<PAGE>
September 1, 2000
Josephthal
JOSEPHTHAL STRATEGIC GROWTH FUND
Prospectus
----------
Class A Shares Class B Shares Class C Shares
[GRAPHIC]
The Securities and Exchange Commission has not approved or disapproved of
these securities or passed on the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
[LOGO OF STRATEGIC GROWTH FUND] NORTH AMERICAN FUNDS
<PAGE>
Table of Contents
Organization of Information
This Prospectus includes information about the Josephthal Strategic Growth Fund
(the "Fund").
<TABLE>
<S> <C>
Section I: Summary of the Fund......................................... Page 1
.Investment Objective
.Principal Investment Strategies
.Main Investing Risks
Section II: Other Information about the Fund........................... Page 3
.Fees and Expenses
.More Information About Investment Strategies and Risks
.Other Risks of Investing
.Fund Management
Section III: Investing in the Fund..................................... Page 8
</TABLE>
This section includes the information you need about how to invest and how to
redeem shares. It also includes other important information about sales
charges, taxes and account privileges.
More Information
The back cover of this prospectus lists a number of places to call or to visit
if you would like additional information.
<PAGE>
Section I: Summary of the Fund
The summary below describes the investment objective and principal investment
strategies of the Fund. This summary also describes the main risks of investing
in the Fund.
Investment Objective and Strategies
The investment objective of the Fund is to seek capital appreciation. To
achieve this objective, Josephthal & Co. ("Josephthal"), the Fund's subadvisor,
ordinarily invests at least 75% of the Fund's total assets in equity securities
of domestic issuers listed on a nationally recognized securities exchange or
traded on the Nasdaq system. Josephthal seeks to identify growth companies,
which often are small or medium-size capitalization companies, with growth
characteristics such as positive earnings comparisons, potential for
accelerated growth and market share gains.
The Fund may make significant investments in certain sectors. One of these
sectors is science and technology, including (but not limited to) companies
that provide computer hardware and software, internet infrastructure,
communications, telecommunications equipment and service, semiconductor
manufacturers, semiconductor capital equipment manufacturers and electronic
manufacturing services. Another sector in which the Fund may make significant
investments is healthcare, including (but not limited to) biotechnology
companies and pharmaceutical manufacturers. The Fund also may make significant
investments in specialty retailing and E-commerce, including (but not limited
to) apparel manufacturers, retailers, general merchandise and E-tailers.
Finally, the Fund may make significant investments in the financial services
sector, including (but not limited to) companies such as commercial banks,
savings and loan associations, brokerage companies, insurance companies, real
estate-related companies, leasing companies, and consumer and industrial
finance companies.
The Fund will invest primarily in common stock but also may invest in other
types of equity securities that offer opportunities for capital appreciation,
including publicly traded partnership interests. The Fund may invest up to 15%
of its total assets in investment grade debt securities.
The Fund may participate in the initial public offering ("IPO") market, and a
portion of the Fund's returns may be attributable to the Fund's investments in
IPOs. There is no guarantee that as the Fund's assets grow that it will be able
to experience significant improvement in performance by investing in IPOs.
Main Investing Risks
The value of your investment in the Fund can change for many reasons, and may
decrease. The primary reasons for possible decreases in the Fund's value are
called "Main Investing Risks," and are explained in this section. Because the
types of investments the Fund makes may change over time, the types of risks
affecting the Fund may change as well. Section II of the Prospectus includes
more information about other risks that could affect the Fund's value.
It is important to remember that, as with any investment, it is possible for
investors to lose money by investing in the Fund. An investment in the Fund is
not a deposit in a bank and is not insured by the Federal Deposit Insurance
Corporation or any other government agency.
Equity Risk
Equity securities, such as a company's common stock, may fall in value in
response to factors relating to the issuer, such as management decisions or
falling demand for a company's goods or services. Additionally, factors
affecting a company's particular industry, such as increased production costs,
may affect the value of its equity securities. Equity securities also rise and
fall in value as a result of factors affecting entire financial markets, such
as political or economic developments, or changes in investor psychology.
Growth stocks are the stocks of companies that have earnings that are expected
to grow relatively rapidly. As a result, the values of growth stocks may be
more sensitive to changes in current or expected earnings than the values of
other stocks.
Smaller Companies:
Market capitalization refers to the total value of a company's outstanding
stock. Smaller companies with market capitalizations of less than $1 billion or
so are more likely than larger companies to have limited product lines, smaller
markets for their products and services, and they may depend on a small or
inexperienced management group. Small company stock may not trade very
actively, and their prices may fluctuate more than stocks of larger
1
<PAGE>
companies. Stocks of smaller companies may be more vulnerable to negative
changes than stocks of larger companies.
IPO Risk
The risks associated with equity securities are typically higher for equity
securities purchased in IPOs. Issuers in IPOs typically have a limited
operating history, and the prices of equity securities are often very volatile
for some time following an IPO.
Financial Services Company Risk
Companies in the financial services sector may be adversely affected by the
cost of capital funds, changes in interest rates and price competition. They
also may be affected by changes in government regulation.
Healthcare Company Risk
Certain healthcare companies are subject to intense competition and rapid
technological change. They also may be affected by changes in government
regulations. Many such companies also face high research and development costs
and obsolescence of their products. These factors may have a significant
adverse effect on the financial condition and operating results of companies in
the healthcare industries. Healthcare companies may also have persistent losses
or erratic revenue patterns, which in turn may lead to significant volatility
in their share prices. Additionally, the viability of many healthcare companies
depends largely on whether such companies can obtain Food and Drug
Administration ("FDA") approval of their products or services. If a healthcare
company fails to obtain FDA approval for one or more of its products or
services, the company may be unable to continue operations, and the Fund's
investment in the company may lose some or all of its value.
