<PAGE>
Prospectus
2000
[LOGO OF NORTH AMERICAN FUNDS]
Class A Shares
Class B Shares
Class C Shares
International Small Cap Fund Equity-Income Fund
International Equity Fund Balanced Fund
Global Equity Fund Strategic Income Fund
Small Cap Growth Fund Core Bond Fund
Mid Cap Growth Fund Municipal Bond Fund
Large Cap Growth Fund U.S. Government Securities Fund
Tax-Sensitive Equity Fund Money Market Fund
Growth & Income Fund
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.
March 27, 2000
<PAGE>
[LOGO]
Table of Contents
Organization of Information
This Prospectus includes information about fifteen different Funds.
.Section I of the Prospectus includes summaries of each Fund.
.Section II includes additional information about the Funds' investment
strategies, additional risk information and information about the Funds'
management.
.Section III of the Prospectus includes information about how to invest
and manage your North American Funds account.
<TABLE>
<S> <C>
Section I: Summaries of the Funds............. Page 1
Summary of each Fund
.Investment Objective
.Principal Investment Strategies
.Main Investing Risks
.Investment Performance
.Descriptions of Main Investment Risks
Section II: Other Information about each
Fund.......................................... Page 19
.Fees and Expenses
.More Information About Investment
Strategies and Risks
.Other Risks of Investing
.Fund Management
Section III: Investing in the Funds........... Page 39
</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
If you'd like information additional to that included in this Prospectus, the
back cover lists a number of places to call or to visit for
additional materials.
<PAGE>
Section I:
Fund Summaries
North American Funds (the "Trust") is a group of mutual funds that includes
fifteen separate investment portfolios, or Funds. Each Fund also has a
specific, unique investment objective. Each Fund has a subadvisor,
a firm responsible for making investment decisions for the Fund.
The summaries on the next 15 pages describe each Fund's investment objective
and principal investment strategies, list the main risks of investing in the
Fund, and show the Fund's past investment performance. Explanations of the main
risks of investing in each Fund starts on page 17.
Below the Funds' descriptions are a chart and a table. The bar chart shows how
the investment returns of one class of each Fund's shares have varied in the
past ten years, or in the years since the Fund began if it is less than ten
years old. The bar chart does not reflect sales charges; if it did, performance
would be less than shown.
The table (the Average Annual Total Return Table) following each bar chart
shows how that Fund's average annual returns for each Class of shares for the
last one, five and ten years (or since the Fund began, for newer Funds) com-
pared to returns of a broad-based securities market index. The table reflects
sales charges, including the maximum initial sales charge for Class A shares,
and the maximum applicable Deferred Sales Charge for Class B shares and Class C
shares.
Each Fund's bar chart and Average Annual Total Return Table provides an indica-
tion of the historical risk/return of an investment in the Fund.
It is important to remember that past performance does not predict future per-
formance, and that as with any investment, it is possible for investors to lose
money by investing in the Funds. An investment in any of the Funds is not a
deposit in a bank and is not insured by the Federal Deposit Insurance Corpora-
tion or any other government agency.
- ------
1
<PAGE>
International Small Cap Fund
Investment Goal and Strategies
The investment objective of the International Small Cap Fund is to seek capital
appreciation. To achieve this objective, Founders Asset Management, LLC
("Founders"), the Fund's subadvisor, invests primarily in equity securities
issued by foreign companies with market capitalizations, or annual revenues, of
$1 billion or less.
These companies are located in both established and emerging economies
throughout the world. Founders selects securities based on its evaluation of
their potential to offer capital appreciation opportunities. The Fund may
invest in derivatives.
Main Investing Risks
.Currency Risk
.Derivatives Risk
.Equity Risk, including the risks associated with investing in smaller compa-
nies
.Foreign Investment Risk
.Liquidity Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 2/20/96)
- ----------------------------------------------
<S> <C> <C>
Class A 83.27% 23.09%
- ----------------------------------------------
Class B 87.74% 23.67%
- ----------------------------------------------
Class C 92.00% 24.16%
- ----------------------------------------------
MSCI WORLD 27.93% 13.18%
ex-U.S. Index
</TABLE>
- --------------------------------------------------------------------------------
------
2
<PAGE>
International Equity Fund
Investment Goal and Strategies
The investment objective of the International Equity Fund is to seek long-term
capital appreciation. Morgan Stanley Asset Management ("MSAM"), the Fund's
subadvisor, pursues this objective by investing primarily in accordance with
country and sector weightings determined by MSAM in equity securities of non-
U.S. issuers which, in the aggregate, replicate broad market indices.
MSAM seeks to maintain a diversified portfolio of international equity securi-
ties based on a top-down approach that emphasizes country and sector selection
and weighting rather than individual stock selection. MSAM capitalizes on the
significance of country and sector selection in international equity portfolio
returns by over- and underweighting countries based on three factors: (i) valu-
ation, (ii) fundamental change, and (iii) market momentum/technicals.
The Fund may use various instruments that derive their values from those of
specified securities, indices, currencies or other points of reference for both
hedging and non-hedging purposes. Derivatives may include futures, options,
forward contracts, swaps, and structured notes. These derivatives, including
those used to manage risk, are themselves subject to risks of the different
markets in which they trade and, therefore, may not serve their intended pur-
poses.
Main Investing Risks
.Currency Risk
.Derivatives Risk
.Equity Risk
.Foreign Investment Risk
.Liquidity Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 1/9/95)
- ------------------------------------------------------
<S> <C> <C>
Class A 20.91% 9.55%
- ------------------------------------------------------
Class B 22.37% 9.95%
- ------------------------------------------------------
Class C 26.37% 10.21%
- ------------------------------------------------------
MSCI All Country World 30.91% 12.38%
EX-US Index
- ------------------------------------------------------
MSCI EAFE Index 26.96% 12.83%
</TABLE>
- --------------------------------------------------------------------------------
- ------
3
<PAGE>
Global Equity Fund
Investment Goal and Strategies
The investment objective of the Global Equity Fund is long-term capital
appreciation. To achieve this objective, Founders Asset Management, LLC
("Founders"), the Fund's subadvisor, invests in a globally diversified
portfolio of equity securities.
The Fund normally invests at least 65% of total assets in equity securities of
growth companies in a variety of markets throughout the world. The Fund may
purchase securities in any foreign country, as well as the United States, and
emphasizes common stocks of both emerging and established growth companies that
generally have proven performance records and strong market positions. The
Fund's portfolio will always invest at least 65% of its total assets in three
or more countries. The Fund will not invest more than 50% of its total assets
in the securities of any one foreign country. The Fund may invest in deriva-
tives.
Main Investing Risks
.Currency Risk
.Derivatives Risk
.Equity Risk, particularly the risk associated with investments in growth
stocks
.Foreign Investment Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A & B) (Class C)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -3.00% 9.19% 7.58% N/A
- -----------------------------------------------------------------------
Class B -2.73% 9.58% 7.98% N/A
- -----------------------------------------------------------------------
Class C 1.33% 9.85% N/A 9.37%
- -----------------------------------------------------------------------
MSCI WORLD
Index 24.93% 19.76% 17.86% 14.88%
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A and Class B - 4/1/94; Class C - 11/1/90
------
4
<PAGE>
Small Cap Growth Fund (formerly Emerging Growth Fund)
Investment Goal and Strategies
The investment objective of the Emerging Growth Fund is maximum capital appre-
ciation. Credit Suisse Asset Management, LLC ("CSAM"), the Fund's subadvisor,
pursues this objective by investing primarily in equity securities of U.S. com-
panies. The focus of the Fund is emerging growth companies, which often are
small or medium-size companies with growth characteristics such as positive
earnings and potential for accelerated growth.
The Fund may also invest in high-quality bonds, and, to a certain extent, in
foreign securities. The Fund may invest in derivatives.
The Fund is not "diversified," which means that it may invest in a relatively
small number of issuers of securities, and its value may be affected very
significantly by the change in value of a single security.
Main Investing Risks
.Concentration Risk
.Credit Risk
.Currency Risk
.Derivatives Risk
.Equity Risk, particularly the risks associated with investing in smaller com-
panies
.Interest Rate Risk
.Liquidity Risk
.Foreign Investment Risk
.Management Risk
The bar chart and table
provide an indication
of risk by showing the
variability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 1/6/98)
- ---------------------------------------------------
<S> <C> <C>
Class A 63.18% 28.58%
- ---------------------------------------------------
Class B 65.41% 29.15%
- ---------------------------------------------------
Class C 69.44% 31.17%
- ---------------------------------------------------
Russell 2000 Growth 43.09% 20.35%
</TABLE>
- --------------------------------------------------------------------------------
- ------
5
<PAGE>
Mid Cap Growth Fund (formerly Small/Mid Cap Fund)
Investment Goal and Strategies
The investment objective of the Mid Cap Growth Fund is to seek long term capi-
tal appreciation. INVESCO Funds Group, Inc. ("INVESCO"), the Fund's subadvisor,
invests primarily in common stocks of mid-sized companies--those with market
capitalizations ranging from approximately $2 billion to $15 billion at the
time of purchase--but also has the flexibility to invest in other types of
securities including preferred stocks, convertible securities and bonds. The
core of the Fund's portfolio will be invested in securities of established com-
panies that are leaders in attractive growth markets with a history of strong
returns. The remainder of the portfolio will be invested in securities of com-
panies that show accelerating growth, driven by product cycles, favorable
industry or sector conditions and other factors that the subadviser believes
will lead to rapid sales or earnings growth. The Fund's strategy relies on many
short-term factors including current information about a company, investor
interest, price movements of a company's securities and general market and mon-
etary conditions. Consequently, the Fund's investments will usually be bought
and sold frequently. The Fund may invest in derivatives.
Main Investing Risks
.Credit Risk
.Currency Risk
.Derivatives Risk
.Equity Risk, including the risks associated with investing in smaller compa-
nies
.Foreign Investment Risk
.Interest Rate Risk
.Liquidity Risk
.Management Risk
The bar chart and table
provide an indication
of risk by showing the
variability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 3/4/96)
- --------------------------------------------------
<S> <C> <C>
Class A 24.60% 19.33%
- --------------------------------------------------
Class B 26.29% 19.83%
- --------------------------------------------------
Class C 30.29% 20.35%
- --------------------------------------------------
S&P MidCap 14.72% 20.64%
400 Index
- --------------------------------------------------
Russell 2000 Index 21.26% 13.70%
</TABLE>
- --------------------------------------------------------------------------------
------
6
<PAGE>
Large Cap Growth Fund (formerly Growth Equity Fund)
Investment Goal and Strategies
The investment objective of the Large Cap Growth Fund is to seek long-term cap-
ital growth. To achieve this goal, Founders Asset Management LLC ("Founders"),
the Fund's subadvisor, invests at least 65% of the Fund's total assets in the
common stocks of well-established, high-quality growth companies whose earnings
are expected by Founders to increase faster than the market average.
The Fund may invest in other types of equity securities that offer opportuni-
ties for capital appreciation. The Fund may also invest in high-quality bonds.
The Fund may invest up to 100% of its total assets in American Depositary
Receipts (ADRs) and up to 30% of its total assets in foreign securities (other
than ADRs). The Fund may not invest more than 25% of its total assets in any
one foreign country. The Fund may invest in derivatives.
Main Investing Risks
.Credit Risk
.Currency Risk
.Derivatives Risk
.Equity Risk, including the particular risks associated with growth stocks
.Foreign Investment Risk
.Interest Rate Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 3/4/96)
- ---------------------------------------
<S> <C> <C>
Class A 30.42% 24.49%
- ---------------------------------------
Class B 32.60% 25.24%
- ---------------------------------------
Class C 36.58% 25.64%
- ---------------------------------------
S&P 500 21.04% 26.26%
Index
</TABLE>
- --------------------------------------------------------------------------------
- ------
7
<PAGE>
Tax-Sensitive Equity Fund
Investment Goal and Strategies
The investment objective of the Tax-Sensitive Equity Fund is to maximize after-
tax total return, with an emphasis on long-term growth of capital, primarily
through investment in equity securities of companies that appear to be under-
valued. Wellington Management Company, LLP ("Wellington"), the Fund's
subadvisor, uses tax-sensitive strategies designed to reduce the impact of fed-
eral income tax on the after-tax returns actually achieved by the Fund's share-
holders.
The Fund focuses on medium to large capitalization companies with above-average
capital growth potential. Wellington emphasizes individual stock selection
rather than attempting to time which industries or sectors may perform best.
Wellington selects stocks for the Fund's portfolio by:
.Using a mathematical model to identify companies that have strong and consis-
tent historic earnings, are valued attractively by the market, and have
improving growth prospects.
.Using fundamental research and qualitative analysis to evaluate the stocks
identified by the mathematical model. Wellington looks for companies with
sustainable profit growth, proven management teams, attractive businesses, and
strong financial characteristics.
To reduce the impact of federal and state income taxes on the Fund's after-tax
returns, the Fund:
.Minimizes sales of securities that result in capital gains. If this cannot be
avoided, the Fund will sell the securities with the smallest capital gains,
and will sell securities with long-term gains first.
.Sells securities to create capital losses, which can offset realized capital
gains.
.Favors low yield stocks and limits income-producing investments.
The Fund may invest in derivatives.
Main Investing Risks
.Derivatives Risk
.Equity Risk, including particular risks associated with value stocks
.Foreign Investment Risk
.Management Risk
The bar chart and table
provide an indication
of risk by showing the
variability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund
(since 1/6/98)
- ---------------------------------------
<S> <C> <C>
Class A -6.49% -2.16%
- ---------------------------------------
Class B -6.59% -2.55%
- ---------------------------------------
Class C -2.65% 0.00%
- ---------------------------------------
S&P 500 21.04% 24.75%
Index
</TABLE>
- --------------------------------------------------------------------------------
------
8
<PAGE>
Growth & Income Fund
Investment Goal and Strategies
The investment objective of the Growth and Income Fund is to provide long-term
growth of capital and income consistent with prudent investment risk.
Wellington Management Company, LLP ("Wellington"), the Fund's subadvisor,
pursues this objective by investing mostly in a diversified portfolio of common
stocks of U.S. issuers that Wellington believes are of high quality. The Fund
will typically invest in dividend-paying stocks of larger companies. The Fund
may invest up to 20% of its total assets in foreign securities.
To select stocks for the Fund, Wellington assesses a company and its business
environment, management, balance sheet, income statement, anticipated earnings
and dividends, and other
related measures of fundamental value. Wellington Management will also monitor
and evaluate the economic and political climate and the principal securities
markets of the country in which each company is located. The Fund may invest in
derivatives.
Main Investing Risks
.Derivatives Risk
.Equity Risk, including particular risks associated with value stocks
.Foreign Investment Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A & B) (Class C)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 10.78% 23.47% 20.95% N/A
- --------------------------------------------------------------------
Class B 11.73% 24.05% 21.49% N/A
- --------------------------------------------------------------------
Class C 15.74% 24.18% N/A 17.17%
- --------------------------------------------------------------------
S&P 500 21.04% 28.54% 25.52% 19.80%
Index
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A and Class B - 4/1/94; Class C - 5/1/91
- ------
9
<PAGE>
Equity-Income Fund
Investment Goal and Strategies
The investment objective of the Equity-Income Fund is to provide substantial
dividend income and also long term capital appreciation. To achieve this
objective, Wellington Management Company, LLP ("Wellington"), the Fund's
subadvisor, invests primarily in dividend-paying common stocks of companies
that also offer the opportunity for price appreciation.
The Fund will invest up to 100% of its assets in U.S. equity securities. The
Fund's portfolio is expected to include approximately 30 stocks. Wellington
selects stocks based on relative dividend yield (a measure of the stock's cur-
rent yield relative to the yields available in the broader stock market) cou-
pled with a disciplined research approach.
Main Investing Risks
.Concentration Risk
.Credit Risk
.Equity Risk, particularly the risks associated with value stocks
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A & B) (Class C)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -12.58% 12.67% 10.51% N/A
- --------------------------------------------------------------------
Class B -12.44% 13.05% 10.91% N/A
- --------------------------------------------------------------------
Class C -8.77% 13.27% N/A 8.57%
- --------------------------------------------------------------------
S&P 500
Index 21.04% 28.54% 25.52% 17.75%
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A and Class B - 4/1/94; Class C - 8/28/89
-------
10
<PAGE>
Balanced Fund
Investment Goal and Strategies
The investment objective of the Balanced Fund is current income and capital
appreciation. To achieve this goal, INVESCO Funds Group, Inc. ("INVESCO"), the
Fund's subadvisor, invests in a combination of common stocks and fixed-income
securities, including preferred stocks, convertible securities and bonds. The
Fund normally invests the majority of its total assets in common stocks and
approximately one-quarter of its assets in investment grade debt securities.
The portion of the Fund's portfolio invested in equity securities emphasizes
companies the subadvisor believes to have better-than-average earnings growth
potential, as well as companies within industries that the subadviser believes
are well-positioned for the current and expected economic climate. Since cur-
rent income is a component of total return, the subadvisor also considers com-
panies' dividend payout records. Most of these holdings are traded on national
stock exchanges or in the over-the-counter market. The Fund may also take posi-
tions in securities traded on regional or foreign exchanges. A portion of the
Fund's portfolio invested in debt securities may include obligations of the US.
government, government agencies, and investment grade corporate bonds. Obliga-
tions issued by U.S. government agencies may include some supported only by the
credit of the issuing agency rather than by the full faith and credit of the
U.S. government. The Fund may hold securities of any maturity, with the average
maturity of the portfolio varying depending upon economic and market condi-
tions. The Fund may invest in derivatives.
