<PAGE>
As filed with the Securities and Exchange Commission on March 15, 2000
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
[ ] Pre-Effective Amendment No.
[ ] Post-Effective Amendment No.
North American Funds
(Exact name of Registrant as Specified in Charter)
286 Congress Street
Boston, Massachusetts 02210
(800) 872-8037
(Area Code and Telephone Number)
John I. Fitzgerald, Esq.
General Counsel
North American Funds
286 Congress Street
Boston, Massachusetts 02210
(800) 872-8037
(Name and Address of Agent for Service)
Copy to:
Gregory D. Sheehan, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
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Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
Title of Securities Being Registered:
Shares of Beneficial Interest ($.001 par value) of Growth & Income Fund, a
series of the Registrant
----------------
It is proposed that this filing will become effective on April 14, 2000
pursuant to Rule 488.
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The Registrant has registered an indefinite amount of its securities under
the Securities Act of 1933, pursuant to Rule 24f-2 under the Investment Company
Act of 1940. In reliance upon Rule 24f-2, no filing fee is being paid at this
time.
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<PAGE>
NORTH AMERICAN FUNDS
Equity-Income Fund
Tax-Sensitive Equity Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
June 1, 2000
To the Shareholders:
This is to notify you that a Special Meeting of Shareholders of the Equity-
Income Fund and the Tax-Sensitive Equity Fund, each a series of North American
Funds, will be held on June 1, 2000 at 10:00 a.m., Eastern Time, at the offices
of American General Asset Management Corp., 286 Congress Street, Boston,
Massachusetts 02210, for the following purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization
providing for the transfer of all of the assets of the Equity-Income Fund
to the Growth & Income Fund in exchange for shares of the Growth & Income
Fund and the assumption by the Growth & Income Fund of all of the
liabilities of the Equity-Income Fund, and the distribution of such shares
to the shareholders of the Equity-Income Fund in complete liquidation of
the Equity-Income Fund. (To be voted upon by the shareholders of the
Equity-Income Fund only.)
2. To approve or disapprove an Agreement and Plan of Reorganization
providing for the transfer of all of the assets of the Tax-Sensitive Equity
Fund to the Growth & Income Fund in exchange for shares of the Growth &
Income Fund and the assumption by the Growth & Income Fund of all of the
liabilities of the Tax-Sensitive Equity Fund, and the distribution of such
shares to the shareholders of the Tax-Sensitive Equity Fund in complete
liquidation of the Tax-Sensitive Equity Fund. (To be voted upon by the
shareholders of the Tax-Sensitive Equity Fund only.)
3. To transact such other business as may properly come before the
meeting.
The Trustees have fixed the close of business on April 7, 2000 as the record
date for determination of shareholders entitled to notice of, and to vote at,
the Special Meeting.
By Order of the Board of Trustees
[ ]
April 14, 2000
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-
PAID ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE SPECIAL
MEETING.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
OVERVIEW OF MERGERS....................................................... 2
Proposed Transactions................................................... 2
Operating Expenses...................................................... 3
Federal Income Tax Consequences......................................... 5
Comparison of Investment Objectives, Policies and Restrictions.......... 5
Risk Factors............................................................ 7
Comparison of Distribution Policies and Purchase, Exchange and
Redemption Procedures.................................................. 9
SPECIAL MEETING OF SHAREHOLDERS........................................... 10
THE PROPOSALS: APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF
REORGANIZATION........................................................... 10
Board of Trustees' Recommendations...................................... 10
Required Shareholder Vote............................................... 10
Background and Reasons for the Proposed Mergers......................... 11
INFORMATION ABOUT THE MERGERS............................................. 11
Agreement and Plan of Reorganization.................................... 11
Description of the Merger Shares........................................ 12
Organization............................................................ 12
Federal income tax consequences......................................... 13
Capitalization.......................................................... 13
INFORMATION ABOUT THE FUNDS............................................... 14
VOTING INFORMATION........................................................ 15
Record date, quorum and method of tabulation............................ 15
Shares outstanding and beneficial ownership............................. 15
Solicitation of proxies................................................. 15
Revocation of proxies................................................... 16
Shareholder proposals at future meetings of shareholders................ 16
Adjournment............................................................. 16
</TABLE>
<PAGE>
PROSPECTUS/PROXY STATEMENT
April 14, 2000
This Prospectus/Proxy Statements relates to the proposed mergers (the
"Mergers") of the Equity-Income Fund and the Tax-Sensitive Equity Fund (each an
"Acquired Fund") into the Growth & Income Fund (the "Acquiring Fund"). Each of
the Acquired Funds and the Acquiring Fund is a series of North American Funds.
The Acquired Funds and the Acquiring Fund are referred to in this
Prospectus/Proxy Statement as the "Funds." The Mergers are to be effected
through the transfer of all of the assets of each Acquired Fund to the
Acquiring Fund in exchange for shares of beneficial interest of the Acquiring
Fund (the "Merger Shares") and the assumption by the Acquiring Fund of all of
the liabilities of the Acquired Fund. This will be followed by the distribution
of the Merger Shares to the shareholders of the Acquired Fund in liquidation of
the Acquired Fund. As a result of each proposed transaction, each shareholder
of the Acquired Fund will receive in exchange for his or her Acquired Fund
shares a number of Acquiring Fund shares of the same class equal in value at
the date of the exchange to the aggregate value of the shareholder's Acquired
Fund shares. This means that you may end up with a different number of shares
compared to what you originally held, but the total dollar value of your shares
will remain the same.
Because shareholders of the Acquired Funds are being asked to approve
transactions which will result in their receiving shares of the Acquiring Fund,
this Proxy Statement also serves as a Prospectus for the Merger Shares of the
Acquiring Fund.
North American Funds is an open-end series management investment company
organized as a Massachusetts business trust.
This Prospectus/Proxy Statement explains concisely what you should know
before investing in the Acquiring Fund. Please read it carefully and keep it
for future reference.
The following documents have been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated into this Prospectus/Proxy
Statement by reference:
. the Funds' current Prospectus, dated March 1, 2000 (the "Fund Prospectus");
. the Funds' current Statement of Additional Information, dated March 1, 2000
(the "Fund SAI");
. the Statement of Additional Information relating to this Prospectus/Proxy
Statement dated April , 2000 (the "Merger SAI"); and
. the Report of Independent Accountants and financial statements in respect of
each Fund included in the Funds' Annual Report to Shareholders for the year
ended October 31, 1999 (the "Annual Report").
This Prospectus/Proxy Statement is accompanied by or has been preceded by a
copy of the Fund Prospectus. For a free copy of the Fund Prospectus, Fund SAI,
Merger SAI, or Annual Report, please call 1-800-872-8037 or write to North
American Funds at:
North American Funds
286 Congress Street
Boston, MA 02210
The SEC has not approved or disapproved these securities or passed upon the
accuracy or adequacy of this Prospectus/Proxy Statement. Any representation to
the contrary is a crime.
You can lose money by investing in the Acquiring Fund. The Acquiring Fund
may not achieve its goals, and is not intended as a complete investment
program. An investment in the Acquiring Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
1
<PAGE>
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OVERVIEW OF MERGERS
Proposed Transactions
The Trustees of North American Funds on behalf of the Funds have approved
transactions involving the Merger of each Acquired Fund into the Acquiring
Fund. Each Merger is proposed to be accomplished pursuant to an Agreement and
Plan of Reorganization providing for the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange for shares of the Acquiring
Fund and the assumption by the Acquiring Fund of all the liabilities of the
Acquired Fund, followed by the liquidation of the Acquired Fund.
American General Asset Management Corp. ("AGAM"), formerly named CypressTree
Asset Management Corporation, Inc., has been in the business of investment
management since 1996. AGAM is the investment adviser to each Fund under an
interim investment advisory agreement adopted pursuant to Rule 15a-4 under the
Investment Company Act of 1940, as amended (the "1940 Act") that expires on
August 7, 2000. Subject to the approval by the shareholders of North American
Funds,* it is expected that AGAM will continue to serve as investment adviser
to North American Funds. AGAM has delegated responsibility for managing the
portfolios of each of the Funds to Wellington Management Company, LLP
("Wellington Management").
The investment objective of the Acquiring Fund is similar to the investment
objectives of the Acquired Funds, which objectives and certain differences are
explained further below under "Comparison of Investment Objectives, Policies
and Restrictions."
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* Shareholder approval of the investment advisory agreements with AGAM is the
subject of a separate proxy statement dated April , 2000, which will be
mailed to North American Funds shareholders on or about April , 2000. For a
copy of this proxy statement, call 1-800-872-8037.
As a result of each proposed Merger, each Acquired Fund will receive a
number of Class A, Class B and Class C Merger Shares of the Acquiring Fund
equal in value to the value of the net assets of the Acquired Fund being
transferred and attributable to the Class A, Class B and Class C shares of the
Acquired Fund. Following the transfer, (i) the Acquired Fund will distribute to
each of its Class A, Class B and Class C shareholders a number of full and
fractional Class A, Class B and Class C Merger Shares of the Acquiring Fund
equal in value to the aggregate value of the shareholder's Class A, Class B and
Class C Acquired Fund shares, as the case may be, and (ii) the Acquired Fund
will be liquidated.
The Class A, Class B and Class C shares of the Acquiring Fund have identical
characteristics to the corresponding classes of the Acquired Funds.
Class A Shares
Class A shares of the Funds are sold subject to a front-end sales load and
are subject to a distribution and servicing fee at an aggregate annual rate of
0.35% of assets attributable to Class A shares. Class A shares are generally
not subject to a contingent deferred sales charge (a "CDSC"), except in the
case of certain purchases of Class A shares without a sales load, which are
redeemed within one year of purchase.
Class B Shares
Class B shares of the Funds are sold at net asset value, without an initial
sales charge but subject to a CDSC at declining rates if redeemed within six
years of purchase. Class B shares of the Funds are subject to servicing and
distribution fees at an aggregate annual rate of 1.00% of assets attributable
to Class B shares and generally convert automatically to Class A shares
approximately eight years after purchase for purchases on or after October 1,
1997. Class B shares purchased before October 1, 1997 convert six years after
purchase.