Liquidity Risk
Liquidity risk is the risk that the Fund will not be able to sell a security
because there are too few people who actively buy and sell, or trade, that
security on a regular basis. This risk may be greater for smaller companies.
The Fund may not be able to sell an illiquid security at a fair price.
Liquidity risk increases if the Fund invests in derivatives, foreign
investments or restricted securities.
Management Risk
Management risk is the risk that the subadvisor of the Fund, despite using
various investment and risk analysis techniques, may not produce the desired
investment results.
Science & Technology Company Risk
Companies in the rapidly changing fields of science and technology often face
unusually high price volatility, both in terms of gains and losses. The
potential for wide variation in performance is based on the special risks
common to these stocks. For example, products or services that at first appear
promising may not prove commercially successful or may become obsolete quickly.
Earnings disappointments can result in sharp price declines. A portfolio
focused primarily on these stocks is, therefore, likely to be much more
volatile.
No performance information is available for the Fund because it has not
completed a full calendar year of operations. In the future, the Fund will
disclose performance information in a bar chart and performance table.
2
<PAGE>
Section II: Other Information about the Fund
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you invest in
the Fund.
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge Imposed Maximum Deferred Sales Charge
on Purchases (as a (as a percentage of original
percentage of offering purchase price or redemption
price) price, whichever is lower)
---------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.75% 1%*
Class B None 5%**
Class C None 1%***
---------------------------------------------------------------------------------
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets):
<TABLE>
<CAPTION>
Total Annual
Management Distribution Other Fund Operating
Fees (12b-1) Fees Expenses Expenses
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A .90% .35% .52% 1.77%
Class B .90% 1.00% .52% 2.42%
Class C .90% 1.00% .52% 2.42%
--------------------------------------------------------------------------------------
</TABLE>
* 1% first year after purchase for purchases of $1 million or more.
** 5% first and second year; 4% third year; 3% fourth year; 2% fifth year; 1%
sixth year and 0% thereafter.
*** 0% after first year. The higher Distribution Fees borne by Class B and
Class C shares may cause long-term shareholders to pay more in sales charges
than the maximum permitted front-end sales charge on Class A shares.
By translating "Total Annual Fund Operating Expenses" into dollar amounts,
these examples help you compare the costs of investing in the Fund, or a
particular class of shares, with the costs of investing in other mutual funds.
The examples below assume that you:
. Invest $10,000 in the Fund for the time period indicated and then
redeem all of your shares at the end of those periods.
. Your investment earns a 5% return each year and that each Fund's
operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
-----------------------------------------
<S> <C> <C>
Class A 745 1,100
Class B 745 1,155
Class B--No Redemption 245 755
Class C 345 755
Class C--No Redemption 245 755
-----------------------------------------
</TABLE>
3
<PAGE>
More Information About Investment Strategies and Risks
This Prospectus does not attempt to disclose all of the different
investment techniques that the Fund might use, or all of the types of
securities in which the Fund might invest. As with any mutual fund,
investors must rely on the professional judgment and skill of the Fund's
management. Josephthal may choose not to use some or all of the
investment techniques available to the Fund, and these choices may cause
the Fund to lose money or not achieve its goal. The investment objective
of the Fund may be changed by the Trustees without the approval of the
Fund's shareholders. Except as noted for certain investment restrictions,
the strategies the Fund uses to achieve its investment objective also may
be changed by the Trustees without approval of the shareholders. This
section provides additional information about the Fund, and should be
read in conjunction with the Fund Summary.
The Fund emphasizes equity securities of growth companies that represent
attractive opportunities for capital appreciation. In selecting investments for
the Fund, Josephthal seeks to identify companies that it believes will achieve
superior growth rates based on its market research and company analysis. The
Fund will focus on science and technology companies that are positioned to take
advantage of technological change and convergence, including companies in the
computer, internet infrastructure, communications, telecommunications, semi-
conductor and electronic industries. In addition, the Fund may make significant
investments in the healthcare sector, including in particular biotechnology and
pharmaceutical companies, and in the consumer sector, including in particular
high quality consumer retailers.
Certain investments in smaller capitalization companies may offer greater
opportunities for capital appreciation than larger companies, but may also
involve special risks. The Fund also may buy securities such as convertible
debt, preferred stock, options, or other securities exchangeable for shares of
common stock and other equity securities, including publicly traded partnership
interests.
The Fund may buy investment grade debt securities issued by both domestic and
foreign issuers; however, the Fund may invest no more than 15% of its total
assets in debt securities. The Fund may invest up to 25% of its total assets in
securities of foreign issuers, either directly or indirectly through American
Depository Receipts (ADRs) or closed-end investment companies.
The Fund may hold up to 15% of its net assets in illiquid investments, such as
securities for which market quotations are not readily available, in repurchase
agreements which have a maturity longer than seven days, and in securities
subject to restrictions on resale for which no adequate trading market exists.
There is no percentage restriction on the Fund's ability to enter into
repurchase agreements with maturities of seven days or less.
The Fund may sell securities short and borrow the same security from a broker
or other institution to complete the sale; however, the Fund will not sell
short securities whose underlying value exceeds 25% of its net assets. All
percentage tests are measured at the time of investment.