Main Investing Risks
.Credit Risk
.Currency Risk
.Derivatives Risk
.Equity Risk
.Foreign Investment Risk
.Interest Rate Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- -----------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A & B) (Class C)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -8.68% 10.91% 9.19% N/A
- -------------------------------------------------------------------
Class B -8.55% 11.24% 9.56% N/A
- -------------------------------------------------------------------
Class C -4.74% 11.49% N/A 9.99%
- -------------------------------------------------------------------
S&P 500
Index 21.04% 28.54% 25.52% 21.24%
- -------------------------------------------------------------------
Lehman Brothers -0.83% 7.73% 6.68% 6.62%
Aggregate Bond
Index
</TABLE>
- -----------------------------------------
*Inception dates: Class A and Class B - 4/1/94; Class C - 8/28/89
- -------
11
<PAGE>
Strategic Income Fund
Investment Goal and Strategies
The investment objective of the Strategic Income Fund is to seek a high level
of total return consistent with preservation of capital. To achieve this goal,
American General Investment Management, L.P. ("AGIM"), the Fund's subadvisor,
invests at least 65% of the Fund's total assets in a broad range of fixed-
income securities, including investment grade bonds (rated Baa or higher by
Moody's and BBB or higher by S&P), U.S. Government and agency obligations,
mortgage-backed securities, and U.S., Canadian, and foreign high-risk, high-
yield bonds (rated C or higher by Moody's and CC or higher by S&P, or
comparable unrated securities). Up to 25% of the Fund's total assets will be
invested in foreign emerging market debt, and up to an additional 25% in non-
U.S. dollar bonds. The Fund may invest up to 20% of total assets in equity
securities, such as common and preferred stocks, convertible securities, and
warrants. The Fund may invest in asset-backed securities, foreign currency,
futures and options, illiquid securities (limited to 15% of the Fund's assets),
investment companies, loan participations, money market securities, mortgage-
related securities, real estate securities, repurchase agreements, reverse
repurchase agreements, dollar rolls, structured securities, swaps, variable
amount master demand notes, variable rate demand notes, and when-issued
securities. The Fund may invest in derivatives.
Main Investing Risks
.Credit Risk, including the particular risks associated with junk bonds
.Currency Risk
.Derivatives Risk
.Foreign Investment Risk
.Interest Rate Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A) (Class B & C)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -4.47% 7.73% 5.22% N/A
- ----------------------------------------------------------------------------
Class B -4.17% 8.04% N/A 6.78%
- ----------------------------------------------------------------------------
Class C -0.17% 8.34% N/A 6.90%
- ----------------------------------------------------------------------------
Lehman Brothers -0.83% 7.73% 5.66% 6.68%
Aggregate Bond
Index
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A - 11/1/93; Class B and Class C - 4/1/94
-------
12
<PAGE>
Core Bond Fund (formerly Investment Quality Bond Fund)
Investment Goal and Strategies
The investment objective of the Core Bond Fund is to provide a high level of
current income consistent with the maintenance of principal and liquidity.
American General Investment Management, L.P. ("AGIM"), the Fund's subadvisor,
invests in a combination of common stocks and fixed-income securities,
including preferred stocks, convertible securities and bonds. The Fund normally
invests the majority of its total assets in common stocks and approximately
one-quarter of its assets in investment grade debt securities. The portion of
the Fund's portfolio invested in equity securities emphasizes companies the
subadvisor believes to have better-than-average earnings growth potential, as
well as companies within industries that the subadvisor believes are well-
positioned for the current and expected economic climate. Since current income
is a component of total return, the subadviser also considers companies'
dividend payout records. Most of these holdings are traded on national stock
exchanges or in the over-the-counter market. The Fund may also take positions
in securities traded on regional or foreign exchanges. A portion of the Fund's
portfolio invested in debt securities may include obligations of the U.S.
government, government agencies, and investment grade corporate bonds.
Obligations issued by U.S. government agencies may include some supported only
by the credit of the issuing agency rather than by the full faith and credit of
the U.S. government. The Fund may hold securities of any maturity, with the
average maturity of the portfolio varying depending upon economic and market
conditions. The Fund may invest in derivatives.
Main Investing Risks
.Credit Risk, including the particular risks associated with junk bonds
.Currency Risk
.Derivatives Risk
.Foreign Investment Risk
.Interest Rate Risk
.Liquidity Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past Past Life of Fund* Life of Fund*
One Year Five Years (Class A) (Class B & C)
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -8.15% 5.56% 5.89% N/A
- ------------------------------------------------------------------
Class B -8.06% 5.91% N/A 4.99%
- ------------------------------------------------------------------
Class C -4.18% 6.23% N/A 5.13%
- ------------------------------------------------------------------
100% Lehman -1.94% 8.16% 7.38% 6.98%
Brothers
Corporate
- ------------------------------------------------------------------
50% Lehman -2.10% 7.80% 7.61% 6.67%
Brothers
Corporate
50% Lehman
Brothers
Government
</TABLE>
- ------------------------------------------
*Inception dates: Class A - 5/1/91; Class B and Class C - 4/1/94
- -------
13
<PAGE>
Municipal Bond Fund (formerly National Municipal Bond Fund)
Investment Goal and Strategies
The investment objective of the Municipal Bond Fund is to achieve a high level
of current income that is exempt from regular federal income taxes. The Fund is
also particularly concerned with preserving capital. American General
Investment Management, L.P. ("AGIM") is the Fund's subadvisor. The Fund will
invest at least 90% of total assets in investment grade municipal fixed-income
securities, such as municipal bonds, municipal notes, and other municipal
obligations. Investment grade bonds are those rated at least Baa3 by Moody's or
BBB- by S&P or Fitch, or of comparable quality. The municipal notes are short-
term obligations rated high quality or better by Moody's, S&P, or Fitch. The
Fund may invest up to 20% of total assets in taxable fixed-income securities,
including money market instruments, U.S. Government obligations, and other
investment grade securities rated as above. U.S. Government securities are
securities issued or guaranteed by the U.S. Government which are supported by
the full faith and credit of the U.S. Government; the right of the issuer to
borrow from the U.S. Treasury; the credit of the issuing government agency; or
the authority of the U.S. Government to purchase obligations of the agency. The
Fund may invest in asset-backed securities, equity securities, futures and
options, illiquid securities (limited to 15% of the Fund's assets), investment
companies, loan participations, mortgage-related securities, real estate
securities, repurchase agreements, reverse repurchase agreements, variable
amount master demand notes, variable rate demand notes, and when-issued
securities. If the Fund invests in municipal securities issued for certain
private purposes, a portion of the Fund's dividends may be subject to the
alternative minimum tax.
Main Investing Risks
.Concentration Risk
.Credit Risk
.Interest Rate Risk
.Liquidity Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A) (Class B & C)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -8.88% 5.13% 3.10% N/A
- ----------------------------------------------------------------------------
Class B -8.93% 5.18% N/A 4.20%
- ----------------------------------------------------------------------------
Class C -5.09% 5.50% N/A 4.34%
- ----------------------------------------------------------------------------
Lehman Brothers -0.83% 7.73% 5.84% 6.68%
Aggregate Bond
Index
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A - 7/6/93; Class B and Class C - 4/1/94
-------
14
<PAGE>
U.S. Government Securities Fund
Investment Goal and Strategies
The investment objective of the U.S. Government Securities Fund is to obtain a
high level of current income consistent with preservation of capital and main-
tenance of liquidity. American General Investment Management, L.P. ("AGIM"),
the Fund's subadvisor, pursues this objective by emphasizing investments in
debt obligations and mortgage-backed securities issued or guaranteed by the
U.S. Government or its agencies, and in derivative investments relating to such
securities.
Main Investing Risks
.Credit Risk
.Derivatives Risk
.Interest Rate Risk
.Management Risk
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- ---------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Past Five Years Life of Fund* Life of Fund*
(Class A) (Class B & C)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A -6.66% 5.03% 5.98% N/A
- -----------------------------------------------------------------------------
Class B -6.26% 5.34% N/A 4.69%
- -----------------------------------------------------------------------------
Class C -2.31% 5.66% N/A 4.83%
- -----------------------------------------------------------------------------
Merrill Lynch 1- 0.55% 6.9% 7.28% 6.28%
10 year
Government Index
</TABLE>
- ---------------------------------------------------
*Inception dates: Class A - 8/28/89; Class B and Class C - 4/1/94
- -------
15
<PAGE>
Money Market Fund
Investment Goal and Strategies
The investment objective of the Money Market Fund is to obtain maximum current
income consistent with preservation of principal and liquidity. American
General Investment Management, L.P. ("AGIM") is, the Fund's subadvisor. The
Fund invests in short-term money market securities to provide you with
liquidity, protection of your investment and current income. In
accordance with Rule 2a-7 of the Investment Company Act, such securities must
mature in 13 months or less and the Fund must have a dollar-weighted average
portfolio maturity of 90 days or less. The investments of the Fund may include
securities issued or guaranteed by the U.S. Govern- ment (and its agencies or
instrumentalities), certificates of deposit and other obligations of
domestic banks that have total assets in excess of $1 billion, commercial paper
sold by corporations and finance companies, corporate debt obligations with
remaining maturities of 13 months or less, repurchase agreements, money market
instruments of foreign issuers payable in U.S. dollars (limited to no more than
20% of the fund's net assets), asset-backed securities, loan participations,
adjustable rate securities, Variable Rate Demand Notes, illiquid and restricted
securities (limited to 10% of the Fund's net assets at all times), and Rule
144A securities. The Fund may invest in investment companies, real estate
securities, and reverse repurchase agreements.
Main Investing Risks
.Interest Rate Risk
.Management Risk
.An investment in the Money Market Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or by any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
The bar chart and
table provide an
indication of risk
by showing the vari-
ability of the
Fund's historical
returns.
[GRAPH]
- --------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Past One Year Life of Fund* Life of Fund*
(Class A) (Class B & C)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 4.62% 4.80% N/A
- --------------------------------------------------------------------------------------------
Class B 4.62% N/A 5.04%
- --------------------------------------------------------------------------------------------
Class C 4.62% N/A 5.04%
</TABLE>
- --------------------------------------------------------------------------------
*Inception dates: Class A - 8/28/89; Class B and Class C - 4/1/94
-------
16
<PAGE>
Descriptions of Main Investing Risks
The value of your investment in a Fund can change for many reasons, and may
decrease. The primary reasons for possible decreases in a Fund's value are
called "Main Investing Risks," and are explained in this section. Because the
types of investments a Fund makes change over time, the types of risks
affecting the Fund will change as well. Section II of the Prospectus includes
more information about other risks that might affect the Funds' values.
Concentration Risk
Investment professionals believe that investment risk can be reduced through
diversification, which is simply the practice of choosing more than one type of
investment. On the other hand, concentrating investments in a smaller number of
securities increases risk.
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 counterparty to a derivatives contract or a securities loan,
will not repay the principal and interest owed to the investors or otherwise
honor its obligations. There are different levels of credit risk. Funds that
invest in lower-rated securities have higher levels of credit risk. Lower-rated
or unrated securities of equivalent quality (generally known as junk bonds)
have very high levels of credit risk. Securities that are highly rated have
lower levels of credit risk.
Funds may be subject to greater credit risk because they may invest in debt
securities issued in connection with corporate restructurings by highly
leveraged (indebted) issuers and in debt securities not current in the payment
of interest or principal, or in default.
Funds that invest in foreign securities are also 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.
Currency Risk
Funds that invest in securities that are denominated in and/or are receiving
revenues in foreign currencies are subject to currency risk. Currency risk is
the risk that foreign currencies will decline in value relative to the U.S.
dollar. In the case of hedging positions, it is the risk that the U.S. dollar
will decline in value relative to the currency hedged.
Derivatives Risk
Derivatives are financial contracts between two parties 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 also offer the opportunity for great
increases in value. Because derivatives are contracts between parties, there is
also some credit risk associated with using derivatives. Additional risks
associated with derivatives include mispricing and improper valuation. Deriva-
tives risk for some Funds will be increased by their investments in structured
securities.
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.
- -------
17
<PAGE>
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.
Value stocks are the stocks of companies that are not expected to experience
significant earnings growth, but that are undervalued, or are inexpensive rela-
tive to the value of the company and its business as a whole. These companies
may have experienced recent troubles that have caused their stocks to be out of
favor with investors. If the market does not recognize the value of the company
over time, the price of its stock may fall, or simply may not increase as
expected.
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 stocks may not trade very active-
ly, and their prices may fluctuate more than stocks of larger companies. Stocks
of smaller companies may be more vulnerable to negative changes than stocks of
larger companies.
Foreign Investment Risk
Funds investing in foreign securities may experience rapid changes in value.
One reason for this volatility is that the securities markets of many foreign
countries are relatively small, with a limited number of companies representing
a small number of industries. Also, foreign securities issuers are usually not
subject to the same degree of regulation as U.S. issuers. Reporting, accounting
and auditing standards of foreign countries differ, in some cases significant-
ly, from U.S. standards.
The possibility of political instability or diplomatic developments in foreign
countries could trigger nationalization of companies and industries, expropria-
tion (confiscation of property), extremely high levels of taxation, and other
negative developments. In the event of nationalization, expropriation or other
confiscation, a Fund could lose its entire investment. Funds that invest in
sovereign debt obligations are exposed to the risks of political, social and
economic change in the countries that issued the bonds.
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 securi-
ties are obligations of the issuer to make payments of principal and/ or inter-
est on future dates. As interest rates rise, an investment in a Fund can lose
value, because the value of the securities the Fund holds may fall.
Market risk is generally greater for Funds that invest in debt securities with
longer maturities. This risk may be increased for Funds that invest in mort-
gage-backed or other types of asset-backed securities that are often prepaid.
Even Funds that invest in the highest quality debt securities are subject to
interest rate risk.
Liquidity Risk
Liquidity risk is the risk that a 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. A Fund holding an illiquid security may not be
able to sell the security at a fair price. Liquidity risk increases for Funds
investing in derivatives, foreign investments or restricted securities.
Management Risk
Management risk is the risk that the subadvisor of a Fund, despite using vari-
ous investment and risk analysis techniques, may not produce the desired
investment results.
-------
18
<PAGE>
Section II:
Fees and Expenses of the North American Funds
This table describes the fees and expenses that you may pay if you invest in
the Funds.
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering price)
Equity Funds/1/ 5.75% None None
Other Funds except Money Market Fund 4.75% None None
Money Market Fund None None None
Maximum Deferred Sales Charge (as a
percentage of original purchase price or
redemption price, whichever is lower)
Other Funds except Money Market Fund 1%/2/ 5%/3/ 1%/4/
Money Market Fund None None None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<CAPTION>
Fund Class A Class B Class C
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
International Small Cap Fund
Management Fees 1.05% 1.05% 1.05%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.84% 0.84% 0.84%
Total Annual Fund Operating Expenses 2.24% 2.89% 2.89%
- ------------------------------------------------------------------------------
International Equity Fund
Management Fees 0.90% 0.90% 0.90%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.73% 0.73% 0.72%
Total Annual Fund Operating Expenses 1.98% 2.63% 2.62%
- ------------------------------------------------------------------------------
Global Equity Fund
Management Fees 0.90% 0.90% 0.90%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.62% 0.62% 0.62%
Total Annual Fund Operating Expenses 1.87% 2.52% 2.52%
- ------------------------------------------------------------------------------
Small Cap Growth Fund (formerly Emerging Growth Fund)
Management Fees 0.95% 0.95% 0.95%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 5.66% 5.63% 5.65%
Total Annual Fund Operating Expenses 6.96% 7.58% 7.60%
- ------------------------------------------------------------------------------
</TABLE>
- -------
19
<PAGE>
<TABLE>
<CAPTION>
Class Class Class
Fund A B C
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Mid Cap Growth Fund (formerly Small/Mid Cap Fund)
Management Fees 0.93% 0.93% 0.93%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.61% 0.61% 0.61%
Total Annual Fund Operating Expenses 1.89% 2.54% 2.54%
- ----------------------------------------------------------------------
Large Cap Growth Fund (formerly Growth Equity Fund)
Management Fees 0.90% 0.90% 0.90%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.65% 0.62% 0.62%
Total Annual Fund Operating Expenses 1.90% 2.52% 2.52%
- ----------------------------------------------------------------------
Tax-Sensitive Equity Fund
Management Fees 0.85% 0.85% 0.85%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.85% 0.86% 0.86%
Total Annual Fund Operating Expenses 2.05% 2.71% 2.71%
- ----------------------------------------------------------------------
Growth & Income Fund
Management Fees 0.67% 0.67% 0.67%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.47% 0.46% 0.46%
Total Annual Fund Operating Expenses 1.49% 2.13% 2.13%
- ----------------------------------------------------------------------
Equity-Income Fund
Management Fees 0.71% 0.71% 0.71%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.52% 0.52% 0.52%
Total Annual Fund Operating Expenses 1.58% 2.23% 2.23%
- ----------------------------------------------------------------------
Balanced Fund
Management Fees 0.75% 0.75% 0.75%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.50% 0.50% 0.50%
Total Annual Fund Operating Expenses 1.60% 2.25% 2.25%
- ----------------------------------------------------------------------
Strategic Income Fund
Management Fees 0.74% 0.74% 0.74%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.58% 0.58% 0.58%
Total Annual Fund Operating Expenses 1.67% 2.32% 2.32%
- ----------------------------------------------------------------------
</TABLE>
-------
20
<PAGE>
<TABLE>
<CAPTION>
Fund Class A Class B Class C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Core Bond Fund (formerly Investment Quality Bond Fund)
Management Fees 0.60% 0.60% 0.60%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.75% 0.79% 0.78%
Total Annual Fund Operating Expenses 1.70% 2.39% 2.38%
- -------------------------------------------------------------------------------
Municipal Bond Fund (formerly National Municipal Bond
Fund)
Management Fees 0.60% 0.60% 0.60%
Distribution (12b-1) Fees 0.15% 1.00% 1.00%
Other Expenses 0.66% 0.66% 0.66%
Total Annual Fund Operating Expenses 1.41% 2.26% 2.26%
- -------------------------------------------------------------------------------
U.S. Government Securities Fund
Management Fees 0.60% 0.60% 0.60%
Distribution (12b-1) Fees 0.35% 1.00% 1.00%
Other Expenses 0.51% 0.51% 0.51%
Total Annual Fund Operating Expenses 1.46% 2.11% 2.11%
- -------------------------------------------------------------------------------
Money Market Fund
Management Fees 0.20% 0.20% 0.20%
Distribution (12b-1) Fees 0.00% 0.00% 0.00%
Other Expenses 0.75% 0.79% 0.81%
Total Annual Fund Operating Expenses 0.95% 0.99% 1.01%
</TABLE>
- --------------------------------------------------------------------------------
1 "Equity Funds" The higher By translating
are the first Distribution Fees "Total Annual Fund
ten funds borne by Class B Operating
listed in the and Class C shares Expenses" into
table. may cause long- dollar amounts,
2 1% first year term shareholders these examples
after purchase to pay more in help you compare
for purchases sales charges than the costs of
of $1 million the maximum investing in a
or more. permitted front- particular Fund,
3 5% first and end sales charge or a particular
second year; 4% on Class A shares. class of shares,
third year; 3% with the costs of
fourth year; 2% investing in other
fifth year; 1% mutual funds.
sixth year and
0% thereafter.