Class C Shares
Class C shares of the Funds also are sold at net asset value without an
initial sales charge but subject to a CDSC if redeemed within the first year of
purchase. Class C shares are subject to servicing and
2
<PAGE>
distribution fees at an aggregate annual rate of 1.00% of assets attributable
to Class C shares and generally convert automatically to Class A shares
approximately ten years after purchase for purchases prior to July 1, 1999.
Class C shares purchased on or after July 1, 1999 will not convert into Class A
shares.
You will not be charged a front end sales load on the issuance of the Merger
Shares, or a CDSC on Acquired Fund shares exchanged for Merger Shares. The
Merger Shares that you receive will be subject to a CDSC on redemption to the
same extent that that Acquired Fund shares exchanged were so subject. In other
words, the Merger Shares will be treated as having been purchased on the date
that you originally purchased the Acquired Fund shares and for the price you
originally paid. For purposes of determining the conversion date of the Class B
and Class C Merger Shares into Class A shares, the Merger Shares will be
treated as having been purchased on the date that you originally purchased the
Acquired Fund shares (so that the conversion of such shares will be unchanged
by the Mergers). See the Fund Prospectus for more information about the
characteristics of Class A, Class B and Class C shares of the Acquiring Fund.
As described more fully below, the Trustees of North American Funds approved
the Mergers based on, among other things, a careful review of the investment
capabilities, philosophy and performance of AGAM and Wellington Management. The
Trustees of North American Funds unanimously recommend that shareholders of
each Acquired Fund approve the Merger for such Fund. In reaching that
conclusion, the Trustees considered that each Merger offers shareholders the
opportunity to pursue a similar investment objective in a larger Fund, which
should offer economies of scale and opportunities for greater diversification
of risk. See "Proposals--Background and Reasons for the Proposed Mergers."
Operating Expenses
As the following tables suggest, the Mergers should result in Acquired Fund
shareholders experiencing lower Fund expenses. Of course, there can be no
assurance that the Mergers will result in expense savings for shareholders.
These tables summarize, for Class A shares, Class B shares and Class C shares,
expenses
. that each Fund incurred in its fiscal year ended October 31, 1999, restated
to reflect the elimination of fee waivers and expense reimbursements
previously in effect; and
. that the Acquiring Fund would have incurred in its most recent fiscal year
after giving effect on a pro forma combined basis to the proposed Merger, if
the Merger had occurred at the beginning of such fiscal year.
The tables are provided to help you understand an investor's share of the
operating expenses which each Fund incurs. The examples show the estimated
cumulative expenses attributable to a hypothetical $10,000 investment in each
Acquired Fund, the Acquiring Fund and the Acquiring Fund on a pro forma basis,
over specified periods. By translating "Total Annual Fund Operating Expenses"
into dollar amounts, these examples help you compare the costs of investing in
a particular Fund, or a particular class of shares, with the costs of investing
in other mutual funds.
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees
Maximum Sales Charge Imposed on Purchase (as a
percentage of offering price at the time of
purchase)............................................ 5.75% None None
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or redemption
price, whichever is lower)........................... 1%(1) 5%(2) 1%(3)
</TABLE>
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(1) First year after purchase for purchases of $1 million or more.
(2) 5% first and second year; 4% third year; 3% fourth year; 2% fifth year; 1%
sixth year and 0% thereafter.
(3) 0% after first year.
3
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Expenses
---------
Current Expenses
---------------------------------------
Annual Fund Operating Growth &
Expenses Equity-Income Tax-Sensitive Growth & Income
(as a percentage of average Fund Equity Fund Income Fund Fund
net assets) ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Management Fees
Class A.................... 0.75% 0.85% 0.73% 0.73%
Class B.................... 0.75% 0.85% 0.73% 0.73%
Class C.................... 0.75% 0.85% 0.73% 0.73%
12b-1 Fees
Class A.................... 0.35% 0.35% 0.35% 0.35%
Class B.................... 1.00% 1.00% 1.00% 1.00%
Class C.................... 1.00% 1.00% 1.00% 1.00%
Other Expenses
Class A.................... 0.37% 0.40% 0.38% 0.32%
Class B.................... 0.37% 0.40% 0.38% 0.32%
Class C.................... 0.37% 0.40% 0.38% 0.32%
Total Fund Operating
Expenses
Class A.................... 1.47% 1.60% 1.46% 1.40%
Class B.................... 2.12% 2.25% 2.11% 2.05%
Class C.................... 2.12% 2.25% 2.11% 2.05%
</TABLE>
Example of Fund Expenses:
An investment of $10,000 would incur the following expenses, assuming 5%
annual return, constant expenses and, except as indicated, redemption at the
end of each time period:
<TABLE>
<CAPTION>
Pro Forma
Expenses
---------
Current Expenses
--------------------------------------- Growth &
Equity-Income Tax-Sensitive Growth & Income
Fund Equity Fund Income Fund Fund
------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Class A
1 year....................... $ 716 $ 728 $ 715 $ 709
3 years...................... $1,103 $1,051 $1,010 $ 993
5 years...................... $1,332 $1,396 $1,327 $1,297
10 years..................... $2,231 $2,366 $2,221 $2,158
Class B
1 year....................... $ 715 $ 728 $ 714 $ 708
3 years...................... $1,064 $1,103 $1,061 $1,043
5 years...................... $1,339 $1,405 $1,334 $1,303
10 years..................... $2,284 $2,419 $2,273 $2,210
Class B (no redemption)
1 year....................... $ 215 $ 228 $ 214 $ 208
3 years...................... $ 664 $ 703 $ 661 $ 643
5 years...................... $1,139 $1,205 $1,134 $1,103
10 years..................... $2,284 $2,419 $2,273 $2,210
Class C
1 year....................... $ 315 $ 328 $ 314 $ 308
3 years...................... $ 664 $ 703 $ 661 $ 643
5 years...................... $1,139 $1,205 $1,134 $1,103
10 years..................... $2,452 $2,585 $2,441 $2,379
Class C (no redemption)
1 year....................... $ 215 $ 228 $ 214 $ 208
3 years...................... $ 664 $ 703 $ 661 $ 643
5 years...................... $1,139 $1,205 $1,134 $1,103
10 years..................... $2,452 $2,585 $2,441 $2,379
</TABLE>
4
<PAGE>
Federal Income Tax Consequences
For federal income tax purposes no gain or loss will be recognized by an
Acquired Fund or its shareholders as a result of the Merger, and the tax basis
of the Merger Shares received by each Acquired Fund shareholder will be the
same as the tax basis of the shareholder's Acquired Fund shares. See
"Information about the Mergers--Federal Income Tax Consequences."
Comparison of Investment Objectives, Policies and Restrictions
The Acquiring Fund has an investment objective that is similar to those of
the Acquired Funds. The investment objectives, policies and restrictions of the
Funds, and certain differences between them, are summarized below. For a more
detailed description of the investment techniques used by the Funds, please see
the Fund Prospectus. For information concerning the risks associated with
investments in the various Funds, see "Risk Factors," below.
Equity-Income Fund vs. Growth & Income Fund
The Equity-Income Fund and the Growth & Income Fund have similar investment
objectives. The Growth & Income Fund seeks to provide long-term growth of
capital and income consistent with prudent investment risk. The Growth & Income
Fund typically invests in dividend-paying common stocks of larger U.S. issuers.
The Equity-Income Fund seeks to provide substantial dividend income and also
long-term capital appreciation. The Equity-Income Fund typically invests in
dividend-paying common stock of companies that also offer the opportunity for
price appreciation.
The average annual total return for the Equity-Income Fund and the Growth &
Income Fund is set forth in the chart below.
Total Return Comparison
As of 12/31/99*
<TABLE>
<CAPTION>
Since
1 Year 5 Years 4/01/94
------- ------- -------
<S> <C> <C> <C>
Equity-Income Fund...................................... -12.58% 12.67% 10.51%
Growth & Income Fund.................................... 10.78% 23.47% 20.95%
</TABLE>
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* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
Growth & Income Fund's performance, including information about waivers/
reimbursements that affected the Fund's performance, see the Fund Prospectus.
Selection of stocks for the Growth & Income Fund involves the assessment of
companies and their business environments, management, balance sheets, income
statements, anticipated earnings and dividends, and other related measures of
fundamental value. Wellington Management, the Growth & Income Fund's
subadviser, will also monitor and evaluate the economic and political climate
and the principal securities markets of the countries in which target companies
are located. The Equity-Income Fund selects stocks based on relative dividend
yield (a measure of the stock's current yield relative to the yields available
in the broader stock market) coupled with a disciplined research approach. The
Equity-Income Fund generally considers companies with the following
characteristics: established operating histories; above-average current
dividend yield relative to 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; low stock price relative to underlying value as measured by
assets, earnings, cash flow, or business franchises. The Equity-Income Fund's
portfolio generally includes approximately thirty stocks.
In addition to investment in dividend-paying stocks of larger companies, the
Growth & Income 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 Equity-Income Fund may also
invest in convertible securities, as well as preferred stocks and warrants. The
Equity-Income Fund may invest in bonds of any
5
<PAGE>
quality (including "junk bonds"), while the Growth & Income Fund may likewise
invest in marketable debt securities of domestic issuers and of foreign issuers
(payable in U.S. dollars), but any such securities must either be rated at the
time of purchase "A" or better by Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Corporation ("S&P"), or must be unrated securities
considered of equivalent quality by Wellington Management. The Growth & Income
Fund may invest in derivatives, and may invest up to 20% of its assets in
foreign securities, while the Equity-Income Fund limits investment in
derivatives to repurchase agreements, and does not typically invest in foreign
securities. The Equity-Income Fund may invest in U.S. dollar-denominated money
market securities, including repurchase agreements, in the two highest rating
categories that mature in one year or less.
Both the Growth & Income Fund and the Equity-Income Fund may lend up to 33%
of portfolio assets to brokers, dealers, and other financial institutions. The
main risks of investing in each Fund include equity risk and management risk.
In addition, the main risks of investing in the Growth & Income Fund include
derivatives risk and foreign investment risk, while the main risks of investing
in the Equity-Income Fund include concentration risk and credit risk.