In seeking to achieve its investment objective, the Fund may use certain
futures and option strategies. The Fund will not engage in options, futures or
forward transactions, other than for hedging purposes, if as a result more than
5% of its total assets would be so invested. The Fund may engage in such
transactions to an unlimited extent for hedging purposes.
Other Risks of Investing in the Fund
Although the Fund may have the flexibility to use some or all of the
investments or strategies described in this Prospectus and the Statement of
Additional Information, Josephthal may choose not to use these investments or
strategies for a variety of reasons. These choices may cause the Fund to miss
opportunities, lose money or not achieve its goal.
Credit Risk
Credit Risk is the risk that the issuer or the guarantor (the entity that
agrees to pay the debt if the issuer cannot) of a debt or fixed income
security, or the counterpart to a derivatives contract or a securities loan,
will not repay the principal and interest owed to the investors or otherwise
honor its obligations. Debt securities rated in one of the four highest rating
categories by a rating agency (and comparable unrated securities) are known as
"investment grade" and generally have lower levels of credit risk than lower-
rated securities.
Investments in foreign securities are subject to increased credit risk because
of the difficulties of requiring foreign entities, including issuers of
sovereign (national) debt, to honor their contractual commitments, and because
a number of foreign governments and other issuers are already in default.
4
<PAGE>
Foreign Securities
There are risks associated with investing in foreign securities. These risks
include unforeseen changes in tax laws, political changes, and changes in
foreign currency values and exchange rates.
There may be less publicly available information about foreign issuers. Foreign
issuers including foreign branches of U.S. banks, are subject to different
accounting and reporting requirements, which are generally less extensive than
the requirements for domestic issuers. Foreign stock markets generally have
substantially less volume than the U.S. exchanges and securities of foreign
issuers are generally less liquid and more volatile, relative to U.S. issuers.
For emerging markets, these risks can be more extreme. There is frequently less
governmental regulation of foreign exchanges, broker-dealers and issuers than
in the United States, and brokerage costs may be higher. In addition,
investments in foreign companies may be subject to the possibility of
nationalization or other changes in policy. Policy changes may allow foreign
governments to withhold dividends, expropriate (confiscate, or keep) investment
returns, or raise taxes to extremely high levels, among other things. Also,
should a foreign issuer default, it may be difficult to recover anything in a
bankruptcy proceeding.
Lending Fund Securities
The Fund may lend up to 33% of its total portfolio assets, or securities, to
brokers, dealers and other financial institutions. These loans must be callable
(the Fund may ask that the loan be repaid in full) at any time by the Fund. The
loans must be at all times fully secured by cash, cash equivalents or
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and marked to market (priced at market value) to the value
of loaned securities on a daily basis. As with any extensions of credit, there
may be risks of delay in recovery and in some cases even loss of rights in the
collateral should the borrower of the securities fail financially. However,
these loans of Fund securities will only be made to firms deemed by Josephthal
to be creditworthy.
Interest Rate Risk (Market Risk)
Interest rate risk, or market risk, is the risk that a change in interest rates
will negatively affect the value of a security. This risk applies primarily to
debt securities such as bonds, notes and asset-backed securities. Debt
securities are obligations of the issuer to make payments of principal and/or
interest on future dates.
Market risk is generally greater for investments in debt securities with longer
maturities. This risk may be increased for investments in mortgage-backed or
other types of asset-backed securities that are often prepaid. Even investments
in the highest quality debt securities are subject to interest rate risk.
Leverage Risk
Borrowing money to buy securities is using leverage. Leverage risk is the risk
that leverage, or debt, will enable the Fund to buy more of a security that
falls in value. In this case, the Fund would still need to repay the money it
borrowed. The Fund can create leverage, or borrow money, by using different
types of techniques including reverse repurchase agreements, dollar rolls, and
derivatives including inverse floating rate instruments.
Hedging and Other Strategic Transactions
The Fund may use a variety of investment strategies described below for hedging
purposes only, including hedging various market risks (such as interest rates,
currency exchange rates and broad or specific market movements), and managing
the effective maturity or duration of debt instruments held by the Fund.
Hedging is using forward contracts and options to hedge against fluctuations in
the values of securities. These transactions are generally used to protect
against possible changes in the market value of securities the Fund already
owns or plans to buy, to protect unrealized gains or to improve the Fund's
return in some way.
The Fund may purchase and sell (or write) exchange-listed and over-the-counter
put and call options on securities, index futures contracts, financial futures
contracts and fixed-income indices and other financial instruments, enter into
financial futures contracts, enter into interest rate transactions, and enter
into currency transactions. Such transactions may involve derivatives, which
are financial contracts whose value depends on, or is derived from, the change
in value of an underlying asset, reference rate or index. When the value of the
underlying security or index changes, the value of the derivative changes as
well. As a result, derivatives can lose all of their value very quickly.
Derivatives involve credit risk if the other party to the derivative should
fail to meet its obligations to the Fund. Additional risks associated with
derivatives include imperfect correlation (between the values of the derivative
and the underlying investment) and improper valuation. Interest rate
transactions may include swaps, caps, floors and collars, and currency
transactions may include currency forward contracts, currency futures
contracts, currency swaps and options on currencies or currency futures
contracts.
5
<PAGE>
Frequent Trading
The Fund may buy or sell investments extremely frequently, increasing brokerage
commissions and other expenses of the Fund. Frequent trading may also increase
the amount of capital gains realized by the Fund, including short-term capital
gains, which are generally taxable to shareholders at ordinary income tax
rates.