4 0% after first
year.
5 Fund fees and
expenses are
currently being
voluntarily
waived and/or
reimbursed by
AGAM such that
the Funds have
the following
net total
annual
operating
expenses.
<TABLE>
<CAPTION>
Class A Class B Class C
- --------------------------------------------------------
<S> <C> <C> <C>
International Small Cap Fund 2.05% 2.70% 2.70%
- --------------------------------------------------------
International Equity Fund 1.90% 2.55% 2.55%
- --------------------------------------------------------
Small Cap Growth Fund 1.82% 2.47% 2.47%
- --------------------------------------------------------
Mid Cap Growth Fund 1.78% 2.43% 2.43%
- --------------------------------------------------------
Large Cap Growth Fund 1.77% 2.42% 2.42%
- --------------------------------------------------------
Tax-Sensitive Equity Fund 1.60% 2.25% 2.25%
- --------------------------------------------------------
Growth & Income Fund 1.46% 2.11% 2.11%
- --------------------------------------------------------
Equity-Income Fund 1.47% 2.12% 2.12%
- --------------------------------------------------------
Balanced Fund 1.51% 2.16% 2.16%
- --------------------------------------------------------
Strategic Income Fund 1.55% 2.20% 2.20%
- --------------------------------------------------------
Core Bond Fund 1.30% 1.95% 1.95%
- --------------------------------------------------------
Municipal Bond Fund 1.00% 1.85% 1.85%
- --------------------------------------------------------
U.S. Government Securities Fund 1.25% 1.90% 1.90%
- --------------------------------------------------------
Money Market Fund 0.70% 0.70% 0.70%
- --------------------------------------------------------
</TABLE>
- -------
21
<PAGE>
The examples assume that you:
. Invest $10,000 in a 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>
Fund 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Small Cap Fund
Class A Shares 789 1,235 1,706 3,002
Class B Shares 792 1,295 1,723 3,057
Class B No redemption 292 895 1,523 3,057
Class C Shares 392 895 1,523 3,214
Class C No redemption 292 895 1,523 3,214
- ------------------------------------------------------------------------------
International Equity Fund
Class A Shares 764 1,161 1,581 2,749
Class B Shares 766 1,217 1,595 2,803
Class B No redemption 266 817 1,395 2,803
Class C Shares 365 814 1,390 2,954
Class C No redemption 265 814 1,390 2,954
- ------------------------------------------------------------------------------
Global Equity Fund
Class A Shares 754 1,129 1,528 2,639
Class B Shares 755 1,185 1,540 2,694
Class B No redemption 255 785 1,340 2,604
Class C Shares 355 785 1,340 2,856
Class C No redemption 255 785 1,340 2,856
- ------------------------------------------------------------------------------
Small Cap Growth Fund (formerly Emerging
Growth Fund)
Class A Shares 1,225 2,486 3,698 6,527
Class B Shares 1,248 2,587 3,753 6,573
Class B No redemption 748 2,187 3,553 6,573
Class C Shares 850 2,192 3,661 6,682
Class C No redemption 750 2,192 3,561 6,682
- ------------------------------------------------------------------------------
Mid Cap Growth Fund (formerly Small/Mid Cap
Fund)
Class A Shares 756 1,135 1,538 2,669
Class B Shares 757 1,191 1,550 2,714
Class B No redemption 257 791 1,350 2,714
Class C Shares 367 791 1,350 2,875
Class C No redemption 257 791 1,350 2,875
- ------------------------------------------------------------------------------
Large Cap Growth Fund (formerly Growth Equity
Fund)
Class A Shares 757 1,138 1,542 2,669
Class B Shares 755 1,185 1,540 2,701
Class B No redemption 255 785 1,340 2,701
Class C Shares 355 785 1,340 2,856
Class C No redemption 255 785 1,340 2,856
- ------------------------------------------------------------------------------
Tax-Sensitive Equity Fund
Class A Shares 771 1,181 1,615 2,817
Class B Shares 774 1,241 1,635 2,860
Class B No redemption 274 841 1,435 2,880
Class C Shares 374 841 1,435 3,041
Class C No redemption 274 841 1,435 3,041
- ------------------------------------------------------------------------------
</TABLE>
-------
22
<PAGE>
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth & Income Fund
Class A Shares 718 1,019 1,341 2,252
Class B Shares 716 1,057 1,344 2,297
Class B No redemption 216 667 1,144 2,297
Class C Shares 316 667 1,144 2,462
Class C No redemption 216 667 1,144 2,462
- ----------------------------------------------------------------------------
Equity-Income Fund
Class A Shares 726 1,045 1,386 2,345
Class B Shares 726 1,097 1,395 2,398
Class B No redemption 226 697 1,195 2,398
Class C Shares 326 697 1,195 2,565
Class C No redemption 226 697 1,195 2,565
- ----------------------------------------------------------------------------
Balanced Fund
Class A Shares 728 1,051 1,396 2,368
Class B Shares 728 1,103 1,405 2,419
Class B No redemption 228 703 1,205 2,419
Class C Shares 328 703 1,205 2,585
Class C No redemption 228 703 1,205 2,585
- ----------------------------------------------------------------------------
Strategic Income Fund
Class A Shares 637 976 1,339 2,357
Class B Shares 735 1,124 1,440 2,491
Class B No redemption 235 724 1,240 2,491
Class C Shares 335 724 1,240 2,656
Class C No redemption 235 724 1,240 2,656
- ----------------------------------------------------------------------------
Core Bond Fund (formerly Investment Quality
Bond Fund)
Class A Shares 640 985 1,354 2,388
Class B Shares 742 1,145 1,475 2,552
Class B No redemption 242 745 1,275 2,552
Class C Shares 341 742 1,270 2,716
Class C No redemption 241 742 1,270 2,716
- ----------------------------------------------------------------------------
Municipal Bond Fund (formerly National Municipal
Bond Fund)
Class A Shares 612 900 1,209 2,086
Class B Shares 729 1,106 1,410 2,378
Class B No redemption 229 706 1,210 2,378
Class C Shares 329 706 1,210 2,595
Class C No redemption 229 706 1,210 2,595
- ----------------------------------------------------------------------------
U.S. Government Securities Fund
Class A Shares 617 915 1,235 2,138
Class B Shares 714 1,061 1,334 2,273
Class B No redemption 214 661 1,134 2,273
Class C Shares 314 661 1,134 2,441
Class C No redemption 214 651 1,134 2,441
- ----------------------------------------------------------------------------
Money Market Fund
Class A Shares 97 303 525 1,166
Class B Shares 101 315 547 1,213
Class B No Redemption 101 315 547 1,213
Class C Shares 103 322 558 1,236
Class C No Redemption 103 322 558 1,236
- ----------------------------------------------------------------------------
</TABLE>
- -------
23
<PAGE>
More Information About
Investment Strategies and Risks
This Prospectus does not attempt to disclose all of the different investment
techniques that the Funds might use, or all of the types of securities in which
the Funds might invest. As with any mutual fund, investors must rely on the
professional judgment and skill of the Funds' management. A subadvisor may
choose not to use some or all of the investment techniques available to a Fund,
and these choices may cause the Fund to lose money or not achieve its goal.
Each Fund has a unique investment goal (see the Fund Summaries) that it tries
to achieve through its investment strategies. The investment goals, or objec-
tives, of the Funds cannot be changed without the approval of the holders of a
majority of the outstanding shares of each Fund. However, except for certain
investment restrictions, the strategies a Fund uses to achieve its investment
objective may be changed by the Trustees without approval of the shareholders.
Because each Fund is different, they have different investment policies and
risks, and will also have different returns over time. This section provides
additional information about the Funds, and should be read in conjunction with
the Fund Summaries.
International Small Cap Fund
The Fund may invest without limit in American Depositary Receipts and American
Depositary Shares (collectively, "ADRs"). ADRs are receipts representing shares
of a foreign corporation held by a U.S. bank that entitle the holder to all
dividends and capital gains on the underlying foreign shares. ADRs are
denominated in U.S. dollars and trade in the U.S. securities markets.
The Fund may invest a significant portion of its assets in the securities of
small companies. Small companies are still in the developing stages of their
life cycles and may have limited product lines, markets or financial resources
and/or lack management depth. The securities of small companies may have lim-
ited marketability and may experience more abrupt or erratic movements in price
than securities of larger companies or the market averages in general. Because
of this, the net asset value of the International Small Cap Fund may fluctuate
more widely than popular market averages.
The Fund may also invest in convertible securities, preferred stocks, bonds,
debentures and other corporate obligations when Founders believes that these
investments offer opportunities for capital appreciation.
The Fund may invest in investment-grade bonds, debt securities and corporate
obligations. For purposes of this Fund, investment grade securities are those
rated Baa or higher by Moody's, or BBB or higher by S&P. The Fund may choose to
invest in lower-rated convertible securities and preferred stocks (securities
rated Ba or lower by Moody's and BB or lower by S&P). The Fund may also invest
in unrated convertible securities and preferred stocks if Founders believes
they are equivalent in quality to the rated securities that the Fund may buy.
The Fund will not invest more than 5% of its total assets in unrated or below
investment-grade fixed-income securities, with the exception of preferred
stocks. If the Fund holds securities that are downgraded to below investment
grade after they are purchased, the Fund does not have to sell them unless the
Fund's investments in unrated and below investment grade securities is equal to
or greater than 5% of total fund assets.
Since the Fund's assets will be invested primarily in foreign securities and
since substantially all of the Fund's revenues will be received in foreign cur-
rencies, the Fund's net asset values will be affected by changes in currency
exchange rates. The Fund will pay dividends in dollars and will incur currency
conversion costs.
-------
24
<PAGE>
International Equity Fund
MSAM's Active International Allocation team analyzes both the global economic
environment and the economies of the industrialized countries comprising the
MSCI Europe, Australasia, Far East (EAFE) Index. EAFE countries include Japan,
most nations in Western Europe, Australia, New Zealand, Hong Kong and Singa-
pore. MSAM views each country and sector as unique investment opportunities and
evaluates prospects for value, growth, inflation, interest rates, corporate
earnings, liquidity and risk characteristics, investor sentiment and currency
outlook. After determining to invest in a country or sector, MSAM establishes
overweight, underweight or neutral positions relative to the broad market index
for that country or sector. Within the countries or sectors selected for
investment, MSAM purchases optimized baskets of equity securities designed to
track the local market index. The Fund does not invest in securities of U.S.
issuers. MSAM considers an issuer to be from a particular country if (i) its
principal securities trading market is in that country; (ii) alone or on a con-
solidated basis it derives 50% or more of its annual revenue from either goods
produced, sales made or services performed in that country; or (iii) it is
organized under the laws of, and has a principal office in, that country.
The Fund will limit its use of derivatives for non-hedging purposes to 33 1/3%
of its total assets measured by the aggregate notional amount of outstanding
derivatives. While the use of derivatives may be advantageous to the Fund, if
MSAM is not successful in employing them, the Fund's performance may be worse
than if it did not make such investments.
The Fund may invest in emerging market countries and, with regard to such
investments, make global and regional allocations to emerging markets, as well
as allocations to specific emerging market countries. Emerging market countries
are countries that major international financial institutions, such as the
World Bank, generally consider to be less economically mature than developed
nations, such as the United States or most nations in Western Europe. Emerging
market countries can include every nation in the world except the United
States, Canada, Japan, Australia, New Zealand and most countries located in
Western Europe. Emerging market countries may be more likely to experience
political turmoil or rapid changes in economic conditions than more developed
countries, and the financial condition of issuers in emerging market countries
may be more precarious than in other countries. The characteristics result in
greater risk of price volatility in emerging market countries, which may be
heightened by currency fluctuations relative to the U.S. dollar.
Global Equity Fund
The Fund invests primarily in equity securities of issuers throughout the
world, including issuers in the U.S. and emerging market countries.
The Fund may also invest in money market instruments. Although the Fund intends
to invest primarily in securities listed on stock exchanges, it will also
invest in equity securities that are traded over-the-counter or that are not
admitted to listing on a stock exchange or dealt in on a regulated market. Pri-
vately traded securities may have additional liquidity risks. The Fund may also
engage in forward foreign currency transactions and purchase when-issued or
delayed delivery securities.
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25
<PAGE>
Small Cap Growth Fund
The Fund will usually invest at least 65% of its total assets in common stocks
or warrants of emerging growth companies that represent attractive opportuni-
ties for maximum capital appreciation. Emerging growth companies are small- or
medium-sized companies beyond their start-up phase showing positive earnings or
the potential for accelerated earnings growth.
Although the Fund will typically invest in smaller companies, the Fund may
invest in emerging growth companies of any size. Emerging growth companies gen-
erally benefit from new products or services, technological developments,
changes in management or other factors. The Fund may also invest in companies
experiencing unusual developments affecting their market value, called "special
situation" companies. These companies may be involved in acquisitions or con-
solidations, reorganization, recapitalization, mergers, liquidation, or distri-
bution of cash, securities or other assets, tender or exchange offers, a
breakup or workout of a holding company, lawsuits which, if resolved favorably,
would improve the value of the company's stock, or a change in corporate con-
trol.
The Fund may invest up to 20% of its total assets in investment grade debt
securities (other than money market obligations) and preferred stocks that are
not convertible into common stock. The Fund may also invest up to 20% of its
total assets in the securities of foreign issuers, which have certain risks
associated with them. The Fund's status is non-diversified , although its port-
folio managers have typically diversified the Fund's investments.
The interest income to be derived may be considered as one factor in selecting
debt securities for investment. Because the market value of debt obligations
can be expected to vary inversely with changes in prevailing interest rates,
investing in debt obligations may provide an opportunity for capital apprecia-
tion when interest rates are expected to decline. The success of such a strat-
egy is dependent upon the manager's ability to accurately forecast changes in
interest rates.
A security will be considered investment grade if it is rated within the four
highest grades by Moody's or S&P or, if unrated, is determined by the manager
to be of comparable quality. Bonds rated in the fourth highest grade may have
speculative characteristics. If a security held by the Fund is no longer rated,
or is rated below the Fund's minimum allowed rating, the manager factors this
information into the decision about whether the Fund should continue to hold
the securities. The Fund can normally invest up to 20% of its total assets in
domestic and foreign short-term money market obligations.
Investing in securities of emerging growth and small-sized companies can
involve greater risks because these securities may have limited marketability.
Because small and medium-sized companies normally have fewer shares outstanding
than larger companies, it may be more difficult for the Fund to buy or sell
large numbers of shares without affecting current prices. Small- and medium-
sized companies are typically subject to a greater degree of changes in earn-
ings and business prospects than are larger, more established companies. There
is typically less publicly available information concerning small- and medium-
sized companies than for larger, more established ones. And companies with
small market capitalizations may also be dependent upon a single proprietary
product or market niche, may have limited product lines, markets or financial
resources, or may depend on a limited management group.
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26
<PAGE>
Mid Cap Growth Fund
The Fund invests in equity securities, including common and preferred stocks,
and securities that can be converted into or exchanged for equity securities,
including warrants and rights. The Fund will typically invest in companies
whose securities are traded on domestic stock exchanges or in the over-the-
counter market.
To give the Fund the flexibility to take advantage of new opportunities that
can help to meet the Fund's investment objectives, the Fund can invest up to
15% of its net assets in money market instruments, bank and thrift obligations,
obligations issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, foreign bank obligations and obligations of foreign branches
of domestic banks, variable rate master demand notes and repurchase agreements.
The Fund may invest up to 20% of its total assets in foreign securities and
will be subject to certain risks as a result of these investments. The Fund may
also purchase American Depositary Receipts ("ADRs") or U.S. dollar-denominated
securities of foreign issuers that are not included in the 20% foreign securi-
ties limitation.