Tax-Sensitive Equity Fund vs. Growth & Income Fund
The Growth & Income Fund and the Tax-Sensitive Equity Fund have similar
investment objectives. The Growth & Income Fund seeks to provide long-term
growth of capital and income consistent with prudent investment risk. The
Growth & Income Fund typically invests in dividend-paying common stocks of
larger U.S. issuers. The Tax-Sensitive Equity Fund seeks 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
undervalued. The Tax-Sensitive Equity Fund focuses on medium to large
capitalization companies with above-average capital growth potential.
The average annual total returns for the Growth & Income Fund and the Tax-
Sensitive Equity Fund are set forth in the table below:
Total Return Comparison
As of 12/31/99*
<TABLE>
<CAPTION>
Since
1 Year 5 Years 1/06/98
------ ------- -------
<S> <C> <C> <C>
Tax-Sensitive Equity Fund................................ -6.49% N/A -2.14%
<CAPTION>
Since
1 Year 5 Years 4/01/94
------ ------- -------
<S> <C> <C> <C>
Growth & Income Fund..................................... 10.78% 23.47% 20.95%
</TABLE>
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
Growth & Income Fund's performance, including information about waivers/
reimbursements that affected the Fund's performance, see the Fund Prospectus.
Selection of stocks for the Growth & Income Fund involves the assessment of
companies and their business environments, management, balance sheets, income
statements, anticipated earnings and dividends, and other related measures of
fundamental value. Wellington Management, the Growth & Income Fund's
subadviser, will also monitor and evaluate the economic and political climate
and the principal securities markets of the countries in which target companies
are located.
The Tax-Sensitive Equity Fund emphasizes investment in securities with low
dividend yields, and seeks to minimize investment in income-producing
securities. The Tax-Sensitive Equity Fund selects stocks by use of a
mathematical model that identifies companies that have strong and consistent
historic earnings, are valued attractively by the market, and have improving
growth prospects. Stock-specific factors employed in mathematical modeling
include: current price/earnings ratios; stability of earnings growth;
forecasted changes in earnings growth; trends in consensus analysts' estimates;
and measures of earnings relative to expectations. The Tax-Sensitive Equity
Fund also undertakes fundamental research and qualitative analysis of the
companies identified by mathematical modeling, in search of those with
sustainable profit growth, proven management teams, attractive businesses, and
strong financial characteristics.
Unlike the Growth & Income Fund, the Tax-Sensitive Equity Fund consistently
uses tax-sensitive
6
<PAGE>
strategies designed to reduce the impact of federal income tax on the after-tax
returns actually achieved by the Tax-Sensitive Equity Fund's shareholders.
These strategies include minimizing the sale of securities resulting in capital
gains, favoring the sale of securities with the smallest capital gains, and
selling securities with long-term gains first. The Tax-Sensitive Equity Fund
also seeks to sell securities to create capital losses, which can offset
realized capital gains. Because the Growth & Income Fund does not emphasize tax
mitigation strategies, it is likely to generate higher taxable income for
Growth & Income Fund shareholders. In addition, the portfolio turnover rate of
the Growth & Income Fund will typically exceed that of the Tax-Sensitive Equity
Fund, which may result in higher transaction costs.
The Tax-Sensitive Equity Fund usually invests at least 80% of its total
assets in equity and equity-related securities, such as common stocks and
preferred stocks. The Growth & Income Fund also emphasizes investment in equity
securities, but is not subject to any analogous percentage threshold. Unlike
the Tax-Sensitive Equity Fund, the Growth & Income Fund invests in securities
that can be converted into, or that include the right to buy common stocks,
including convertible securities issued in the Euromarket or preferred stocks.
Both Funds may invest in the foreign securities, but the Tax-Sensitive Equity
Fund limits such investments that are not listed on a U.S. securities exchange
or traded in the U.S. over-the-counter market to 10% of its total assets, while
the Growth & Income Fund may invest up to 20% of its assets in foreign
securities (without regard to where they are traded). The Growth & Income Fund
may invest in marketable debt securities of domestic issuers and of foreign
issuers rated at the time of purchase "A" or better by Moody's or S&P, or
unrated securities considered by Wellington Management to be of equivalent
quality. Both Funds currently limit their investments to securities that are
denominated or quoted in U.S. dollars. Both Funds may invest in derivatives.
Both the Growth & Income Fund and the Tax-Sensitive Equity Fund may lend up
to 33% of portfolio assets to brokers, dealers, and other financial
institutions. Investments in both Funds entail risks associated with
derivatives and foreign investments.
Risk Factors
Certain risks associated with an investment in the Acquiring Fund are
summarized below. Because the Acquiring Fund and the Acquired Funds share
certain policies described more fully above under "Overview of Mergers--
Comparisons of Investment Objectives, Policies and Restrictions," many of the
risks of an investment in the Acquiring Fund are substantially similar to the
risks of an investment in the Acquired Funds. A more detailed description of
the risks associated with an investment in the Acquiring Fund may be found in
the Fund Prospectus under the captions "More Information About Investment
Strategies and Risks," and "Other Risks of Investing" and in the Fund SAI under
the caption "Investment Policies and Risks."
The values of all securities and other instruments held by the Acquiring
Fund vary from time to time in response to a wide variety of market factors.
Consequently, the net asset value per share of the Acquiring Fund will vary,
and may be less at the time of redemption than it was at the time of
investment.
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. The Equity-Income
Fund is subject to concentration risk as it may invest up to 100% of its assets
in U.S. equity securities.
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, such as the Equity-Income Fund, 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
7
<PAGE>
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. Derivatives risk for some Funds may 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. The Tax-Sensitive Equity Fund, the Growth & Income Fund and the
Equity-Income Fund invest primarily in equity securities.
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 undervalued, or are
inexpensive relative 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. The Tax-Sensitive Equity Fund, the Growth & Income
Fund and the Equity-Income Fund purchase value stocks which offer the potential
for capital appreciation.
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
actively, 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, such as the Growth & Income Fund and the
Tax-Sensitive Equity Fund, that invest 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 significantly, from U.S. standards.
The possibility of political instability or diplomatic developments in
foreign countries could trigger nationalization of companies and industries,
expropriation (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.
8
<PAGE>
Interest Rate Risk (Market Risk). Interest rate risk, or market risk, is the
risk that a change in interest rates will negatively affect the value of a
security. This risk applies primarily to debt securities such as bonds, notes
and asset backed securities. Debt securities are obligations of the issuer to
make payments of principal and/or interest on future dates. 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 mortgage-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 subadviser of a Fund,
despite using various investment and risk analysis techniques, may not produce
the desired investment results.
Comparison of Distribution Policies and Purchase, Exchange and Redemption
Procedures
The Growth & Income Fund declares and pays dividends semi-annually, and the
Tax-Sensitive Equity Fund and the Equity-Income Fund declare and pay dividends
annually. Each Fund distributes any net realized capital gains annually. It is
expected that, shortly prior to the Exchange Date, each of the Acquired Funds
and the Acquiring Fund will declare and distribute as a special dividend any
investment company taxable income (computed without regard to the deduction for
dividends paid) and any net realized capital gains through the Exchange Date
not previously distributed.
The Funds have identical procedures for purchasing shares. Each of the Funds
offers three classes of shares, Class A, Class B and Class C. Class A, Class B
and Class C shares of the Funds may be purchased at their net asset value next
determined, plus applicable sales charges in the case of Class A shares, from
American General Funds Distributors, Inc. ("AGFD"), formerly named CypressTree
Funds Distributors, Inc., the Funds' principal underwriter. In addition, shares
of the Funds may be purchased through other broker-dealers that have dealer
agreements with AGFD.
Class B shares of the Funds are subject to a CDSC at declining rates if
redeemed within six years of purchase. Class C shares of the Funds are subject
to a CDSC if redeemed within one year of purchase. Class B and Class C Merger
Shares will be subject to a CDSC on redemption to the same extent that the
Class B and Class C Acquired Fund shares were so subject. No sales charge will
be charged to Acquired Fund shareholders on the issuance of the Merger Shares,
and no CDSC will be charged by the Acquired Funds.
Shares of each Fund can generally be exchanged for shares of the same class
of any other North American Fund. For more details, see the Fund Prospectus and
Fund SAI.
The Funds have identical redemption procedures. Shares of a Fund may be
redeemed at their net asset value next determined after receipt of the
redemption request, less any applicable CDSC, on any day the New York Stock
Exchange is open. Shares can be redeemed by contacting the relevant Fund by
mail, by telephone, through broker dealers if a dealer agreement is in place or
by wire communication.
See the Fund Prospectus for further information.
9
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
This Prospectus/Proxy Statement is being furnished in connection with a
Special Meeting of Shareholders of each Acquired Fund to be held on June 1,
2000 or at such later time made necessary by adjournment (the "Meeting") and
the solicitation of proxies by and on behalf of the shareholders of the
Acquired Funds for use at the Meeting. The Meeting is being held to consider
the proposed Mergers of each Acquired Fund with the Acquiring Fund by the
transfer of all of the Acquired Fund's assets and liabilities to the Acquiring
Fund. The approval of each Merger is a condition to the Merger of the other
Funds. This Prospectus/Proxy Statement and the enclosed form of proxy are being
mailed to shareholders on or about April 14, 2000.
The Trustees of North American Funds know of no matters other than those set
forth herein to be brought before the Meeting. If, however, any other matters
properly come before the Meeting, it is the Trustees' intention that proxies
will be voted on such matters in accordance with the judgment of the persons
named in the enclosed form of proxy.
- --------------------------------------------------------------------------------
THE PROPOSALS:
APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
Shareholders of the Equity-Income Fund are being asked to approve or
disapprove a Merger between the Equity-Income Fund and the Growth & Income Fund
(Proposal 1); and shareholders of the Tax-Sensitive Equity Fund are being asked
to approve or disapprove a Merger between the Tax-Sensitive Equity Fund and the
Growth & Income Fund (Proposal 2). Each Merger is proposed to take place
pursuant to an Agreement and Plan of Reorganization between the Acquired Fund
and the Acquiring Fund (the "Agreement"), each of which is in the form attached
to this Prospectus/Proxy Statement as Appendix A.
