,700 175,987
----------
Banking - 2.38%
Star Banc Corp. 2,900 183,244
State Street Corp. 10,200 729,300
----------
912,544
Business Services - 10.59%
America Online, Inc.* 12,600 1,008,000
H & R Block, Inc. 11,500 517,500
Cognizant Corp. 21,000 1,080,188
Consolidation Capital Corp.* 7,500 165,469
HBO & Co. 10,900 651,956
Paychex, Inc. 11,600 630,025
----------
4,053,138
Computer Services - 1.81%
Network Associates, Inc.* 10,100 691,850
----------
Construction Materials - 3.94%
Masco Corp. 16,900 980,200
Royal Group Technologies Ltd,* 17,000 528,063
----------
1,508,263
Containers & Glass - 0.88%
Owens Illinois, Inc.* 8,500 336,281
----------
Drugs & Health Care - 17.54%
Alza Corp. Cl.A* 7,200 345,150
AmeriSource Health Corp., Cl.A* 13,100 713,950
Bergen Brunswig Corp., Cl.A 6,700 304,012
Biomatrix, Inc.* 5,000 158,750
Biomet, Inc. 12,400 372,000
Cardinal Health, Inc. 9,100 875,875
Elan Corporation PLC, ADR* 8,700 540,488
Forest Laboratories, Inc. Cl.A* 20,100 727,369
General Nutrition Companies, Inc.* 17,300 620,637
Guidant Corp. 4,500 300,938
McKesson Corp. 10,200 721,013
Omnicare, Inc. 13,000 445,250
Quorum Health Group, Inc.* 18,350 589,494
----------
6,714,926
Electronics - 0.47%
Micron Technology, Inc. 5,800 180,163
----------
Energy & Energy Services - 1.93%
AES Corp.* 13,400 739,512
----------
Financial Services - 4.88%
Dime Bancorp, Inc. 11,600 355,975
Finova Group, Inc. 4,000 234,250
INMC Mtg Holdings, Inc. 10,200 247,350
Paine Webber Group, Inc. 9,900 443,644
Charles Schwab Corp. 6,100 213,500
Sovereign Bancorp, Inc. 19,800 373,725
----------
1,868,444
Food & Beverages - 3.57%
Outback Steakhouse, Inc.* 13,900 529,938
Suiza Foods Corp.* 14,100 835,425
----------
1,365,363
Homebuilders - 0.45%
Champion Enterprises, Inc.* 7,000 174,125
----------
Hotels & Restaurants - 0.98%
Showbiz Pizza Time, Inc.* 9,700 374,662
----------
Household Appliances & Furnishing - 4.14%
Furniture Brands International, Inc.* 19,000 558,125
Leggett & Platt 15,500 805,031
Newell Co. 4,600 222,238
----------
1,585,394
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------
Shares Value
------ -----
Household Products - 0.94%
Black & Decker Corp. 7,000 $ 361,375
-----------
Insurance - 3.39%
Fremont General Corp. 3,200 178,400
MGIC Investment Corp. 11,500 724,500
SunAmerica, Inc. 7,950 397,003
-----------
1,299,903
Leisure Time - 5.59%
Carnival Corporation 5,500 382,594
Coach USA, Inc.* 7,800 370,012
International Game Technology 37,300 1,037,406
Premier Parks, Inc.* 3,300 350,437
-----------
2,140,449
Pollution Control - 2.75%
USA Waste Services, Inc.* 21,475 1,053,617
-----------
Railroads - 1.43%
Kansas City Southern Industries, Inc. 12,100 546,769
-----------
Retail Trade - 8.05%
BJ's Wholesale Club, Inc.* 9,500 380,594
Borders Group, Inc.* 19,400 623,225
CVS Corp. 7,200 531,000
Fred Meyer, Inc.* 7,600 341,050
K-Mart Corp.* 26,500 462,094
Staples, Inc.* 30,150 744,328
-----------
3,082,291
Software - 2.97%
Compuware Corp.* 14,800 723,350
Sterling Commerce, Inc.* 9,700 412,856
-----------
1,136,206
Telecommunications - 1.13%
Ascend Communications, Inc.* 9,900 431,269
-----------
Tires & Rubber - 1.02%
Safeskin Corp.* 11,000 391,875
-----------
Toys & Amusements - 1.49%
Mattel, Inc. 14,900 570,856
-----------
TOTAL COMMON STOCKS
(Cost $27,694,136) $34,042,630
Principal Value
--------- -----
SHORT TERM INVESTMENTS - 11.09%
BAT Capital Carp., 5.60% 5/12/98 $ 400,000 $ 399,316
CSC Enterprises, 5.55% 5/08/98 400,000 399,568
KZH Holding Corp., 5.58% 5/13/98 400,000 399,256
Navigator Securities Lending Trust 2,741,407 2,741,407
SSGA Money Market Fund 308,509 308,509
-----------
4,248,056
TOTAL INVESTMENTS
(Small/Mid Cap Fund) (Cost $31,942,192) $38,290,686
===========
Growth Equity Fund
- ------------------
Shares Value
------ -----
COMMON STOCKS - 90.06%
Air Travel - 1.02%
Lufthansa AG 14,200 $ 337,879
-----------
Banking - 1.83%
Citicorp 4,000 602,000
-----------
Broadcasting - 4.12%
CBS Corp. 16,125 574,453
Jacor Communications, Inc.* 5,025 285,797
Tele Communications, Inc. 15,525 500,681
-----------
1,360,931
Business Services - 5.72%
America Online, Inc. 2,800 224,000
Cognizant Corp. 6,050 311,197
Comdisco, Inc. 6,100 269,925
Computer Sciences Corp. 8,000 422,000
Fiserv, Inc. 7,825 511,559
Viad Corp. 5,800 149,713
-----------
1,888,394
Chemicals - 2.06%
Monsanto Co. 12,875 678,122
-----------
Computers & Business Equipment - 0.71%
Oce-Van Der Grinten NV 1,550 234,023
-----------
Computer Software - 0.77%
Sterling Commerce, Inc. 5,950 253,247
-----------
Conglomerates - 0.90%
Cendant Corp.* 11,900 297,500
-----------
Drugs & Health Care - 11.08%
ALZA Corp. 2,900 139,019
Bristol-Myers Squibb Co. 3,950 418,206
Eli Lilly and Co. 4,750 330,422
Medtronic, Inc. 3,950 207,869
Merck & Co., Inc. 2,450 295,225
Novartis AG 150 247,917
Pfizer, Inc. 13,600 1,547,850
Stryker Corp. 3,375 160,875
Warner Lambert Co. 1,625 307,430
-----------
3,654,813
Electrical Equipment - 2.86%
General Electric Co. 11,100 944,888
-----------
Electronics - 3.50%
Intel Corp. 8,400 678,825
Maxim Integrated Products, Inc. 5,550 224,081
Tellabs, Inc.* 3,375 253,378
-----------
1,156,284
Financial Services - 9.51%
Associates First Capital Corp. 3,365 401,034
Beneficial Corp. 6,600 860,475
Capital One 4,250 408,266
CIT Group 575 20,376
Federal National Mortgage Association 8,175 489,478
Green Tree Financial Corp. 14,200 578,650
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Shares Value
------ -----
Financial Services - continued
SLM Holdings Corp. 8,887 $ 379,364
----------
3,137,643
Food & Beverages - 4.24%
Coca-Cola Enterprises, Inc. 10,650 402,038
PepsiCo, Inc. 7,800 309,562
Ralston Purina 2,875 304,750
Sara Lee Corp. 6,450 384,178
----------
1,400,528
Gas & Pipeline Utilities - 0.40%
Cooper Cameron Corp.* 2,000 132,875
----------
Hotels & Restaurants - 2.52%
Hilton Hotels Corp. 14,250 455,110
Mirage Resorts, Inc.* 17,125 377,820
----------
832,930
Household Appliances Furnishing - 4.07%
Hunter Douglas NV* 2,525 123,119
Maytag Corp. 12,200 628,300
Newell Co. 7,500 362,344
Sunbeam Corp. 9,150 229,894
----------
1,343,657
Household Products - 5.53%
Black & Decker Corp. 3,000 154,875
Colgate Palmolive Co. 4,250 381,172
Dial Corp. 14,225 346,734
Procter & Gamble Co. 4,700 386,281
----------
1,823,162
Industrial Machinery - 0.68%
Crane Co. 4,150 223,322
----------
Insurance - 5.39%
Allstate Corp. 3,500 336,875
Conseco, Inc. 4,100 203,462
Everest Reinsurance Holdings 4,975 205,219
Hartford Financial Services Group 3,850 426,387
Marsh & McLennan Companies, Inc. 2,450 223,256
The Progressive Corp. 2,825 382,611
----------
1,777,810
Leisure Time - 3.11%
Galileo International, Inc. 8,825 356,309
The Walt Disney Co. 4,200 522,113
Grand Casinos, Inc.* 8,500 149,281
----------
1,027,703
Newspapers - 0.71%
News Corp., Ltd. 10,100 235,456
----------
Paper - 0.84%
Fort James Corp. 5,550 275,419
----------
Retail Trade - 5.79%
Amazon.com, Inc.* 50 4,587
Circuit City Stores, Inc. 9,800 398,125
Fred Meyer, Inc. 9,825 440,897
K-Mart Corp.* 11,200 195,300
Lowes Companies, Inc. 9,350 653,916
Office Max* 11,550 217,284
----------
1,910,109
Savings & Loan - 2.22%
H.F. Ahmanson and Co. 5,050 385,063
Golden West Financial Corp. 3,300 347,531
----------
732,594
Software - 3.67%
Intuit, Inc. 3,800 202,112
Microsoft Corp. 6,250 563,281
PeopleSoft, Inc. 5,750 267,375
Veritas Software Corp.* 3,250 177,938
----------
1,210,706
Telephone - 3.99%
Bell Atlantic Corp. 3,250 304,078
MCI Communications 20,150 1,013,797
----------
1,317,875
Tobacco - 2.82%
Philip Morris Companies, Inc. 14,025 523,308
RJR Nabisco Holdings Corp. 14,625 406,757
----------
930,065
TOTAL COMMON STOCKS
(Cost $24,421,560) $29,719,935
-----------
Principal Value
--------- -----
SHORT TERM INVESTMENTS - 7.71%
Navigator Securities Lending Trust $ 2,544,356 $ 2,544,356
SSGA Money Market Fund 1,000 1,000
-----
$ 2,545,356
-----------
REPURCHASE AGREEMENT - 2.23%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.00%, to be
repurchased at $736,102 on 05/01/98,
collateralized by $745,000 U.S. Treasury Bonds,
5.50% due 02/28/99 (valued at $758,311
including interest) $ 736,000 $ 736,000
-----------
TOTAL INVESTMENTS
(Growth Equity Fund)(Cost $27,702,916) $33,001,291
===========
Tax-Sensitive Equity Fund
- -------------------------
Shares Value
------ -----
COMMON STOCKS - 88.91%
Aerospace- 2.51%
Precision Castparts Corp. 1,000 $ 62,125
-----------
Agricultural Machinery - 1.89%
Deere & Company 800 46,750
-----------
Apparel & Textiles - 4.60%
Jones Apparel Group, Inc.* 1,000 59,812
Nautica Enterprises, Inc.* 1,200 29,850
Tommy Hilfiger Corp.* 400 24,400
-----------
114,062
Banking - 4.05%
Bankamerica Corp. 500 42,500
Chase Manhattan Corp. 200 27,713
Citicorp 200 30,100
-----------
100,313
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)-- continued
(showing percentage of total value of investments)
- ------------------------------------------------------------------------------
Shares Value
------ -----
Business Services - 3.68%
GTECH Holdings Corp.* 800 $ 28,700
Xerox Corp. 550 62,425
-----------
91,125
Chemicals - 2.16%
Potash Corporation of Saskatchewan, Inc. 600 53,588
-----------
Computers & Business Equipment - 6.92%
Sun Microsystems, Inc.* 1,000 41,187
SCI SYS, Inc.* 1,600 65,900
Tektronix, Inc. 1,500 64,500
-----------
171,587
Containers & Glass - 2.71%
Owens Illinois, Inc.* 1,700 67,256
-----------
Drugs & Health Care - 4.78%
Ballard Medical Products 2,000 50,250
Merck & Company, Inc. 150 18,075
Schering Plough Corp. 250 20,031
Watson Pharmaceuticals, Inc.* 700 30,100
-----------
118,456
Electrical Equipment - 5.40%
American Power Conversion Corp.* 2,100 67,594
Belden, Inc. 1,600 66,300
-----------
133,894
Electronics - 2.54%
Harris Corp. 1,300 62,888
-----------
Financial Services - 2.41%
SLM Holding Corp. 1,400 59,762
-----------
Home Building - 2.43%
Clayton Homes, Inc. 3,000 60,188
-----------
Industrial Conglomerates - 5.60%
Crane Company 1,300 69,956
United Technologies Corp. 700 68,906
-----------
138,862
Insurance - 11.89%
Allied Group, Inc. 700 20,913
Allstate Corp. 300 28,875
CONSECO, Inc. 1,300 64,512
Delphi Financial Group, Inc.* 1,012 57,684
Old Republic International Corp. 1,200 54,300
Reliastar Financial Group 1,500 68,437
-----------
294,721
International Oil - 5.80%
British Petroleum 500 47,250
Mobil Corp. 600 47,400
Texaco, Inc. 800 49,200
-----------
143,850
Metal Fabrication - 2.30%
Kaydon Corp. 1,300 56,956
-----------
Packaged Foods & Products - 4.94%
Lancaster Colony Corp. 1,600 61,800
Universal Foods Corp. 1,200 60,675
-----------
122,475
Real Estate - 1.94%
Liberty Property 400 $ 10,225
Patriot American Hospitality, Inc. 400 10,100
Prentiss Properties Trust 400 10,150
Starwood Hotels & Resorts 350 17,566
-----------
48,041
Retail Grocery - 4.91%
Kroger CO.* 1,400 58,625
Richfood Holdings, Inc. 2,300 63,106
-----------
121,731
Retail Trade - 2.73%
Claire's Stores, Inc. 1,400 30,538
Ross Stores, Inc. 800 37,050
-----------
67,588
Software - 0.94%
Computer Associates International, Inc. 400 23,425
-----------
Tobacco - 1.81%
Philip Morris Companies, Inc. 1,200 44,775
-----------
TOTAL COMMON STOCKS
(Cost $2,161,715) $ 2,204,418
-----------
Principal Value
--------- -----
REPURCHASE AGREEMENT - 11.09%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.00%, to be
repurchased at $275,038 on 05/01/98,
collateralized by $275,000 U.S. Treasury Notes,
7.125% due 09/30/99 (valued at $283,712,
including interest) $ 275,000 $ 275,000
-----------
TOTAL INVESTMENTS
(Tax-Sensitive Equity Fund) (Cost$2,436,715) $ 2,479,418
===========
Growth and Income Fund
- ----------------------
Shares Value
------ -----
COMMON STOCKS - 95.25%
Aerospace - 2.72%
Boeing Co. 52,000 $ 2,603,250
Lockheed Martin Corp. 22,000 2,450,250
United Technologies Corp. 17,000 1,673,438
-----------
6,726,938
Agricultural Machinery - 0.73%
Deere & Company 31,000 1,811,563
-----------
Air Travel - 1.22%
Southwest Airlines Co. 110,000 3,018,125
-----------
Aluminum - 0.61%
Aluminium Company of America 19,600 1,519,000
-----------
Automobiles- 0.35%