Large Cap Growth Fund
At least 65% of the Fund's total assets will be invested in common stocks of
well-established, high-quality growth companies. The Fund may also invest in
convertible securities, preferred stocks, debentures and other corporate obli-
gations when Founders believes that these investments offer opportunities for
capital appreciation. Although these securities may produce current income,
income will not be a substantial factor in selecting these securities.
The Fund may invest in investment grade bonds, debentures and corporate obliga-
tions rated Baa or higher by Moody's or BBB or higher by S&P. The Fund may
choose to invest in lower-rated (Ba or lower by Moody's and BB or lower by S&P)
convertible and preferred stocks but not rated below B. The Fund may also
invest in unrated convertible securities and preferred stocks if Founders
believes that they are equivalent in quality to the rated securities the Fund
may buy.
The Fund will never have more than 5% of its total assets invested in unrated
or below-investment-grade fixed income securities, with the exception of pre-
ferred stocks. If the Fund holds securities that are downgraded after they are
purchased, the Fund does not have to sell them unless the Fund assets in
unrated and blow investment-grade securities reaches 5% of total assets.
The Fund is also permitted to use forward foreign currency contracts and
futures contracts. The Fund may also purchase and/or write options on securi-
ties and on indices, and may invest in Rule 144A securities.
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27
<PAGE>
Tax-Sensitive Equity Fund
This Fund is designed for investors in all but the lowest federal income tax
bracket seeking the highest long-term after-tax total return. The Fund tries to
minimize taxable dividend income by emphasizing securities with low dividend
yields and minimizing investments in income producing securities.
Usually, at least 80% of the Fund's total assets will be invested in equity and
equity-related securities, such as common stocks and preferred stocks. The Fund
may invest in equity securities of foreign issuers that are listed on a U.S.
securities exchange or traded in the U.S. over-the-counter market, but will not
invest more than 10% of its total assets in securities that are not listed or
traded. The Fund currently intends to limit its investments in foreign securi-
ties to those that are denominated or quoted in U.S. dollars.
When selling portfolio securities, the Fund will generally select the highest
cost shares of the specific security (and/or, if gains will be realized, shares
that will produce long-term capital gains) in order to reduce the realization
of capital gains, short-term gains in particular. To help achieve its invest-
ment objective, the Fund may sell securities in order to realize capital loss-
es. Realized capital losses can be used to offset realized capital gains,
reducing the amount of capital gains the Fund would distribute.
The Fund generally expects to have relatively low annual portfolio turnover
under normal circumstances, which is one way to help minimize taxable gains to
investors. For taxpayers in all but the lowest tax brackets, ordinary income is
taxed at a higher tax rate than capital gains on securities held for more than
one year ("long-term capital gains"). Ordinary income includes dividends from
the Fund's net investment income and net short-term capital gains. Net long-
term capital gains realized and distributed by the Fund are subject to federal
taxes as long-term capital gains. The Fund expects generally to hold appreci-
ated portfolio securities for more than one year. This holding period will
reduce the realization and distribution to shareholders of short-term capital
gains, which are taxed at higher ordinary income rates.
Although the Fund will always consider the impact of federal and state income
taxes on a shareholder's investment returns, portfolio management decisions may
be made based on other criteria, including actual or anticipated economic, mar-
ket or issuer-specific developments. In this case, the Fund may produce taxable
ordinary income. The Fund may occasionally need to sell securities it would
otherwise have held to generate cash, pay expenses or meet shareholder redemp-
tion requests. Certain investments by the Fund may produce ordinary taxable
income on a regular basis.
As part of the strategy of reducing the impact of federal and state income
taxes paid by shareholders on Fund distributions, the Fund will follow a disci-
plined investment strategy, emphasizing stocks that the manager believes to
offer above-average potential for capital growth while offering low dividend
yields. Although the precise application of the strategy will vary according to
market conditions, to identify attractive equity securities the manager intends
to use statistical modeling techniques that look at stock-specific factors.
These factors include: Current price/earnings ratios; stability of earnings
growth; forecasted changes in earnings growth; trends in consensus analysts'
estimates; and measures of earnings results relative to expectations. Once
securities are identified, fundamental analysis will be completed before they
are included in the Fund's holdings. Securities selected for inclusion in the
Fund's portfolio will represent various industries and sectors.
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28
<PAGE>
Growth & Income Fund
Wellington Management seeks to achieve the Fund's objective by investing pri-
marily in a diversified portfolio of common stocks of U.S. issuers which Wel-
lington Management believes are of high quality. Wellington Management believes
that high quality companies are evidenced by a leadership position within an
industry, a strong or improving balance sheet, relatively high return on equi-
ty, steady or increasing dividend payout, and strong management skills. The
Fund's investments will emphasize primarily dividend paying stocks of larger
companies. The Fund may invest in securities that can be converted into, or
that include the right to buy common stocks, including convertible securities
issued in the Euromarket and preferred stocks. The Fund may also invest in mar-
ketable debt securities of domestic issuers and of foreign issuers (payable in
U.S. dollars) rated at the time of purchase "A" or better by Moody's or S&P, or
unrated securities considered to be of equivalent quality in Wellington Manage-
ment's judgment. Under normal market conditions, the subadvisor expects that
the Fund's portfolio will consist primarily of equity securities.
Equity-Income Fund
The Fund will generally consider companies with the following characteristics:
.established operating histories;
.above-average current dividend yield relative to the average yield of the S&P
500 Stock Index;
.low price/earnings ratios relative to the S&P 500 Stock Index;
.sound balance sheets and other financial characteristics; and
.low stock price relative to a company's underlying value as measured by
assets, earnings, cash flow, or business franchises.
The Fund will tend to take a "value" approach and invest in stocks and other
securities that appear to be temporarily undervalued by various measures, such
as price/earnings ratios. Value investors seek to buy a stock (or other securi-
ty) when its price is low in relation to what they believe to be its real worth
or future prospects. By identifying companies whose stocks are currently out of
favor, value investors hope to realize significant appreciation as other
investors recognize the stock's real value and the price rises accordingly.
The Fund may also buy bonds of any quality, including "junk bonds," preferred
stocks, convertible securities, and warrants, and may hold U.S. dollar-denomi-
nated money market securities, including repurchase agreements, in the two
highest rating categories that mature in one year or less.
Balanced Fund
The Fund may invest in convertible securities, preferred stocks, bonds, deben-
tures, and other corporate obligations when Founders believes that these
investments offer opportunities for capital appreciation. Current income is
also a factor in the selection of these securities.
The Fund may invest without limit in ADRs and up to 30% of its total assets in
foreign securities (other than ADRs). The Fund will not invest more than 25% of
its total assets in the securities of any one foreign country. The Fund will be
subject to special risks as a result of its ability to invest up to 30% of its
total assets in foreign securities, excluding ADRs.
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29
<PAGE>
Strategic Income Fund
The Fund may invest in debt obligations issued or guaranteed by a foreign sov-
ereign government or one of its agencies or political subdivisions, and debt
obligations issued or guaranteed by international organizations designated or
supported by governmental entities to promote economic reconstruction or devel-
opment and international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the
"World Bank"), the European Coal and Steel Community, the Asian Development
Bank and the Inter-American Development Bank. These securities may be denomi-
nated in multi-national currency units.
The purpose of investing a portion of the Fund's assets in below investment
grade, mortgage, and international debt securities, is to provide investors
with a higher yield than a high-quality domestic corporate bond fund, and with
less risk than a fund that invests principally in below investment grade secu-
rities. Some of the debt securities the Fund may select may considered compara-
ble to securities having, the lowest ratings for non-subordinated debt instru-
ments assigned by Moody's or S&P (i.e., rated C by Moody's or CCC or lower by
S&P).
Core Bond Fund
Credit research on corporate bonds includes examining both quantitative (mathe-
matical) and qualitative criteria established by AGIM. These criteria include
an issuer's industry, operating and financial profiles, business strategy, man-
agement quality, and projected financial and business conditions.
At least 65% of the Fund's assets will be invested in high quality debt securi-
ties. "High quality" debt securities are those rated (at the time of purchase)
"A" or better by Moody's or S&P (in the three highest rating tiers), or unrated
debt securities considered to be of comparable quality by AGIM. The Fund may
only invest up to 20% of its total assets in debt securities rated below "Baa"
by Moody's or "BBB" by S&P, or unrated debt securities considered to be of com-
parable quality by AGIM. The Fund will not be required to sell any downgraded
bonds that cause the Fund to exceed this 20% maximum guideline.
The Fund may invest up to 20% of its assets in domestic and foreign high yield
corporate and government debt securities, commonly referred to as "high
yield/high risk" or "junk" bonds. These bonds may be rated "B" or below by
Moody's (Moody's lowest rating is "C"), or "BB" or below by S&P (S&P's lowest
rating is "D"), or they may be unrated but considered to be of comparable qual-
ity by AGIM. There is no minimum rating required by the Fund. Domestic and for-
eign high yield debt securities involve greater risks than higher quality secu-
rities, including price volatility and risk of default in the payment of inter-
est and principal.
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<PAGE>
Municipal Bond Fund
The Fund's portfolio may include "moral obligation" securities, which are nor-
mally issued by special purpose public authorities. If the issuer of moral
obligation securities cannot make its interest and principal payments from cur-
rent revenues, it may rely on a reserve fund. The availability of the reserve
fund is a moral commitment, but not a legal obligation, of the state or munici-
pality that created the issuer.
The Fund also may invest in resource recovery bonds, which may be general obli-
gations of the issuing municipality or supported by corporate or bank guaran-
tees. The viability of the resource recovery project, environmental protection
regulations and project operator tax incentives may affect the value and credit
quality of resource recovery bonds.
In order to maintain liquidity, the Fund may invest up to 20% of its total
assets in taxable obligations, including taxable high-quality short-term money
market instruments, including:
.Obligations of the U.S. Government or its agencies or instrumentalities
.Commercial paper of issuers rated at the time of purchase "A-2" or better by
S&P, "P-2" or better by Moody's, or "F-2" or better by Fitch Investors Servic-
es, Inc., ("Fitch"), or unrated securities of similar quality
.Certificates of deposit, bankers' acceptances or time deposits of U.S. banks
with total assets of at least $1 billion (including obligations of foreign
branches of such banks) and of the 75 largest foreign commercial banks in
terms of total assets (including domestic branches of such banks), and repur-
chase agreements with respect to such obligations.
If at some point, AGIM determines that the market to securities exempt from
federal income taxes is troubled, the Fund may invest up to 100% of its net
assets taxable high-quality short-term money market instruments. Of course,
dividends paid by the Fund that are generated by taxable money market instru-
ments will be taxable to investors. From time to time, the Fund may invest more
than 25% of its total assets in obligations whose interest payments are from
revenues of similar projects (such as utilities or hospitals) or whose issuers
share the same geographic location. As a result, the Fund may be more suscepti-
ble to a single economic, political or regulatory development than would a Fund
of securities with a greater variety of issuers.
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31
<PAGE>
U.S. Government Securities Fund
The Fund may invest in:
.Mortgage-backed securities guaranteed by the Government National Mortgage
Association ("GNMA"), popularly known as "Ginnie Maes," that are backed by the
full faith and credit of the U.S. Government. These are known as a "modified
pass through" type of mortgage- backed security ("GNMA Certificates"). These
securities entitle the holder to receive all interest and principal payments
due whether or not payments are actually made on the underlying mortgages
.U.S. Treasury obligations
.Obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government. These securities are backed by their own credit, and may not be
backed by the full faith and credit of the U.S. Government
.Mortgage-backed securities guaranteed by agencies or instrumentalities of the
U.S. Government which are supported by their own credit but not the full faith
and credit of the U.S. Government, such as the Federal Home Loan Mortgage Cor-
poration and the Federal National Mortgage Association;
.Collateralized mortgage obligations issued by private issuers for which the
underlying mortgage-backed securities serving as collateral are backed (i) by
the credit alone of the U.S. Government agency or instrumentality which issues
or guarantees the mortgage backed securities, or (ii) by the full faith and
credit of the U.S. Government; and
.Repurchase agreements collateralized by any of the foregoing.
Money Market Fund
The Fund invests in high quality, U.S. dollar-denominated money market instru-
ments, as described on page 16.
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<PAGE>
Other Risks of Investing in the North American Funds
Although a 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, its subadvisor may choose not to use these investments or strate-
gies for a variety of reasons. These choices may cause a Fund to miss opportu-
nities, lose money or not achieve its goal.
High Yield/High Risk Securities
High yield securities (often known as "junk bonds") include debt instruments
that have an equity security attached to them. Securities rated below invest-
ment grade and comparable unrated securities offer yields that fluctuate over
time, but generally offer higher yields than do higher rated securities. Howev-
er, securities rated below investment grade also involve greater risks than
higher rated securities. Under rating agency guidelines, medium- and lower-
rated securities and comparable unrated securities will likely have some qual-
ity and protective characteristics that are outweighed by large uncertainties
or major risk exposures to adverse conditions.
Some of the debt securities in which the Funds may choose to invest may be, or
may be similar to, the lowest rated non-subordinated debt (securities rated C
by Moody's or CCC or lower by S&P). This type of security is very risky, as
issuers may not have the ability to repay principal and interest, and may even
default. If this should occur, the value of shares of the Fund holding them
could fall.
Foreign Securities
There are risks associated with investing in foreign securities. These risks
include unforeseen changes in tax laws, political changes, and changes in for-
eign 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 high-
er. In addition, investments in foreign companies may be subject to the possi-
bility 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
Each 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 securi-
ties issued or guaranteed by the U.S. government or its agencies or instrumen-
talities, 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 collat-
eral should the borrower of the securities fail financially. However, these
loans of Fund securities will only be made to firms deemed by the subadvisors
to be creditworthy.
Leverage Risk
Funds that borrow money to buy securities are using leverage. Leverage risk is
the risk that leverage, or debt, will enable a 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. Funds 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.
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33
<PAGE>
Hedging and Other
Strategic Transactions
Individual Funds may be authorized to 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 simply believing that certain securi-
ties will fall, or rise, in value, and structuring transactions that take
advantage of those changes. These transactions are generally used to protect
against possible changes in the market value of securities a Fund already owns
or plans to buy, to protect unrealized gains or to improve the Fund's return in
some way.
Where allowed, individual Funds 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. This category
includes derivative transactions. A "derivative" is generally defined as an
instrument whose value is based upon, or derived from, some underlying index or
rate. 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.
Euro Conversion
Any future conversion of certain European currencies to the Euro may present
additional risks to those Funds exposed to such currencies.
Frequent Trading
A 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 a Fund, including short-term capital
gains, which are generally taxable to shareholders at ordinary income tax
rates.
Temporary Defensive Strategies
A Fund's subadvisor may at certain times decide that pursuing the Fund's
investment strategies is inconsistent with market conditions. A subadvisor may
then employ defensive strategies designed mostly to limit losses. However, the
subadvisor 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.
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<PAGE>
Management of the Funds
Under the federal securities laws, Massachusetts law and the Trust's Agreement
and Declaration of Trust and By-Laws, the business and affairs of the Trust are
managed under the direction of the Trustees.
American General Asset Management Corp. ("AGAM"), formerly CypressTree Asset
Management Corporation, Inc., 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
Funds
.Selects, contracts with and compensates subadvisors to manage the assets of
the Funds
.Makes recommendations to the Trustees regarding the hiring, termination and
replacement of subadvisors
.Reimburses the Fund if the total of certain expenses allocated to any Fund
exceeds certain limitations
.Monitors the subadvisors for compliance with the investment objectives and
related policies of each Fund
.Reviews the performance of the subadvisors
.Periodically reports to the Trustees
The following table shows the management fees each Fund paid to AGAM for the
last fiscal year under the Advisory Agreement as a percentage of the Fund's
average daily net asset value.
<TABLE>
<CAPTION>
Funds Management
Fees
- ---------------------------------------------
<S> <C>
International Small Cap Fund 1.05%
International Equity Fund .90%
Global Equity Fund .90%
Small Cap Growth Fund .95%
Mid Cap Growth Fund .92%
Large Cap Growth Fund .90%
Tax-Sensitive Equity Fund .85%
Growth & Income Fund .68%
Equity-Income Fund .73%
Balanced Fund .75%
Strategic Income Fund .73%
Core Bond Fund .60%
Municipal Bond Fund .60%
U.S. Government Securities Fund .60%
Money Market Fund .20%
</TABLE>
- --------------------------------------------------------------------------------
Under an order granted to the 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 share-
holder approval. This "Manager of Managers" structure permits the Funds 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
subadvisors, including making recommendations to the Trust regarding the hir-
ing, termination and replacement of subadvisors.
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35
<PAGE>
Subadvisory Agreements
Nine investment subadvisors which provide portfolio management services to the
Funds:
Wellington Management Company, LLP
Wellington Management Company, LLP, the subadvisor to the Growth & Income Fund,
the Core Bond Fund, the Tax-Sensitive Equity Fund, and the Equity-Income Fund
("Wellington Management"), whose principal business address is 75 State Street,
Boston, Massachusetts 02109.
Wellington Management and its predecessor organizations have provided invest-
ment management services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals since 1928. As
of September 30, 1999, Wellington Management had investment management author-
ity with respect to approximately $217 billion of assets.