Temporary Defensive Strategies
Josephthal may at certain times decide that pursuing the Fund's investment
strategies is inconsistent with market conditions. Josephthal may then employ
defensive strategies designed mostly to limit losses. However, Josephthal may
choose not to use defensive strategies, even in volatile or unsettled market
conditions. Such defensive strategies may cause the Fund to miss opportunities
or to not achieve its goal.
Management of the North American Funds
Under the federal securities laws, Massachusetts law, and North American Funds'
Agreement and Declaration of Trust and By-Laws, the business and affairs of the
North American Funds (the "Trust") are managed under the direction of its
trustees (the "Trustees").
American General Asset Management Corp.("AGAM") is the investment adviser for
the Trust. AGAM was formed in 1996 to advise, acquire and distribute mutual
funds through broker-dealers, banks and other intermediaries. AGAM's address is
286 Congress Street, Boston, Massachusetts 02210. According to its Advisory
Agreement With the Trust (the "Advisory Agreement"), AGAM:
. Oversees the administration of all aspects of the business and affairs of
the Fund
. Selects, contracts with and compensates the subadvisor to manage the assets
of the Fund
. Makes recommendations to the Trustees regarding the hiring, termination and
replacement of the subadvisor
. Reimburses the Fund if the total of certain expenses allocated to the Fund
exceeds certain limitations
. Monitors the subadvisor for compliance with the investment objectives and
related policies of the Fund
. Reviews the performance of the subadvisor
. Periodically reports to the Trustees
Under an order granted to the North American Funds by the Securities and
Exchange Commission, AGAM is permitted to appoint a subadvisor, to create a
subadvisory agreement, and to terminate or amend a subadvisory agreement, in
each case without shareholder approval. This "Manager of Managers" structure
permits the Fund to change subadvisors or the fees paid to subadvisors without
the expense and delays associated with obtaining shareholder approval. AGAM has
ultimate responsibility under the Manager of Managers structure to oversee the
subadvisor, including making recommendations to the Trust regarding the hiring,
termination and replacement of the subadvisor.
Subadvisory Agreement
Josephthal & Co.
AGAM has retained Josephthal & Co., Inc. ("Josephthal"), 200 Park Avenue, 25th
Floor, New York, New York 10166, as the subadvisor to the Fund. Josephthal is a
registered investment adviser and a registered broker-dealer. Josephthal is a
research-driven, full service investment banking and brokerage firm which,
joined by its affiliated companies, has over 1,000 financial consultants in
over 80 domestic and international offices. Pursuant to a subadvisory agreement
between AGAM and Josephthal (the "Subadvisory Agreement"), Josephthal will
provide continuous investment advisory services to the Fund, including:
investment research, advice and management and periodic reporting to AGAM and
the Trust. For its services as subadvisor to the Fund, Josephthal receives a
fee from AGAM equal to .500% of the average daily net assets of the Fund.
Howard S. Schachter serves as the Fund's portfolio manager and is responsible
for the day-to-day investment decisions of the Fund. Mr. Schachter is a
Managing Director of Josephthal. He joined Josephthal in September 1998 and is
based in Josephthal's New York City headquarters. Mr. Schachter has thirty
years industry experience and has held a variety of positions. Prior to joining
Josephthal, Mr. Schachter spent six years with Needham & Co., where he managed
the Needham Growth Fund.
6
<PAGE>
The following table shows the management fees that the Fund will pay to AGAM
annually under the Advisory Agreement as a percentage of the Fund's average
daily net asset value. The subadvisory fee is paid by AGAM to Josephthal out of
the advisory fee.
Advisory and Subadvisory Fees
-----------------------------
<TABLE>
<CAPTION>
Advisory Fee Subadvisory Fee
(AGAM) (Josephthal)
<S> <C> <C>
First $50,000,000 .900% .500%
Between $50,000,000 and $200,000,000 .850% .450%
Between $200,000,000 and $500,000,000 .825% .425%
Excess over $500,000,000 .800% .400%
</TABLE>
7
<PAGE>
Section III:
Investing in the Fund
Classes of Shares
Three classes of shares (Class A, Class B and Class C) of the Fund are offered
by this Prospectus.
The initial investment minimum for all classes of shares is $1,000. For
retirement plans and other automatic investment programs, the initial purchase
minimum is $50. You must maintain a minimum account balance of $500, or $50 for
retirement plans and other automatic investment programs. Purchases and
redemptions will be made at the share price calculated by North American Funds
after the request is received in good order. Confirmations of all transactions
will be mailed to you promptly, and a copy will be sent to your broker of
record. North American Funds may refuse any request to purchase shares.
<TABLE>
<CAPTION>
Buying Fund Shares Redeeming Fund Shares
--------------------------------------------------------------------------------------
<S> <C> <C>
By Mail Mail a check and account Send a written request to:
application to: North American Funds
North American Funds P.O. Box 8505
P.O. Box 8505 Boston, MA 02266-8508
Boston, MA 02266-8508
To add to an existing
account,
mail a check with your
account number to:
North American Funds
P.O. Box 8505
Boston, MA 02266-8508
Overnight Mailing Address:
North American Funds
c/o Boston Financial
Attn: Leadership Services
66 Brooks Drive
Braintree, MA 02184
--------------------------------------------------------------------------------------
By Wire Transfer For wire instructions, Yes, with a minimum of
contact Customer Service at $1,000. For wire
1-800-872-8037 instructions, contact
Customer Service at 1-800-
872-8037
--------------------------------------------------------------------------------------
By Phone No Yes, simply call 1-800-872-
8037 by 4:00 p.m. to receive
that day's closing price
--------------------------------------------------------------------------------------
Through Broker-Dealers Yes, if a dealer agreement is Yes, if a dealer agreement is
in place in place
--------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales Charges Purchases of less than Shares are sold Shares are sold
$1 million are sold without a front end without a front end
with a front end sales sales charge. For sales charge. For
charge (see table shares redeemed within shares redeemed within
below). six years there is a one year there is a 1%
sales charge at sales charge at
Purchases over $1 redemption (see table redemption.
million are sold below).
without a front end Available for
sales charge. For Available for purchases under
shares redeemed within purchases of $250,000 $1 million.
one year there is a 1% or less.
back end sales charge
at redemption.