General Motors Corp. 15,600 861,900
-----------
Banking - 7.53%
The Chase Manhattan Corp. 14,000 1,939,875
Citicorp 30,200 4,545,100
First Union Corp. 84,000 5,071,500
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Banking - continued
U.S. Bancorp 37,000 $ 4,699,000
Wachovia Corp. 28,000 2,378,250
---------
18,633,725
Business Services - 1.80%
Automatic Data Processing, Inc. 33,000 2,208,937
First Data Corp. 66,000 2,235,750
---------
4,444,687
Chemicals - 2.41%
The Dow Chemical Co. 12,400 1,198,925
E.I. Du Pont de Nemours & Co. 35,000 2,548,437
Zeneca Group PLC, ADR 50,400 2,211,300
---------
5,958,662
Computers & Business Equipment - 6.45%
3Com Corp.* 12,400 424,700
Cisco Systems, Inc.* 33,000 2,417,250
Computer Sciences Corp.* 28,000 1,477,000
EMC Corp.* 32,000 1,476,000
Hewlett-Packard Company 34,400 2,590,750
International Business Machines Corp. 39,000 4,519,125
Xerox Corp. 27,000 3,064,500
---------
15,969,325
Construction & Mining Equipment - 0.64%
Caterpillar, Inc. 28,000 1,594,250
---------
Containers & Glass - 0.38%
Crown Cork & Seal, Inc. 18,000 937,125
---------
Drugs & Health Care - 10.73%
Abbott Laboratories 44,000 3,217,500
American Home Products Corp. 11,000 1,024,375
Bristol-Myers Squibb Co. 23,800 2,519,825
Columbia/HCA Healthcare Corp. 62,000 2,042,125
Johnson & Johnson 30,000 2,141,250
Merck & Company, Inc. 19,000 2,289,500
Pfizer, Inc. 50,000 5,690,625
Pharmacia & Upjohn, Inc. 86,000 3,617,375
Tenet Healthcare Corp.* 16,400 613,975
Warner-Lambert Co. 18,000 3,405,375
---------
26,561,925
Electric Utilities - 2.19%
DPL, Inc. 82,500 1,500,469
Duke Energy Co. 29,000 1,678,375
New England Electric System 24,000 1,044,000
Texas Utilities Co. 30,000 1,200,000
---------
5,422,844
Electrical Equipment - 3.06%
General Electric Co. 89,000 7,576,125
---------
Electronics -4.39%
AMP, Inc. 40,000 1,572,500
Analog Devices, Inc.* 30,000 1,168,125
Intel Corp. 39,800 3,216,337
Lucent Technologies 26,000 1,979,250
Motorola, Inc. 35,300 1,963,563
Texas Instruments, Inc. 15,000 960,938
---------
10,860,713
Financial Services - 7.15%
American Express Co. 46,000 4,692,000
Federal National Mortgage Association 70,000 4,191,250
Merrill Lynch & Co., Inc. 11,000 965,250
Morgan Stanley Dean Witter 33,000 2,602,875
Travelers Group, Inc. 85,800 5,249,888
---------
17,701,263
Food & Beverages - 4.24%
Coca-Cola Company 25,000 1,896,875
General Mills, Inc. 20,000 1,351,250
H.J. Heinz Co. 22,000 1,199,000
Nabisco Holdings Corp. Cl.A 27,000 1,290,938
Pepsico, Inc. 39,000 1,547,812
Sara Lee Corp. 54,000 3,216,375
---------
10,502,250
Gas & Pipeline Utilities - 0.92%
K N Energy 15,000 880,312
National Fuel Gas Co. NJ 16,000 736,000
Peoples Energy Corp. 18,000 652,500
---------
2,268,812
Hotels & Restaurants - 1.38%
McDonald's Corp. 55,000 3,403,125
---------
Household Products - 2.39%
Colgate Palmolive Co. 18,000 1,614,375
Gillette Co. 8,000 923,500
Procter & Gamble Co. 41,000 3,369,688
---------
5,907,563
Insurance - 4.97%
ACE, Ltd. 75,000 2,840,625
Allstate Corp. 40,000 3,850,000
American International Group, Inc. 24,000 3,157,500
Marsh & McLennan Companies, Inc. 27,000 2,460,375
---------
12,308,500
International Oil - 5.92%
Amoco Corp. 51,400 2,274,450
Chevron Corp. 39,000 3,224,812
Exxon Corp. 52,500 3,829,219
Royal Dutch Petroleum Co. 65,000 3,676,562
UNOCAL Corp. 40,000 1,637,500
---------
14,642,543
Leisure Time - 0.47%
The Walt Disney Co. 9,300 1,156,106
---------
Liquor - 0.74%
Anheuser-Busch Companies, Inc. 39,800 1,823,337
---------
Newspapers - 1.59%
Gannett, Inc. 58,000 3,940,375
---------
Paper - 2.41%
International Paper Co. 30,000 1,565,625
Kimberly Clark Corp. 44,000 2,233,000
Minnesota Mining & Manufacturing Co. 23,000 2,170,625
---------
5,969,250
Petroleum Services - 1.86%
Diamond Offshore Drilling, Inc. 20,000 1,012,500
Schlumberger, Ltd. 43,200 3,580,200
---------
4,592,700
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30,1998 (Unaudited)-- continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Railroads & Equipment - 0.66%
Union Pacific Corp. 30,000 $ 1,642,500
------------
Real Estate - 0.22%
Security Capital Pacific Trust 24,000 537,000
------------
Retail Trade - 4.78%
Dayton Hudson Corp. 46,000 4,016,375
The GAP, Inc. 42,000 2,160,375
May Dept Stores 26,000 1,603,875
Wal-Mart Stores, Inc. 80,000 4,045,000
------------
11,825,625
Software - 2.44%
Microsoft Corp. 67,000 6,038,375
------------
Telecommunication Services - 0.54%
Cox Communications, Inc.* 30,000 1,338,750
------------
Telephone - 5.60%
Bell Atlantic Corp. 36,096 3,377,232
BellSouth Corp. 21,000 1,347,937
SBC Communications, Inc. 96,000 3,978,000
U.S. West, Inc. 50,000 2,637,500
WorldCom, Inc.* 59,000 2,524,094
------------
13,864,763
Tires & Rubber - 0.57%
Goodyear Tire and Rubber Co. 20,000 1,400,000
------------
Tobacco - 1.19%
Philip Morris Companies, Inc. 79,000 2,947,688
------------
TOTAL COMMON STOCKS
(Cost $144,683,652) $235,707,432
------------
Principal Value
--------- -----
SHORT TERM INVESTMENT - 2.65%
Navigator Securities Lending Trust $6,550,969 $ 6,550,969
REPURCHASE AGREEMENT - 2.10%
Repurchase Agreement with Swiss Bank
dated 04/30/98 at 5.50%, to be repurchased
at $5,190,793 on 05/01/98, collateralized
by $3,559,000 U.S. Treasury Bonds,
12.00% due 08/15/13 (valued at $5,297,902
including interest) 5,190,000 $ 5,190,000
------------
TOTAL INVESTMENTS $247,448,401
(Growth & Income Fund) (Cost $156,424,621) ============
Equity-Income Fund
- ------------------
Shares Value
------ -----
COMMON STOCKS -87.74%
Aerospace - 0.34%
Allied Signal Corp. 15,800 $ 692,238
------------
Aluminum - 0.51%
Reynolds Metals Co. 15,500 1,023,000
------------
Apparel & Textiles - 0.05%
Unifi, Inc. 2,700 103,444
------------
Auto Parts - 1.12%
TRW, Inc. 19,700 1,040,406
Genuine Parts Company 34,200 1,231,200
------------
2,271,606
Automobiles - 0.68%
General Motors Corp. 20,400 1,374,450
------------
Banking - 9.01%
Banc One Corp. 27,650 1,626,166
BankBoston Corp. 11,800 1,273,663
Bankers Trust New York Corp. 14,100 1,820,663
The Chase Manhattan Corp. 9,700 1,344,056
First Union Corp. 20,810 1,256,404
Fleet Financial Group, Inc. 17,100 1,477,013
Mellon Bank Corp. 48,300 3,477,600
Mercantile Bankshares Corp. 19,150 734,881
J.P. Morgan & Company, Inc. 15,600 2,047,500
National City Corp. 15,400 1,066,450
PNC Bank Corp. 14,400 870,300
Wells Fargo & Company 3,300 1,216,050
------------
18,210,746
Building & Construction - 0.11%
Georgia Pacific Corp. 9,100 233,188
------------
Business Services - 1.34%
H&R Block, Inc. 30,800 1,386,000
R.R. Donnelley & Sons Co. 30,200 1,330,688
------------
2,716,688
Chemicals - 7.47%
The Dow Chemical Co. 28,200 2,726,588
E.I. Du Pont De Nemours & Co. 24,100 1,754,781
Eastman Chemical Co. 9,600 660,000
Great Lakes Chemical Corp. 27,600 1,386,900
Hercules, Inc. 25,900 1,238,344
Imperial Chemical Industries PLC, ADR 15,500 1,126,656
Lubrizol Corp. 23,000 848,125
Nalco Chemical Co. 24,300 965,925
Olin Corp. 26,300 1,231,169
PPG Industries, Inc. 22,900 1,618,744
Witco Corp. 38,900 1,541,412
------------
15,098,644
Computers & Business Equipment - 0.32%
Hewlett Packard Co. 8,500 640,156
------------
Conglomerates - 1.34%
Fortune Brands, lnc 24,900 918,188
Lonrho PLC 44,050 317,571
Tomkins 250,000 1,471,976
------------
2,707,735
Construction Materials - 0.38%
Armstrong World Industries, Inc. 9,000 771,750
------------
Cosmetics & Toiletries - 0.87%
International Flavors & Fragrances, Inc. 35,800 1,751,962
------------
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Domestic Oil - 3.15%
Amerada Hess Corp. 22,200 $ 1,276,500
Atlantic Richfield Co. 32,600 2,542,800
Phillips Petroleum Co. 17,200 852,475
Unocal Corp. 13,300 544,469
USX-Marathon Group 32,400 1,160,325
-----------
6,376,569
Drugs & Health Care - 5.07%
Abbott Laboratories 14,200 1,038,375
American Home Products Corp. 28,400 2,644,750
Amgen, Inc. 9,400 560,475
Bausch & Lomb, Inc. 22,600 1,117,287
Baxter International, Inc. 14,000 776,125
Pharmacia & Upjohn, Inc. 48,900 2,056,856
Smith & Nephew PLC 241,700 697,403
United States Surgical Corp. 43,200 1,360,800
-----------
10,252,071
Electric Utilities - 6.26%
Baltimore Gas & Electric Co. 16,500 519,750
Central & South West Corp. 15,100 393,544
Dominion Resources, Inc. 19,700 779,381
DQE, Inc. 22,100 759,688
Duke Energy Co. 28,900 1,672,587
Entergy Corp. 30,000 746,250
FirstEnergy Corp. 45,950 1,389,987
GPU, Inc. 9,000 356,625
Houston Industries, Inc. 37,000 1,075,313
PacifiCorp 40,000 930,000
PECO Energy Co. 36,000 857,250
Southern Co. 50,400 1,335,600
TECO Energy, Inc. 20,000 532,500
Unicom Corp. 37,500 1,303,125
-----------
12,651,600
Electrical Equipment - 2.01%
Cooper Industries, Inc. 19,000 1,270,625
General Electric Co. 20,700 1,762,087
Hubbell, Inc. 21,100 1,040,494
-----------
4,073,206
Electronics - 0.62%
AMP, Inc. 31,700 1,246,206
-----------
Financial Services - 1.59%
Federal National Mortgage Association 28,800 1,724,400
Travelers Group, Inc. 24,249 1,483,736
-----------
3,208,136
Food & Beverages - 3.76%
General Mills, Inc. 23,900 1,614,744
H.J. Heinz Co. 25,500 1,389,750
Kellogg Co. 15,000 618,750
McCormick & Company, Inc. 44,000 1,507,000
Quaker Oats Co. 31,400 1,632,800
Sara Lee Corp. 14,000 833,875
-----------
7,596,919
Forest Products - 0.35%
Georgia Pacific Corp. 9,100 702,406
-----------
Gold - 0.56%
Newmont Mining Corp. 35,000 1,126,562
-----------
Hotels & Restaurants - 0.36%
Hilton Hotels Corp. 22,700 724,981
-----------
Household Appliances Furnishing - 0.78%
Whirlpool Corp. 21,900 1,576,800
-----------
Household Products - 0.27%
Tupperware Corp. 20,500 554,781
-----------
Industrial Machinery - 0.40%
Pall Corp. 41,100 806,588
-----------
Insurance - 4.43%
American General Corp. 25,500 1,698,938
Exel, Ltd. 18,700 1,396,656
Hilb, Rogal & Hamilton Co. 2,100 37,538
Lincoln National Corp. 10,500 932,531
SAFECO Corp. 21,300 1,063,669
St. Paul Companies, Inc. 25,962 2,200,280
Transamerica Corp. 8,700 1,004,850
Willis Corroon Group PLC, ADR 44,100 611,887
-----------
8,946,349
International Oil - 6.76%
Amoco Corp. 57,500 2,557,650
The British Petroleum Company PLC 13,500 1,275,750
Chevron Corp. 23,300 1,926,619
Exxon Corp. 34,600 2,523,638
Mobil Corp. 23,600 1,864,400
Royal Dutch Petroleum Company, ADR 26,600 1,504,563
Texaco, Inc. 32,900 2,023,350
-----------
13,675,970
Liquor - 1.44%
Anheuser-Busch Companies, Inc. 40,900 1,873,731
Brown-Forman Corp., Class B 18,400 1,041,900
-----------
2,915,631
Mining - 0.18%
Phelps Dodge Corp. 5,500 369,187
-----------
Newspapers - 1.41%
Dow Jones & Co. 21,900 1,066,256
Knight-Ridder, Inc. 30,500 1,778,531
-----------
2,844,787
Non-ferrous Metals - 0.29%
Inco, Ltd. 33,000 579,562
-----------
Paper - 3.66%
Consolidated Papers, Inc. 20,800 1,376,700
International Paper Co. 23,600 1,231,625
Kimberly-Clark Corp. 28,400 1,441,300
Minnesota Mining & Manufacturing Co. 16,400 1,547,750
Union Camp Corp. 29,800 1,799,175
-----------
7,396,550
Petroleum Services - 0.68%
Enron Corp. 8,100 398,419
Occidental Petroleum Corp. 33,400 983,212
-----------
1,381,631
Photography - 0.84%
Eastman Kodak Co. 23,500 1,696,406
-----------
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Shares Value
------ -----
Pollution Control - 1.01%
Browning Ferris Industries, Inc. 23,800 $ 812,175
Waste Management, Inc. 37,000 1,239,500
------------
2,051,675
Publishing - 1.07%
Dun & Bradstreet Corp. 30,300 1,075,650
McGraw-Hill Companies, Inc. 5,300 410,419
The Reader's Digest Association, Inc. 25,200 677,250
------------
2,163,319
Railroads & Equipment - 2.66%
Burlington Northern Santa Fe Corp. 12,600 1,247,400
GATX Corp. 5,800 480,675
Norfolk Southern Corp. 52,600 1,758,812
Union Pacific Corp. 34,600 1,894,350
------------
5,381,237
Real Estate - 2.38%
Crescent Real Estate Equities 14,500 494,812
Rouse Co. 5,100 157,462
Security Capital Pacific Trust 11,900 266,262
Simon DeBartolo Group, Inc. 46,500 1,531,594
Starwood Hotels and Resorts 36,918 1,852,822
Weingarten Realty Investors 12,000 511,500
------------
4,814,452
Retail Trade - 1.49%
May Department Stores Co. 16,300 1,005,506