Matthew E. Megargel, Senior Vice President of Wellington Management, has served
as fund manager to the Growth & Income Fund since February 1992. Mr. Megargel
has served as fund manager of the Tax-Sensitive Equity Fund and the Equity-
Income Fund since March 2000. Mr. Megargel joined Wellington Management in 1983
as a research analyst and took on additional responsibilities as a fund manager
in 1988. In 1991, he became solely a fund manager with Wellington Management.
Credit Suisse Asset Management, LLC.
Credit Suisse Asset Management, LLC., the subadvisor to the Small Cap Growth
Fund, is located at 153 E. 53rd Street, New York, New York, 10022.
CSAM is a professional investment counseling firm which provides investment
services to investment companies, employee benefit plans, endowment funds,
foundations and other institutions and individuals. As of November 30, 1999,
CSAM managed approximately $60 billion of assets, and together with its global
affiliates, managed $168 billion worldwide.
The co-fund managers of the Small Cap Growth Fund are Elizabeth B. Dater and
Stephen J. Lurito. Ms. Dater, a managing director, has been fund manager of the
Small Cap Growth Fund since its inception and has been a fund manager since
1978. Mr. Lurito, a managing director, has been a fund manager of the Small Cap
Growth Fund since its inception and has been with the firm since 1987.
Founders Asset Management, LLC.
Investment decisions for the Large Cap Growth Fund, International Small Cap
Fund and Global Equity Funds are made by its subadvisor, Founders Asset Manage-
ment, LLC, located at 2930 East Third Avenue, Denver, Colorado 80206. Founders
is a registered investment adviser first established as an asset manager in
1938, and is a subsidiary of Mellon Bank, N.A. As of September 30, 1999, Found-
ers had over $7.5 billion of assets under management, including approximately
$5.2 billion in mutual fund accounts and $2.3 billion in other advisory
accounts.
To facilitate the day-to-day investment management of the Large Cap Growth
Fund, International Small Cap Fund, and Global Equity Fund, Founders employs a
unique team-and-lead-manager system. The management team is composed of several
members of the Investment Department, including lead portfolio managers, port-
folio traders and research analysts. Team members share responsibility for pro-
viding ideas, information, knowledge and expertise in the management of the
Funds. Each team member has one or more areas of expertise that is applied to
the management of the Fund. Daily decisions on Fund selection for the Fund
rests with a lead fund manager assigned to the Fund.
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36
<PAGE>
Tracy P. Stouffer, Vice President of Investments, has been the lead fund man-
ager for the International Small Cap Fund since July 1999. Previously, Mr.
Stouffer was a vice president and portfolio manager with Federated Global
Incorporated from 1995 to July 1999 and a vice president and portfolio manager
with Clariden Asset Management from 1988 to 1995.
Thomas M. Arrington, Vice President of Investments, is a Chartered Financial
Analyst who has been the co-portfolio manager, along with Scott Chapman, of the
Large Cap Growth Fund since December 1998. Mr. Arrington has served as co-port-
folio manager to the Global Equity Fund since March 2000. Prior to joining
Founders, he was vice president and director of income equity strategy at
HighMark Capital Management, a subsidiary of Union BanCal Corp., where he man-
aged the HighMark Income Equity Fund, a large-cap fund. He received a bache-
lor's degree in economics from the University of California, Los Angeles and an
MBA from San Francisco State University.
Scott Chapman, Vice President of Investments, is a Chartered Financial Analyst
who has been the co-portfolio manager, along with Thomas Arrington, of the
Large Cap Growth Fund since December 1998. Mr. Chapman has served as co-portfo-
lio manager to the Global Equity Fund since March 2000. Before joining Found-
ers, Chapman was vice president and director of growth strategy for HighMark
Capital. He has more than 10 years experience in equity investment management,
including security analysis positions with McCullough, Andrews and Cappiello
and Cooper Development Co. Chapman received a bachelor of science degree in
accounting from Santa Clara University and an MBA in finance from Golden Gate
University.
Douglas A. Loeffler, Vice President of Investments, is a Chartered Financial
Analyst who has served as the co-portfolio manager of the Global Equity Fund
since March, 2000. Mr. Loeffler has been the lead portfolio manager for Dreyfus
Founders Worldwide Growth Fund since July, 1999. Prior to joining Founders in
1995, Mr. Loeffler was an investment professional at Scudder, Stevens & Clark
for seven years.
INVESCO Funds Group, Inc. ("INVESCO")
INVESCO, with principal offices at 7800 E. Union Blvd., Denver, Colorado 80237,
has been the subadvisor to the Balanced Fund and the Mid Cap Growth Fund since
March 2000. Established in 1932, INVESCO Funds Group is one of the oldest
existing mutual fund management companies in the United States. Some of the
world's largest institutions and more than one million individual investors
rely on the knowledge of INVESCO's investment specialists. As of December 31,
1999, INVESCO and its affiliates managed approximately $357 billion in assets,
including $40 billion in shareholder accounts.
Charles P. Mayer, Director of Investments & Senior Vice President, manages the
equity portion of the Balanced Fund. Mr. Mayer, who joined INVESCO in 1993, has
been an investment professional since 1969. Mr. Mayer holds a BA from St.
Peter's College, and an MBA from St. John's University.
Donovan J. Paul, Senior Vice President, manages the fixed-income portion of the
Balanced Fund. Mr. Paul, who joined INVESCO in 1994, has been an investment
professional since 1976. Mr. Paul holds a BBA from the University of Iowa, and
an MBA from the University of Northern Iowa.
Peter Lovell, Vice President, is a co-manager of the Balanced Fund. Mr. Lovell,
who joined INVESCO in 1994, has been an investment professional since 1976. Mr.
Lovell holds a BBA from the University of Iowa, and an MBA from the University
of Northern Iowa.
Timothy J. Miller, Senior Vice President, manages the Mid Cap Growth Fund. Mr.
Miller, who joined INVESCO in 1992, has been an investment professional since
1979. Mr. Miller holds a BSBA from St. Louis University, and an MBA from the
University of Missouri.
- -------
37
<PAGE>
Morgan Stanley Dean Witter Investment Management Inc.
Morgan Stanley Dean Witter Investment Management Inc., with principal offices
at 1221 Avenue of the Americas, New York, New York 10020, has been the
subadvisor to the International Equity Fund since April 1, 1999. Morgan Stanley
Dean Witter Investment Management Inc. in certain instances does business using
the name Morgan Stanley Asset Management ("MSAM"). MSAM, a wholly-owned subsid-
iary of Morgan Stanley Dean Witter & Co., conducts a worldwide fund management
business, providing a broad range of fund management services to customers in
the United States and abroad. As of September 30, 1999, MSAM, together with its
affiliated institutional asset management companies, managed investments total-
ing approximately $173.5 billion.
Ann D. Thivierge shares portfolio management responsibility for the Interna-
tional Equity Fund with Barton M. Biggs. Ms. Thivierge is a Managing Director
of MSAM. She joined MSAM in 1986 and holds a B.A. in International Relations
from James Madison College, Michigan State University, and an M.B.A. in Finance
from New York University.
Barton M. Biggs has been Chairman and a director of MSAM since 1980. He is also
a director and chairman of various registered investment companies to which
MSAM and certain of its affiliates provide investment advisory services. Mr.
Biggs holds a B.A. from Yale University and an M.B.A. from New York University.
American General Investment Management, L.P. ("AGIM")
AGIM has been the subadvisor to the Strategic Income Fund, the Municipal Bond
Fund, the Core Bond Fund, the U.S. Government Securities Fund, and the Money
Market Fund since March, 2000. AGIM was formed in 1998 as a successor to the
investment management division of American General Corporation, and is an indi-
rect wholly-owned subsidiary of American General Corporation. AGIM also pro-
vides investment management and advisory services to pension and profit sharing
plans, financial institutions and other investors. Accounts managed by AGIM had
combined assets, as of December 31, 1999, of approximately $68.9 billion. AGIM
is located at 2929 Allen Parkway, Houston, Texas 77019.
Steven Guterman, Executive Vice President portfolio manager of the Strategic
Income Fund, joined AGIM in 1998. Mr. Guterman served as Managing Director at
Salomon Brothers, Inc. from 1996 to 1998 and as Senior Portfolio Manager and
head of the U.S. Fixed Income Portfolio Group from 1990 to 1998.
Municipal Bond Fund. The Fund is managed by a team of investment professionals
at AGIM.
Robert N. Kase, Portfolio Manager, who serves as the portfolio manager of the
Core Bond Fund and the U.S. Government Securities Fund, joined AGIM in 1998.
Mr. Kase has served as Investment Officer of Variable Annuity Life Insurance
Company and Senior Portfolio Manager of AGIM since 1998, and was Senior Portfo-
lio Manager with CL Capital Management, Inc. from 1992 to 1998.
Teresa Moro, Portfolio Manager, who serves as the portfolio manager of the
Money Market Fund, has served as Vice President and Investment Officer of Amer-
ican General Series Portfolio Company and as portfolio manager of the American
General Series Portfolio Company Money Market Fund since 1991.
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38
<PAGE>
Section III:
Investing in the North American Funds
Classes of Shares
Three classes of shares of North American Funds are offered by this Prospectus:
Class A shares, Class B shares, and Class C shares.
The initial investment minimum for all classes of shares per fund is $1,000.
For retirement plans and other automatic investment programs, the initial pur-
chase minimum is $50. You must maintain a minimum account balance of $500, or
$50 for retirement plans and other automatic investing 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 rec-
ord. North American Funds may refuse any request to purchase shares.
<TABLE>
<CAPTION>
Buying Fund Redeeming Fund
Shares 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 02266-8505
Boston, MA 02266-8505
To add to an existing account, mail
a check with your account number:
North American Funds
P.O. Box 8505
Boston, MA 02266-8505
Overnight Mailing Address:
North American Funds
c/o Boston Financial
attn: Leadership Services
66 Brooks Dr.
Braintree, MA 02184
- ----------------------------------------------------------------------------------------------------------
By Wire Transfer For wire instructions, contact Yes, with a minimum of $1,000. For wire
Customer Service at 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 in place Yes, if a dealer agreement is in place
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- -------
39
<PAGE>
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales Charges .Purchases of less .Shares are sold .Shares are sold
than without a front end without a front end
$1 million are sold sales charge. For sales charge. For
with a front end shares redeemed shares redeemed
sales charge within six years within one year
(see table on next there is a sales there is a 1% sales
page). charge at redemption charge at
.Purchases over $1 (see table on next redemption.
million are sold page). This does not .Available for
without a front end apply to the Money purchases under $1
sales charge. For Market Fund. million.
shares redeemed .Available for
within one year purchases of
there is a 1% back $250,000 or less.
end sales charge at
redemption.
- -----------------------------------------------------------------------------------
Programs That .Rights of .For B and C Shares,
Reduce Accumulation - you the back end sales
Sales Charges will pay the sales charge is equal to
charge applicable to the lesser of the
your total account net asset value at
balance in all redemption, or the
classes of shares. original purchase
.Statement of price.
intention -agree to
invest a certain
amount over 13
months and you will
pay the sales charge
based on your goal.
---------------------------------------------------------------------
.For an account
opened after 5-1-95,
in any class of
shares, there will
be no deferred sales
charge applied, if a
systematic
withdrawal plan is
established for up
to 12% of the
account value to be
withdrawn annually.
.For qualified group
retirement plans,
please see the
Statement of
Additional
Information (SAI)
for a more detailed
discussion.
- -----------------------------------------------------------------------------------
</TABLE>
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40
<PAGE>
Sales Charge Tables
Class A Shares Sales
Charge Table
There is no front end sales charge for Class A shares of the Money Market Fund.
If A shares of this Fund are exchanged for Class A shares of another Fund, the
regular sales charge for Class A shares will be charged.
<TABLE>
<CAPTION>
Amount of Sales Charge Sales Charge Concession to
Purchase 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
Equity Funds 5.75% 6.10% 5.00%
Other Funds 4.75% 4.99% 4.00%
- -----------------------------------------------------------------------------------
$50,000 but less than 4.75% 4.99% 4.00%
$100,000
- -----------------------------------------------------------------------------------
$100,000 but less than 4.00% 4.17% 3.25%
$250,000
- -----------------------------------------------------------------------------------
$250,000 but less than 3.00% 3.09% 2.50%
$500,000
- -----------------------------------------------------------------------------------
$500,000 but less than $1 2.25% 2.30% 1.75%
million
- -----------------------------------------------------------------------------------
$1 million or more None* None* See Below**
- -----------------------------------------------------------------------------------
</TABLE>
* 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
(0.50% for sales of the National Municipal Bond Fund), 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 Dis-
tributor. 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.
- -------
41
<PAGE>
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>
Class B shares purchased on or after October 1, 1997 will automatically convert
into Class A shares eight years after the calendar month in which a sharehold-
er's order to purchase the shares was accepted.
Class C Shares*
Class C shares are offered for sale at net asset value and are offered for pur-
chases 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 purchased on or after July 1, 1999, including shares purchased
through reinvestment of dividends and distributions, will not convert into
Class A shares after ten years. Class C shares purchased before July 1, 1999
will continue to convert into Class A shares ten years after the end of the
calendar month in which a shareholder's order to purchase the shares was
accepted. After June 30, 1999, 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 Funds reserve the right to redeem proceeds in whole or in part by a distri-
bution in kind of marketable securities held by the Fund.
Payment Following Redemption
Each Fund will normally send the proceeds from a redemption (less any applica-
ble 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. Each 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.
* Any shares in the redeeming shareholder's account that can be redeemed with-
out charge will be redeemed prior to those subject to a charge. Only time of
ownership spent in Funds other than the Money Market Fund counts towards
determining the applicable deferred sales charge.
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42
<PAGE>
Pricing of Fund Shares
The public offering price of the Class A shares of each Fund is the net asset
value per share (next determined following receipt of an order) plus, in the
case of all Funds except the Money Market Fund, 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 each Fund is calculated sep-
arately and, except as described below, is determined once daily as of the
close of regularly scheduled trading on the New York Stock Exchange. Net asset
value per share of each class of each Fund (other than the Money Market Fund,
as described below) is calculated by dividing the value of the portion of the
Fund's securities and other assets attributable to that class, less the liabil-
ities attributable to that class, by the number of shares of that class out-
standing. No determination is required on (i) days on which changes in the
value of such Fund's securities holdings will not materially affect the current
net asset value of the shares of the Fund and (ii) 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 instru-
ments, 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 a 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 the subadvisors under procedures estab-
lished and regularly reviewed by the Trustees.
Shares of the Fund are available at the net asset value to investors purchasing
shares of the Funds with redemption proceeds from other mutual fund complexes
on which the investor has paid for front end sales charge or was subject to a
deferred sales charge, whether or not paid, if such redemption occurred more
than 60 days prior to such purchase. The Distributor will require satisfactory
evidence of your qualification of this waiver. Please call for more informa-
tion. 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.
All instruments held by the Money Market Fund and short-term debt instruments
with a remaining maturity of 60 days or less held by the other Funds are valued
on an amortized cost basis.
Unless you request cash payment, all dividends and distributions will be rein-
vested. All Funds except the Money Market Fund declare and pay capital gains
annually.
- -------
43
<PAGE>
Dividends and Distributions from North American Funds
These Funds declare and pay income dividends annually:
.International Small Cap Fund
.Global Equity Fund
.Small Cap Growth Fund
.Mid Cap Growth Fund
.Large Cap Growth Fund
.Tax-Sensitive Equity Fund
.Equity-Income Fund
.Balanced Fund
These Funds declare and pay income dividends semi-annually:
.International Equity Fund
.Growth & Income Fund
These Funds declare income dividends daily and pay monthly:
.Strategic Income Fund
.Core Bond Fund
.Municipal Bond Fund
.U.S. Government Securities Fund
.Money Market Fund
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44
<PAGE>
Taxes
It is expected that each Fund of the Trust will qualify as a "regulated
investment company" under the Code. If it so qualifies, a 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 tax-
able year, provided that it distributes to its shareholders (i) at least 90%
of its net investment income for such taxable year, and at least 90% of its
net tax-exempt interest income for such taxable year. If in any year a Fund
fails to qualify as a regulated investment company, such Fund would incur reg-
ular corporate federal income tax on its taxable income for that year and be
subject to certain additional distribution requirements upon re-qualification.
Each Fund will be subject to a 4% nondeductible excise tax on its taxable
income to the extent it does not meet certain distribution requirements by the
end of each calendar year. Each Fund intends to make sufficient distributions
to avoid application of the corporate income and excise taxes.
Certain investments, including investments in assets "market 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, hedging trans-
actions, forward 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.
Funds investing in foreign securities or currencies may be required to pay
withholding or other taxes to foreign governments on dividends and interest.
The investment yield of the Funds investing in foreign securities or curren-
cies 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 a Fund is eligible for and makes an
election to allow the shareholders of that 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, Funds investing in
securities of passive foreign investment companies may be subject to U.S. fed-
eral income taxes (and interest on such taxes) as a result of such invest-
ments. The investment yield of the Funds making 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.
A 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 distribu-
tions 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 repre-
sent 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 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 disposi-
tion 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.
If a shareholder sells or otherwise disposes of a share of a Fund
- -------
45
<PAGE>
before holding it for more than six months, any loss on the sale or other dis-
position of such share shall be (i) treated as a long-term capital loss to the
extent of any capital gain dividends received by the shareholder with respect
to such share or (ii) in the case of the National Municipal Bond Fund, disal-
lowed to the extent of any exempt-interest dividend received by the shareholder
with respect to such shares. 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 ending 30 days after the date on which the shares are dis-
posed.