--------------------------------------------------------------------------------------------
Programs That Rights of For B and C Shares,
Reduce Sales Accumulation--you will the back end sales
Charges pay the sales charge charge is equal to the
applicable to your lesser of the net
total account balance asset value at
in all classes of redemption, or the
shares. original purchase
price.
Statement of
intention--agree to
invest a certain
amount over 13 months
and you will pay the
sales charge based on
your goal.
--------------------------------------------------------------------------------------------
For qualified group retirement plans, please see the Statement of
Additional information (SAI) for a more detailed discussion.
</TABLE>
Sales Charge Tables
Class A Shares Sales Charge Table
---------------------------------
<TABLE>
<CAPTION>
Amount of Purchase Sales Charge Sales Charge Concession to
Payment as a as a Broker Dealer as
Percentage of Percentage of a Percentage of
the Offering Price the Net Amount Offering Price
Invested
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
-----------------------------------------------------------------------------
$50,000 but less than
$100,000 4.75% 4.99% 4.00%
-----------------------------------------------------------------------------
$100,000 but less than
$250,000 4.00% 4.17% 3.25%
-----------------------------------------------------------------------------
$250,000 but less than
$500,000 3.00% 3.09% 2.50%
-----------------------------------------------------------------------------
$500,000 but less than $1
million 2.25% 2.30% 1.75%
-----------------------------------------------------------------------------
$1 million or more None* None* See below**
-----------------------------------------------------------------------------
</TABLE>
Class B Shares Sales Charge Table***
---------------------------------
<TABLE>
<CAPTION>
Year(s) Since Purchase Deferred Sales Charge
as Percentage of
Amount Redeemed
------------------------------------------------------------
<S> <C>
Up to 2 years 5%
------------------------------------------------------------
2 years or more but less than 3 years 4%
------------------------------------------------------------
3 years or more but less than 4 years 3%
------------------------------------------------------------
4 years or more but less than 5 years 2%
------------------------------------------------------------
5 years or more but less than 6 years 1%
------------------------------------------------------------
6 or more years 0%
------------------------------------------------------------
</TABLE>
9
<PAGE>
Class C Shares***
Class C shares are offered for sale at net asset value and are offered for
purchases of less than $1 million. Class C shares are sold without a front end
sales charge. Class C shares are subject to a deferred sales charge of 1% of
the dollar amount subject thereto during the first year after purchase.
Class C shares will be redeemed or exchanged in order of the date purchased,
with the shares purchased earlier being redeemed or exchanged first, unless a
shareholder specifically requests that specific shares be redeemed or
exchanged.
Redemption in Kind
The North American Funds reserve the right to redeem proceeds in whole or in
part by a distribution in kind of marketable securities held by the Fund.
Payment Following Redemption
The Fund will normally send the proceeds from a redemption (less any applicable
deferred sales charge) on the next business day, but may delay payment for up
to seven days.
Payment may be delayed if the shares to be redeemed were purchased by a check
that has not cleared. The Fund may suspend the right of redemption and may
postpone payment for more than seven days when the New York Stock Exchange is
closed for other than weekends or holidays, or if permitted by the rules of, or
action by, the SEC.
----------------------------
* A CDSC (back end sales charge) may apply.
** For purchases of Class A shares of $1 million or more the Distributor will
pay a commission to dealers as follows: 1.00% on sales up to $5 million, plus
0.50% of the amount in excess of $5 million; provided, however, that the
Distributor may pay a commission on sales in excess of $5 million of up to
1.00% to certain dealers which, at the Distributor's invitation, enter into an
agreement with the Distributor in which the dealer agrees to return any
commission paid to it on the sale (or a pro rata portion thereof) if the
shareholder redeems his shares within a period of time after purchase as
specified by the Distributor. Purchases of $1 million or more for each
shareholder account will be aggregated over a 12-month period (commencing from
the date of the first such purchase) for purposes of determining the level of
commission to be paid during that period with respect to such account.
*** Any shares in the redeeming shareholder's account that can be redeemed
without charge will be redeemed prior to those subject to a charge.
10
<PAGE>
Pricing of Fund Shares; Dividends and Distributions
The public offering price of the Class A shares of the Fund is the net asset
value per share (next determined following receipt of an order) plus a front
end sales charge, if applicable. The share price for Class B shares and Class C
shares is the net asset value per share (next determined following receipt of
an order).
The net asset value of the shares of each class of the Fund is calculated
separately and, except as described below, is determined once daily as of the
close of regularly scheduled trading on the New York Stock Exchange (generally
4:00 p.m., Eastern time). Net asset value per share of each class of the Fund
is calculated by dividing the value of the portion of the Fund's securities and
other assets attributable to that class, less the liabilities attributable to
that class, by the number of shares of that class outstanding. No determination
is required on days when the New York Stock Exchange is closed (for example,
national holidays). Generally, trading in non-U.S. securities, as well as U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of regularly scheduled trading on
the New York Stock Exchange. The values of such securities used in computing
the net asset value of the shares of a class of the Fund are generally
determined as of such times. Occasionally, events which affect the values of
such securities may occur between the times at which they are generally
determined and the close of regularly scheduled trading on the Exchange and
would therefore not be reflected in the computation of a class's net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair value as
determined in good faith by Josephthal under procedures established and
regularly reviewed by the Trustees.