Each Agreement provides, among other things, for the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange for (i) the
issuance to the Acquired Fund of the Class A, Class B and Class C Merger
Shares, the number of which will be calculated based on the value of the net
assets attributable to the Class A, Class B and Class C shares, respectively,
of the Acquired Fund acquired by the Acquiring Fund and the net asset value per
Class A, Class B and Class C shares of the Acquiring Fund and (ii) the
assumption by the Acquiring Fund of all of the liabilities of the Acquired
Fund, all as more fully described below under "Information About the Mergers."
After receipt of the Merger Shares, each Acquired Fund will cause the Class
A Merger Shares to be distributed to its Class A shareholders, the Class B
Merger Shares to be distributed to its Class B shareholders, the Class C Merger
Shares to be distributed to its Class C shareholders, in complete liquidation
of the Acquired Fund. Each shareholder of the Acquired Fund will receive a
number of full and fractional Class A, Class B and Class C Merger Shares equal
in value at the date of the exchange to the aggregate value of the
shareholder's Class A, Class B and Class C Acquired Fund shares, as the case
may be.
Board of Trustees' Recommendations. The Board of Trustees of North American
Funds has voted unanimously to approve each proposed Merger and to recommend
that shareholders of each Acquired Fund also approve the Merger for such Fund.
Required Shareholder Vote. Approval of the proposed Merger for each Acquired
Fund will require the affirmative vote of the lesser of (i) 67% or more of the
Class A, Class B and Class C shares of the relevant Acquired Fund, voting
together as a single class, if holders of more than 50% of the Class A, Class B
and Class C shares, taken as a single class, of the relevant Acquired Fund are
present or represented by proxy at the meeting; or (ii) more than 50% of the
Class A, Class B and Class C shares, voting together as a single class,
provided a quorum is present at the meeting. The holders of thirty percent of
the Class A, Class B and Class C shares of each Acquired Fund outstanding at
the close of business on the Record Date present in person or represented by
proxy will constitute a quorum for the Meeting with respect to that Fund.
10
<PAGE>
Background and Reasons for the Proposed Mergers
The Board of Trustees of North American Funds, including all of its Trustees
who are not "interested persons" of North American Funds (the "Independent
Trustees"), has unanimously determined that each Merger would be in the best
interests of the relevant Funds, and that the interests of the Funds'
shareholders would not be diluted as a result of effecting the Merger. At a
meeting held on February 28, 2000, the Board unanimously approved each proposed
Merger and recommended its approval by shareholders. Before reaching their
conclusions, the Board conducted an extensive "due diligence" review. The Board
took into account the fact that current owners of AGAM will be bearing the
expenses associated with the Mergers, including those described under
"Information about the Mergers." The Board also took into account the depth and
strength of staffing of investment professionals and administrative personnel
at AGAM, the portfolio managers of the Acquiring Fund and the other service
providers to the Acquiring Fund, as well as American General Funds
Distributors, Inc.'s plans for distribution of the Funds following the Mergers.
In addition, the Board took into account the relative historical investment
performance of the Acquiring Fund, on the one hand, and the Acquired Funds, on
the other hand. Furthermore, Trustees took into account the capital loss carry-
forwards for each Acquired Fund and the Acquiring Fund, and the unrealized
capital appreciation in each Acquired Fund and in the Acquiring Fund, in each
case as a percentage of the Fund's total net assets. Those percentages as of
October 31, 1999 were as follows:
<TABLE>
<CAPTION>
Unrealized Capital
Capital Loss Appreciation
Carry-Forwards (Depreciation)
(as a percentage (as a percentage
of total net assets) of total net assets)
Fund on 10/31/99 on 10/31/99
---- -------------------- --------------------
<S> <C> <C>
Equity-Income Fund.................... * 6.6%
Tax-Sensitive Equity Fund............. 19.45% 8.2%
Growth & Income Fund.................. * 36.6%
</TABLE>
- --------
* Less than $50,000 or less than 0.01% of net assets.
The principal reasons why the Board of Trustees is recommending the Mergers
are as follows:
(i) Decreases in overall expenses. The Mergers are expected to result in
aggregate operating expenses that would be lower than those expected to be
borne by the Acquired Funds as described more fully in the Overview under
"Operating Expenses." Of course, there can be no assurance that the Mergers
will result in savings in operating expenses to shareholders.
(ii) Appropriate investment objectives, diversification, etc. The investment
objective, policies, and restrictions of the Acquiring Fund are compatible with
those of the Acquired Funds, and the Trustees believe that an investment in
shares of the Acquiring Fund (whose portfolio will have been combined with
those of the Acquired Funds) will provide shareholders with an investment
opportunity comparable to those currently afforded by the Acquired Funds, with
the potential for reduced investment risk because of the opportunities for
additional diversification of portfolio investments through increased Fund
assets.
(iii) Continued investment in a mutual fund without recognition of gain or
loss for federal income tax purposes. The proposed reorganization will permit
Acquired Fund shareholders to keep their investment in an open-end mutual fund,
without recognition of gain or loss for federal income tax purposes. If the
Acquired Funds were to liquidate and shareholders were to receive the net asset
value of their shares in liquidating distributions, gain or loss would be
recognized for federal income tax purposes. See "Information About the
Mergers--Federal Income Tax Consequences" below.
INFORMATION ABOUT THE MERGERS
Agreement and Plan of Reorganization. Each proposed Agreement and Plan of
Reorganization provides that the Acquiring Fund will acquire all of the assets
of the Acquired Funds in exchange for the issuance of the Class A, Class B and
Class C Merger Shares and for the assumption by the Acquiring Fund of all of
the liabilities of the Acquired Fund, all as of the Exchange Date (defined in
each Agreement to be June 30, 2000 or such other date as may be agreed upon by
the Acquiring Fund
11
<PAGE>
and the Acquired Fund). The following discussion of the Agreements is qualified
in its entirety by the full text of each Agreement, the form of which is
attached as Appendix A to this Prospectus/Proxy Statement.
Each Acquired Fund will sell all of its assets to the Acquiring Fund, and,
in exchange, the Acquiring Fund will assume all of the liabilities of the
Acquired Fund and deliver to the Acquired Fund (i) a number of full and
fractional Class A Merger Shares having an aggregate net asset value equal to
the value of the assets of the Acquired Fund attributable to its Class A
shares, less the value of the liabilities of the Acquired Fund assumed by the
Acquiring Fund attributable to the Class A shares of the Acquired Fund, (ii) a
number of full and fractional Class B Merger Shares having an aggregate net
asset value equal to the value of assets of the Acquired Fund attributable to
its Class B shares, less the value of the liabilities of the Acquired Fund
assumed by the Acquiring Fund attributable to the Class B shares of the
Acquired Fund, and (iii) a number of full and fractional Class C Merger Shares
having an aggregate net asset value equal to the value of the assets of the
Acquired Fund attributable to its Class C shares, less the value of the
liabilities of the Acquired Fund assumed by the Acquiring Fund attributable to
the Class C shares of the Acquired Fund.
Immediately following the Exchange Date, each Acquired Fund will distribute
pro rata to its shareholders of record as of the close of business on the
Exchange Date the full and fractional Merger Shares received by the Acquired
Fund, with Class A Merger Shares being distributed to holders of Class A shares
of the Acquired Fund, Class B Merger Shares being distributed to holders of
Class B shares of the Acquired Fund and Class C Merger Shares being distributed
to holders of Class C shares of the Acquired Fund. As a result of the proposed
transaction, each holder of Class A, Class B and Class C shares of the Acquired
Fund will receive a number of Class A, Class B and Class C Merger Shares equal
in aggregate value at the Exchange Date to the value of the Class A, Class B
and Class C shares of the Acquired Fund held by the shareholder. This
distribution will be accomplished by the establishment of accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund shareholders,
each account representing the respective number of full and fractional Class A,
Class B and Class C Merger Shares due such shareholder. Because the shares of
the Acquiring Fund will not be represented by certificates, certificates for
Merger Shares will not be issued.
The consummation of each Merger is subject to the conditions set forth in
the Agreement, any of which may be waived, except for the condition requiring
shareholder approval of the Agreement. The Agreement may be terminated and the
Merger abandoned at any time, before or after approval by the shareholders of
each Acquired Fund, prior to the Exchange Date, by mutual consent of the
relevant Funds or, if any condition set forth in the Agreement has not been
fulfilled and has not been waived by the party entitled to its benefits, by
such party.
All legal and accounting fees and expenses, printing other fees and expenses
(other than portfolio transfer taxes (if any), brokerage and other similar
expenses, all of which will be borne by the relevant Fund) incurred in
connection with the consummation of the transactions contemplated by the
Agreement will be borne by American General Corporation and/or its affiliates,
including registration fees. Notwithstanding the foregoing, expenses will in
any event be paid by the party directly incurring such expenses if and to the
extent that the payment by any other party of such expenses would result in the
disqualification of the first party as a "regulated investment company" within
the meaning of Section 851 of the Internal Revenue Code of 1986, as amended
(the "Code").
Description of the Merger Shares. Full and fractional Merger Shares will be
issued to each Acquired Fund's shareholders in accordance with the procedure
under the Agreement as described above. The Merger Shares are Class A, Class B
and Class C shares of the Acquiring Fund, which have characteristics identical
to those of the corresponding class of Acquired Fund shares with respect to
sales charges, CDSCs, conversion and 12b-1 servicing and distribution fees.
Organization. Each of the Merger Shares will be fully paid and nonassessable
by the Acquiring Fund when issued, will be transferable without restriction,
and will have no preemptive or conversion rights, except that certain Class B
and
12
<PAGE>
Class C Merger Shares convert automatically into Class A shares as described
above. The Amended and Restated Agreement and Declaration of Trust of North
American Funds (the "Declaration of Trust") permits North American Funds to
divide its shares, without shareholder approval, into two or more series of
shares representing separate investment portfolios and to further divide any
such series, without shareholder approval, into two or more classes of shares
having such preferences and special or relative rights and privileges as the
Trustees may determine. The Acquiring Fund's shares are currently divided into
three classes. The rights of shareholders of the Acquired Funds and the
Acquiring Fund are exactly the same.