Generally, unless a shareholder of any Fund includes his or her taxpayer iden-
tification 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 divi-
dends (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 restric-
tion) to its shareholders state and local income tax exemptions available to
direct owners of certain types of U.S. government securities. Thus, for resi-
dents of these states, distributions derived from a Fund's investment in cer-
tain 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.
Municipal Bond Fund--Taxation
The National Municipal Bond Fund also intends to satisfy conditions under the
Code that will enable interest from municipal obligations, which is exempt from
regular federal income taxes in the hands of each Fund, to qualify as "exempt-
interest dividends" when distributed to such Fund's shareholders. Except as
discussed below, such dividends are exempt from regular federal income taxes.
Although exempt-interest dividends paid by the National Municipal Bond Fund
will be excluded by shareholders of the Funds from their gross income for regu-
lar federal income tax purposes, under the Code all or a portion of such divi-
dends may be (i) a preference item for purposes of the alternative minimum tax,
(ii) a component of the "ACE" adjustment for purposes of determining the amount
of corporate alternative minimum tax or (iii) a factor in determining the
extent to which a shareholder's Social Security or railroad retirement benefits
are taxable. Moreover, the receipt of exempt-interest dividends from each of
the Funds affect the federal tax liability of certain foreign corporations, S
Corporations and insurance companies. Furthermore, under the Code, interest on
indebtedness incurred or continued to purchase or carry Fund shares, which
interest is deemed to relate to exempt-interest dividends, will not be deduct-
ible by shareholders of the Fund for federal income tax purposes.
The exemption of exempt-interest dividend income from regular federal income
taxation does not necessarily result in similar exemptions for such income
under tax laws of state or local taxing authorities. In general, states exempt
from state income tax only that portion of any exempt-interest dividend that is
derived from interest received by a regulated investment company on its hold-
ings of obligations issued by that state or its political subdivisions and
instrumentalities.
A notice detailing the tax status of dividends and distributions paid by the
National Municipal Bond Fund will be mailed annually to its shareholders. As
part of this notice, the Fund will report to its shareholders the percentage of
interest income earned by the Fund during the preceding year on tax-exempt
obligations indicating, on a state-by-state basis, the source of such income.
Descriptions of tax consequences set forth in this Prospectus and in the State-
ment 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 a Fund, including the effect and applicability of state,
local, foreign, and other tax laws and the possible effects of changes in fed-
eral or other tax laws. This discussion is not intended as a substitute for
careful tax planning.
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46
<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 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 each Fund, except the Money Market Fund and the Municipal
Bond Fund, are subject to a Rule 12b-1 fee of up to .35% of average daily net
assets, five-sevenths of which (.25%) is a "service fee." There are no Rule
12b-1 fees on the Money Market Fund, and the Rule 12b-1 fee paid by Class A
shares, or for the Municipal Bond Fund is up to .15% of average annual net
assets, all of which is a "service fee."
Class B shares of each Fund except the Money Market Fund are subject to a Rule
12b-1 fee of up to 1.00% of average annual net assets, one-fourth (.25%) of
this is a "service fee."
Class C shares of each Fund except the Money Market Fund are subject to a Rule
12b-1 fee of up to 1.00% of average annual net assets, one-fourth (.25%) of
this 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.
- -------
47
<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 Distribution Diversification
With this program, you can have all dividends and other distributions from one
Fund automatically invested in the same class of shares of another 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.
Checkwriting
Checkwriting is available to Class A and Class C shareholders of the U.S. Gov-
ernment Securities, Municipal Bond and Money Market Funds. Simply request this
on your account application, and complete a signature card, and you will
receive a book of blank checks. The minimum amount of a check is $250. When a
check is presented for payment, enough shares will be redeemed to cover the
amount of the check and any applicable deferred sales charge. If the amount of
the check plus the sales charge is more than the account value, the check will
be returned unpaid.
Exchange Privilege
Shareholders may make free unlimited exchanges by mail or telephone within
classes of shares without any sales charge. Shares of one class may not be
exchanged for shares of any other class of any 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 varify
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 phone 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 A shares over $1 mil-
lion, 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 Investing
Your shares of any class of the Money Market, U.S. Government Securities or
Municipal Bond Fund can be exchanged monthly for shares of the same class of
other Funds. An exchange of at least $50 per exchange will be made around the
15th of each month in accordance with your instructions. This program takes
advantage of dollar cost averaging.
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, quarter-
ly, 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 your application and pay-
ments 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.
-------
48
<PAGE>
Financial Highlights
[LOGO OF FINANCIAL HIGHLIGHTS]
The financial highlights tables are intended to help you understand each Fund's
financial performance for the past five years or, if shorter, the period of a
Fund's operations. Certain information reflects financial results for a single
Fund share. The Total returns in the tables represent the return that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
derived from each Fund's financial statements, which have been audited by
Pricewaterhouse -Coopers LLP. Its report, along with each Fund's financial
statements, is included in the Trust's annual report, which is available upon
request.
- -------
49
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Small Cap Fund
----------------------------------------------------------------------------------
Class A Class B
----------------------------------------- --------------------------------------
Year Year Year 3/04/96* Year Year Year 3/04/96*
Ended Ended Ended to Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97 10/31/96 10/31/99 10/31/98 10/31/97 10/31/96
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $13.91 $13.86 $13.43 $12.50 $13.66 $13.71 $13.37 $12.50
- --------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.14) (0.02) (0.03) 0.05 (0.27) (0.12) (0.11) (0.01)
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 5.06 0.07 0.46 0.88 4.96 0.07 0.45 0.88
------------------------------------------------------------------------------------
Total from investment
operations 4.92 0.05 0.43 0.93 4.69 (0.05) 0.34 0.87
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $18.83 $13.91 $13.86 $13.43 $18.35 $13.66 $13.71 $13.37
- --------------------------------------------------------------------------------------------------------------
Total Return 35.37% 0.36% 3.20% 7.44%+ 34.33% (0.36%) 2.54% 6.96%+
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000's) $2,309 $2,173 $3,225 $2,120 $7,417 $7,073 $7,369 $5,068
- --------------------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.90% 1.90% 1.90% 1.90%# 2.55% 2.55% 2.55% 2.55%#
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (0.87%) (0.12%) (0.19%) (0.50%)# (1.53%) (0.79%) (0.84%) (0.15%)#
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 202% 54% 75% 67%# 202% 54% 75% 67%#
- --------------------------------------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 2.24% 2.23% 2.46% 3.07%# 2.89% 2.88% 2.98% 3.27%#
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
International Small Cap Fund
--------------------------------------
Class C
--------------------------------------
Year Year Year 3/04/96*
Ended Ended Ended to
10/31/99 10/31/98 10/31/97 10/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.66 $13.71 $13.37 $12.50
- --------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) (0.31) (0.12) (0.11) (0.01)
Net realized and unrealized
gain/(loss) on investments and
foreign currency 5.02 0.07 0.45 0.88
----------------------------------------
Total from investment operations 4.71 (0.05) 0.34 0.87
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $18.37 $13.66 $13.71 $13.37
- --------------------------------------------------------------------------------
Total Return 34.48% (0.36%) 2.54% 6.96%+
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period (000's) $5,972 $6,195 $7,025 $5,517
- --------------------------------------------------------------------------------
Ratio of total expenses to average net
assets 2.55% 2.55% 2.55% 2.55%#
- --------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (1.53%) (0.78%) (0.84%) (0.15%)#
- --------------------------------------------------------------------------------
Portfolio turnover rate 202% 54% 75% 67%#
- --------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.89% 2.88% 2.96% 3.25%#
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Net investment income per share has been calculated using the average share
method
# Annualized
+ Non-annualized
-------
50
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity Fund
-----------------------------------------------------
Class A
-----------------------------------------------------
Year Year Year Year 1/09/95*
Ended Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97 10/31/96** 10/31/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.83 $10.81 $11.35 $10.11 $10.00
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.02 0.03 0.06 0.09 0.06
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 2.07 0.02 0.35 1.33 0.08
-----------------------------------------------------
Total from investment
operations 2.09 0.05 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 (0.03) (0.90) (0.76) (0.10) -
-----------------------------------------------------
Total distributions (0.03) (1.03) (0.95) (0.18) (0.03)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $11.89 $9.83 $10.81 $11.35 $10.11
- --------------------------------------------------------------------------------
Total Return 21.33% 0.67% 3.55% 14.25% 1.37%+
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of
period (000's) $3,997 $3,769 $4,461 $4,732 $6,897
- --------------------------------------------------------------------------------
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 0.18% 0.44% 0.97% 0.84% 0.70%#
- --------------------------------------------------------------------------------
Portfolio turnover rate 142% 173% 146% 170% 69%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 1.98% 1.87% 1.96% 1.97% 2.18%#
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity Fund
-------------------------------------------------------
Class B
-------------------------------------------------------
Year Year Year Year 1/09/95*
Ended Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97** 10/31/96** 10/31/95
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.77 $10.75 $11.30 $10.10 $10.00
- ----------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.05) (0.02) 0.03 0.06 0.01
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 2.05 0.00 0.31 1.30 0.12
-------------------------------------------------------
Total from investment
operations 2.00 (0.02) 0.34 1.36 0.13
<CAPTION>
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distributions
Dividends from net
investment income - (0.06) (0.13) (0.05) (0.03)
Distributions from
realized capital gains (0.03) (0.90) (0.76) (0.11) -
-------------------------------------------------------
Total distributions (0.03) (0.96) (0.89) (0.16) (0.03)
- ----------------------------------------------------------------------------------
Net Asset Value, End of
Period $11.74 $9.77 $10.75 $11.30 $10.10
- ----------------------------------------------------------------------------------
Total Return 20.53% (0.03%) 2.92% 13.58% 1.28%+
- ----------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------
Net assets, end of
period (000's) $14,269 $14,030 $16,334 $15,217 $8,421
- ----------------------------------------------------------------------------------
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 (0.45%) (0.18%) 0.32% 0.57% 0.15%#
- ----------------------------------------------------------------------------------
Portfolio turnover rate 142% 173% 146% 170% 69%
- ----------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 2.63% 2.52% 2.54% 2.60% 2.93%#
- ----------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
- -------
51
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity Fund
-------------------------------------------------------
Class C
-------------------------------------------------------
Year Year Year Year 1/09/95*
Ended Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97** 10/31/96** 10/31/95
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.77 $10.76 $11.31 $10.10 $10.00
- ----------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.05) (0.02) 0.03 0.06 0.01
Net realized and
unrealized gain/(loss)
on Investments and
foreign currency 2.05 (0.01) 0.31 1.30 0.12
-------------------------------------------------------
Total from investment
operations 2.00 (0.03) 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 (0.03) (0.90) (0.76) (0.10) -
-------------------------------------------------------
Total distributions (0.03) (0.96) (0.89) (0.15) (0.03)
- ----------------------------------------------------------------------------------
Net Asset Value, End of
Period $11.74 $9.77 $10.76 $11.31 $10.10
- ----------------------------------------------------------------------------------
Total Return 20.53% (0.13%) 2.91% 13.63% 1.28%+
- ----------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------
Net assets, end of
period (000's) $6,680 $7,960 $8,460 $9,076 $6,324
- ----------------------------------------------------------------------------------
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 (0.49%) (0.19%) 0.32% 0.51% 0.13%#
- ----------------------------------------------------------------------------------
Portfolio turnover rate 142% 173% 146% 170% 69%
- ----------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 2.62% 2.52% 2.57% 2.60% 2.93%#
- ----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Equity Fund
----------------------------------------------------
Class A
----------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99** 10/31/98 10/31/97 10/31/96** 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $16.43 $16.32 $14.50 $13.84 $14.82
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.08 0.02 0.06 (0.04) -
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 0.82 1.34 3.45 0.91 (0.54)
----------------------------------------------------
Total from investment
operations 0.90 1.36 3.51 0.87 (0.54)
----------------------------------------------------
Distributions
Dividends from net
investment income - (0.22) (0.05) (0.21) -
Distributions from
realized capital gains (1.21) (1.03) (1.64) - (0.44)
----------------------------------------------------
Total distributions (1.21) (1.25) (1.69) (0.21) (0.44)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $16.12 $16.43 $16.32 $14.50 $13.84
- ---------------------------------------------------------------------------------
Total Return 5.60% 8.90% 26.10% 6.33% (3.52%)
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $12,757 $31,055 $30,960 $25,924 $23,894
- ---------------------------------------------------------------------------------
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 0.47% 0.09% 0.33% (0.30%) 0.03%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 38% 20% 28% 165% 57%
- ---------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 1.84% 1.75% 1.81% 1.83% 1.92%
- ---------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
-------
52
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Equity Fund
----------------------------------------------------
Class B
----------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97* 10/31/96* 10/31/95*
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $16.24 $16.14 $14.36 $13.73 $14.79
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.04) (0.11) (0.05) (0.14) (0.09)
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 0.84 1.35 3.47 0.91 (0.53)
----------------------------------------------------
Total from investment
operations 0.80 1.24 3.42 0.77 (0.62)
----------------------------------------------------
Distributions
Dividends from net
investment income - (0.11) (0.14) -
Distributions from
realized capital gains (1.21) (1.03) (1.64) - (0.44)
----------------------------------------------------
Total distributions (1.21) (1.14) (1.64) (0.14) (0.44)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $15.83 $16.24 $16.14 $14.36 $13.73
- ---------------------------------------------------------------------------------
Total Return 5.01% 8.17% 25.63% 5.64% (4.09%)
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $25,381 $30,287 $31,833 $25,661 $23,317
- ---------------------------------------------------------------------------------
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 (0.25%) (0.55%) (0.32%) (0.95%) (0.61%)
- ---------------------------------------------------------------------------------
Portfolio turnover rate 38% 20% 28% 165% 57%
- ---------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.50% 2.40% 2.47% 2.48% 2.58%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Equity Fund
--------------------------------------------------
Class C
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96* 10/31/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $16.30 $16.19 $14.41 $13.73 $14.79
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.04) (0.10) (0.05) (0.14) (0.09)
Net realized and unrealized
gain/(loss) on
investments and foreign
currency 0.84 1.35 3.47 0.92 (0.53)
--------------------------------------------------
Total from investment
operations 0.80 1.25 3.42 0.78 (0.62)
--------------------------------------------------
Distributions
Dividends from net
investment income - (0.11) - (0.10) -
Distributions from realized
capital gains (1.21) (1.03) (1.64) - (0.44)
--------------------------------------------------
Total distributions (1.21) (1.14) (1.64) (0.10) (0.44)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $15.89 $16.30 $16.19 $14.41 $13.73
- --------------------------------------------------------------------------------
Total Return 4.99% 8.21% 25.54% 5.70% (4.09%)
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $45,201 $57,774 $61,245 $64,830 $83,340
- --------------------------------------------------------------------------------
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 (0.24%) (0.56%) (0.32%) (0.95%) (0.64%)
- --------------------------------------------------------------------------------
Portfolio turnover rate 38% 20% 28% 165% 57%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.50% 2.40% 2.46% 2.48% 2.53%
- --------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
53
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small Cap Growth Fund
(formerly Emerging Growth Fund)
-----------------------------------------------------------------------
Class A Class B Class C
--------------------- --------------------- ---------------------
Year 1/06/98* Year 1/06/98* Year 1/06/98*
Ended to Ended to Ended to
10/31/99 ** 10/31/98 10/31/99 ** 10/31/98 10/31/99 ** 10/31/98
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $8.88 $10.00 $8.83 $10.00 $8.84 $10.00
- ----------------------------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.15) (0.08) (0.21) (0.12)*** (0.21) (0.12)**
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 4.08 (1.04) 3.95 (1.05) 3.94 (1.04)
-----------------------------------------------------------------------
Total from investment
operations 3.93 (1.12) 3.74 (1.17) 3.73 (1.16)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $12.81 $8.88 $12.57 $8.83 $12.57 $8.84
- ----------------------------------------------------------------------------------------------------
Total Return 44.26% (11.20%)+ 42.36% (11.70%)+ 42.19% (11.60%)+
- ----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------
Net assets, end of
period (000's) $224 $146 $660 $263 $440 $238
- ----------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.70% 1.70%# 2.35% 2.35%# 2.35% 2.35%#
- ----------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (1.43%) (1.00%)# (2.04%) (1.76%)# (2.03%) (1.67%)#
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 52%+ 129% 52%+ 129% 52%+
- ----------------------------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 6.96% 15.48%# 7.58% 16.48%# 7.60% 15.78%#
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mid Cap Growth Fund
(formerly Small/Mid Cap Fund)
---------------------------------------------------------------------------------------
Class A Class B
----------------------------------------- -------------------------------------------
Year Year Year 3/04/96* Year Year Year 3/04/96*
Ended Ended Ended to Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97 10/31/96 10/31/99 ** 10/31/98 10/31/97** 10/31/96
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $16.09 $15.51 $12.62 $12.50 $15.77 $15.33 $12.58 $12.50
- --------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.21) (0.15) (0.14) (0.02) (0.32) (0.25) (0.23) (0.05)
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 4.12 0.97 3.03 0.14 4.02 0.93 2.98 0.13
---------------------------------------------------------------------------------------