Shares of the Fund are available at the net asset value to investors purchasing
shares of the Fund with redemption proceeds from other mutual fund complexes on
which the investor has paid a front end sales charge or was subject to a
deferred sales charge, whether or not paid, if such redemption occurred no more
than 60 days prior to such purchase. The Distributor will require satisfactory
evidence of your qualification of this waiver. Please call for more
information. The redemption of the shares from the other mutual fund is, for
federal income tax purposes, a sale upon which a gain or loss may be realized.
Short-term debt instruments with a remaining maturity of 60 days or less held
by the Fund are valued on an amortized cost basis.
Unless you request cash payment, all dividends and distributions will be
reinvested. The Fund declares and pays capital gains and income dividends
annually.
11
<PAGE>
Taxes
It is expected that the Fund will qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). If it so
qualifies, the Fund will not be subject to United States federal income taxes
on its net investment income and net capital gain, if any, that it distributes
to its shareholders in each taxable year, provided that it distributed to its
shareholders at least 90% of its net investment income for such taxable year.
If in any year the Fund fails to qualify as a regulated investment company, it
would incur regular corporate federal income tax on its taxable income for that
year and be subject to certain additional distribution requirements upon re-
qualification. The Fund will be subject to a 4% non-deductible excise tax on
its taxable income to the extent it does not meet certain distribution
requirements by the end of each calendar year. The Fund intends to make
sufficient distributions to avoid application of the corporate income and
excise taxes.
Certain investments, including investments in assets "marked to the market" for
federal income tax purposes, debt obligations issued or purchased at a discount
and potentially so-called "index securities", may create taxable income in
excess of the cash they generate. In such cases, a Fund may be required to sell
assets (including when it is not advantageous to do so) to generate the cash
necessary to distribute as dividends to its shareholders all of its income and
gains and thereby to eliminate any tax liability at the Fund level. In addition,
transactions in options, futures contracts, and straddles may accelerate income,
defer losses, cause adjustments in the holding periods of a Fund's securities
and convert long-term capital gains into short-term capital gains and short-term
capital losses into long-term capital losses. These transactions may affect the
amount, timing and character of distributions to shareholders.
Because the Fund may invest in foreign securities or currencies, it may be
required to pay withholding or other taxes to foreign governments on dividends
and interest. The investment yield of the Fund's investment in foreign
securities or currencies will be reduced by these foreign taxes. Shareholders
will bear the cost of any foreign taxes, but may not be able to claim a foreign
tax credit or deduction for these foreign taxes. If the Fund is eligible for
and makes an election to allow the shareholders of the Fund to claim a foreign
tax credit or deduction for these taxes for any taxable year, the shareholders
will be notified. The ability of the shareholders to utilize such a foreign tax
credit is subject to a holding period requirement. In addition, if the Fund
invests in securities of passive foreign investment companies, it may be
subject to U.S. federal income taxes (and interest on such taxes) as a result
of such investments. The investment yield of such investments will be reduced
by these taxes and interest. Shareholders will bear the cost of these taxes and
interest, but will not be able to claim a deduction for these amounts.
The Fund's distributions derived from interest, dividends and certain other
income, including in general short-term capital gains, will result in taxable
ordinary income to the shareholders of the Fund, whether received in cash or
reinvested in shares. Properly designated Fund distributions derived from net
long-term capital gains (i.e., net gains derived from the sale of securities
held for more than 12 months) will result in taxable long-term capital gain
income to the shareholders of the Fund, regardless of whether the distributions
are received in cash or reinvested in shares and regardless of how long a
shareholder has held shares in the Fund. Distributions are taxed as described in
this paragraph even if such distributions economically represent a return of a
particular shareholder's investment. Distributions that represent a return of a
particular shareholder's investment are likely to occur in respect of shares
purchased at a time when a Fund's net asset value reflects gains that are either
unrealized, or realized but not distributed.
The redemption, sale or exchange of Fund shares (including the exchange of
shares of one North American Fund for shares of another) is a taxable event and
may result in a gain or loss. Gain or loss, if any, recognized on the sale or
other disposition of shares of the Fund will be taxed as capital gain or loss
if the shares are capital assets in the shareholder's hands. Generally, a
shareholder's gain or loss will be a long-term gain or loss if the shares have
been held for more than one year. Pursuant to the Taxpayer Relief Act of 1997,
long-term capital gains generally are subject to a maximum tax rate of 20%.
If a shareholder sells or otherwise disposes of a share of the Fund before
holding it for more than six months, any loss on the sale or other disposition
of such share shall be treated as a long-term capital loss to the extent of any
capital gain dividends received by the shareholder with respect to such share.
A loss realized on a sale or exchange of shares may be disallowed if other
shares are acquired within a 61-day period beginning 30 days before and
12
<PAGE>
ending 30 days after the date on which the shares are disposed.
Generally, unless a shareholder of the Fund includes his or her taxpayer
identification number (social security number for individuals) in the
Shareholder Application and certifies that he or she is not subject to backup
withholding, the Fund is required to withhold and remit to the U.S. Treasury
31% from dividends other than exempt-interest dividends and other reportable
payments to the shareholder.