Federal income tax consequences. As a condition to each Acquired Fund's
obligation to consummate the Merger, the Acquired Fund will receive an opinion
from Ropes & Gray, special counsel to North American Funds, to the effect that,
on the basis of the existing provisions of the Code, current administrative
rules and court decisions, for federal income tax purposes: (i) under Section
361 of the Code, no gain or loss will be recognized by the Acquired Fund as a
result of the reorganization; (ii) under Section 354 of the code, no gain or
loss will be recognized by shareholders of the Acquired Fund on the
distribution of Merger Shares to them in exchange for their shares of the
Acquired Fund; (iii) under Section 358 of the Code, the tax basis of the Merger
Shares that the Acquired Fund's shareholders receive in place of their Acquired
Fund shares will be the same as the basis of the Acquired Fund shares; (iv)
under Section 1223(1) of the Code, a shareholder's holding period for the
Merger Shares received pursuant to the Agreement will be determined by
including the holding period for the Acquired Fund shares exchanged for the
Merger Shares, provided that the shareholder held the Acquired Fund shares as a
capital asset; (v) under Section 1032 of the Code, no gain or loss will be
recognized by the Acquiring Fund as a result of the reorganization; (vi) under
Section 362(b) of the Code, the Acquiring Fund's tax basis in the assets that
the Acquiring Fund receives from the Acquired Fund will be the same as the
Acquired Fund's basis in such assets; and (vii) under Section 1223(2) of the
Code, the Acquiring Fund's holding period in such assets will include the
Acquired Fund's holding period in such assets. The opinion will be based on
certain factual certifications made by officers of North American Funds, and
will also be based on customary assumptions.
Prior to the Exchange Date, each Fund will declare a distribution to
shareholders which, together with all previous distributions, will have the
effect of distributing to shareholders of all of its investment company taxable
income (computed without regard to the deduction for dividends paid) and net
realized capital gains, if any, through the Exchange Date.
Capitalization. The following tables show the capitalization of the
Acquiring Fund and each Acquired Fund as of [ ] and of the Acquiring Fund on
a pro forma basis as of that date, giving effect to the proposed acquisition by
the Acquiring Fund of the assets and liabilities of the Acquired Fund at net
asset value:
13
<PAGE>
Capitalization Tables
[ ]
(Unaudited)
<TABLE>
<CAPTION>
Equity-Income Growth & Pro Forma
Fund Income Fund Combined
------------- ----------- ---------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A................................... $ $ $
Class B...................................
Class C...................................
Shares outstanding (000's omitted)
Class A...................................
Class B...................................
Class C...................................
Net asset value per share
Class A................................... $ $ $
Class B...................................
Class C...................................
<CAPTION>
Tax-Sensitive Growth & Pro Forma
Equity Fund Income Fund Combined
------------- ----------- ---------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A................................... $ $ $
Class B...................................
Class C...................................
Shares outstanding (000's omitted)
Class A...................................
Class B...................................
Class C...................................
Net asset value per share
Class A................................... $ $ $
Class B...................................
Class C...................................
</TABLE>
Pro forma financial statements of the Acquiring Fund as of and for the
fiscal year ended October 31, 1999 are included in the Merger SAI. Because each
Agreement provides that the Acquiring Fund will be the surviving Fund following
the Merger and because the Acquiring Fund's investment objective and policies
will remain unchanged by the Merger, the pro forma financial statements reflect
the transfer of the assets and liabilities of the Acquired Fund to the
Acquiring Fund as contemplated by the Agreement.
- --------------------------------------------------------------------------------
INFORMATION ABOUT THE FUNDS
Other information regarding the Funds, including information with respect to
their investment objectives, policies and restrictions and financial history
may be found in the Merger SAI, the Fund Prospectus, the Fund SAI and the
Annual Report, which are available upon request by calling 1-800-872-8037.
Other information filed by North American Funds with respect to the Funds
can be inspected and copied at the Public Reference Facilities maintained by
the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and 500
West Madison
14
<PAGE>
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also
be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates, or at no charge from the EDGAR database on the
SEC's website at "www.sec.gov."
- --------------------------------------------------------------------------------
VOTING INFORMATION
Record date, quorum and method of tabulation. Shareholders of record of each
Acquired Fund at the close of business on April 7, 2000 (the "Record Date")
will be entitled to notice of and to vote at the Meeting or any adjournment
thereof. The holders of thirty percent of the outstanding shares of each
Acquired Fund outstanding at the close of business on the Record Date present
in person or represented by proxy will constitute a quorum for the Meeting with
respect to that Fund. Shareholders are entitled to one vote for each share
held, with fractional shares voting proportionally. Class A, Class B and Class
C shareholders of each Acquired Fund vote together as a single class in
connection with the approval or disapproval of the Mergers. Shareholders of
each Acquired Fund will vote only on the approval or disapproval of that Fund's
Merger.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by North American Funds as tellers for the Meeting. The tellers will
count the total number of votes cast "for" approval of the Proposal for
purposes of determining whether sufficient affirmative votes have been cast.
The tellers will count shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or the
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) as shares that are present
and entitled to vote on the matter for purposes of determining the presence of
a quorum. So long as a quorum is present, abstentions and broker non-votes have
the effect of negative votes on the Proposals relating to the Mergers.
Shares outstanding and beneficial ownership. As of the Record Date, as shown
on the books of the Acquired Fund, there were issued and outstanding the
following number of shares of beneficial interest of each class of each
Acquired Fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Equity-Income Fund......................................
Tax-Sensitive Equity Fund...............................
</TABLE>
[As of the Record Date, the officers and Trustees of North American Funds as
a group beneficially owned less than 1% of the outstanding shares of each class
of each Acquired Fund.] As of March 31, 2000, to the best of the knowledge of
North American Funds, the following persons owned of record or beneficially 5%
or more of the outstanding shares of the Acquired Funds and the Acquiring Fund:
[Insert 5% owners table]
Solicitation of proxies. Solicitation of proxies by personal interview,
mail, and telephone, may be made by officers and Trustees of North American
Funds and the employees of AGAM and its affiliates. In addition, the firm of
Georgeson Shareholder Communications, Inc. ("Georgeson") has been retained to
assist in the solicitation of proxies. The costs for solicitation of proxies,
like the other costs associated with the Merger of the Funds, will be borne by
American General Corporation. See "Information About the Mergers."
Georgeson may call shareholders to ask if they would be willing to have
their votes recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to authorize
the voting of their shares in accordance with their instructions and to confirm
that their instructions have been recorded
15
<PAGE>
properly. Shareholders voting by telephone would be asked for their social
security number or other identifying information, and would be given an
opportunity to authorize proxies to vote their shares in accordance with their
instructions. To ensure that the shareholders' instructions have been recorded
correctly, they will receive a confirmation of their instructions in the mail.
A special toll-free number will be available in case the information contained
in the confirmation is incorrect. Although a shareholder's vote may be taken by
telephone, each shareholder will receive a copy of this Prospectus/Proxy
Statement, and may vote by mail using the enclosed proxy card. Shareholders may
contact Georgeson at [1-800- .]
Revocation of proxies. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary of North American Funds at the
principal office of North American Funds, 286 Congress Street, Boston, MA
02210) or in person at the Meeting, by executing a superseding proxy, or by
submitting a notice of revocation to the Secretary of North American Funds. All
properly executed proxies received in time for the Meeting will be voted as
specified in the proxy, or, if no specification is made FOR the proposal (set
forth in the Proposals of the Notice of Meeting) to implement the Merger with
respect to the relevant Acquired Fund.
Shareholder proposals at future meetings of shareholders. The Declaration of
Trust does not provide for annual meetings of shareholders, and North American
Funds do not currently intend to hold such a meeting for shareholders of the
Acquired Funds in 2000. Shareholder proposals for inclusion in a proxy
statement for any subsequent meeting of the Acquired Funds' shareholders must
be received by North American Funds a reasonable period of time prior to any
such meeting. If the Mergers are consummated, there will be no meetings of the
shareholders of the Acquired Funds.
Adjournment. If sufficient votes in favor of any proposal are not received
by the time scheduled for the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any adjournment will require the affirmative vote of a plurality of
the votes cast on the question in person or by proxy at the session of the
Meeting to be adjourned. If the Meeting is adjourned only with respect to one
Proposal, any other Proposal may still be acted upon by the shareholders. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the Proposal. They will vote
against any such adjournment those proxies required to be voted against the
Proposal.
April , 2000
16
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Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
[ , 2000] in Boston, Massachusetts, by and between North American Funds, a
Massachusetts business trust, on behalf of its Equity-Income Fund series (the
"Acquired Fund"), and North American Funds, on behalf of its Growth & Income
Fund series (the "Acquiring Fund").
Plan of Reorganization
(a) The Acquired Fund will sell, assign, convey, transfer and deliver to the
Acquiring Fund on the Exchange Date (as defined in Section 6) all of its
properties and assets. In consideration therefor, the Acquiring Fund shall, on
the Exchange Date, assume all of the liabilities of the Acquired Fund existing
at the Valuation Time (as defined in Section 3(c)) and deliver to the Acquired
Fund (i) a number of full and fractional Class A shares of beneficial interest
of the Acquiring Fund (the "Class A Merger Shares") having an aggregate net
asset value equal to the value of the assets of the Acquired Fund attributable
to the Class A shares of the Acquired Fund transferred to the Acquiring Fund on
such date less the value of the liabilities of the Acquired Fund attributable
to the Class A shares of the Acquired Fund assumed by the Acquiring Fund on
that date, (ii) a number of full and fractional Class B shares of beneficial
interest of the Acquiring Fund (the "Class B Merger Shares") having an
aggregate net asset value equal to the value of the assets of the Acquired Fund
attributable to the Class B shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the Class B shares of the Acquired Fund assumed by the
Acquiring Fund on that date, and (iii) a number of full and fractional Class C
shares of beneficial interest of the Acquiring Fund (the "Class C Merger
Shares") having an aggregate net asset value equal to the value of the assets
of the Acquired Fund attributable to the Class C shares of the Acquired Fund
transferred to the Acquiring Fund on such date less the value of the
liabilities of the Acquired Fund attributable to the Class C shares of the
Acquired Fund assumed by the Acquiring Fund on that date. (The Class A Merger
Shares, the Class B Merger Shares and the Class C Merger Shares shall be
referred to collectively as the "Merger Shares").