J.C. Penney Company, Inc. 28,200 2,003,963
------------
3,009,469
Steel - 0.38%
USX-U.S. Steel Group 19,400 759,025
------------
Telephone - 8.03%
ALLTEL Corp. 61,200 2,616,300
American Telephone & Telegraph Corp. 31,600 1,897,975
BCE, Inc. 26,800 1,140,675
Bell Atlantic Corp. 16,800 1,571,850
BellSouth Corp. 21,000 1,347,937
Frontier Corp. 29,000 868,188
GTE Corp. 36,100 2,109,594
SBC Communications, Inc. 53,092 2,200,000
Southern New England Telecom. Corp. 14,900 1,043,000
Sprint Corp. 7,400 505,512
Telecomunicacoes Brasilleras 1,600 194,900
U.S. West, Inc. 13,900 733,225
------------
16,229,156
Tobacco - 2.10%
Philip Morris Companies, Inc. 53,300 1,988,756
RJR Nabisco Holdings Corp. 29,300 814,906
UST, Inc. 52,300 1,441,519
------------
4,245,181
Trucking & Freight - 0.21%
Alexander & Baldwin, Inc. 15,000 429,375
------------
TOTAL COMMON STOCKS
(Cost $135,757,529) $177,381,394
------------
Principal Value
--------- -----
SHORT TERM INVESTMENTS - 12.04%
Federal Home Loan Mortgage Corp.,
5.45% due 05/01/98 $ 400,000 $ 400,000
Asset Securitization Coop. Corp.,
5.51% due 05/11/98 5,200,000 5,192,041
Deutsch Bank Financial, Inc.,
5.50% due 07/06/98 700,000 692,942
National Rural Utilities Coop Financial
Association, 5.50% due 06/19/98 2,000,000 1,985,028
Rio Tinto America, Inc.,
5.50% due 06/11/98 3,800,000 3,776,197
Navigator Securities Lending Trust 12,305,022 12,305,022
------------
$ 24,351,230
REPURCHASE AGREEMENT - 0.22%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.00%, to be
repurchased at $435,060 on 05/01/98,
collateralized by $320,000 U.S. Treasury Bonds,
9.125% due 05/15/18 (valued at $458,080
including interest) $ 435,000 $ 435,000
------------
TOTAL INVESTMENTS
(Equity-Income Fund)(Cost $160,543,759) $202,167,624
============
Balanced Fund
- -------------
Shares Value
------ -----
COMMON STOCKS - 64.40%
Aerospace - 0.95%
Lockheed Martin Corp. 4,700 $ 523,462
Northrop Grumman Corp. 4,800 507,300
------------
1,030,762
Banking - 2.40%
Bankers Trust Corp. 4,600 593,975
Chase Manhattan Corp. 10,800 1,496,475
Mercantile Bancorporation 9,200 509,450
------------
2,599,900
Broadcasting - 0.50%
Telecommunications, Inc. 16,900 545,025
------------
Chemicals - 3.50%
ARCO Chemical Co. 13,000 690,625
Bayer AG* 37,450 1,665,326
E.I. DuPont de Nemours & Co. 12,300 895,594
Imperial Chemical Industries PLC, ADR 7,300 530,619
------------
3,782,164
Computers & Business Equipment - 2.06%
Compaq Computer Corp. 13,700 384,456
International Business Machines Corp. 12,100 1,402,088
Sun Microsystems, Inc.* 10,700 440,706
------------
2,227,250
Domestic Oil - 4.32%
Atlantic Richfield Co. 40,300 3,143,400
Phillips Petroleum Co. 30,800 1,526,525
------------
4,669,925
Drugs & Health Care - 15.30%
Abbott Laboratories 4,000 292,500
American Home Products Corp. 8,300 772,937
Glaxo Wellcome PLC, ADR 19,025 537,811
Glaxo Wellcome PLC 48,500 2,743,281
Johnson & Johnson 12,700 906,462
Eli Lilly and Co. 22,075 1,535,592
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Drugs & Health Care - continued
Merck & Company, Inc. 7,300 $ 879,650
Mylan Laboratories 9,525 258,366
Novartis AG 1,000 1,652,782
Pfizer, Inc. 18,200 2,071,387
Schering-Plough Corp. 16,325 1,751,170
SmithKline Beecham PLC 22,500 1,340,156
SmithKline Beecham PLC, ADR 83,900 1,000,621
Warner Lambert 4,300 813,506
-------
16,556,221
Electric Utilities - 0.59%
Baltimore Gas & Electric Co. 20,300 639,450
-------
Electrical Equipment - 0.96%
General Electric Co. 12,200 1,038,525
---------
Electronics - 1.45%
Intel Corp. 19,400 1,567,763
---------
Financial Services - 1.66%
Travelers Group, Inc. 16,200 991,238
Charles Schwab Corp. 23,000 805,000
-------
1,796,238
Food & Beverages - 2.56%
Campbell Soup Co. 9,200 472,075
Dean Foods, Inc. 10,300 482,812
Dole Food, Inc. 27,500 1,235,781
Nestle SA* 300 581,806
-------
2,772,474
Gas & Pipeline Utilities - 0.74%
Sonat, Inc. 18,000 798,750
-------
Gold - 1.55%
Newmont Mining Corp. 52,000 1,673,750
---------
Hotels & Restaurants - 0.73%
Hilton Hotels 24,600 785,663
-------
Household Products - 3.80%
Colgate Palmolive Co. 12,800 1,148,000
Dial Corp 44,100 1,074,938
Kimberly-Clark Corp. 16,000 812,000
Procter & Gamble Co. 7,500 616,406
Unilever N.V. 6,200 462,675
-------
4,114,019
Industrial Machinery - 0.51%
Thermo Electron Corp.* 15,525 618,089
-------
Insurance - 7.51%
Allstate Corp. 24,950 2,401,438
W.R. Berkley Corp. 23,437 1,092,750
Chubb Corp. 12,700 1,002,506
Marsh & McLennan Companies, Inc. 12,175 1,109,447
SAFECO Corp. 9,475 473,158
Travelers Property Casualty Corp. CI. A 48,700 2,045,400
---------
8,124,699
International Oil - 1.97%
Amoco Corp. 12,000 $ 531,000
Chevron Corp. 3,900 322,481
Mobil Corp. 9,300 734,700
Texaco, Inc. 8,900 547,350
-------
2,135,531
Manufacturing - 1.39%
Minnesota Mining & Manufacturing Co. 15,900 1,500,563
---------
Mining - 1.42%
Potash Corporation of Saskatchewan, Inc. 17,200 1,536,175
---------
Paper - 3.02%
Fort James Corp. 35,600 1,766,650
---------
Publishing - 0.25%
Time Warner, Inc. 3,400 266,900
-------
Real Estate - 0.44%
Legacy Hotels Real Estate
Investment Trust 77,025 479,403
-------
Retail Grocery - 0.49%
Hannaford Bros. 12,000 533,250
-------
Software - 0.96%
Computer Associates International, Inc. 17,700 1,036,556
---------
Telephone - 3.42%
Ameritech Corp. 12,100 515,006
Bell Atlantic 4,900 458,456
SBC Communications, Inc. 17,700 733,444
Sprint Corp. 15,000 1,024,688
U.S. West, Inc. 18,400 970,600
-------
3,702,194
Tobacco - 1.28%
Philip Morris 37,025 1,381,495
---------
TOTAL COMMON STOCKS
(Cost $65,435,109) $69,679,384
-----------
<CAPTION>
Principal Value
--------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 22.43%
U.S. Treasury Strips - 0.41%
Principal Only due 08/15/99 $ 470,000 $ 437,857
-----------
Federal National Mortgage Association - 0.92%
6.35% due 01/08/03 1,000,000 997,660
-------
U.S. Treasury Bonds - 11.62%
6.125% due 11/15/27 2,800,000 2,864,736
6.25% due 08/15/23 1,000,000 1,027,810
6.375% due 08/15/27 1,000,000 1,052,190
6.50% due 11/15/26 320,000 340,550
6.625% due 02/15/27 3,150,000 3,409,371
7.125% due 02/15/23 1,485,000 1,689,648
7.25% due 08/15/22 1,900,000 2,186,786
---------
12,571,091
</TABLE>
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Principal Value
--------- -----
U.S. Treasury Notes - 9.48%
5.875% due 02/15/04 $ 650,000 $ 655,993
6.125% due 07/31/00 830,000 838,815
6.25% due 02/15/07 1,580,000 1,633,072
6.625% due 03/31/02 1,600,000 1,652,496
6.625% due 04/30/02 2,400,000 2,480,256
6.875% due 05/15/06 2,800,000 2,997,736
------------
10,258,368
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $23,024,970) $ 24,264,976
------------
SHORT TERM INVESTMENTS - 6.91%
E.I. DuPont, 5.37% 9/04/98 $ 1,027,000 $ 1,007,698
General RE Corp CP, 5.48% 6/19/98 1,027,000 1,019,340
Navigator Securities Lending Trust 5,449,285 5,449,285
SSGA Money Market Fund 1,000 1,000
------------
7,477,323
REPURCHASE AGREEMENT - 6.26%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.00%, to be
repurchased at $6,771,940 on 05/01/98,
collateralized by $5,965,000 U.S. Treasury
Bonds, 7.25% due 08/15/22 (valued at $6,996,482,
including interest) $ 6,771,000 $ 6,771,000
------------
TOTAL INVESTMENTS
(Balanced Fund)(Cost $101,708,402) $108,192,683
============
Strategic Income Fund
- ----------------------
Principal Value
--------- -----
CORPORATE BONDS - 33.78%
Aerospace - 0.21%
B.E. Aerospace, Inc.,
8.00% due 03/01/08 $ 250,000 $ 246,875
------------
Apparel & Textiles - 0.48%
Clark-Schwebel, Inc.,
10.50% due 04/15/06 500,000 552,500
------------
Banking - 2.15%
Banc One Corp.,
7.60% due 05/01/07 600,000 643,146
Euro Inv Bank,
4.25% due 07/16/98 JPY 50,000,000 381,593
Korea Development Bank,
9.60% due 12/01/00 1,000,000 1,017,300
Malayan Bkg Berhad NY BRH,
7.125% due 09/15/05 525,000 437,215
------------
2,479,254
Building Products - 0.42%
Falcon Holding Group LP,
8.375% due 04/15/10 500,000 490,000
------------
Business Services - 1.36%
Borg-Warner Security Corp.,
9.125% due 05/01/03 500,000 523,750
First Data Corp.,
6.375% due 12/15/07 500,000 500,505
Iron Mountain, Inc.,
10.125% due 10/01/06 500,000 540,000
------------
1,564,255
Chemical Products - 0.50%
Revlon Worldwide Corp.,
Series B, zero coupon due 03/15/01 750,000 575,625
------------
Crude Petroleum & Natural Gas - 2.01%
Bellwether Exploration Co.,
10.875% due 04/01/07 250,000 263,750
Benton Oil & Gas Co.,
11.625% due 05/01/03 200,000 216,000
Cliffs Drilling Co.,
10.25% due 05/15/03 250,000 268,750
National Energy Group, Inc.,
10.75% due 11/01/06 500,000 465,000
Occidental Petroleum Corp.,
9.25% due 08/01/19 700,000 850,052
United Refining Co.,
10.75% due 06/15/07 250,000 252,500
------------
2,316,052
Drugs & Health Care - 1.27%
Dade International, Inc.,
11.125% 05/01/06 500,000 560,000
Prime Medical Services, Inc.,
8.75% due 04/01/08 500,000 500,000
Vencor, Inc.,
9.88% due 05/01/05 400,000 403,655
------------
1,463,655
Electronics - 0.76%
Decisionone Corp.,
9.75% due 08/01/07 500,000 472,500
Unisys Corp.,
7.875% due 04/01/08 400,000 400,000
------------
872,500
Energy & Utilities - 1.32%
AES Corp.,
8.50% due 11/01/07 250,000 256,250
Costilla Energy, Inc.,
10.25% due 10/01/06 500,000 510,000
Dawson Production Svcs.,
9.375% due 02/01/07 250,000 253,750
High Voltage Energy Corp.,
10.5% due 08/15/04 250,000 260,000
Transamerican Energy Corp.,
11.5% due 06/15/02 250,000 248,125
------------
1,528,125
Financial Services - 3.08%
Green Tree Financial Corp.,
7.07% due 09/15/07 2,169,205 2,230,875
Merrill Lynch & Co., Inc.,
6.00% due 02/12/03 425,000 421,554
Navistar International Corp.,
8.00% due 02/01/08 500,000 497,500
Paine Webber Group, Inc.,
7.00% due 03/01/00 400,000 405,008
------------
3,554,937
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) -- continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Principal Value
--------- -----
Food & Beverages - 2.32%
Ameriserve Food Distr, Inc.,
10.125% due 07/15/07 $500,000 $535,000
Dole Foods, Inc.,
6.75% due 07/15/00 1,000,000 1,007,730
Delta Beverage Group, Inc.,
9.75% due 12/15/03 250,000 260,313
SC International Services, Inc.,
9.25% due 09/01/07 500,000 523,750
Stroh Brewery Co.,
11.10% due 07/01/06 500,000 350,000
---------
2,676,793
Food Stores - 0.39%
Carr Gottstein Foods Co.,
12.00% due 11/15/05 400,000 447,000
---------
Forest Products - 0.21%
Doman Industries, Ltd.,
8.75% due 03/15/04 250,000 246,250
---------
General Obligation - 0.19%
United States Leasing International,
8.45% due 01/25/05 200,000 221,554
---------
Hotels & Restaurants - 0.47%
Prime Hospitality Corp.,
9.75% due 04/01/07 500,000 538,750
---------
Industrials - 6.27%
Alvey Systems, Inc.,
11.375% due 01/31/03 250,000 266,250
Berry Plastics Corp.,
12.25% due 04/15/04 650,000 710,125
Burke Industries, Inc.,
10.0% due 08/15/07 250,000 262,500
CFP Holdings, Inc.,
11.625% due 01/15/04 250,000 247,188
Commonwealth Aluminum Corp.,
10.75% due 10/01/06 400,000 422,000
Doane Products Co.,
10.625% due 03/01/06 250,000 271,250
Foamex, L.P.,
9.875% due 05/15/07 375,000 412,500
Hamischfeger Industries, Inc.,
6.875% due 02/15/27 600,000 623,754
Hollinger, Inc.,
zero coupon due 10/05/13 1,500,000 603,750
ICG Holdings, Inc.,
Step up to 13.50% due 09/15/05 500,000 427,500
Marcus Cable Company,
Step up to 14.25% due 12/15/05 250,000 229,375
Norsk Hydro AS,
6.70% due 01/15/18 400,000 393,888
Pueblo Xtra International,
9.50% due 08/01/03 500,000 487,500
Rayovac Corp.,
10.25% due 11/01/06 454,000 501,670
Raytheon Company,
5.95% due 03/15/01 200,000 199,288
Stellex Inds, Inc.,
9.50% due 11/01/07 250,000 253,750
Venture Holdings Trust,
9.75% due 04/01/04 390,000 399,750
Williams Scotsman, Inc.,
9.875% due 06/01/07 500,000 520,000
---------
7,232,038
Insurance - 0.45%
Aetna Services, Inc.,
7.625% due 08/15/26 500,000 523,105
---------
Leisure Time - 0.45%
Grand Casinos,
9.00% due 10/15/04 500,000 522,500
---------
Metal & Metal Products - 0.23%
Renco Metals, Inc.,
11.50% due 07/01/03 250,000 265,000
---------
Other - 2.37%
American Media Operations, Inc.,
11.625% due 11/15/04 500,000 543,125
CSC Holdings, Inc.