Depending on the residence of the shareholder for tax purposes, distributions
may also be subject to state and local taxes or withholding taxes. Most states
provide that a regulated investment company may pass through (without
restriction) to its shareholders state and local income tax exemptions
available to direct owners of certain types of U.S. government securities.
Thus, for residents of these states, distributions derived from the Fund's
investment in certain types of U.S. government securities should be free from
state and local income taxes to the extent that the interest income from such
investments would have been exempt from state and local income taxes if such
securities had been held directly by the respective shareholders themselves.
Descriptions of tax consequences set forth in this Prospectus and in the
Statement of Additional Information are intended to be a general guide.
Investors should consult their tax advisers with respect to the specific tax
consequences of an investment in the Fund, including the effect and
applicability of state, local, foreign, and other tax laws and the possible
effects of changes in federal or other tax laws. This discussion is not
intended as a substitute for careful tax planning.
13
<PAGE>
Rule 12b-1 Fees
The Trust has adopted a distribution plan under Rule 12b-1 of the Investment
Company act of 1940, as amended, that allows the North American Funds to pay
distribution fees for the sale and distribution of fund shares. Portions of the
fees are used to provide payments for services provided to shareholders
("service fees"), as indicated below.
Class A shares of the Fund are subject to Rule a 12b-1 fee of up to .35% of
average daily net assets, five-sevenths of which (.25%) is a "service fee."
Class B shares of the Fund are subject to a Rule 12b-1 fee of up to 1.00% of
average annual net assets, one-fourth (.25%) of which is a "service fee."
Class C shares of the Fund are subject to a Rule 12b-1 fee of up to 1.00% of
average annual net assets, one-fourth (.25%) of which is a "service fee."
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time they will increase the cost of your investment and may cost you more than
paying other types of sales charges. The higher fees for Class B and Class C
shares may therefore cost you more than paying the maximum permitted front-end
sales charge on Class A Shares.
14
<PAGE>
Account Services
To use any of these programs, simply fill out the appropriate section of your
account application, or request the appropriate form.
Automatic Dividend Diversification
With this program, you can have all dividends and other distributions from one
North American Fund automatically invested in the same class of shares of
another North American Fund.
Automatic Investment Plan
Shareholders can set up an Automatic Investment Plan. Once each month the
shareholder's account will be debited the amount (at least $50) specified by
the shareholder.
Exchange Privilege
Shareholders may make free unlimited exchanges by mail or telephone within
classes of shares of all other North American Funds without any sales charge.
Other North American Funds are: International Small Cap Fund, International
Equity Fund, Global Equity Fund, Small Cap Growth Fund, Mid Cap Growth Fund,
Large Cap Growth Fund, Growth & Income Fund, Science & Technology Fund,
Balanced Fund, Strategic Income Fund, Core Bond Fund, U.S. Government
Securities Fund, Money Market Fund, Mid Cap Value Fund, Municipal Bond Fund,
Municipal Money Market Fund, Stock Index Fund, Small Cap Index Fund, Socially
Responsible Fund, High Yield Bond Fund, Aggressive Growth LifeStyle Fund,
Moderate Growth LifeStyle Fund, Conservative Growth LifeStyle Fund. Shares of
one class may not be exchanged for shares of any other class of any North
American Fund. Be aware that exchanges are regarded as sales for federal and
state income tax purposes and could result in a gain or loss, depending on the
original cost of shares exchanged. Exchanges usually occur on the same day they
are requested. The terms of the exchange privilege may change and the privilege
may be revoked at any time without notice.
The Fund will not be responsible for any losses resulting from unauthorized
telephone transactions if it follows reasonable procedures designed to verify
the identity of the caller. The Fund will request personal or other information
from the caller, and will record calls. By establishing an account with the
Fund, you consent to all recording of telephone calls.
You may make exchanges over the telephone by calling 1-800-872-8037.
Reinstatement Privilege
If you redeem Class A shares (under $1 million) and reinvest within 90 days,
you will not have to pay a sales charge. If you redeem Class A shares over $1
million, or Class B or C shares and pay a deferred sales charge and then
reinvest within 90 days, your account will be credited the amount of the
deferred sales charge.
Systematic Withdrawal Plan
If you have an account balance of at least $10,000, you can set up a plan to
have redemptions paid to you, or someone you designate, on a monthly,
quarterly, semi-annual or annual basis. You can withdraw up to 12% of the
account value annually, if a monthly plan, up to 1% per month, without a
deferred sales charge. If you request this service after completing our
application and payments are to be made to someone other than yourself, you
will have to provide a signature guarantee. Redemption checks are generally
mailed within two days after redemption. The availability of this service may
end, and a fee of up to $5 per withdrawal may be charged with 30 days written
notice to you.
Transfer of Shares
You may transfer Fund shares to family members and others at any time without a
sales charge. Consult your tax adviser concerning such transfers.
15
<PAGE>
North American Funds
286 Congress Street
Boston, Massachusetts 02210
(800) 872-8037
For Additional Information
More information about the Fund, including the SAI, is available to you free of
charge. To request additional information:
By Telephone
Call 1-800-872-8037
By Mail from the Funds (There is no fee)
Write to:
North American Funds
286 Congress Street
Boston, MA 02210
From the SEC
Information about the Fund (including the SAI) also is available from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
<TABLE>
<S> <C>
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for
location and hours
On the Internet . EDGAR database at www.sec.gov
. By email request at
[email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
</TABLE>
Statement of Additional Information (SAI)
The SAI provides additional information about the North American Funds.