Total from investment
operations 3.91 0.82 2.89 0.12 3.70 0.68 2.75 0.08
---------------------------------------------------------------------------------------
Distributions
Distributions from
capital gains (1.48) (0.24) - - (1.48) (0.24) - -
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $18.52 $16.09 $15.51 $12.62 $17.99 $15.77 $15.33 $12.58
- --------------------------------------------------------------------------------------------------------------------
Total Return 25.50% 5.51% 22.90% 0.96%+ 24.62% 4.65% 21.86% 0.64%+
- --------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000's) $5,970 $4,814 $4,170 $2,966 $17,184 $13,972 $11,802 $6,659
- --------------------------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.68% 1.68% 1.68% 1.68%# 2.33% 2.33% 2.33% 2.33%#
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (1.15%) (0.90%) (1.02%) (0.40%)# (1.80%) (1.55%) (1.67%) (1.05%) #
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 181% 162% 145% 92%# 181% 162% 145% 92%#
- --------------------------------------------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 1.89% 1.93% 2.24% 2.69%# 2.54% 2.58% 2.79% 3.05%#
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
# Annualized
+ Non-annualized
** Net investment income per share has been calculated using the average share
method
-------
54
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mid Cap Growth Fund
(formerly Small/Mid Cap Fund)
------------------------------------------------
Class C
------------------------------------------------
Year Ended Year Ended Year Ended 3/04/96* to
10/31/99 ** 10/31/98 10/31/97** 10/31/96
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $15.79 $15.35 $12.59 $12.50
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) (0.32) (0.25) (0.23) (0.05)
Net realized and unrealized
gain/(loss) on investments
and foreign currency 4.03 0.93 2.99 0.14
------------------------------------------------
Total from investment
operations 3.71 0.68 2.76 0.09
------------------------------------------------
Distributions
Distributions from capital
gains (1.48) (0.24) - -
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $18.02 $15.79 $15.35 $12.59
- ---------------------------------------------------------------------------------
Total Return 24.65% 4.64% 21.92% 0.72%+
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $18,939 $16,221 $13,471 $8,241
- ---------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 2.33% 2.33% 2.33% 2.33%#
- ---------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (1.80%) (1.55%) (1.67%) (1.05%)#
- ---------------------------------------------------------------------------------
Portfolio turnover rate 181% 162% 145% 92%#
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.54% 2.58% 2.78% 3.04%#
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large Cap Growth Fund
(formerly Growth Equity Fund)
------------------------------------------------------------------------------------
Class A Class B
----------------------------------------- -----------------------------------------
Year Year Year 3/04/96* Year Year Year 3/04/96*
Ended Ended Ended to Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97 10/31/96 10/31/99 ** 10/31/98 10/31/97 10/31/96
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $17.73 $17.01 $13.78 $12.50 $17.46 $16.90 $13.73 $12.50
- ---------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.19) (0.07) (0.03) 0.28 (0.31) (0.18) (0.13) 0.24
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 5.05 2.22 3.45 1.00 4.96 2.17 3.46 0.99
------------------------------------------------------------------------------------
Total from investment
operations 4.86 2.15 3.42 1.28 4.65 1.99 3.33 1.23
------------------------------------------------------------------------------------
Distributions
Dividends from net
investment income - - (0.19) - - - (0.16) -
Distributions from
capital gains (1.15) (1.43) - - (1.15) (1.43) - -
------------------------------------------------------------------------------------
Total distributions (1.15) (1.43) (0.19) (1.15) (1.43) (0.16)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $21.44 $17.73 $17.01 $13.78 $20.96 $17.46 $16.90 $13.73
- ---------------------------------------------------------------------------------------------------------------
Total Return 28.57% 13.85% 25.13% 10.24% 27.77%+ 12.93% 24.50% 9.84%+
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000's) $5,656 $3,919 $3,053 $2,244 $17,171 $11,659 $9,040 $4,748
- ---------------------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.65% 1.65% 1.65% 1.65%# 2.30% 2.30% 2.30% 2.30%#
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (0.94%) (0.43%) (0.17%) 4.11%# (1.58%) (1.07%) (0.82%) 4.18%#
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 145% 115% 181% 450% 145%# 115% 181% 450%#
- ---------------------------------------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 1.90% 1.91% 2.28% 2.71%# 2.52% 2.56% 2.78% 3.06%#
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Net investment income per share has been calculated using the average share
method
# Annualized
+ Non-annualized
- -------
55
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large Cap Growth Fund
(formerly Growth Equity Fund)
-----------------------------------------
Class C
-----------------------------------------
Year Year Year 3/04/96*
Ended Ended Ended to
10/31/99 ** 10/31/98 10/31/97 10/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.44 $16.89 $13.73 $12.50
- --------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) (0.31) (0.20) (0.13) 0.24
Net realized and unrealized
gain/(loss) on investments and
foreign currency 4.95 2.18 3.46 0.99
-----------------------------------------
Total from investment operations 4.64 1.98 3.33 1.23
-----------------------------------------
Distributions
Dividends from net investment income - - (0.17) -
Distributions from capital gains (1.15) (1.43) - -
-----------------------------------------
Total distributions (1.15) (1.43) (0.17) -
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $20.93 $17.44 $16.89 $13.73
- --------------------------------------------------------------------------------
Total Return 27.75% 12.87% 24.50% 9.84%+
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period (000's) $19,463 $12,965 $12,766 $6,494
- --------------------------------------------------------------------------------
Ratio of total expenses to average
net assets 2.30% 2.30% 2.30% 2.30%#
- --------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (1.58%) (1.06%) (0.82%) 4.13%#
- --------------------------------------------------------------------------------
Portfolio turnover rate 145% 115% 181% 450%#
- --------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.52% 2.56% 2.75% 2.96%#
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tax-Sensitive Equity Fund
----------------------------------------------------------------------
Class A Class B Class C
--------------------- --------------------- ---------------------
Year 1/06/98* Year 1/06/98* Year 1/06/98*
Ended to Ended to Ended to
10/31/99 ** 10/31/98 10/31/99 ** 10/31/98 10/31/99 ** 10/31/98
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.07 $10.00 $9.04 $10.00 $9.04 $10.00
- ---------------------------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.05) (0.01) (0.11) (0.04)** (0.11) (0.03)**
Net realized and
unrealized gain/(loss)
on Investments and
foreign currency 0.47 (0.92) 0.43 (0.92) 0.42 (0.93)
----------------------------------------------------------------------
Total from investment
operations 0.42 (0.93) 0.32 (0.96) 0.31 (0.96)
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.49 $9.07 $9.36 $9.04 $9.35 $9.04
- ---------------------------------------------------------------------------------------------------
Total Return 4.63% (9.30%)+ 3.54% (9.60%)+ 3.43% (9.60%)+
- ---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------
Net assets, end of
period (000's) $1,526 $4,149 $3,724 $2,900 $3,723 $3,286
- ---------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.60% 1.60%# 2.25% 2.25%# 2.25% 2.25% #
- ---------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (0.48%) (0.40%)# (1.14%) (1.80%)# (1.14%) (1.84%)#
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate 56% 38% + 56% 38% + 56% 38% +
- ---------------------------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 2.05% 2.51%# 2.71% 3.24%# 2.71% 3.16%#
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Net investment income per share has been calculated using the average share
method
+ Non-annualized
# Annualized
-------
56
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth & Income Fund
--------------------------------------------------
Class A
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $24.26 $21.77 $17.56 $14.72 $13.09
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.03 0.08 0.14 0.18 0.26
Net realized and unrealized
gain/(loss) on investments
and foreign currency 5.45 4.14 5.26 2.99 1.90
--------------------------------------------------
Total from investment
operations 5.48 4.22 5.40 3.17 2.16
--------------------------------------------------
Distributions
Dividends from net
investment income - - (0.15) (0.21) (0.23)
Distributions from realized
capital gains (0.96) (1.70) (1.04) (0.12) (0.30)
Distributions in excess of
net investment income - (0.03) - - -
--------------------------------------------------
Total distributions (0.96) (1.73) (1.19) (0.33) (0.53)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $28.78 $24.26 $21.77 $17.56 $14.72
- --------------------------------------------------------------------------------
Total Return 23.11% 20.82% 31.95% 21.84% 17.28%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $37,210 $42,916 $34,186 $18,272 $12,180
- --------------------------------------------------------------------------------
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 0.11% 0.34% 0.66% 1.10% 1.91%
- --------------------------------------------------------------------------------
Portfolio turnover rate 28% 18% 39% 49% 40%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 1.49% 1.45% 1.50% 1.56% 1.69%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth & Income Fund
---------------------------------------------------
Class B
---------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96* 10/31/95*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $24.01 $21.67 $17.50 $14.69 $13.08
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) (0.15) (0.07) 0.01 0.07 0.16
Net realized and
unrealized gain/(loss) on
investments and foreign
currency 5.38 4.11 5.23 2.99 1.94
---------------------------------------------------
Total from investment
operations 5.23 4.04 5.24 3.06 2.10
---------------------------------------------------
Distributions
Dividends from net
investment income - - (0.03) (0.13) (0.19)
Distributions from
realized capital gains (0.96) (1.70) (1.04) (0.12) (0.30)
---------------------------------------------------
Total distributions (0.96) (1.70) (1.07) (0.25) (0.49)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $28.28 $24.01 $21.67 $17.50 $14.69
- --------------------------------------------------------------------------------
Total Return 22.28% 20.04% 31.40% 21.08% 16.73%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $104,695 $75,574 $54,871 $34,740 $19,052
- --------------------------------------------------------------------------------
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 (0.54%) (0.32%) 0.01% 0.45% 1.14%
- --------------------------------------------------------------------------------
Portfolio turnover rate 28% 18% 39% 49% 40%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.13% 2.10% 2.15% 2.20% 2.33%
- --------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
57
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth & Income Fund
-------------------------------------------------
Class C
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $24.10 $21.75 $17.56 $14.71 $13.08
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) (0.15) (0.07) 0.01 0.07 0.18
Net realized and unrealized
gain/(loss) on investments
and foreign currency 5.40 4.12 5.25 3.00 1.90
-------------------------------------------------
Total from investment
operations 5.25 4.05 5.26 3.07 2.08
-------------------------------------------------
Distributions
Dividends from net
investment income - - (0.03) (0.10) (0.15)
Distributions from realized
capital gains (0.96) (1.70) (1.04) (0.12) (0.30)
-------------------------------------------------
Total distributions (0.96) (1.70) (1.07) (0.22) (0.45)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $28.39 $24.10 $21.75 $17.56 $14.71
- ---------------------------------------------------------------------------------
Total Return 22.28% 20.00% 31.37% 21.12% 16.56%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $156,056 $122,395 $98,250 $74,825 $63,154
- ---------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.99% 1.99% 1.99% 1.99% 1.99%
- ---------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (0.54%) (0.31%) 0.01% 0.45% 1.26%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 28% 18% 39% 49% 40%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.13% 2.10% 2.13% 2.20% 2.26%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity-Income Fund
--------------------------------------------------
Class A
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $17.64 $17.44 $17.37 $15.94 $14.78
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.22 0.29 0.33 0.16 0.12
Net realized and unrealized
gain/(loss) on investments
and foreign currency 0.46 1.46 3.59 2.69 1.83
--------------------------------------------------
Total from investment
operations 0.68 1.75 3.92 2.85 1.95
--------------------------------------------------
Distributions
Dividends from net
investment income (0.29) (0.33) (0.18) (0.14) -
Distributions from realized
capital gains (1.12) (1.22) (3.67) (1.28) (0.79)
--------------------------------------------------
Total distributions (1.41) (1.55) (3.85) (1.42) (0.79)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $16.91 $17.64 $17.44 $17.37 $15.94
- --------------------------------------------------------------------------------
Total Return 3.93% 10.55% 27.24% 19.23% 14.22%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $13,990 $36,661 $36,334 $28,470 $22,026
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.40% 1.42% 1.34% 1.34% 1.34%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 1.30% 1.57% 2.01% 0.98% 0.79%
- --------------------------------------------------------------------------------
Portfolio turnover rate 73% 22% 36% 169% 54%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 1.58% 1.51% 1.55% 1.55% 1.62%
- --------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
58
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity-Income Fund
--------------------------------------------------
Class B
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $17.43 $17.24 $17.22 $15.84 $14.77
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.10 0.16 0.23 0.06 0.02
Net realized and unrealized
gain/(loss) on investments
and foreign currency 0.47 1.46 3.54 2.69 1.84
--------------------------------------------------
Total from investment
operations 0.57 1.62 3.77 2.75 1.86
--------------------------------------------------
Distributions
Dividends from net
investment income (0.17) (0.21) (0.08) (0.09) -
Distributions from realized
capital gains (1.12) (1.22) (3.67) (1.28) (0.79)
--------------------------------------------------
Total distributions (1.29) (1.43) (3.75) (1.37) (0.79)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $16.71 $17.43 $17.24 $17.22 $15.84
- --------------------------------------------------------------------------------
Total Return 3.30% 9.81% 26.29% 18.59% 13.58%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $31,659 $38,954 $36,191 $27,058 $19,874
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 2.04% 2.07% 1.99% 1.99% 1.99%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 0.58% 0.93% 1.36% 0.33% 0.13%
- --------------------------------------------------------------------------------
Portfolio turnover rate 73% 22% 36% 169% 54%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.23% 2.16% 2.21% 2.20% 2.32%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity-Income Fund
----------------------------------------------------
Class C
----------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95 *
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $17.53 $17.33 $17.27 $15.84 $14.77
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.10 0.17 0.23 0.06 0.02
Net realized and
unrealized gain/(loss)
on investments and
foreign currency 0.46 1.46 3.56 2.69 1.84
----------------------------------------------------
Total from investment
operations 0.56 1.63 3.79 2.75 1.86
----------------------------------------------------
Distributions
Dividends from net
investment income (0.17) (0.21) (0.06) (0.04) -
Distributions from
realized capital gains (1.12) (1.22) (3.67) (1.28) (0.79)
----------------------------------------------------
Total distributions (1.29) (1.43) (3.73) (1.32) (0.79)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $16.80 $17.53 $17.33 $17.27 $15.84
- ---------------------------------------------------------------------------------
Total Return 3.22% 9.83% 26.33% 18.53% 13.58%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $70,200 $95,986 $94,649 $83,855 $83,719
- ---------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 2.04% 2.07% 1.99% 1.99% 1.99%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 0.59% 0.93% 1.36% 0.33% 0.15%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 73% 22% 36% 169% 54%
- ---------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.23% 2.10% 2.19% 2.20% 2.23%
- ---------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
59
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Balanced Fund
------------------------------------------------------
Class A
------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 * 10/31/95 *
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.48 $12.58 $12.33 $12.02 $11.13
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.24 0.25 0.34 0.39 0.38
Net realized and
unrealized gain/(loss)
on investments and
foreign currency (0.09) 1.04 1.52 1.07 1.35
------------------------------------------------------
Total from investment
operations 0.15 1.29 1.86 1.46 1.73
------------------------------------------------------
Distributions
Dividends from net
investment income (0.23) (0.32) (0.45) (0.40) (0.32)
Distributions from
realized capital gains (0.84) (2.07) (1.16) (0.75) (0.52)
------------------------------------------------------
Total distributions (1.07) (2.39) (1.61) (1.15) (0.84)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $10.56 $11.48 $12.58 $12.33 $12.02
- ---------------------------------------------------------------------------------
Total Return 1.20% 12.42% 17.01% 13.10% 16.95%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of
period (000's) $5,936 $14,415 $12,294 $10,873 $10,033
- ---------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.39% 1.39% 1.34% 1.34% 1.34%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to
average net assets 2.18% 2.11% 2.74% 3.32% 3.39%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 198% 185% 211% 253% 226%
- ---------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 1.60% 1.53% 1.59% 1.55% 1.69%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Balanced Fund
--------------------------------------------------------
Class B
--------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 * 10/31/96 * 10/31/95 *
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.40 $12.49 $12.26 $11.98 $11.12
- -----------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.18 0.18 0.25 0.31 0.30
Net realized and
unrealized gain/(loss)
on investments and
foreign currency (0.10) 1.04 1.53 1.07 1.36
--------------------------------------------------------
Total from investment
operations 0.08 1.22 1.78 1.38 1.66
--------------------------------------------------------
Distributions
Dividends from net
investment income (0.15) (0.24) (0.39) (0.35) (0.28)
Distributions from
realized capital gains (0.84) (2.07) (1.16) (0.75) (0.52)
--------------------------------------------------------
Total distributions (0.99) (2.31) (1.55) (1.10) (0.80)
- -----------------------------------------------------------------------------------
Net Asset Value, End of
Period $10.49 $11.40 $12.49 $12.26 $11.98
- -----------------------------------------------------------------------------------
Total Return 0.57% 11.71% 16.27% 12.35% 16.31%
- -----------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------
Net assets, end of
period (000's) $13,958 $18,929 $17,140 $16,219 $9,875
- -----------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 2.04% 2.04% 1.99% 1.99% 1.99%
- -----------------------------------------------------------------------------------
Ratio of net investment
income (loss) to
average net assets 1.60% 1.46% 2.09% 2.67% 2.69%
- -----------------------------------------------------------------------------------
Portfolio turnover rate 198% 185% 211% 253% 226%
- -----------------------------------------------------------------------------------
Expense ratio before
expense reimbursement
by advisor 2.25% 2.18% 2.23% 2.20% 2.37%
- -----------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
60
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Balanced Fund
----------------------------------------------------
Class C
----------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95 *
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $11.54 $12.62 $12.35 $12.02 $11.12
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.17 0.18 0.25 0.32 0.31
Net realized and
unrealized gain/(loss)
on investments and
foreign currency (0.09) 1.05 1.54 1.07 1.35
----------------------------------------------------
Total from investment
operations 0.08 1.23 1.79 1.39 1.66
----------------------------------------------------
Distributions
Dividends from net
investment income (0.15) (0.24) (0.36) (0.31) (0.24)
Distributions from
realized capital gains (0.84) (2.07) (1.16) (0.75) (0.52)
----------------------------------------------------