10.50% due 05/15/16 500,000 580,000
Hines Horticulture, Inc.,
Series B, 11.75% due 10/15/05 500,000 545,000
Kindercare Learning Centre, Inc.,
9.50% due 02/15/09 250,000 256,875
LIN Holdings Corp.,
1.00% due 03/01/08 500,000 312,500
Praxair, Inc.,
6.15% due 04/15/03 500,000 497,210
---------
2,734,710
Paper - 0.22%
Stone Container Corp.,
12.25% due 04/01/02 250,000 257,500
---------
Pollution Control - 0.98%
Allied Waste Industries, Inc.,
Step up to 11.30% due 06/01/07 750,000 547,500
Norcal Waste Systems, Inc.,
Step up to 13.25% due 11/15/05 500,000 585,000
---------
1,132,500
Real Estate - 0.45%
Radnor Holdings Corp.,
10.00% due 12/01/03 500,000 521,250
---------
Retail Trade - 1.29%
Cole National Group, Inc.,
8.625% due 08/15/07 250,000 252,500
Hills Stores Company, Series B,
12.50% due 07/01/03 250,000 225,000
Musicland Group, Inc.,
9.875% due 03/15/08 250,000 250,000
Staples, Inc.,
7.125% due 08/15/07 750,000 765,045
---------
1,492,545
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Principal Value
--------- -----
Steel - 0.43%
Murrin Murrin Holdings,
9.375% due 08/31/07 $ 500,000 $ 495,000
-----------
Telecommunication Services - 2.97%
Adelphia Communications Corp.,
9.875% due 03/01/07 175,000 188,125
10.50% due 07/15/04 75,000 82,500
Comcast Cellular Holdings, Inc.,
9.50% due 05/01/07 500,000 520,000
GTE Corp.,
6.94% due 04/15/28 400,000 396,836
International Cabletel, Inc.,
Step up to 11.50% due 02/01/06 1,000,000 810,000
Nextel Communications,
1.00% due 02/15/08 250,000 160,625
1.00% due 08/15/04 400,000 385,000
SFX Broadcasting, Inc.,
10.75% due 05/15/06 250,000 275,000
Telewest Communications PLC,
Step up to 11.00% due 10/01/07 750,000 603,750
-----------
3,421,836
Transportation - 0.53%
Stena AB
10.5% die 12/15/05 250,000 272,500
TFM SA DE CV,
Step up to 11.75% due 06/15/09 500,000 341,250
-----------
613,750
TOTAL CORPORATE BONDS
(Cost $36,434,674) $38,985,859
-----------
CONVERTIBLE BONDS - 0.23%
Fresenius Medical Care Capital Trust,
9.00% due 12/01/06 $ 250,000 $ 261,250
-----------
TOTAL CONVERTIBLE BONDS
(Cost $255,625) $ 261,250
-----------
U.S. TREASURY OBLIGATIONS - 1.75%
U.S. Treasury Notes - 1.75%
3.375% due 01/15/07 $ 360,000 $ 348,862
5.50% due 02/15/08 1,170,000 1,154,275
6.125% due 08/15/07 500,000 513,515
-----------
2,016,652
TOTAL U.S. TREASURY OBLIGATIONS $ 2,016,652
(Cost $2,031,853) -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 18.89%
Federal Home Loan Banks - 0.39%
5.89% due 07/24/00 $ 450,000 $ 451,404
-----------
Federal Home Loan Mortgage Corporation - 1.60%
11.565% due 06/15/21 329,226 108,565
6.50% due 01/01/99 700,000 693,434
8.50% due 05/01/08 470,907 491,824
10.00% due 05/15/20 502,226 546,327
-----------
1,840,150
Government National Mortgage Association - 0.85%
7.50% due 10/15/27 $ 485,843 $ 499,048
7.50% due 10/15/27 376,706 386,944
7.50% due 10/15/27 94,924 97,505
-----------
983,497
Federal National Mortgage Association - 15.65%
Interest Only due 03/17/20, REMIC 6,765,346 192,406
Interest Only due 10/17/36, REMIC 12,783,341 387,719
Interest Only due 02/25/35, REMIC 6,552,986 558,970
6.65% due 08/25/07, REMIC 1,200,000 1,196,760
8.80% due 01/25/19, REMIC 434,460 462,018
10.40% due 04/25/19, REMIC 112,796 124,922
6.5% due 12/01/99 6,500,000 6,432,920
7.5% due 12/01/99 1,000,000 1,025,930
7.0% due 12/01/99 7,500,000 7,581,975
13.00% due 01/01/99 84,295 101,312
-----------
18,064,932
Student Loan Marketing Association - 0.40%
7.20% due 11/09/00 450,000 465,048
-----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $21,667,897) $21,805,031
-----------
FIXED INCOME - OTHER - 1.48%
Mid State Trust VI, Class A,
7.34% due 07/01/35 $ 1,662,885 $ 1,712,771
-----------
TOTAL FIXED INCOME - OTHER $ 1,712,771
(Cost $1,662,631) -----------
FOREIGN GOVERNMENT OBLIGATIONS - 17.84%
Republic of Argentina - 1.13%
6.625% due 03/31/05 $ 1,425,000 $ 1,307,437
-----------
Federal Republic of Brazil - 2.55%
10.125% due 05/15/27 3,025,000 2,945,745
-----------
Government of Canada - 0.59%
7.00% due 12/01/06 CAD 360,000 279,735
7.50% due 09/01/00 550,000 404,080
-----------
683,815
Government of Costa Rica - 0.22%
Series B, 6.25% due 05/21/15 300,000 253,500
-----------
Kingdom of Denmark - 0.91%
8.00% due 05/15/03 DKK 6,340,000 1,049,948
-----------
Republic of Ecuador - 0.39%
3.25% due 02/27/15 723,298 452,061
-----------
Federal Republic of Germany - 1.18%
3.50% due 09/18/98 DEM 2,000,000 1,113,260
5.625% due 01/04/28 DEM 530,000 295,634
6.00% due 01/05/06 DEM 230,000 136,291
6.5% due 07/04/27 DEM 800,000 502,410
-----------
2,047,595
Republic of Greece - 0.25%
11.00% due 02/25/00 GRD 90,400,000 291,279
-----------
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) - continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Principal Value
--------- -----
Republic of Italy - 0.81%
zero coupon due 07/31/98 ITL 1,680,000,000 $937,807
--------
Government of Mexico - 1.79%
6.25% due 12/31/19, Series B 1,500,000 1,263,750
6.25% due 12/31/19, Series W-A 250,000 209,687
11.50% due 05/15/26 500,000 595,000
-------
2,068,437
Government of Morocco - 0.77%
FRN due 01/01/09 1,000,000 890,000
-------
Government of The Netherlands - 0.75%
9.00% due 01/15/01 NLG 1,570,000 865,789
-------
New South Wales Treasury Corp - 0.06%
7.375% due 02/21/07 AUD 100,000 70,150
-------
Government of New Zealand - 1.04%
6.5% due 02/15/00 NZD 700,000 380,684
8.00% due 07/15/98 NZD 1,480,000 820,496
-------
1,201,180
Government of Panama - 0.68%
3.75% due 07/17/14 1,000,000 782,500
-------
Government of Peru - 0.29%
4.00% due 03/07/17 500,000 335,995
-------
Russian Principal Loan - 2.61%
3.249% due 12/15/20 4,750,000 3,007,344
---------
Kingdom of Sweden - 0.48%
11.00% due 01/21/99 SEK 4,100,000 551,927
-------
Republic of Venezuela - 0.74%
6.813% due 12/18/07 952,382 850,762
-------
TOTAL FOREIGN GOVERNMENT $20,593,271
OBLIGATIONS (Cost $21,771,749) -----------
Shares Value
------ -----
WARRANTS - 0.01%
Financial Services - 0.01%
BPC Holdings Corp. (Expiration
date 04/15/04; strike price $18.797) 500 $10,000
Telephone - 0.00%
Wireless One, Inc. (Expiration
date 10/19/00; strike price $11.50) 750 7
-------
TOTAL WARRANTS (Cost $0) $10,007
-------
Principal Value
--------- -----
SHORT TERM INVESTMENT - 11.92%
Navigator Securities Lending Trust $13,751,685 $13,751,685
-----------
REPURCHASE AGREEMENT - 14.10%
Repurchase Agreement with State Street
Bank & Trust Company dated 04/30/98 at
5.48%, to be repurchased at $16,276,477
on 05/01/98, collateralized by
$11,000,000 U.S. Treasury Bonds, $10,625
due 08/15/15 (valued at $16,845,318,
including interest) $16,274,000 $16,274,000
-----------
TOTAL INVESTMENTS
(Strategic Income Fund)(Cost $113,850,114) $115,410,526
============
Investment Quality Bond Fund
- ----------------------------
Principal Value
--------- -----
CORPORATE BONDS - 41.99%
Apparel & Textiles - 0.13%
Clark-Schwebel, Inc.,
10.50% due 04/15/06 $10,000 $11,050
Collins & Aikman Products Co.,
11.50% due 04/15/06 10,000 11,200
------
22,250
Banking - 8.46%
BankAmerica Corp.,
9.50% due 04/01/01 114,000 124,512
Credit National,
7.00% due 11/14/05 150,000 150,750
Export-Import Bank of Korea,
6.375% due 02/15/06 200,000 168,300
First Financial Caribbean Corp.,
7.84% due 10/10/06 135,000 140,538
NBD Bancorp,
8.25% due 11/01/24 300,000 353,652
Republic New York Corp.,
9.75% due 12/01/00 155,000 168,570
U.S. Bancorp,
7.50% due 06/01/26 300,000 325,215
Western Financial Bank,
8.875% due 08/01/07 25,000 23,750
------
1,455,287
Broadcasting - 0.12%
Jacor Communications Co.,
8.75% due 06/15/07 10,000 10,350
Jacor Communications Co.,
8.00% due 02/15/10 10,000 9,950
-----
20,300
Building Products - 0.18%
Falcon Building Products Inc.,
9.50% due 06/15/07 20,000 20,500
Falcon Holding Group LP,
8.375% due 04/15/10 10,000 9,800
-----
30,300
Business Services - 0.06%
Iron Mountain, Inc.,
8.75% due 09/30/09 10,000 10,150
------
Chemical Products - 0.30%
Huntsman Corp.,
9.50% due 07/01/07 15,000 15,225
Revlon Worldwide Corp.,
Series B, zero coupon due 03/15/01 20,000 15,350
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30,1998 (Unaudited) -- continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Principal Value
--------- -----
Chemical Products - continued
Sovereign Specialty Chemicals,
9.50% due 08/01/07 $10,000 $10,450
Texas-Petro Chemical Corp.,
11.125% due 07/01/06 10,000 10,900
------
51,925
Crude Petroleum & Natural Gas - 0.86%
Cistilla Energy, Inc.,
10.25% due 10/01/06 20,000 21,100
Cross Timbers Oil Co.,
9.25% due 04/01/07 30,000 31,275
Dailey Petroleum Services Corp.,
9.50% due 02/15/08 5,000 5,050
Energy Corporation of America,
9.50% due 05/15/07 20,000 20,050
Newfield Exploration Co.,
7.45% due 10/15/07 45,000 45,046
Petroleos Mexicanos,
8.85% due 09/15/07 25,000 25,062
------
147,583
Drugs & Health Care - 2.85%
Alleglance Corp.,
7.00% due 10/15/26 325,000 335,550
Owens & Minor, Inc.,
10.875% due 06/01/06 25,000 27,938
Tenet Healthcare Corp.,
7.875% due 01/15/03 110,000 111,650
Universal Hospital Services,
10.25% due 03/01/08 15,000 15,375
------
490,513
Electric Utilities - 0.74%
The Cleveland Electric Illuminating
Company, 7.19% due 07/01/00 125,000 126,821
-------
Financial Services - 6.84%
American General Finance
Corp., 8.00% due 02/15/05 230,000 237,473
Amresco Communications, Inc.,
9.875% due 03/15/05 20,000 20,600
Amerus Capital I,
8.85% due 02/01/27 100,000 102,181
BanPonce Financial Corp.,
6.75% due 08/09/01 250,000 252,930
Beneficial Corp.,
8.40% due 05/15/08 75,000 85,202
Contifinancial Corp.,
8.125% due 04/01/08 10,000 10,098
Japan Financial Corp.,
9.125% due 10/11/00 200,000 213,840
Neenah Corp.,
11.125% due 05/01/07 10,000 11,012
Pindo Deli Financial Mauritlus, Ltd.,
10.75% due 10/01/07 10,000 8,100
Sun Canada Financial Co.,
7.25% due 12/15/15 200,000 209,744
Tembec Finance Corp.,
9.875% due 09/30/05 15,000 15,863
United Cos Finl Corp,
8.375% due 07/01/05 $10,000 $9,943
------
1,176,986
Food & Beverages - 0.09%
Del Monte Foods Co.,
Step-up, due 12/15/07 25,000 16,063
Homebuilders - 0.09%
Engle Homes, Inc.,
9.25% due 02/01/08 15,000 15,375
------
Industrials - 7.11%
Abraxas Petroleum Corp.,
11.50% due 11/01/04 10,000 10,350
Accuride Corp.,
9.25% due 02/01/08 10,000 10,000
American Pad & Paper Co.,
13.00% due 11/15/05 5,000 5,081
Acetex. Corp.,
9.75% due 10/01/03 10,000 10,300
Acindar Industria, Argentina,
11.25% due 02/15/04 10,000 10,450
Advanced Micro Devices
Inc., 11.00% due 08/01/03 25,000 27,000
Argo-Tech Corp.,
8.625% due 10/01/07 15,000 15,206
Cincinnati Milacron, Inc.,
7.875% due 05/15/00 130,000 132,931
DecisionOne Corp.,
9.75% due 08/01/07 10,000 9,450
Dime Capital Trust I,
9.33% due 05/06/27 150,000 170,775
Domtar, Inc.