Investment Company Act File No. 811-5797
<PAGE>
NORTH AMERICAN FUNDS:
JOSEPHTHAL STRATEGIC GROWTH FUND
Supplement Dated September 1, 2000
to the
Statement of Additional Information
Dated July 7, 2000
Disclosure relating to a new series of the Trust:
Josephthal Strategic Growth Fund
--------------------------------------------------------------------------------
Note: This document supplements the North American Funds (the "Trust")
Statement of Additional Information dated July 7, 2000 (the "Statement of
Additional Information") filed electronically with the Securities and Exchange
Commission via EDGAR on July 7, 2000 - Registration Nos. 33-27958, 811-5797,
Accession Number: 0000950109-00-002746 - and incorporated herein by reference.
--------------------------------------------------------------------------------
1. Date of the Statement of Additional Information.
The date of the Statement of Additional Information is hereby amended to
September 1, 2000.
2. A New Series of the Trust.
The Trust intends to offer Class A, Class B and Class C shares of a new
series, the Josephthal Strategic Growth Fund (the "Fund").
3. Investment Policies and Risks.
The disclosure under "Investment and Risk Factors Applicable to Multiple
Funds" in the Statement of Additional Information applies to the Fund. With
respect to the disclosure under that heading related to illiquid securities, the
Fund is precluded from investing in excess of 15% of its net assets in
securities that are not readily marketable. The disclosure under "Hedging and
Other Strategic Transactions" applies to the Fund.
4. Investment Restrictions.
As a matter of fundamental policy, the Fund may not:
(1) With respect to 75% of its total assets, invest more than 5% of
its total assets at the time of purchase in the securities of any single
issuer (other than obligations issued
<PAGE>
or guaranteed as to principal and interest by the U.S. Government or any of
its agencies or instrumentalities); except that the Fund may purchase
securities of other investment companies without regard to such limitation
to the extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act.
(2) With respect to 75% of its total assets, purchase more than 10%
of any class of the outstanding voting securities of any issuer; except
that the Fund may purchase securities of other investment companies without
regard to such limitation to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated by
the SEC under the 1940 Act, as amended from time to time, or (iii) an
exemption or other relief from the provisions of the 1940 Act.
(3) Invest more than 25% of its total assets in companies within a
single industry, provided, however, that this limitation excludes shares of
other open-end investment companies owned by the Fund but includes the
Fund's pro rata portion of the securities and other assets owned by any
such company. There are no limitations on investments made in instruments
issued or guaranteed by the U.S. Government and its agencies.
(4) Make loans except by purchasing debt securities in accordance
with its investment objective and policies or entering into repurchase
agreements, or by lending its portfolio securities to banks, brokers,
dealers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the rules and regulations or
interpretations of the SEC.
(5) Borrow, except (i) from banks; (ii) to enter into reverse
repurchase agreements or to employ similar investment techniques, and
pledge its assets in connection therewith; and (iii) as a temporary measure
for extraordinary or emergency purposes and then, in no event, in excess of
33 1/3% of the Fund's total assets valued at the lower of market or cost.
If borrowings exceed 5% of the Fund's total assets, the Fund will not
purchase additional securities.
(6) Invest in physical commodities or contracts on physical
commodities.
(7) Purchase or sell real estate, although it may purchase and sell
securities of companies which deal in real estate and may purchase and sell
securities which are secured by interests in real estate.
(8) Underwrite the securities of other issuers.
-2-
<PAGE>
(9) Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (i) making
any permitted borrowings, mortgages or pledges, or (ii) entering into
repurchase transactions.
As a matter of non-fundamental policy, the Fund may not:
(1) Invest more than an aggregate of 15% of the Fund's net assets in
illiquid or restricted securities.
(2) Invest for the purpose of exercising control over management of
any company; except that the Fund may purchase securities of other
investment companies without regard to such limitation to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules
and regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
(3) Invest in securities issued by other investment companies except
as part of a merger, reorganization or other acquisition and except to the
extent permitted by (i) the 1940 Act, as amended from time to time, (ii)
the rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.
5. Temporary Defensive Positions.
The Fund may invest temporarily up to 100% of its assets in cash or cash
equivalents, investment grade debt securities or repurchase agreements for
defensive purposes. Consistent with the Fund's investment objective and
policies, the subadvisor of the Fund, Josephthal & Co., Inc. ("Josephthal"), may
make changes in the portfolio consistent with the Fund's policies whenever it
believes doing so is in the best interest of the Fund.
6. Management of the Trust.
The disclosure under the headings "Management of the Fund" and "Investment
Management Arrangements" in the Statement of Additional Information applies to
the Fund and is incorporated herein by reference.
American General Asset Management Corp. ("AGAM") is the investment adviser
for the Fund. AGAM is owned by American General Corporation, which is a part of
American General Financial Group, a financial services company with
approximately $115 billion in assets and over $6 billion in total stockholders'
equity.
AGAM receives monthly Advisory Fees from the Fund at the maximum annual
rate of .900%, based on the average daily net assets of the Fund. Pursuant to a
Subadvisory
-3-
<PAGE>
Agreement between AGAM and Josephthal, AGAM pays Josephthal a monthly
subadvisory fee at the maximum annual rate of .500% of the average daily net
assets of the Fund.
The Sections "Distribution Plans," "Portfolio Brokerage," "Capital Stock,"
"Purchase, Redemption and Pricing," "Performance Information" and "Taxes" apply
to the Fund and are incorporated herein by reference. The Section "Multiple
Pricing System" applies to the Fund, with the exception that purchases of Class
A shares of less than $1 million are offered for sale at net asset value per
share plus a front end sales charge of up to 5.75% payable at the time of
purchase.
-4-