Total distributions (0.99) (2.31) (1.52) (1.06) (0.76)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $10.63 $11.54 $12.62 $12.35 $12.02
- ---------------------------------------------------------------------------------
Total Return 0.58% 11.68% 16.21% 12.41% 16.25%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $53,669 $65,049 $68,261 $72,821 $80,626
- ---------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 2.04% 2.04% 1.99% 1.99% 1.99%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 1.55% 1.47% 2.09% 2.67% 2.76%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 198% 185% 211% 253% 226%
- ---------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.25% 2.18% 2.20% 2.20% 2.24%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Income Fund
--------------------------------------------------
Class A
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.99 $9.76 $9.80 $9.07 $8.90
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.72 0.67 0.70 0.80 0.78
Net realized and unrealized
gain/(loss) on investments
and foreign currency (0.53) (0.63) 0.28 0.72 0.18
--------------------------------------------------
Total from investment
operations 0.19 0.04 0.98 1.52 0.96
--------------------------------------------------
Distributions
Dividends from net
investment income (0.73) (0.67) (0.84) (0.79) (0.79)
Distributions from realized
capital gains (0.05) (0.14) (0.18) - -
--------------------------------------------------
Total distributions (0.78) (0.81) (1.02) (0.79) (0.79)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $8.40 $8.99 $9.76 $9.80 $9.07
- --------------------------------------------------------------------------------
Total Return 2.10% 0.22% 10.57% 17.35% 11.43%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $8,997 $15,296 $15,924 $13,382 $10,041
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.50% 1.50% 1.50% 1.50% 1.07%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 8.21% 7.02% 7.25% 8.28% 9.08%
- --------------------------------------------------------------------------------
Portfolio turnover rate 119% 162% 193% 68% 180%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 1.67% 1.56% 1.61% 1.65% 1.69%
- --------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
61
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Income Fund
--------------------------------------------------
Class B
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.99 $9.76 $9.80 $9.07 $8.90
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.66 0.61 0.64 0.73 0.73
Net realized and unrealized
gain/(loss) on investments
and foreign currency (0.52) (0.63) 0.28 0.73 0.17
--------------------------------------------------
Total from investment
operations 0.14 (0.02) 0.92 1.46 0.90
--------------------------------------------------
Distributions
Dividends from net
investment income (0.67) (0.61) (0.78) (0.73) (0.73)
Distributions from realized
capital gains (0.05) (0.14) (0.18) - -
--------------------------------------------------
Total distributions (0.72) (0.75) (0.96) (0.73) (0.73)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $8.41 $8.99 $9.76 $9.80 $9.07
- --------------------------------------------------------------------------------
Total Return 1.56% (0.43%) 9.86% 16.59% 10.72%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $21,340 $29,210 $34,590 $30,890 $20,672
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 2.15% 2.15% 2.15% 2.15% 1.95%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 7.58% 6.39% 6.60% 7.63% 8.10%
- --------------------------------------------------------------------------------
Portfolio turnover rate 119% 162% 193% 68% 180%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.32% 2.21% 2.23% 2.27% 2.38%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Income Fund
--------------------------------------------------
Class C
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.99 $9.76 $9.80 $9.07 $8.90
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.66 0.61 0.64 0.73 0.73
Net realized and unrealized
gain/(loss) on investments
and foreign currency (0.52) (0.63) 0.28 0.73 0.17
--------------------------------------------------
Total from investment
operations 0.14 (0.02) 0.92 1.46 0.90
--------------------------------------------------
Distributions
Dividends from net
investment income (0.67) (0.61) (0.78) (0.73) (0.73)
Distributions from realized
capital gains (0.05) (0.14) (0.18) - -
--------------------------------------------------
Total distributions (0.72) (0.75) (0.96) (0.73) (0.73)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $8.41 $8.99 $9.76 $9.80 $9.07
- --------------------------------------------------------------------------------
Total Return 1.56% (0.43%) 9.86% 16.59% 10.72%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $20,749 $33,537 $32,683 $22,783 $14,273
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 2.15% 2.15% 2.15% 2.15% 1.95%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 7.57% 6.37% 6.60% 7.63% 8.25%
- --------------------------------------------------------------------------------
Portfolio turnover rate 119% 162% 193% 68% 180%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 2.32% 2.21% 2.24% 2.28% 2.37%
- --------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
62
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Core Bond Fund
(formerly Investment Quality Bond Fund)
--------------------------------------------------
Class A
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $10.63 $10.52 $10.34 $10.56 $9.74
- --------------------------------------------------------------------------------
Investment Operations:
Net investment
income/(loss) 0.66 0.68 0.67 0.66 0.68
Net realized and unrealized
gain/(loss) on investments
and foreign currency (0.77) 0.10 0.18 (0.20) 0.82
--------------------------------------------------
Total from investment
operations (0.11) 0.78 0.85 0.46 1.50
--------------------------------------------------
Distributions
Dividends from net
investment income (0.67) (0.67) (0.67) (0.68) (0.68)
- --------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.85 $10.63 $10.52 $10.34 $10.56
- --------------------------------------------------------------------------------
Total Return (1.08%) 7.63% 8.57% 4.52% 15.91%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period
(000's) $3,507 $6,730 $7,110 $9,056 $10,345
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.25% 1.25% 1.25% 1.25% 1.25%
- --------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 4.77% 6.45% 6.54% 6.37% 6.72%
- --------------------------------------------------------------------------------
Portfolio turnover rate 43% 48% 65% 56% 132%
- --------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 1.70% 1.54% 1.62% 1.55% 1.73%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Core Bond Fund
(formerly Investment Quality Bond Fund)
-------------------------------------------------
Class B
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.62 $10.52 $10.33 $10.55 $9.74
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.59 0.61 0.60 0.60 0.61
Net realized and unrealized
gain/(loss) on investments (0.75) 0.10 0.20 (0.20) 0.82
-------------------------------------------------
Total from investment
operations (0.16) 0.71 0.80 0.40 1.43
-------------------------------------------------
Distributions
Dividends from net
investment income (0.61) (0.61) (0.61) (0.62) (0.62)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.85 $10.62 $10.52 $10.33 $10.55
- ---------------------------------------------------------------------------------
Total Return (1.56%) 6.93% 8.05% 3.92% 15.12%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $4,295 $4,845 $4,613 $4,678 $3,472
- ---------------------------------------------------------------------------------
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 5.71% 5.81% 5.89% 5.72% 5.95%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 43% 48% 65% 56% 132%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.39% 2.20% 2.33% 2.27% 2.69%
- ---------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
63
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Core Bond Fund
(formerly Investment Quality Bond Fund)
-------------------------------------------------
Class C
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.62 $10.52 $10.33 $10.55 $9.74
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.59 0.61 0.60 0.60 0.61
Net realized and unrealized
gain/(loss) on investments (0.75) 0.10 0.20 (0.20) 0.82
-------------------------------------------------
Total from investment
operations (0.16) 0.71 0.80 0.40 1.43
-------------------------------------------------
Distributions
Dividends from net
investment income (0.61) (0.61) (0.61) (0.62) (0.62)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.85 $10.62 $10.52 $10.33 $10.55
- ---------------------------------------------------------------------------------
Total Return (1.56%) 6.93%+ 8.05% 3.92% 15.12%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $4.593 $5,532 $6,109 $7,543 $7,206
- ---------------------------------------------------------------------------------
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 5.70% 5.81% 5.89% 5.72% 6.00%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 43% 48% 65% 56% 132%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.38% 2.20% 2.29% 2.22% 2.50%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Bond Fund
(formerly National Municipal Bond Fund)
------------------------------------------------
Class A
------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.22 $10.09 $9.73 $9.62 $8.82
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.45 0.47 0.48 0.48 0.51
Net realized and unrealized
gain/(loss) on investments (0.74) 0.13 0.36 0.11 0.80
------------------------------------------------
Total from investment
operations (0.29) 0.60 0.84 0.59 1.31
------------------------------------------------
Distributions
Dividends from net investment
income (0.45) (0.47) (0.48) (0.48) (0.51)
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $9.48 $10.22 $10.09 $9.73 $9.62
- ---------------------------------------------------------------------------------
Total Return (2.95%) 6.04% 8.85% 6.31% 15.26%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $4,435 $5,820 $6,347 $7,710 $7,618
- ---------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.00% 1.00% 0.99% 0.99% 0.80%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average net
assets 4.52% 4.60% 4.87% 4.99% 5.55%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 46% 43% 29% 49% 44%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 1.41% 1.23% 1.23% 1.25% 1.34%
- ---------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
64
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Bond Fund
(formerly National Municipal Bond Fund)
------------------------------------------------
Class B
------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.22 $10.09 $9.73 $9.62 $8.81
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.37 0.38 0.40 0.40 0.43
Net realized and unrealized
gain/(loss) on investments (0.74) 0.13 0.36 0.11 0.81
------------------------------------------------
Total from investment
operations (0.37) 0.51 0.76 0.51 1.24
------------------------------------------------
Distributions
Dividends from net investment
income (0.37) (0.38) (0.40) (0.40) (0.43)
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $9.48 $10.22 $10.09 $9.73 $9.62
- ---------------------------------------------------------------------------------
Total Return (3.77%) 5.15% 7.94% 5.41% 14.42%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $4,197 $5,273 $6,532 $6,130 $5,876
- ---------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.85% 1.85% 1.84% 1.84% 1.70%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average net
assets 3.67% 3.75% 4.02% 4.14% 4.59%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 46% 43% 29% 49% 44%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.26% 2.08% 2.15% 2.11% 2.41%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Bond Fund
(formerly National Municipal Bond Fund)
------------------------------------------------
Class C
------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.22 $10.09 $9.73 $9.62 $8.81
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.37 0.38 0.40 0.40 0.43
Net realized and unrealized
gain/(loss) on investments (0.74) 0.13 0.36 0.11 0.81
------------------------------------------------
Total from investment
operations (0.37) 0.51 0.76 0.51 1.24
------------------------------------------------
Distributions
Dividends from net investment
income (0.37) (0.38) (0.40) (0.40) (0.43)
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $9.48 $10.22 $10.09 $9.73 $9.62
- ---------------------------------------------------------------------------------
Total Return (3.77%) 5.15% 7.94% 5.41% 14.42%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $3,931 $5,147 $5,305 $5,693 $6,834
- ---------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.85% 1.85% 1.84% 1.84% 1.70%
- ---------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average net
assets 3.67% 3.75% 4.02% 4.14% 4.53%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 46% 43% 29% 49% 44%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.26% 2.08% 2.15% 2.25% 2.63%
- ---------------------------------------------------------------------------------
</TABLE>
- -------
65
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Securities Fund
------------------------------------------------
Class A
------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.08 $9.94 $9.80 $9.98 $9.45
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.53 0.56 0.59 0.56 0.63
Net realized and unrealized
gain/(loss) on investments (0.48) 0.16 0.13 (0.12) 0.57
------------------------------------------------
Total from investment
operations 0.05 0.72 0.72 0.44 1.20
------------------------------------------------
Distributions
Dividends from net investment
income (0.58) (0.58) (0.58) (0.56) (0.67)
Distributions in excess of
net investment income - - - (0.06) -
------------------------------------------------
Total distributions (0.58) (0.58) (0.58) (0.62) (0.67)
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $9.55 $10.08 $9.94 $9.80 $9.98
- ---------------------------------------------------------------------------------
Total Return 0.48% 7.41% 7.56% 4.64% 13.15%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $35,379 $49,624 $53,235 $72,774 $81,179
- ---------------------------------------------------------------------------------
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 5.64% 5.65% 6.20% 5.71% 6.54%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 63% 116% 364% 477% 469%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 1.46% 1.40% 1.42% 1.41% 1.45%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Securities Fund
------------------------------------------------
Class B
------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.07 $9.94 $9.80 $9.98 $9.45
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.47 0.49 0.54 0.50 0.56
Net realized and unrealized
gain/(loss) on investments (0.47) 0.15 0.11 (0.12) 0.58
------------------------------------------------
Total from investment
operations 0.00 0.64 0.65 0.38 1.14
------------------------------------------------
Distributions
Dividends from net investment
income (0.51) (0.51) (0.51) (0.50) (0.61)
Distributions in excess of
net investment income - - - (0.06) -
------------------------------------------------
Total distributions (0.51) (0.51) (0.51) (0.56) (0.61)
- ---------------------------------------------------------------------------------
Net Asset Value, End of Period $9.56 $10.07 $9.94 $9.80 $9.98
- ---------------------------------------------------------------------------------
Total Return 0.01% 6.60% 6.84% 3.97% 12.45%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $12,033 $17,850 $16,659 $19,444 $13,993
- ---------------------------------------------------------------------------------
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 5.00% 4.99% 5.55% 5.06% 5.53%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 63% 116% 364% 477% 469%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.11% 2.05% 2.09% 2.06% 2.28%
- ---------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
66
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Securities Fund
-------------------------------------------------
Class C
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96* 10/31/95
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.07 $9.94 $9.80 $9.98 $9.45
- ---------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.47 0.49 0.54 0.50 0.56
Net realized and unrealized
gain/(loss) on investments (0.47) 0.15 0.11 (0.12) 0.58
-------------------------------------------------
Total from investment
operations 0.00 0.64 0.65 0.38 1.14
-------------------------------------------------
Distributions
Dividends from net
investment income (0.51) (0.51) (0.51) (0.50) (0.61)
Distributions in excess of
net investment income - - - (0.06) -
-------------------------------------------------
Total distributions (0.51) (0.51) (0.51) (0.56) (0.61)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.56 $10.07 $9.94 $9.80 $9.98
- ---------------------------------------------------------------------------------
Total Return 0.01% 6.60% 6.84% 3.97% 12.45%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $10,776 $12,708 $14,716 $20,009 $20,186
- ---------------------------------------------------------------------------------
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 5.00% 5.00% 5.55% 5.06% 5.74%
- ---------------------------------------------------------------------------------
Portfolio turnover rate 63% 116% 364% 477% 469%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 2.11% 2.05% 2.09% 2.06% 2.15%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
--------------------------------------------------
Class A
--------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 * 10/31/98 10/31/97 10/31/96 10/31/95
- -------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.05
Distributions
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- -------------------------------------------------------------------------------
Net Asset Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
Total Return 4.56% 5.18% 5.13% 5.16% 5.60%
- -------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------
Net assets, end of period
(000's) $6,030 $10,295 $11,057 $8,087 $11,379
- -------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.50% 0.50% 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets 4.46% 5.06% 5.02% 5.02% 5.45%
- -------------------------------------------------------------------------------
Expense ratio before
expense reimbursement by
advisor 0.95% 0.92% 0.96% 0.95% 0.96%
- -------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
- -------
67
<PAGE>
NORTH AMERICAN FUNDS
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
-------------------------------------------------
Class B
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.05
Distributions
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------
Total Return 4.56% 5.18% 5.13% 5.16% 5.60%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $4,551 $5,919 $3,332 $3,062 $1,564
- ---------------------------------------------------------------------------------
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 4.47% 5.02% 5.02% 5.02% 5.52%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 0.99% 0.98% 1.05% 1.18% 1.41%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
-------------------------------------------------
Class C
-------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99* 10/31/98 10/31/97 10/31/96 10/31/95
- ---------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.05
Distributions
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------
Total Return 4.56% 5.18% 5.13% 5.16% 5.60%
- ---------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Net assets, end of period
(000's) $8,644 $8,237 $7,539 $9,840 $9,394
- ---------------------------------------------------------------------------------
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 4.48% 5.05% 5.01% 5.02% 5.46%
- ---------------------------------------------------------------------------------
Expense ratio before expense
reimbursement by advisor 1.01% 0.94% 1.00% 0.98% 0.95%
- ---------------------------------------------------------------------------------
</TABLE>
* Net investment income per share has been calculated using the average share
method
-------
68
<PAGE>
[LOGO OF NORTH AMERICAN FUNDS]
North American Funds
286 Congress Street
Boston, Massachusetts 02210
(800) 872-8037
Class A Shares
Class B Shares
Class C Shares
International Small Cap Fund
International Equity Fund
Global Equity Fund
Small Cap Growth Fund
Mid Cap Growth Fund
Large Cap Growth Fund
Tax-Sensitive Equity Fund
Growth & Income Fund
Equity-Income Fund
Balanced Fund
Strategic Income Fund
Core Bond Fund
Municipal Bond Fund
U.S. Government Securities Fund
Money Market Fund
For Additional Information
More information about the Funds, including
the SAI, is available to your 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
By Mail, or in Person from the Public Reference Room of the
Securities and Exchange Commission (SEC). (You will pay a
duplication fee,)
Visit or, Write to:
SEC's Public Reference Section
450 Fifth Street, NW
Washington, DC, 20549-6009
1-800-SEC-0330
Online at the SEC's Internet Site
Text-only versions of fund documents can be
viewed online or downloaded from http://www.sec.gov.
Statement of Additional INformation (SAI)
The SAI provides additional information about the Trust and
the Funds. The SAI and the auditor's report and financial
statements included in the Trust's most recent Annual
Report to its shareholders are incorporated by reference
as part of this Prospectus.
Annual and Semi-annual Reports
The Annual and Semi-annual Reports describe the Funds'
performance, list portfolio holdings and include additional
information about the Funds' investments. The Annual
Report discusses the market conditions and investment
strategies that significantly affected the Fund's
performance during their last fiscal year.
File No. 811-5797
0300:90201B