9.50% due 08/01/16 10,000 10,763
Duane Reade, Inc.,
9.25% due 02/15/08 10,000 10,200
EchoStar DBS Corp.,
12.50% due 07/01/02 5,000 5,625
Fairchild Semiconductor Corp.,
10.125% due 03/15/07 20,000 20,800
Gaylord Container Corp.,
9.375% due 06/15/07 10,000 10,000
Globalstar L.P. Capital Corp.,
10.75% due 11/01/04 20,000 20,100
Grove Worldwide LLC,
9.25% due 05/01/08 15,000 14,925
Grupo Int'l Durango,
12.625% due 08/01/03 15,000 16,987
Guitar Center Management Co.
Inc., 11.00% due 07/01/06 17,000 18,912
Henry Company,
10.00% due 04/15/08 5,000 5,062
Iridium LLC/Capitai Corp.,
11.25% due 07/15/05 25,000 25,813
K & F Industries, Inc.,
9.25% due 10/15/07 10,000 10,400
LaRoche Industries, Inc.,
9.50% due 09/15/07 5,000 4,900
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Principal Value
--------- -----
Industrials - continued
LDM Technologies, Inc.,
10.75% due 01/15/07 20,000 $21,000
Moog, Inc., Series B,
10.00% due 05/01/06 25,000 26,750
News America Holdings,
Inc., 9.25% due 02/01/13 250,000 300,505
Pioneer American Acquisition
Corp., 9.25% due 06/15/07 20,000 20,000
Plains Resources, Inc.,
Series B, 10.25% due 03/15/06 20,000 21,600
Psinet, Inc.,
10.00% due 02/15/05 10,000 10,250
Repap New Brunswick, Inc.,
10.625% due 04/15/05 25,000 26,125
Rifkin Acquisitions Partners, L.P.,
11.125% due 01/15/06 25,000 27,375
Standard Pac Corp.,
8.50% due 06/15/07 15,000 15,300
Sullivan Graphics, Inc.,
12.75% due 08/01/05 20,000 20,950
Verio, Inc.,
10.375% due 04/01/05 10,000 10,350
YPF Sociedad Anonima,
8.00% due 02/15/04 145,000 147,105
-------
1,223,940
Insurance-3.17%
Equitable Companies, Inc.,
7.00% due 04/01/28 100,000 100,178
Jackson National Life Insurance Co.,
8.15% due 03/15/27 100,000 109,628
Ohio National Life Insurance Co.,
8.50% due 05/15/26 150,000 167,350
Security Benefit Life Co.,
8.75% due 05/15/16 150,000 168,364
-------
545,520
Leisure Time-0.20%
Argosy Gaming Co.,
13.25% due 06/01/04 20,000 22,500
Hollywood Casino, Inc.,
12.75% due 11/01/03 10,000 11,100
------
33,600
Metal Products-0.06%
Silgan Holdings, Inc.,
9.00% due 06/01/09 10,000 10,450
------
Non-Bank Finance-1.26%
KFW International Financial, Inc.,
9.125% due 05/15/01 200,000 216,798
-------
Retail Trade-1.25%
J.C. Penney Company, Inc.,
7.40% due 04/01/37 200,000 215,650
-------
Steel-0.09%
AK Steel Corp.,
9.125% due 12/15/06 10,000 10,550
Ameristeel Corp.,
8.75% due 04/15/08 5,000 5,000
-----
15,550
Telecommunication Services-3.76%
Allbritton Communications Co.,
8.875% due 02/01/08 15,000 15,000
E. Spire Communications,
Step-up, due 04/01/06 15,000 11,850
American Mobile Satellite, Inc.
12.25% due 04/01/08 5,000 5,100
BTI Telecommunications Corp.,
10.50% due 09/15/07 10,000 10,400
Century Communications,
Step-up, due 01/15/08 25,000 10,875
Concentric Network Corp.,
12.75% due 12/15/07 5,000 6,100
Facilicom International, Inc.,
10.50% due 01/15/08 10,000 10,300
GST Telecommunications,
12.75% due 11/15/07 20,000 23,600
Innova S. de R.L.,
12.875% due 04/01/07 20,000 21,525
Intermedia Communications, Inc.,
8.875% due 11/01/07 25,000 26,000
ITC Deltacom, Inc.,
8.875% due 03/01/08 10,000 10,300
IXC Communications, Inc.,
9.00% due 04/15/08 20,000 20,000
KMC Telecom. Holdings, Inc.,
1% due 02/15/08 50,000 30,250
Level 3 Communications, Inc.,
9.125% due 05/01/08 25,000 24,750
LIN Holdings Corp.,
1% due 03/01/08 25,000 15,625
Nextlink Communications, Inc.,
9.45% due 04/15/08 25,000 15,625
Paging Network, Inc.,
10.125% due 08/01/07 15,000 15,600
RSL Communications PLC,
9.125% due 03/01/08 30,000 30,000
Tele-Communications, Inc.,
9.25% due 04/15/02 200,000 219,554
Viacom, Inc.,
7.75% due 06/01/05 100,000 105,419
Viatel, Inc.,
11.25% due 04/15/08 18,000 18,990
------
646,863
Telephone-3.43%
Comcast Cable Communications,
8.50% due 05/01/27 150,000 174,795
McLeod USA, Inc.,
8.375% due 03/15/08 5,000 5,075
MobileMedia Communications, Inc.
9.375% due 11/01/07 50,000 5,500
NEXTEL Communications, Inc.,
Step up to 9.75% due 10/31/07 60,000 39,000
U.S. West Capital Funding, Inc.,
6.95% due 01/15/37 150,000 155,790
WorldCom, Inc.,
7.55% due 04/01/04 200,000 210,606
-------
590,766
The accompanying notes are an integral part of the financial statements.
51
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited)--continued
(showing percentage of total value of investments)
================================================================================
Principal Value
--------- -----
Transportation - 0.79%
Continental Airlines,
6.648% due 03/15/19 $ 70,000 $ 69,529
Johnstown American Industries
Inc., 11.75% due 08/15/05 30,000 33,300
Southern Railway Company,
8.75% due 10/15/03 30,000 33,509
----------
136,338
Utilities - 0.15%
GCI, Inc.,
9.75% due 08/01/07 25,000 26,375
----------
TOTAL CORPORATE BONDS
(Cost $7,427,610) $7,225,403
----------
U.S. TREASURY OBLIGATIONS - 32.41%
U.S. Treasury Bonds - 32.41%
11.875% due 11/15/03 $ 645,000 $ 830,637
12.00% due 08/15/13 3,240,000 4,748,123
----------
5,578,760
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,446,938) $5,578,760
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 15.61%
Federal Home Loan Mortgage Corp. - 7.00%
6.00% due 10/01/03 - 09/25/22 $ 919,390 $ 901,054
6.50% due 06/15/23 100,000 100,718
7.00% due 09/15/21 200,000 202,374
----------
1,204,146
Federal National Mortgage Association - 4.66%
6.25% due 11/25/19 500,000 500,625
6.60% due 09/25/18, REMIC 300,000 302,250
----------
802,875
Government National Mortgage Association - 3.95%
7.00% due 06/15/23 - 10/15/23 670,491 679,918
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $2,599,218) $2,686,939
----------
FIXED INCOME - OTHER - 1.48%
Miscellaneous Asset Backed Securities - 1.48%
First Union Lehman Bros., Series 1997,
Class A2, 6.60% due 05/18/07 $ 200,000 $ 202,866
Premier Auto Trust, Series 1993,
Class A2, 4.65% due 11/02/99 12,510 12,452
Western Financial Grantor Trust, Series
1995, Class Al, 7.10% due 07/01/00 39,815 40,171
----------
TOTAL FIXED INCOME - OTHER (Cost $252,957) $ 255,489
----------
FOREIGN GOVERNMENT OBLIGATIONS - 0.99%
Republic of Argentina - 0.99%
11.00% due 10/09/06 $ 155,000 $ 169,725
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS (Cost $170,112) $ 169,725
----------
PREFERRED STOCKS - 0.34%
Fairfield Manufacturing Co., Inc. 25 $ 26,188
Primedia, Inc. 145 14,391
SF Holdings Group, Inc. 2 18,250
----------
TOTAL PREFERRED STOCKS (Cost $58,288) $ 58,829
----------
Principal Value
--------- -----
SHORT TERM INVESTMENT - 6.16%
Navigator Securities Lending Trust $1,059,925 $1,059,925
---------- ----------
REPURCHASE AGREEMENT - 1.02%
Repurchase Agreement with Swiss Bank
dated 04/30/98 at 5.50%, to be repurchased
at $176,027 on 05/01/98, collateralized
by $155,000 U.S. Treasury Bonds, 7.25%
due 08/15/22 (valued at $180,450,
including interest) $ 176,000 $ 176,000
---------- ----------
TOTAL INVESTMENTS (Investment
Quality Bond Fund)(Cost $16,787,090) $17,211,070
===========
National Municipal Bond Fund
- ----------------------------
Principal Value
--------- -----
LONG-TERM INVESTMENTS - 100.00%
Alabama - 2.41%
Alabama Housing Finance Authority
Single Family Mortgage Revenue
Collateralized Home Mortgage Program,
Series B-2, 6.40%, 04/01/25 $ 440,000 $ 400,011
----------
California - 9.32%
California Housing Finance Agency
Revenue, Series H, 6.15%, 08/01/16 1,000,000 1,055,940
Metropolitan Water District, Southern California,
Series A, 5.00%, 07/01/17 500,000 486,150
----------
1,542,090
Illinois - 4.37%
Illinois Health Facilities Authority
Revenue (Hospital Association
Project), 7.00%, 02/15/22 200,000 221,352
Chicago, Illinois Skyway Toll Bridging
Revenue, 5.375%, 01/01/16 500,000 501,775
----------
723,127
Iowa - 1.01%
Iowa Finance Authority Hospital Facility
Revenue Refunding (Trinity Regional
Hospital Project), 7.00%, 07/01/12 150,000 166,651
----------
Louisiana - 3.13%
Louisiana Public Facilities Authority Hospital
Revenue Refunding (Touro Infirmary
Project), Series B, 6.125%, 08/15/23 500,000 518,970
----------
Maine - 0.16%
Maine State Housing Authority Mortgage
Purchase, Series A-4, 6.375%, 25,000 26,141
11/15/12 ----------
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) -- continued
(showing percentage of total value of investments)
- --------------------------------------------------------------------------------
Principal Value
--------- -----
Massachusetts - 3.19%
Massachusetts State Special Obligation
Revenue, Series A, 5.50%, 06/01/13 $500,000 $527,325
--------
Missouri - 3.21%
Missouri State Health & Educational
Facilities Authority Revenue,
6.25%, 02/15/11 500,000 531,355
-------
Nebraska - 7.98%
Nebraska Higher Education Loan Program
Income Revenue, 6.65%, 12/01/08 1,200,000 1,320,516
---------
Nevada - 4.13%
Nevada Housing Division, Single-Family
Program, B-2, 6.95%, 10/01/26 300,000 319,683
Nevada Housing Division, Single-Family
Program, Issue C, 6.35%, 10/01/12 345,000 364,441
-------
684,124
New Jersey - 3.38%
New Jersey Economic Development
Authority Water Facilities Revenue
(New Jersey American Water
Company, Incorporated Project),
6.875%, 11/01/34 500,000 558,755
-------
New York - 20.71%
New York State Local Government
Assistance Corporation, Series A,
6.00%, 04/01/16 1,000,000 1,078,160
New York State Dormitory Authority
Revenue, State University Educational
Facilities, Series A, 6.25%, 05/15/08 500,000 548,480
New York State Environmental Facilities
Corporation Pollution Control Revenue
Refunding (IBM Corporation Project),
7.125%, 07/01/12 580,000 624,753
New York State Mortgage Agency
Revenue, Series 40-A, 6.35%, 04/01/21 630,000 655,496
Triborough Bridging & Tunnel Authority
Revenue, Series Y, 5.50%, 01/01/17 500,000 521,405
-------
3,428,294
Pennsylvania - 9.77%
Monroeville, Pennsylvania Hospitals
Authority Hospitals Revenue,
6.25%, 10/01/15 1,000,000 1,054,510
Philadelphia, Pennsylvania Water
& Wastewater Revenue,
6.25%, 08/01/12 500,000 562,575
-------
1,617,085
South Carolina - 3.13%
Greenville Hospital Systems
Hospital Facilities Revenue,
Series B, 5.70%, 05/01/12 500,000 519,150
-------
Tennessee - 2.99%
Humphreys County, Tennessee Industrial
Development Board Solid Waste Disposal
Revenue (E.l. Du Pont De Nemours &
Company Project), 6.70%, 05/01/24 $450,000 $494,586
--------
Texas - 3.92%
Texas State Veterans Housing
Assistance, 6.80%, 12/01/23 90,000 96,481
Port Arthur, Texas, Navy District,
Zero Coupon, 03/01/10 1,000,000 552,240
-------
648,721
Virginia - 6.59%
Virginia State Housing Development
Authority Commonwealth Mortgage,
Subseries I-1, 6.55%, 07/01/17 300,000 315,141
Richmond, Virginia, Metropolitan Authority
Expressway Revenue, Highway Revenue Tolls,
5.25%, 07/15/11 750,000 775,988
-------
1,091,129
Washington - 3.17%
Washington State General Obligation,
Series C, 5.50%, 07/01/16 500,000 524,075
-------
Wisconsin - 7.43%
Wisconsin Housing & Economic
Development Authority Home Ownership
Revenue, Series D, 6.10%, 07/01/24 160,000 163,022
Wisconsin State Health & Educational
Facilities Authority Revenue, Mercy
Hospital of Janesville, Incorporated,
6.60%, 08/15/22 1,000,000 1,067,180
---------
1,230,202
TOTAL INVESTMENTS
(National Municipal Bond Fund)
(Cost $15,669,433) $16,552,307
===========
U.S. Government Securities Fund
- -------------------------------
Principal Value
--------- -----
U.S. TREASURY OBLIGATIONS - 9.18%
U.S. Treasury Bonds - 0.75%
6.375% due 08/15/27 $800,000 $841,752
--------
U.S. Treasury Notes - 8.43%
5.875% due 09/30/02 2,000,000 2,014,680
5.625% due 12/31/02 2,000,000 1,995,940
6.25% due 08/31/02 5,250,000 5,361,562
---------
9,372,182
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,165,871) $10,213,934
===========
U.S. GOVERNMENT AGENCY OBLIGATIONS - 61.38%
U.S. Department of Veteran Affairs - 2.04%
7.25% due 10/15/10 REMIC $2,265,343 $2,273,113
----------
Federal Home Loan Mortgage Corporation - 17.57%
6.00% due 09/01/10 - 10/01/10 591,716 587,627
6.247% due 03/25/21 REMIC 3,000,000 2,958,360
6.50% TBA** $4,000,000 $3,962,480
7.00% due 10/01/12 8,837,832 9,006,281
7.00% due 04/15/21 1,251,057 1,266,897
8.00% due 06/01/08 210,779 218,386
8.25% due 07/01/06 168,225 173,863
8.50% due 05/01/08 295,224 306,207
The accompanying notes are an integral part of the financial statements.