(b) Upon consummation of the transaction described in paragraph (a) of this
Agreement, the Acquired Fund shall distribute in complete liquidation to its
Class A, Class B and Class C shareholders of record as of the Exchange Date the
Class A, Class B and Class C Merger Shares, each such shareholder being
entitled to receive that proportion of such Class A, Class B and Class C Merger
Shares which the number of Class A, Class B and Class C shares of beneficial
interest of the Acquired Fund held by such shareholder bears to the number of
Class A, Class B and Class C shares of the Acquired Fund outstanding on such
date. Certificates representing the Class A, Class B and Class C Merger Shares
will not be issued. All issued and outstanding Class A, Class B and Class C
shares of the Acquired Fund will simultaneously be canceled on the books of the
Acquired Fund.
(c) As promptly as practicable after the liquidation of the Acquired Fund as
aforesaid, the Acquired Fund shall be dissolved pursuant to the provisions of
the Amended and Restated Agreement and Declaration of Trust of North American
Funds (the "Declaration of Trust"), as amended, and applicable law, and its
legal existence terminated. Any reporting responsibility of the Acquired Fund
is and shall remain the responsibility of the Acquired Fund up to and including
the Exchange Date and, if applicable, such later date on which the Acquired
Fund is liquidated.
Agreement
The Acquiring Fund and the Acquired Fund agree as follows:
1. Representations, Warranties and Agreements of the Acquiring Fund. The
Acquiring Fund represents and warrants to and agrees with the Acquired Fund
that:
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a. The Acquiring Fund is a series of North American Funds, a
Massachusetts business trust duly established and validly existing under
the laws of The Commonwealth of Massachusetts, and has power to own all of
its properties and assets and to carry out its obligations under this
Agreement. North American Funds is qualified as a foreign association in
every jurisdiction where required, except to the extent that failure to so
qualify would not have a material adverse effect on North American Funds.
Each of North American Funds and the Acquiring Fund has all necessary
federal, state and local authorizations to carry on its business as now
being conducted and to carry out this Agreement.
b. [Reserved]
c. The statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments
(indicating their market values) of the Acquiring Fund as of and for the
year ended October 31, 1999 have been furnished to the Acquired Fund. Such
statement of assets and liabilities and schedule fairly present the
financial position of the Acquiring Fund as of that date and such
statements of operations and changes in net assets fairly reflect the
results of its operations and changes in net assets for the periods covered
thereby in conformity with generally accepted accounting principles.
d. The current prospectus and statement of additional information of
North American Funds, each dated March 1, 2000 (collectively, as from time
to time amended, the "Prospectus"), which have previously been furnished to
the Acquired Fund, did not as of such date and does not contain as of the
date hereof, with respect to the Acquiring Fund, any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
e. There are no material legal, administrative or other proceedings
pending or, to the knowledge of North American Funds or the Acquiring Fund,
threatened against North American Funds or the Acquiring Fund, which assert
liability on the part of the Acquiring Fund. The Acquiring Fund knows of no
facts which might form the basis for the institution of such proceedings
and is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated.
f. The Acquiring Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown belonging to it on its
statement of assets and liabilities as of October 31, 1999, those incurred
in the ordinary course of its business as an investment company since
October 31, 1999 and those to be assumed pursuant to this Agreement. Prior
to the Exchange Date, the Acquiring Fund will endeavor to quantify and to
reflect on its balance sheet all of its material known liabilities and will
advise the Acquired Fund of all material liabilities, contingent or
otherwise, incurred by it subsequent to October 31, 1999, whether or not
incurred in the ordinary course of business.
g. As of the Exchange Date, the Acquiring Fund will have filed all
federal and other tax returns and reports which, to the knowledge of North
American Funds' officers, are required to be filed by the Acquiring Fund
and will have paid or will pay all federal and other taxes shown to be due
on said returns or on any assessments received by the Acquiring Fund. All
tax liabilities of the Acquiring Fund have been adequately provided for on
its books, and no tax deficiency or liability of the Acquiring Fund has
been asserted, and no question with respect thereto has been raised or is
under audit, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
h. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated by this Agreement, except such as may
be required under the Securities Act of 1933, as amended (the "1933 Act"),
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act") and state
insurance, securities or blue sky laws (which term as used herein shall
include the laws of the District of Columbia and of Puerto Rico).
i. The registration statement (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") by North American
Funds on Form N-14 on behalf of the Acquiring Fund and relating to the
Merger Shares issuable hereunder and the proxy statement of the Acquired
Fund
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relating to the meeting of the Acquired Fund shareholders referred to in
Section 7(a) herein (together with the documents incorporated therein by
reference, the "Acquired Fund Proxy Statement"), on the effective date of
the Registration Statement, (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules
and regulations thereunder and (ii) will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at
the time of the shareholders meeting referred to in Section 7(a) and on the
Exchange Date, the prospectus which is contained in the Registration
Statement, as amended or supplemented by any amendments or supplements
filed with the Commission by North American Funds, and the Acquired Fund
Proxy Statement will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that none of
the representations and warranties in this subsection shall apply to
statements in or omissions from the Registration Statement or the Acquired
Fund Proxy Statement made in reliance upon and in conformity with
information furnished in writing by the Acquired Fund to the Acquiring Fund
specifically for use in the Registration Statement or the Acquired Fund
Proxy Statement.
j. There are no material contracts outstanding to which the Acquiring
Fund is a party, other than as are or will be disclosed in the Prospectus,
the Registration Statement or the Acquired Fund Proxy Statement.
k. All of the issued and outstanding shares of beneficial interest of
the Acquiring Fund have been offered for sale and sold in conformity with
all applicable federal and state securities laws (including any applicable
exemptions therefrom), or the Acquiring Fund has taken any action necessary
to remedy any prior failure to have offered for sale and sold such shares
in conformity with such laws.
l. The Acquiring Fund qualifies and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company"
under Sections 851 and 852 of the Code.
m. The issuance of the Merger Shares pursuant to this Agreement will be
in compliance with all applicable federal and state securities laws.
n. The Merger Shares to be issued to the Acquired Fund have been duly
authorized and, when issued and delivered pursuant to this Agreement, will
be legally and validly issued and will be fully paid and non-assessable by
the Acquiring Fund, and no shareholder of the Acquiring Fund will have any
preemptive right of subscription or purchase in respect thereof.
o. All issued and outstanding shares of the Acquiring Fund are, and at
the Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund shares, nor is there outstanding any security
convertible into any Acquiring Fund shares.
2. Representations, Warranties and Agreements of the Acquired Fund. The
Acquired Fund represents and warrants to and agrees with the Acquiring Fund
that:
a. The Acquired Fund is a series of North American Funds, a
Massachusetts business trust duly established and validly existing under
the laws of The Commonwealth of Massachusetts, and has power to own all of
its properties and assets and to carry out this Agreement. North American
Funds is qualified as a foreign association in every jurisdiction where
required, except to the extent that failure to so qualify would not have a
material adverse effect on North American Funds. Each of North American
Funds and the Acquired Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted and to carry out this Agreement.
b. [Reserved]
c. A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments
(indicating their market values) of the Acquired Fund as of and for the
year
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ended October 31, 1999 have been furnished to the Acquiring Fund. Such
statement of assets and liabilities and schedule fairly present the
financial position of the Acquired Fund as of that date, and such
statements of operations and changes in net assets fairly reflect the
results of its operations and changes in net assets for the period covered
thereby, in conformity with generally accepted accounting principles.
d. The Prospectus, which has been previously furnished to the Acquiring
Fund, did not contain as of such dates and does not contain, with respect
to the Acquired Fund, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
e. There are no material legal, administrative or other proceedings
pending or, to the knowledge of North American Funds or the Acquired Fund,
threatened against North American Funds or the Acquired Fund, which assert
liability on the part of the Acquired Fund. The Acquired Fund knows of no
facts which might form the basis for the institution of such proceedings
and is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated.
f. There are no material contracts outstanding to which the Acquired
Fund is a party, other than as are disclosed in the North American Funds'
registration statement on Form N-1A or the Prospectus.
g. The Acquired Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown on the Acquired Fund's
statement of assets and liabilities as of October 31, 1999 referred to
above and those incurred in the ordinary course of its business as an
investment company since such date. Prior to the Exchange Date, the
Acquired Fund will endeavor to quantify and to reflect on its balance sheet
all of its material known liabilities and will advise the Acquiring Fund of
all material liabilities, contingent or otherwise, incurred by it
subsequent to October 31, 1999, whether or not incurred in the ordinary
course of business.
h. As of the Exchange Date, the Acquired Fund will have filed all
federal and other tax returns and reports which, to the knowledge of North
American Funds' officers, are required to be filed by the Acquired Fund and
has paid or will pay all federal and other taxes shown to be due on said
returns or on any assessments received by the Acquired Fund. All tax
liabilities of the Acquired Fund have been adequately provided for on its
books, and no tax deficiency or liability of the Acquired Fund has been
asserted, and no question with respect thereto has been raised or is under
audit, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
i. At the Exchange Date, North American Funds, on behalf of the Acquired
Fund, will have full right, power and authority to sell, assign, transfer
and deliver the Investments (as defined below) and any other assets and
liabilities of the Acquired Fund to be transferred to the Acquiring Fund
pursuant to this Agreement. At the Exchange Date, subject only to the
delivery of the Investments and any such other assets and liabilities as
contemplated by this Agreement, the Acquiring Fund will acquire the
Investments and any such other assets and liabilities subject to no
encumbrances, liens or security interests whatsoever and without any
restrictions upon the transfer thereof, except as previously disclosed to
the Acquiring Fund. As used in this Agreement, the term "Investments" shall
mean the Acquired Fund's investments shown on the schedule of its
investments as of October 31, 1999 referred to in Section 2(c) hereof, as
supplemented with such changes in the portfolio as the Acquired Fund shall
make, and changes resulting from stock dividends, stock split-ups, mergers
and similar corporate actions through the Exchange Date.
j. No registration under the 1933 Act of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a
public distribution by either of the Acquiring Fund or the Acquired Fund,
except as previously disclosed to the Acquiring Fund by the Acquired Fund.
k. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, 1934 Act, the 1940 Act or state insurance,
securities or blue sky laws.