53
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) -- continued
(showing percentage of total value of investments)
================================================================================
Principal Value
--------- -----
Federal Home Loan Mortgage Corp. - continued
9.50% due 08/01/20 944,144 1,011,896
11.75% due 08/01/13 33,485 38,402
------
19,530,399
Federal National Mortgage Association - 36.91%
6.50% TBA 7,900,000 7,818,472
6.50% due 12/01/03 - 08/01/27 5,396,384 5,356,315
6.527% due 05/25/30 REMIC 2,750,000 2,794,687
6.783% due 01/17/03 REMIC 1,283,013 1,252,535
7.00% TBA** 13,100,000 13,243,183
7.00% due 05/01/26 - 11/01/26 3,784,653 3,827,230
8.00% due 08/01/04 49,724 50,497
8.25% due 03/25/06 REMIC 675,000 726,678
8.50% due 08/01/02 93,912 96,601
11.00% due 02/01/15 538 606
11.50% due 04/01/19 353,712 402,281
12.00% due 02/01/16 - 04/01/16 1,741,708 2,047,324
12.50% due 08/01/11 - 07/01/15 1,362,247 1,614,663
13.00% due 01/01/99 1,691,943 1,396,511
14.50% due 11/01/14 327,971 404,839
-------
41,032,422
Government National Mortgage Association - 4.86%
7.50% due 04/15/02 - 09/15/27 1,315,748 1,349,425
7.75% due 04/15/04 51,679 53,049
8.00% due 11/15/06 - 02/15/08 35,595 37,068
9.00% due 03/20/16 - 06/20/17 1,899,026 2,042,133
10.25% due 02/15/00 - 03/15/01 55,238 57,503
10.50% due 01/15/01 12,470 12,924
11.00% due 03/15/00 - 09/20/15 57,986 61,103
11.25% due 10/20/15 10,064 10,944
11.50% due 08/20/00 - 09/20/15 451,952 508,002
11.75% due 09/15/98 76 79
12.50% due 09/15/14 57,835 67,414
13.00% due 01/15/11 - 06/15/15 557,959 670,568
13.25% due 07/15/14 40,366 46,534
13.50% due 11/15/12 - 02/15/13 56,408 66,853
15.00% due 07/15/11 - 09/15/12 113,008 136,470
15.50% due 08/15/11 - 12/15/11 196,218 247,327
16.00% due 11/15/11 - 12/15/11 27,818 35,203
------
5,402,599
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $67,840,380) $68,238,533
-----------
SHORT TERM INVESTMENT - 8.36%
Navigator Securities Lending Trust $9,293,178 $9,293,178
REPURCHASE AGREEMENT - 21.08%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.48%, to be
repurchased at $23,436,567 on 05/01/98,
collateralized by $15,850,000 U.S. Treasury
Bonds, 10.625% due 08/15/15 (valued at
$24,250,526, including interest) $23,433,000 $23,433,000
----------- -----------
TOTAL INVESTMENTS (U.S. Government
Securities Fund)(Cost $110,732,429) $111,178,645
============
Money Market Fund
- -----------------
COMMERCIAL PAPER - 34.26%
Allied Signal, Inc.,
5.53% due 05/12/98 $600,000 $598,986
American Home Products Corp.,
5.48% due 06/19/98 800,000 794,032
Anheuser Busch, Inc.,
5.50% due 05/01/98 800,000 800,000
Caterpillar Financial Services NV,
5.52% due 05/04/98 800,000 799,632
E.I. DuPont de Nemours & Co.,
5.47% due 06/03/98 800,000 795,989
Goldman Sachs Group LP,
5.48% due 05/14/98 800,000 798,417
Motorola, Inc.,
5.48% due 05/21/98 800,000 797,564
Proctor & Gamble Company,
5.52% due 05/08/98 800,000 799,141
Toronto-Dominion Holdings,
5.50% due 05/06/98 800,000 799,390
-------
TOTAL COMMERCIAL PAPER 6,983,151
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 60.34%
Student Loan Marketing Association - 9.83%
5.74% due 11/16/98 $2,000,000 $2,004,300
Federal Home Loan Banks - 16.18%
5.775% due 10/30/98 500,000 500,061
5.400% disc note due 05/08/98 2,800,000 2,797,060
---------
3,297,121
Federal National Mortgage Association - 34.33%
5.564% due 04/09/99 2,000,000 1,999,060
5.443% due 02/04/99 5,000,000 4,998,471
---------
6,997,531
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS $12,298,952
-----------
REPURCHASE AGREEMENT - 5.40%
Repurchase Agreement with State Street Bank
& Trust Company dated 04/30/98 at 5.00%, to be
repurchased at $1,100,166 on 05/01/98,
collateralized by $1,000,000 U.S. Treasury Notes
6.125% due 07/31/00 (valued at $1,143,442,
including interest) $1,100,000 $1,100,000
---------- ----------
TOTAL INVESTMENTS (Money Market Fund) $20,382,103
===========
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
NORTH AMERICAN FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (Unaudited) -- continued
(showing percentage of total value of investments)
================================================================================
Key to Currency Abbreviations
- -----------------------------
AUD - Australian Dollar
CAD - Canadian Dollar
DKK - Danish Krone
DEM - German Deustche Mark
GBP - Great British Pound
GRD - Greek Drachma
HKD - Hong Kong Dollar
ITL - Italian Lira
JPY - Japanese Yen
NLG - Netherland Guilder
NZD - New Zealand Dollar
ESP - Spanish Peseta
SEK - Swedish Krona
ZAR - South African Rand
Key to Security Abbreviations and Legend
- ----------------------------------------
ADR - American Depository Receipt
ADS - American Depository Shares
FRN - Floating Rate Note
REMIC - Real Estate Mortgage Investment Conduit
TBA - To Be Announced
A - Non-income producing, issuer is in bankruptcy and
is in default of interest payments
* - Non-income producing
** - Purchased on a forward commitment (Note 2)
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE FUND. 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 April 30, 1998, the Fund offered the
following fifteen portfolios: the International Small Cap Fund ("International
Small Cap"), the International Growth and Income Fund ("International Growth and
Income"), the Global Equity Fund ("Global Equity"), the Emerging Growth Fund
("Emerging Growth"), the Small/Mid Cap Fund ("Small/Mid Cap"), the Growth Equity
Fund ("Growth Equity"), the Tax-Sensitive Equity Fund ("Tax-Sensitive Equity"),
the Growth and Income Fund ("Growth and Income"), the Equity-Income Fund
("Equity-Income," formerly Value Equity), the Balanced Fund ("Balanced"), the
Strategic Income Fund ("Strategic Income"), the Investment Quality Bond Fund
("Investment Quality Bond"), the National Municipal Bond Fund ("National
Municipal Bond"), the U.S. Government Securities Fund ("U.S. Government
Securities") and the Money Market Fund ("Money Market").
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 from 5% to zero depending on the
period of time shares are held. Class B shares will automatically convert to
Class A shares of the same portfolio eight 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 (See Note 5). Class A, Class B and Class C of Money Market
have the same expense structure and no distribution expense.
CypressTree Asset Management Corporation, Inc. ("CAM"), a wholly-owned
subsidiary of CypressTree Investments, Inc. ("CypressTree"), serves as
investment adviser and principal underwriter for the Fund, effective October 1,
1997, pursuant to approval by the Fund's Board of Trustees and the Fund's
shareholders. Previously, those services were provided to the Fund by NASL
Financial Services, Inc. ("NASL Financial"). CypressTree Funds Distributors,
Inc. ("CFD"), also a wholly-owned subsidiary of CypressTree, serves as
distributor for the Fund, effective October 1, 1997.
CypressTree, located in Boston, Massachusetts was formed in 1996 to acquire,
advise and distribute mutual funds through broker-dealers, banks and other
intermediaries.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
when preparing the Funds' financial statements. These policies are in accordance
with generally accepted accounting principles ("GAAP").
Security Valuation. Securities held by Money Market and money market instruments
with remaining maturities of 60 days or less held by the other portfolios 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.
Forward Foreign Currency Contracts. All portfolios with the exception of U.S.
Government Securities, National Municipal Bond and Money Market 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 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.
56
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 2 - continued
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 portfolio has terminated by
entering into an offsetting commitment.
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.
Mortgage Dollar Rolls. Strategic Income and U.S. Government Securities may enter
into mortgage dollar rolls in which they sell mortgage-backed securities for
normal delivery in the current month and simultaneously contract to repurchase
similar, but not identical, securities at the same price on an agreed upon date.
The portfolio 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.
Securities Lending. The Fund may lend its portfolio securities in amounts up to
33% of its total non-cash assets to brokers, dealers and other financial
institutions, provided such loans are callable at any time and are at all times
fully collateralized by cash, cash equivalents, short term investments or
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and marked to market to the value of the loaned securities on
a daily basis. The portfolio may bear the risk of delay in recovery of, or even
loss of rights in, the securities loaned should the borrower of the securities
fail financially. Consequently, loans of portfolio securities will only be made
to firms deemed by the Subadvisers to be creditworthy.
The portfolio receives compensation for lending its securities either in form of
fees or by retaining a portion of interest on the investment of any cash
received as collateral. Income generated from the investment of cash collateral
is included as interest income in the Statements of Operations. All collateral
received will be in an amount equal to at least 100% of the market value of the
loaned securities and must be maintained at that level during the period of the
loan. During the loan period, the portfolio continues to retain rights of
ownership, including dividends and interest of the loaned securities. At April
30, 1998, the value of the securities loaned amounted to $2,623,719, $5,377,924,
$10,789,405, $2,696,123, $2,469,873, $6,804,374, $12,105,077, $5,379,697,
$13,341,883, $1,029,654 and $9,161,216 in International Small Cap, International
Growth and Income, Global Equity, Small/Mid Cap, Growth Equity, Growth and
Income, Equity-Income, Balanced, Strategic Income, Investment Quality Bond and
U.S. Government Securities, respectively. At April 30, 1998, the value of
collateral amounted to $2,717,979, $5,507,448, $11,214,867, $2,741,407,
$2,544,356, $6,919,025, $12,305,022, $5,449,285, $13,751,685, $1,059,925 and
$9,293,178 in International Small Cap, International Growth and Income, Global
Equity, Small/Mid Cap, Growth Equity, Growth and Income, Equity-Income,
Balanced, Strategic Income, Investment Quality Bond and U.S. Government
Securities, respectively.
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. Distributions of net investment income are
declared as a dividend to shareholders of record as of the close of business
each day and are paid monthly for Strategic Income, Investment Quality Bond,
National Municipal Bond, U.S. Government Securities and Money Market,
semi-annually to shareholders of International Growth and Income and Growth and
Income, and annually to shareholders of International Small Cap, Global Equity,
Emerging Growth, Small/Mid Cap, Growth Equity, Tax-Sensitive Equity,
Equity-Income and Balanced. During any particular year, net realized gains from
investment, futures and foreign currency transactions for each portfolio, in
excess of available capital loss carryforwards of each portfolio, would be
taxable to the portfolio 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 federal excise tax.
Equalization. Through the year ended October 31, 1997 the Fund followed the
accounting practice known as equalization, by which a portion of the proceeds
from sales and costs of repurchases of the Fund's shares were allocated, on a
per share basis, to undistributed net investment income. As a result, book
undistributed net investment income per share was unaffected by sales or
redemptions of the Fund's shares. Because Distributions to shareholders are
determined on a tax basis, however, this practice is no longer considered
meaningful, so, as of November 1, 1997 this practice was discontinued. This
change does not effect the Funds' net assets, net asset value per share or the
57
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 2 - continued
increase/(decrease) in net assets. The cumulative effect of this change was to
decrease undistributed net investment income/(loss) and to increase
paid-in-capital previously reported through October 31, 1997 by $6,325 in the
International Small Cap Fund, by $87,652 in the Growth Equity fund, by $169,122
in the Growth and Income Fund, by $113,876 in the Equity-Income Fund, by $471 in
the Strategic Income Fund, and by $16,211 in the Investment Quality Bond Fund,
and to increase undistributed net investment income/(loss) and to decrease
paid-in-capital previously reported through October 31, 1997 by $3,653 in the
International Growth and Income Fund, by $390,926 in the Global Equity Fund by
$200,934 in the Balanced Fund, and by $202,524 in the U.S. Government Securities
Fund.
Repurchase and Reverse Repurchase Agreements. Each portfolio may enter into
repurchase agreements and, additionally, U.S. Government Securities 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, U.S. Government
Securities 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, futures and foreign currency for both financial and federal income
tax reporting purposes. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the
reported amount of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Capital Accounts. The Fund reports the accumulated undistributed net investment
income (loss) and accumulated undistributed net realized gain (loss) accounts on
a basis approximating amounts available for future tax distributions (or to
offset future taxable realized gains when a capital loss carryforward is
available). Accordingly, each portfolio of the Fund may periodically make
reclassifications among certain capital accounts without impacting the net asset
value.
3. CAPITAL SHARES. Share activity for the six months ended April 30, 1998 is as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------- ------------------------- -----------------------
Shares Capital Shares Capital Shares Capital
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
International Small Cap
- -----------------------
Sold........................... 19,060 $275,429 65,716 $947,997 52,797 $752,885
Redeemed....................... (100,957) (1,443,498) (25,425) (1,304,011) (92,950) (1,325,891)
---------- ------------ ---------- ----------- ---------- -----------
Net increase/(decrease)...... (81,897) ($1,168,069) 40,291 ($356,014) (40,153) ($573,006)
---------- ------------ ---------- ----------- ---------- -----------
International Growth and Income
- -------------------------------
Sold........................... 80,928 $867,133 115,546 $1,233,377 103,486 $1,100,779
Reinvestment of distributions.. 44,086 424,106 131,403 1,264,504 73,392 706,033
Redeemed....................... (159,406) ($1,708,509) (287,448) (3,051,433) (146,212) (1,558,703)
---------- ------------ ---------- ----------- ---------- -----------
Net increase/(decrease)...... (34,392) ($417,270) (40,499) ($553,552) 30,666 $248,109
---------- ------------ ---------- ----------- ---------- -----------
Global Equity
- -------------
Sold........................... 321,498 $5,327,121 180,585 $3,036,272 173,636 $2,890,859
Reinvestment of distributions.. 152,180 2,323,793 136,782 2,076,353 262,341 3,998,092
Redeemed....................... (375,210) (6,266,508) (182,545) (3,053,980) (467,400) (7,783,337)
---------- ------------ ---------- ----------- ---------- -----------
Net increase/(decrease)...... 98,468 $1,384,406 134,822 $2,058,645 (31,423) ($894,386)
---------- ------------ ---------- ----------- ---------- -----------
Emerging Growth
- ---------------
Sold........................... 16,025 $165,011 6,237 $66,991 11,671 $127,313
Redeemed....................... (4,758) (50,993) -- -- -- --
---------- ------------ ---------- ----------- ---------- -----------
Net Increase/(decrease)...... 11,267 $114,018 6,237 $66,991 11,671 $127,313
---------- ------------ ---------- ----------- ---------- -----------
Small/Mid Cap
- -------------
Sold........................... 92,902 $1,454,971 152,010 $2,377,754 188,981 $2,946,856
Reinvestment of distributions.. 4,511 64,099 13,422 188,304 13,917 195,545
Redeemed....................... (84,116) (1,390,285) (75,794) (1,200,602) (141,924) (2,294,282)
---------- ------------ ---------- ----------- ---------- -----------
Net Increase/(decrease)...... 13,297 $128,785 89,638 $1,365,456 60,974 $848,119
---------- ------------ ---------- ----------- ---------- -----------
</TABLE>
58
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 3- continued
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Capital Shares Capital Shares Capital
--------------------------- ----------------------- ------------------------
Growth Equity
- -------------
Sold ........................... 39,523 $678,237 139,616 $2,416,784 107,675 $1,838,603
Reinvestment of distributions .. 16,478 255,767 47,937 737,772 69,270 1,065,369
Redeemed (22,417) (390,058) (100,990) (1,749,062) (105,873) (1,809,229)
-------- --------- --------- ----------- --------- -----------
Net increase (decrease) ........ 33,584 $543,946 86,563 $1,405,494 71,072 $1,094,743
------ -------- ------ ---------- ------ ----------
Tax-Sensitive Equity
- --------------------
Sold .......................... 114,765 $1,236,316 95,936 $1,057,630 29,928 $331,916
Redeemed ....................... (22,736) (252,000) - - - -
-------- --------- ------ ---------- ------ --------
Net increase/(decrease) ...... 92,029 $984,316 95,936 $1,057,630 29,928 $331,916
------ -------- ------ ---------- ------ --------
Growth and Income
- -----------------
Sold ........................... 499,653 $11,280,530 509,454 $11,590,278 560,830 $12,714,437
Reinvestment of distributions .. 127,179 2,612,267 202,572 4,138,553 348,067 7,142,485
Redeemed ....................... (342,278) (7,717,258) (161,166) (3,670,367) (450,706) (10,263,642)
--------- ----------- --------- ----------- --------- ------------
Net increase/(decrease) ...... 284,554 $6,175,539 550,860 $12,058,464 458,191 $9,593,280
------- ---------- ------- ----------- ------- ----------
Equity-Income
- -------------
Sold ........................... 242,673 $4,336,882 221,356 $3,917,919 396,284 $7,018,210
Reinvestment of distributions .. 194,951 3,251,819 170,531 2,827,410 446,827 7,448,604
Redeemed ....................... (274,113) (4,931,176) (187,903) (3,347,110) (513,090) (9,074,837)
--------- ----------- --------- ----------- --------- -----------
Net increase/(decrease) 163,511 $2,657,525 203,984 $3,398,219 330,021 $5,391,977
------- ---------- ------- ---------- ------- ----------
Balanced
- --------
Sold .......................... 123,912 $1,387,558 257,882 $2,858,219 165,483 $1,882,390
Reinvestment of distributions.. 222,869 2,300,076 274,734 2,832,512 1,113,835 11,628,652
Redeemed ...................... (76,083) (850,603) (141,582) (1,645,180) (645,040) (7,359,089)
-------- --------- --------- ----------- --------- -----------
Net increase (decrease) ....... 270,698 $2,837,031 391,034 $4,045,551 634,278 $6,151,953
------- ---------- ------- ---------- ------- ----------
Strategic Income
- ----------------
Sold .......................... 214,627 $2,104,130 282,539 $2,766,308 602,073 $5,898,236
Reinvestment of distributions . 48,010 467,976 80,330 782,787 115,038 1,121,138
Redeemed ...................... (160,778) (1,574,290) (445,059) (4,363,431) (342,959) (3,356,704)
--------- ----------- --------- ----------- --------- -----------
Net increase/(decrease) 101,859 $997,816 (82,190) ($814,336) 374,152 $3,662,670
------- -------- -------- ---------- ------- ----------
Investment Quality Bond
- -----------------------
Sold .......................... 34,657 $366,930 56,972 $601,925 85,535 $907,940
Reinvestment of distributions . 14,273 151,170 9,356 99,066 11,328 119,924
Redeemed ...................... (89,536) (949,653) (64,386) (680,950) (202,031) (2,141,516)
-------- --------- -------- --------- --------- -----------
Net increase/(decrease) (40,606) ($431,553) 1,942 $20,041 (105,168) ($1,113,652)
-------- ---------- ----- ------- --------- ------------
National Municipal Bond
- -----------------------
Sold .......................... 23,857 $243,628 20,231 $206,864 53,230 $545,139
Reinvestment of distributions . 5,814 59,381 5,870 59,942 6,525 66,642
Redeemed ...................... (72,670) (741,006) (125,106) (1,283,126) (69,820) (713,841)
-------- --------- --------- ----------- -------- ---------
Net increase/(decrease) (42,999) ($437,997) (99,005) ($1,016,320) (10,065) ($102,060)
-------- ---------- -------- ------------ -------- ----------
U.S. Government Securities
- --------------------------
Sold .......................... 263,138 $2,619,046 150,459 $1,499,812 126,702 $1,261,584
Reinvestment of distributions . 82,760 824,080 21,292 212,098 26,395 262,934
Redeemed ..................... (688,043) (6,862,278) (367,638) (3,660,518) (417,824) (4,163,435)
--------- ----------- --------- ----------- --------- -----------
Net increase/(decrease)...... (342,145) ($3,419,152) (195,887) ($1,948,608) (264,727) ($2,638,917)
--------- ------------ --------- ------------ --------- ------------
Money Market
- ------------
Sold .......................... 7,632,868 $7,632,868 5,073,542 $5,073,542 5,293,200 $5,293,283
Reinvestment of distributions . 177,894 177,894 45,988 45,988 143,817 143,817
Redeemed ...................... (8,657,628) (8,657,629) (4,546,376) (4,546,376) (6,637,396) (6,637,396)
----------- ----------- ----------- ----------- ----------- -----------
Net increase/(decrease) ..... (846,866) ($846,867) 573,154 $573,154 (1,200,379) ($1,200,296)
--------- ---------- ------- -------- ----------- ------------
</TABLE>
59
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 3 -- continued
Share activity for the year ended October 31, 1997 is as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
--------------------- --------------------- ---------------------
Shares Capital Shares Capital Shares Capital
------ ------- ------ ------- ------ -------
International Small Cap
- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Sold .............................. 172,223 $2,420,431 311,497 $4,351,711 287,465 $4,020,988
Redeemed .......................... (97,424) ($1,351,821) (152,898) ($2,152,252) (187,448) ($2,627,640)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ...................... 74,799 $1,068,610 158,599 $2,199,459 100,017 $1,393,348
------------ ------------ ------------ ------------ ------------ ------------
International Growth and Income
- -------------------------------
Sold .............................. 167,110 $1,792,918 334,333 $3,645,247 227,165 $2,478,076
Reinvestment of distributions ..... 35,116 372,765 98,555 1,060,875 61,067 656,479
Redeemed .......................... (206,586) (2,209,558) (259,786) (2,818,848) (304,781) (3,276,447)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ......... (4,360) ($43,875) 173,102 $1,887,274 (16,549) ($141,892)
------------ ------------ ------------ ------------ ------------ ------------
Global Equity
- -------------
Sold .............................. 464,254 $7,173,904 399,551 $6,134,403 473,379 $7,118,221
Reinvestment of distributions ..... 208,420 2,882,299 193,787 2,670,382 469,264 6,461,761
Redeemed .......................... (563,696) (8,611,676) (407,472) (6,025,088) (1,660,187) (24,698,621)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ......... 108,978 $1,444,527 185,866 $2,779,697 (717,544) ($11,118,639)
------------ ------------ ------------ ------------ ------------ ------------
Small/Mid Cap
- -------------
Sold .............................. 195,283 $2,625,840 399,400 $5,644,058 742,841 $10,160,673
Redeemed .......................... (161,404) (2,248,506) (158,565) (2,183,317) (519,604) (7,118,896)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 33,879 $377,334 240,835 $3,460,741 223,237 $3,041,777
------------ ------------ ------------ ------------ ------------ ------------
Growth Equity
- -------------
Sold .............................. 126,280 $1,864,938 494,750 $7,629,840 521,137 $7,942,112
Reinvestment of distributions ..... 2,321 32,171 3,748 51,907 6,399 88,628
Redeemed .......................... (111,960) (1,666,958) (309,407) (4,730,354) (244,574) (3,717,442)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ...................... 16,641 $230,151 189,091 $2,951,393 282,962 $4,313,298
------------ ------------ ------------ ------------ ------------ ------------
Growth and Income
- -----------------
Sold .............................. 912,261 $18,629,321 787,724 $15,658,730 882,662 $17,499,038
Reinvestment of distributions ..... 67,848 1,195,199 115,717 2,014,284 245,065 4,269,417
Redeemed .......................... (450,673) (9,067,086) (356,257) (7,090,345) (871,364) (17,278,615)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 529,436 $10,757,434 547,184 $10,582,669 256,363 $4,489,840
------------ ------------ ------------ ------------ ------------ ------------
Equity-Income
- -------------
Sold .............................. 592,754 $9,599,623 500,961 $8,087,441 824,546 $13,307,463
Reinvestment of distributions ..... 442,599 6,338,505 382,378 5,479,472 1,218,941 17,554,558
Redeemed .......................... (590,786) (9,345,352) (356,308) (5,740,317) (1,437,499) (22,895,681)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 444,567 $6,592,776 527,031 $7,826,596 605,988 $7,966,340
------------ ------------ ------------ ------------ ------------ ------------
Balanced
- --------
Sold .............................. 234,801 $2,757,480 279,360 $3,253,994 406,687 $4,786,572
Reinvestment of distributions ..... 125,521 1,380,732 160,862 1,766,281 737,223 8,183,433
Redeemed .......................... (265,075) (3,120,596) (390,785) (4,597,129) (1,633,682) (19,221,203)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ......... 95,247 $1,017,616 49,437 $423,146 (489,772) ($6,251,198)
------------ ------------ ------------ ------------ ------------ ------------
Strategic Income
- ----------------
Sold .............................. 728,750 $7,068,862 883,892 $8,617,970 1,643,552 $16,024,302
Reinvestment of distributions ..... 108,211 1,049,234 178,435 1,729,297 209,694 2,033,928
Redeemed .......................... (570,028) (5,577,914) (668,180) (6,506,732) (827,696) (8,050,790)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 266,933 $2,540,182 394,147 $3,840,535 1,025,550 $10,007,440
------------ ------------ ------------ ------------ ------------ ------------
Investment Quality Bond
- -----------------------
Sold .............................. 71,210 $732,772 85,547 $882,438 93,047 $957,800
Reinvestment of distributions ..... 39,782 410,260 22,683 233,667 34,695 357,313
Redeemed .......................... (311,082) (3,204,349) (122,683) (1,257,374) (277,224) (2,834,680)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ......... (200,090) ($2,061,317) (14,453) ($141,269) (149,482) ($1,519,567)
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
60
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 3 - continued
<TABLE>
<CAPTION>
Class A Class B Class C
--------------------- --------------------- -----------------------
Shares Capital Shares Capital Shares Capital
---------- --------- ---------- --------- ---------- ----------
National Municipal Bond
- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Sold .............................. 34,409 $340,883 138,304 $1,351,243 75,518 $739,075
Reinvestment of distributions ..... 17,041 167,921 17,223 169,763 17,180 169,430
Redeemed .......................... (214,451) (2,098,316) (137,867) (1,352,138) (151,759) (1,490,977)
--------- ----------- --------- ----------- --------- -----------
Net increase/(decrease) ......... (163,001) ($1,589,512) 17,660 $168,868 (59,061) ($582,472)
--------- ------------ ------ -------- -------- ---------
U.S. Government Securities
- --------------------------
Sold .............................. 669,065 $6,537,020 360,887 $3,536,454 447,002 $4,382,934
Reinvestment of distributions ..... 241,937 2,367,629 59,099 578,306 71,244 697,491
Redeemed .......................... (2,978,747) (29,121,804) (727,741) (7,114,391) (1,079,330) (10,556,239)
----------- ------------ --------- ----------- ----------- ------------
Net increase/(decrease) ......... (2,067,745) ($20,217,155) (307,755) ($2,999,631) (561,084) ($5,475,814)
----------- ------------- --------- ------------ --------- ------------
Money Market
- ------------
Sold .............................. 22,410,945 $22,410,945 12,033,916 $12,033,916 25,707,878 $25,707,878
Reinvestment of distributions ..... 360,144 360,144 140,200 140,200 413,794 413,794
Redeemed .......................... (19,800,772) (19,800,772) (11,905,013) (11,905,013) (28,422,359) (28,422,359)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ......... 2,970,317 $2,970,317 269,103 $269,103 (2,300,687) ($2,300,687)
--------- ---------- ------- -------- ----------- ------------
</TABLE>
4. PURCHASES AND SALES OF SECURITIES. The following table summarizes the
securities transactions (excluding short-term investments) for all portfolios,
excluding Money Market, for the six months ended April 30,1998:
<TABLE>
<CAPTION>
Purchases Sales
----------------------------------- ---------------------------------
Portfolio U.S. Government Other Issues U.S. Government Other Issues
--------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
International Small Cap ........... ------- $4,643,303 ------- $4,397,322
International Growth & Income ..... ------- 31,428,553 ------- 33,176,329
Global Equity .................... ------- 13,105,358 ------- 18,179,330
Emerging Growth ................... ------- 259,690 ------- 19,934
Small/Mid Cap .................... ------- 25,403,208 ------- 24,516,420
Growth Equity .................... ------- 19,959,913 ------- 17,693,980
Tax-Sensitive Equity .............. ------- 2,250,390 ------- 74,498
Growth and Income ................ ------- 26,632,522 ------- 14,915,440
Equity-Income .................... ------- 20,714,430 ------- 21,849,987
Balanced ......................... $9,963,278 79,094,675 $22,421,757 76,784,144
Strategic Income .................. 90,825,617 42,150,090 83,596,069 47,516,959
Investment Quality Bond ........... 1,619,555 1,576,069 1,768,006 2,821,296
National Municipal Bond ........... ------- 5,400,421 ------- 6,551,437
U.S. Government Securities ........ 159,642,024 -------- 163,660,526 933,814
</TABLE>
Purchases and sales (maturities) for Money Market for the six months ended April
30,1998 were $199,763,171 and $201,652,688, respectively.