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l. The Registration Statement and the Acquired Fund Proxy Statement, on
the effective date of the Registration Statement, (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders meeting referred to in
Section 7(a) and on the Exchange Date, the Acquired Fund Proxy Statement
and the Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement or the Acquired Fund Proxy Statement made in reliance upon and in
conformity with information furnished in writing by the Acquiring Fund to
the Acquired Fund or North American Funds specifically for use in the
Registration Statement or the Acquired Fund Proxy Statement.
m. The Acquired Fund qualifies and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company"
under Section 851 and 852 of the Code.
n. At the Exchange Date, the Acquired Fund will have sold such of its
assets, if any, as are necessary to assure that, after giving effect to the
acquisition of the assets of the Acquired Fund pursuant to this Agreement,
the Acquiring Fund will remain a "diversified company" within the meaning
of Section 5(b)(1) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the Prospectus, as
amended through the Exchange Date. Notwithstanding the foregoing, nothing
herein will require the Acquired Fund to dispose of any assets if, in the
reasonable judgment of the Acquired Fund, such disposition would adversely
affect the tax-free nature of the reorganization or would violate the
Acquired Fund's fiduciary duty to its shareholders.
o. All of the issued and outstanding shares of beneficial interest of
the Acquired Fund shall have been offered for sale and sold in conformity
with all applicable federal and state securities laws (including any
applicable exemptions therefrom), or the Acquired Fund has taken any action
necessary to remedy any prior failure to have offered for sale and sold
such shares in conformity with such laws.
p. All issued and outstanding shares of the Acquired Fund are, and at
the Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquired Fund. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Acquired Fund shares, nor is there outstanding any
security convertible into any of the Acquired Fund shares.
3. Reorganization.
a. Subject to the requisite approval of the shareholders of the Acquired
Fund and to the other terms and conditions contained herein (including the
Acquired Fund's obligation to distribute to its shareholders all of its
investment company taxable income and net capital gain as described in Section
8(m)), the Acquired Fund agrees to sell, assign, convey, transfer and deliver
to the Acquiring Fund, and the Acquiring Fund agrees to acquire from the
Acquired Fund, on the Exchange Date all of the Investments and all of the cash
and other properties and assets of the Acquired Fund, whether accrued or
contingent (including cash received by the Acquired Fund upon the liquidation
by the Acquired Fund of any Investments), in exchange for that number of shares
of beneficial interest of the Acquiring Fund provided for in Section 4 and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired
Fund, whether accrued or contingent, existing at the Valuation Time (as defined
below) except for the Acquired Fund's liabilities, if any, arising in
connection with this Agreement. Pursuant to this Agreement, the Acquired Fund
will, as soon as practicable after the Exchange Date, distribute all of the
Class A, Class B and Class C Merger Shares received by it to the shareholders
of the Acquired Fund in exchange for their Class A, Class B and Class C shares
of the Acquired Fund.
b. The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
interest, cash or such dividends, rights and other payments received by it on
or after the Exchange Date with respect to the
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Investments and other properties and assets of the Acquired Fund, whether
accrued or contingent, received by it on or after the Exchange Date. Any such
distribution shall be deemed included in the assets transferred to the
Acquiring Fund at the Exchange Date and shall not be separately valued unless
the securities in respect of which such distribution is made shall have gone
"ex" such distribution prior to the Valuation Time, in which case any such
distribution which remains unpaid at the Exchange Date shall be included in the
determination of the value of the assets of the Acquired Fund acquired by the
Acquiring Fund.
c. The Valuation Time shall be 4:00 p.m. Eastern time on the Exchange Date
or such earlier or later day as may be mutually agreed upon in writing by the
parties hereto (the "Valuation Time").
4. Valuation Time. On the Exchange Date, the Acquiring Fund will deliver to
the Acquired Fund (i) a number of full and fractional Class A Merger Shares
having an aggregate net asset value equal to the value of the assets of the
Acquired Fund attributable to the Class A shares of the Acquired Fund
transferred to the Acquiring Fund on such date less the value of the
liabilities of the Acquired Fund attributable to the Class A shares of the
Acquired Fund assumed by the Acquiring Fund on that date, (ii) a number of full
and fractional Class B Merger Shares having an aggregate net asset value equal
to the value of the assets of the Acquired Fund attributable to the Class B
shares of the Acquired Fund transferred to the Acquiring Fund on such date less
the value of the liabilities of the Acquired Fund attributable to the Class B
shares of the Acquired Fund assumed by the Acquiring Fund on that date, and
(iii) a number of full and fractional Class C Merger Shares having an aggregate
net asset value equal to the value of the assets of the Acquired Fund
attributable to the Class C shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the Class C shares of the Acquired Fund assumed by the
Acquiring Fund on that date.
a. The net asset value of the Class A, Class B and Class C Merger Shares
to be delivered to the Acquired Fund, the value of the assets attributable
to the Class A, Class B and Class C shares of the Acquired Fund, and the
value of the liabilities attributable to the Class A, Class B and Class C
shares of the Acquired Fund to be assumed by the Acquiring Fund, shall in
each case be determined as of the Valuation Time.
b. The net asset value of the Class A, Class B and Class C Merger Shares
shall be computed in the manner set forth in the Prospectus. The value of
the assets and liabilities of the Class A, Class B and Class C shares of
the Acquired Fund shall be determined by the Acquiring Fund, in cooperation
with the Acquired Fund, pursuant to procedures which the Acquiring Fund
would use in determining the fair market value of the Acquiring Fund's
assets and liabilities.
c. No adjustment shall be made in the net asset value of either the
Acquired Fund or the Acquiring Fund to take into account differences in
realized and unrealized gains and losses.
d. The Acquired Fund shall distribute the Merger Shares to the
shareholders of the Acquired Fund by furnishing written instructions to the
Acquiring Fund's transfer agent, which will as soon as practicable set up
open accounts for each Acquired Fund shareholder in accordance with such
written instructions.
e. The Acquiring Fund shall assume all liabilities of the Acquired Fund,
whether accrued or contingent, in connection with the acquisition of assets
and subsequent dissolution of the Acquired Fund or otherwise, except for
the Acquired Fund's liabilities, if any, pursuant to this Agreement.
5. Expenses, Fees, etc.
a. The parties hereto understand and agree that the transactions
contemplated by this Agreement are being undertaken contemporaneously with a
general restructuring and consolidation of certain of the registered investment
companies advised by American General Asset Management Corp., formerly named
CypressTree Asset Management Corporation, Inc. and its affiliates; and that in
connection therewith the costs of all such transactions are being borne by
American General Corporation and/or its affiliates. Notwithstanding any of the
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foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by the other party of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
b. [Reserved]
c. [Reserved]
d. [In the event the transactions contemplated by this Agreement are not
consummated for any reason, American General Corporation and/or its affiliates
shall bear all expenses incurred in connection with such transactions.]
e. Notwithstanding any other provisions of this Agreement, if for any reason
the transactions contemplated by this Agreement are not consummated, no party
shall be liable to the other party for any damages resulting therefrom,
including, without limitation, consequential damages, except as specifically
set forth above.
6. Exchange Date. Delivery of the assets of the Acquired Fund to be
transferred, assumption of the liabilities of the Acquired Fund to be assumed,
and the delivery of the Merger Shares to be issued shall be made at Boston,
Massachusetts, as of , 2000, or at such other date agreed to by the
Acquiring Fund and the Acquired Fund, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date."
7. Meetings of Shareholders; Dissolution.
a. North American Funds, on behalf of the Acquired Fund, agrees to call a
meeting of the Acquired Fund's shareholders as soon as is practicable after the
effective date of the Registration Statement for the purpose of considering the
sale of all of its assets to and the assumption of all of its liabilities by
the Acquiring Fund as herein provided and adopting this Agreement.
b. The Acquired Fund agrees that the liquidation and dissolution of the
Acquired Fund will be effected in the manner provided in the Declaration of
Trust in accordance with applicable law and that on and after the Exchange
Date, the Acquired Fund shall not conduct any business except in connection
with its liquidation and dissolution.
c. The Acquiring Fund has, in consultation with the Acquired Fund and based
in part on information furnished by the Acquired Fund, filed the Registration
Statement with the Commission. Each of the Acquired Fund and the Acquiring Fund
will cooperate with the other, and each will furnish to the other the
information relating to itself required by the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder to be set forth in the
Registration Statement.
8. Conditions to the Acquiring Fund's Obligations. The obligations of the
Acquiring Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Acquired
Fund entitled to vote.
b. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, with values
determined as provided in Section 4 of this Agreement, together with a list
of Investments with their respective tax costs, all as of the Valuation
Time, certified on the Acquired Fund's behalf by North American Funds'
President (or any Vice President) and Treasurer (or any Assistant
Treasurer), and a certificate of both such officers, dated the Exchange
Date, that there has been no material adverse change in the financial
position of the Acquired Fund since October 31, 1999, other
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than changes in the Investments and other assets and properties since that
date or changes in the market value of the Investments and other assets of
the Acquired Fund, or changes due to dividends paid or losses from
operations.
c. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement, dated the Exchange Date, signed by North American Funds'
President (or any Vice President) and Treasurer (or any Assistant
Treasurer) certifying that as of the Valuation Time and as of the Exchange
Date all representations and warranties of the Acquired Fund made in this
Agreement are true and correct in all material respects as if made at and
as of such dates and the Acquired Fund has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
at or prior to such dates.