At April 30,1998, 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 Appreciation Unrealized Tax Basis Unrealized
Portfolio Cost (Depreciation) Appreciation Depreciation
----------- ------------------ ------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
International Small Cap ........... $14,413,301 $3,443,562 $4,066,236 $622,674
International Growth and Income ... 25,630,072 3,439,885 4,230,018 790,133
Global Equity .................... 103,669,917 36,290,222 40,548,652 4,258,430
Emerging Growth ................... 237,837 23,047 26,260 3,213
Small/Mid Cap ..................... 29,203,072 6,346,207 6,662,485 316,278
Growth Equity ..................... 25,197,262 5,259,673 5,610,390 350,717
Tax-Sensitive Equity .............. 2,436,714 42,704 81,018 38,314
Growth and lncome ................. 149,873,157 91,024,275 91,735,262 710,987
Equity-Income ..................... 148,983,835 40,878,767 42,583,459 1,704,692
Balanced .......................... 91,602,910 11,140,488 13,155,866 2,015,378
Strategic Income .................. 100,101,904 1,556,937 2,468,403 911,466
lnvestment Quality Bond ........... 15,768,299 382,846 510,031 127,185
</TABLE>
61
<PAGE>
NORTH AMERICAN FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
Note 4- Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
National Municipal Bond................ 15,669,433 882,874 899,540 16,666
U.S. Government Securities............. 101,454,564 430,904 618,642 187,738
</TABLE>
5. INVESTMENT ADVISORY AGREEMENTS. The Fund maintains an Investment Advisory
Agreement with CAM ("the Adviser"), effective October 1, 1997, pursuant to
approval by the Fund's Board of Trustees and Fund shareholders. 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
$50,000,000 Between
First and $200,000,000 Excess over
Portfolio $50,000,000 $200,000,000 and $500,000,000 $500,000,000
- --------- ----------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
International Small Cap........................ 1.050% 1.000% .900% .800%
International Growth and Income................ .900% .850% .800% .750%
Global Equity.................................. .900% .900% .700% .700%
Emerging Growth................................ .950% .950% .950% .950%
Small/Mid Cap.................................. .925% .900% .875% .850%
Growth Equity.................................. .900% .850% .825% .800%
Tax-Sensitive Equity........................... .850% .800% .775% .700%
Growth and Income.............................. .725% .675% .625% .550%
Equity-Income.................................. .800% .700% .600% .600%
Balanced....................................... .775% .725% .675% .625%
Strategic Income............................... .750% .700% .650% .600%
Investment Quality Bond........................ .600% .600% .525% .475%
National Municipal Bond........................ .600% .600% .600% .600%
U.S. Government Securities..................... .600% .600% .525% .475%
Money Market................................... .200% .200% .200% .145%
</TABLE>
For the six months ended April 30, 1998, CAM paid aggregate subadvisory fees of
$1,633,542. In addition, CAM retained net investment advisory fees of $1,867,869
after payment of subadvisory fees, which were allocated among the portfolios as
follows:
<TABLE>
<CAPTION>
Fee % of Net Assets Fee % of Net Assets
Paid to Paid to Retained Retained
Portfolio Subadviser Subadviser by CAM by Adviser
--------- -------------- ------------- ------- --------------
<S> <C> <C> <C> <C>
International Small Cap.............. $56,254 .65% $34,617 .40%
International Growth and Income...... 73,194 .50% 58,555 .40%
Global Equity........................ 304,917 .47% 280,124 .43%
Emerging Growth...................... 299 .54% 217 .39%
Small/Mid Cap........................ 84,470 .52% 64,358 .40%
Growth Equity........................ 68,038 .50% 54,430 .40%
Tax-Sensitive Equity................. 1,030 .44% 915 .39%
Growth and Income.................... 297,938 .28% 420,272 .40%
Equity-Income........................ 294,223 .33% 359,238 .40%
Balanced............................. 173,923 .35% 198,800 .40%
Strategic Income..................... 140,110 .33% 170,284 .40%
Investment Quality Bond.............. 19,247 .23% 32,079 .38%
National Municipal Bond.............. 22,042 .25% 30,883 .35%
U.S. Government Securities........... 91,045 .23% 151,743 .38%
Money Market......................... 6,812 .08% 11,354 .13%
</TABLE>
Expense Reimbursement and Distribution Plan. Pursuant to the Investment Advisory
Agreement, the Adviser 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 portfolio, other than
Money Market, of a monthly distribution fee to the Adviser as principal
underwriter for the Fund as highlighted in the table below:
62
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 5 - Continued
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C
---------------- -------------- ------------- --------------
International Small Cap
- -----------------------
<S> <C> <C> <C>
Management fees................. 1.050% 1.050% 1.050%
Other expenses ................. 0.500% 0.500% 0.500%
------ ------ ------
Expense limitation.............. 1.550% 1.550% 1.550%
====== ====== ======
Rule 12b-1 fees................. 0.350% 1.000% 1.000%
------ ------ ------
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%
Global Equity
- -------------
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%
Emerginq Growth
- ---------------
Management fees.................. 0.950% 0.950% 0.950%
Other expenses................... 0.400% 0.400% 0.400%
------ ------ ------
Expense limitation............... 1.350% 1.350% 1.350%
====== ====== ======
Rule 12b-1 fees.................. 0.350% 1.000% 1.000%
Small/Mid Cap
- -------------
Management fees.................. 0.925% 0.925% 0.925%
Other expenses................... 0.400% 0.400% 0.400%
------ ------ ------
Expense limitation............... 1.325% 1.325% 1.325%
====== ====== ======
Rule 12b-1 fees.................. 0.350% 1.000% 1.000%
Growth Equity
- -------------
Management fees.................. 0.900% 0.900% 0.900%
Other expenses................... 0.400% 0.400% 0.400%
------ ------ ------
Expense limitation............... 1.300% 1.300% 1.300%
====== ====== ======
Rule 12b-1 fees.................. 0.350% 1.000% 1.000%
Tax-Sensitive Equity
- --------------------
Management fees.................. 0.850% 0.850% 0.850%
Other expenses................... 0.400% 0.400% 0.400%
------ ------ ------
Expense limitation............... 1.250% 1.250% 1.250%
====== ====== ======
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%
Equity-Income
- -------------
Management fees................... 0.800% 0.800% 0.800%
Other expenses.................... 0.265% 0.265% 0.265%
------ ------ ------
Expense limitation................ 1.065% 1.065% 1.065%
====== ====== ======
Rule 12b-1 fees................... 0.350% 1.000% 1.000%
Balanced
- --------
Management fees.................... 0.775% 0.775% 0.775%
Other expenses.................... 0.265% 0.265% 0.265%
------ ------ ------
Expense limitation................ 1.040% 1.040% 1.040%
====== ====== ======
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%
</TABLE>
63
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 5 - Continued
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C
--------------- --------- ---------- ---------
<S> <C> <C> <C>
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%
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%
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%
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>
In accordance with the Investment Advisory agreement, the Advisers, in addition
to providing advisory services, provide accounting and administrative services
for which CAM charged $694,600 to the Fund, before reimbursement based on
expense limitations, for the six-months ended April 30,1998.
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 $750 plus travel expenses for
each Board of Trustees meeting attended and an annual retainer of $3,000.
7. COMMITMENTS. At April 30,1998, International Small Cap, Global Equity,
International Growth and Income, Balanced and Strategic Income had entered into
forward foreign currency contracts which contractually obligate the portfolio to
deliver currencies at future dates. Open sale and purchase contracts at April
30,1998 were as follows:
<TABLE>
<CAPTION>
Net
Contracts Unrealized
to In Exchange Settlement Appreciation
Deliver For Date Value (Depreciation)
--------------- -------------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C>
International Small Cap
- -----------------------
Purchases
$3,366 ESP 512,784 5/05/98 $3,367 $1
------ ------ --
International Growth and Income
- -------------------------------
Sales
Great British Pounds........... 72,296 $120,568 5/01/98 120,930 ($362)
Great British Pounds........... 903,758 1,478,207 5/27/98 1,509,675 (31,468)
Japanese Yen................... 30,000,000 227,497 5/01/98 226,689 808
Japanese Yen................... 258,024,172 2,004,840 5/27/98 1,957,862 46,978
Austrian Schilling............. 5,686,912 448,000 5/27/98 451,118 (3,118)
Swiss Franc.................... 1,486,512 992,000 5/27/98 993,861 (1,861)
Australian Dollar.............. 1,429,916 953,825 5/27/98 933,088 20,737
Deutsche Mark.................. 8,609,534 4,764,882 5/27/98 4,805,132 (40,250)
French Franc................... 11,425,957 1,892,725 5/27/98 1,903,877 (11,152)
Irish Punt..................... 182,505 253,937 5/27/98 256,049 (2,112)
Netherlands Guilder............ 169,007 84,419 5/27/98 83,798 621
New Zealand Dollar............. 1,423,112 816,867 5/27/98 788,630 28,237
Singapore Dollar............... 499,914 301,516 5/27/98 315,632 (14,116)
------- ------- --------
14,339,283 14,346,341 (7,058)
---------- ---------- -------
</TABLE>
64
<PAGE>
NORTH AMERICAN FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 7- Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Contracts Unrealized
to In Exchange Settlement Appreciation
Deliver For Date Value (Depreciation)
------------- ------------ ---------- ------ ---------------
Purchases
$118,525 ATS 1,496,911 5/27/98 $118,744 $219
495,092 AUD 756,269 5/27/98 493,501 (1,591)
2,099,650 DEM 3,789,901 5/27/98 2,115,210 15,560
1,516,650 GBP 903,758 5/27/98 1,509,675 (6,975)
1,976,616 JPY 258,024,172 5/27/98 1,957,862 (18,754)
666,000 NZD 1,165,190 5/27/98 645,700 (20,300)
310,795 SGD 499,914 5/27/98 315,632 4,837
------- ------- -----
7,183,328 7,156,324 (27,004)
========= ========= --------
(34,062)
Global Equity ========
- -------------
Sales
Netherlands Guilder............ 1,715,775 $848,973 5/1/98 $849,351 (378)
Great British Pounds.......... 4,750,000 7,753,825 12/16/98 7,871,171 (117,346)
--------- --------- ---------
$8,602,798 8,720,522 (117,724)
=========
Strategic Income
- ----------------
Sales
Swedish
Krona............................. 339,518 $43,764 5/4/98 $43,854 (90)
Swedish Krona................. 6,069,086 760,537 5/12/98 784,207 (23,670)
Canadian Dollars.............. 964,880 674,741 5/12/98 674,943 (202)
Deutsche Mark................. 5,367,013 2,966,404 5/12/98 2,992,814 (26,410)
New Zealand Dollar............ 3,697,070 2,063,005 5/12/98 2,051,516 11,489
Netherlands Guilder........... 1,795,216 893,780 5/12/97 889,314 4,466
Japanese Yen.................. 229,122,752 1,801,665 5/12/98 1,734,530 67,135
Italian Lira.................1,977,635,438 1,103,357 5/12/98 1,116,566 (13,209)
--------- --------- --------
10,307,253 10,287,744 19,509
========== ========== ------
Purchases
$1,143,764 DEM 2,042,644 5/4/98$ 1,138,249 (5,515)
881,709 CAD 1,240,625 5/12/98 867,829 (13,880)
2,863,239 DEM 5,220,526 5/12/98 2,911,128 47,889
1,109,898 ITL 1,995,208,313 5/12/98 1,126,488 16,590
1,373,998 JPY 174,846,444 5/12/98 1,323,642 (50,356)
872,276 NZD 1,490,000 5/12/98 826,806 (45,470)
893,780 SEK 6,873,884 5/12/98 888,197 (5,583)
------- ------- -------
9,138,664 9,082,339 (56,325)
========= ========= --------
(36,816)
65
</TABLE>
<PAGE>
Trustees
Bradford K. Gallagher, Chairman
William F. Achtmeyer
Donald B. Allen
William F. Devin
Kenneth J. Lavery
Officers
Bradford K. Gallagher, President
Joseph T. Grause, Jr.,
Vice President and Treasurer
John I. Fitzgerald, Secretary
Distributor
CypressTree Funds Distributors, Inc.
286 Congress Street
Boston, MA 02210
Adviser
CypressTree Asset Management Corporation, Inc.
125 High Street
Boston, MA 02110
Transfer and Dividend Agent
State Street Bank and Trust Company
P.O. Box 8505
Boston, MA 02266-8505
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
North American Funds Shareholder Service
286 Congress Street
Boston, MA 02210
800-872-8037
<PAGE>
----------------
Bulk Third Class
U.S. POSTAGE
PAID
Permit No. 19
Hudson, MA
----------------