d. [Reserved]
e. That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
f. That the Acquiring Fund shall have received an opinion of Ropes &
Gray, counsel to the Acquired Fund, in form satisfactory to counsel to the
Acquiring Fund, and dated the Exchange Date, to the effect that (i) North
American Funds is a Massachusetts business trust duly formed and is validly
existing under the laws of The Commonwealth of Massachusetts and has the
power to own all its properties and to carry on its business as presently
conducted; (ii) this Agreement has been duly authorized, executed and
delivered by North American Funds on behalf of the Acquired Fund and,
assuming that the Registration Statement, the Prospectus and the Acquired
Fund Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940
Act and assuming due authorization, execution and delivery of this
Agreement by North American Funds on behalf of the Acquiring Fund, is a
valid and binding obligation of North American Funds and the Acquired Fund;
(iii) North American Funds, on behalf of the Acquired Fund, has power to
sell, assign, convey, transfer and deliver the assets contemplated hereby
and, upon consummation of the transactions contemplated hereby in
accordance with the terms of this Agreement, the Acquired Fund will have
duly sold, assigned, conveyed, transferred and delivered such assets to the
Acquiring Fund; (iv) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate the Declaration of Trust or By-Laws or any provision of any
agreement known to such counsel to which North American Funds or the
Acquired Fund is a party or by which it is bound; and (v) to the knowledge
of such counsel, no consent, approval, authorization or order of any court
or governmental authority is required for the consummation by North
American Funds on behalf of the Acquired Fund of the transactions
contemplated hereby, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required under state
securities or blue sky laws.
g. [That the Acquiring Fund shall have received an opinion of Ropes &
Gray (which opinion would be based upon certain factual representations and
subject to certain qualifications), dated the Exchange Date, in form
satisfactory to the Acquiring Fund and its counsel, with respect to the
matters specified in Section 9(f) of this Agreement.]
h. [That the Acquiring Fund shall have received an opinion of Ropes &
Gray (which opinion would be based upon certain factual representations and
subject to certain qualifications), dated the Exchange Date, in form
satisfactory to the Acquiring Fund and its counsel, to the effect that, on
the basis of the existing provisions of the Code, current administrative
rules, and the court decisions, for federal income tax purposes (i) no gain
or loss will be recognized by the Acquiring Fund upon receipt of the
Investments transferred to the Acquiring Fund pursuant to this Agreement in
exchange for the Merger Shares; (ii) the basis to the Acquiring Fund of the
Investments will be the same as the basis of the Investments in the hands
of the Acquired Fund immediately prior to such exchange; and (iii) the
Acquiring Fund's holding periods with respect to the Investments will
include the respective periods for which the Investments were held by the
Acquiring Fund.]
i. That the assets of the Acquired Fund to be acquired by the Acquiring
Fund will include no assets which the Acquiring Fund, by reason of charter
limitations or of investment restrictions disclosed in the Registration
Statement in effect on the Exchange Date, may not properly acquire.
A-8
<PAGE>
j. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of North American Funds or the Acquiring
Fund, threatened by the Commission.
k. That North American Funds shall have received from the Commission,
any relevant state securities administrator and any relevant state
insurance regulatory authority such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and
any applicable state securities or blue sky laws or state insurance laws in
connection with the transactions contemplated hereby, and that all such
orders shall be in full force and effect.
l. That all actions taken by North American Funds on behalf of the
Acquired Fund in connection with the transactions contemplated by this
Agreement and all documents incidental thereto shall be satisfactory in
form and substance to the Acquiring Fund and its counsel.
m. That, prior to the Exchange Date, the Acquired Fund shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of the
Acquired Fund (i) all of the excess of (x) the Acquired Fund's investment
income excludable from gross income under Section 103(a) of the Code over
(y) the Acquired Fund's deductions disallowed under Sections 265 and
171(a)(2) of the Code, (ii) all of the Acquired Fund's investment company
taxable income (as defined in Section 852 of the Code) for its taxable
years ending on or after October 31, 1999 and on or prior to the Exchange
Date (computed in each case without regard to any deduction for dividends
paid) in each case for its taxable years ending on or after October 31,
1999 and on or prior to the Exchange Date, and (iii) all of the Acquired
Fund's net capital gain realized (after reduction for any capital loss
carryover), in each case for the taxable year ending on October 31, 1999
and all subsequent taxable periods ending on or prior to the Exchange Date.
n. That the Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and the
Treasurer (or any Assistant Treasurer) of North American Funds, as to the
tax cost to the Acquired Fund of the securities delivered to the Acquiring
Fund pursuant to this Agreement, together with any such other evidence as
to such tax cost as the Acquiring Fund may reasonably request.
o. That the Acquired Fund's custodian shall have delivered to the
Acquiring Fund a certificate identifying all of the assets of the Acquired
Fund held or maintained by such custodian as of the Valuation Time.
p. That the Acquired Fund's transfer agent shall have provided to the
Acquiring Fund (i) the originals or true copies of all of the records of
the Acquired Fund in the possession of such transfer agent as of the
Exchange Date, (ii) a certificate setting forth the number of shares of the
Acquired Fund outstanding as of the Valuation Time, and (iii) the name and
address of each holder of record of any shares and the number of shares
held of record by each such shareholder.
q. [Reserved]
r. [Reserved]
s. That the merger of the Tax-Sensitive Equity Fund into the Growth &
Income Fund shall be approved by the requisite votes of the holders of the
outstanding shares of beneficial interest of the Tax-Sensitive Equity Fund.
9. Conditions to the Acquired Fund's Obligations. The obligations of the
Acquired Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Acquired
Fund entitled to vote.
A-9
<PAGE>
b. That North American Funds, on behalf of the Acquiring Fund, shall
have executed and delivered to the Acquired Fund an Assumption of
Liabilities dated as of the Exchange Date pursuant to which the Acquiring
Fund will assume all of the liabilities of the Acquired Fund existing at
the Valuation Time in connection with the transactions contemplated by this
Agreement, other than liabilities arising pursuant to this Agreement.
c. That the Acquiring Fund shall have furnished to the Acquired Fund a
statement, dated the Exchange Date, signed by North American Funds'
President (or any Vice President) and Treasurer (or any Assistant
Treasurer) certifying that as of the Valuation Time and as of the Exchange
Date all representations and warranties of the Acquiring Fund made in this
Agreement are true and correct in all material respects as if made at and
as of such dates, and that the Acquiring Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed
or satisfied at or prior to each of such dates; and that North American
Funds shall have furnished to the Acquired Fund a statement, dated the
Exchange Date, signed by an officer of North American Funds certifying that
as of the Valuation Time and as of the Exchange Date, to the best of North
American Funds' knowledge, after due inquiry, all representations and
warranties of the Acquiring Fund made in this Agreement are true and
correct in all material respects as if made at and as of such date.
d. That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.
e. That the Acquired Fund shall have received an opinion of Ropes &
Gray, counsel to the Acquiring Fund, in form satisfactory to counsel to the
Acquired Fund, and dated the Exchange Date, to the effect that (i) North
American Funds is a Massachusetts business trust duly formed and is validly
existing under the laws of The Commonwealth of Massachusetts and has the
power to own all its properties and to carry on its business as presently
conducted; (ii) the Merger Shares to be delivered to the Acquired Fund as
provided for by this Agreement are duly authorized and upon such delivery
will be validly issued and will be fully paid and non-assessable by North
American Funds and the Acquiring Fund and no shareholder of the Acquiring
Fund has any preemptive right to subscription or purchase in respect
thereof; (iii) this Agreement has been duly authorized, executed and
delivered by North American Funds on behalf of the Acquiring Fund and,
assuming that the Prospectus, the Registration Statement and the Acquired
Fund Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940
Act and assuming due authorization, execution and delivery of this
Agreement by North American Funds on behalf of the Acquired Fund, is a
valid and binding obligation of North American Funds and the Acquiring
Fund; (iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, violate the
Declaration of Trust or By-Laws, or any provision of any agreement known to
such counsel to which North American Funds or the Acquiring Fund is a party
or by which it is bound; (v) no consent, approval, authorization or order
of any court or governmental authority is required for the consummation by
North American Funds on behalf of the Acquiring Fund of the transactions
contemplated herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required under state
securities or blue sky laws; and (vi) the Registration Statement has become
effective under the 1933 Act, and to best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the 1933 Act. In addition, such counsel
shall also state that they have participated in conferences with officers
and other representatives of the Acquiring Fund at which the contents of
the Acquired Fund Proxy Statement and related matters were discussed, and,
although they are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Acquired Fund Proxy Statement, on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of officers and other
representatives of the Acquiring Fund), no facts have come to their
attention that lead them to believe that the portions of the Acquired Fund
Proxy Statement relevant to the transfer of assets contemplated by this
Agreement as of its date, as of the date of the Acquired Fund shareholders'
meeting, or as of the Exchange Date, contained an untrue statement of a
material fact regarding the Acquiring Fund or omitted to state a
A-10
<PAGE>
material fact required to be stated therein or necessary to make the
statements therein regarding the Acquiring Fund, in light of the
circumstances under which they were made, not misleading. Such opinion may
state that such counsel does not express any opinion or belief as to the
financial statements or other financial data, or as to the information
relating to the Acquired Fund, contained in the Acquired Fund Proxy
Statement or the Registration Statement, and may contain other customary or
appropriate qualifications.
f. [That the Acquired Fund shall have received an opinion of Ropes &
Gray, dated the Exchange Date (which opinion would be based upon certain
factual representations and subject to certain qualifications), in form
satisfactory to the Acquired Fund and its counsel, to the effect that, on
the basis of the existing provisions of the Code, current administrative
rules, and court decisions, for federal income tax purposes: (i) no gain or
loss will be recognized by the Acquired Fund as a result of the
reorganization; (ii) no gain or loss will be recognized by shareholders of
the Acquired Fund on the distribution of Merger Shares to them in exchange
for their shares of the Acquired Fund; (iii) the tax basis of the Merger
Shares that the Acquired Fund's shareholders receive in place of their
Acquired Fund shares will be the same as the basis of the Acquired Fund
shares; and (iv) a shareholder's holding period for the Merger Shares
received pursuant to the Agreement will be determined by including the
holding period for the Acquired Fund shares exchanged for the Merger
Shares, provided that the shareholder held the Acquired Fund shares as a
capital asset.]
g. That all actions taken by North American Funds on behalf of the
Acquiring Fund in connection with the transactions contemplated by this
Agreement and all documents incidental thereto shall be satisfactory in
form and substance to the Acquired Fund and its counsel.
h. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of North American Funds or the Acquiring
Fund, threatened by the Commission.
i. That North American Funds shall have received from the Commission,
any relevant state securities administrator and any relevant state
insurance regulatory authority such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and
any applicable state securities or blue sky laws or state insurance laws in
connection with the transactions contemplated hereby, and that all such
orders shall be in full force and effect.
j. That the merger of the Tax-Sensitive Equity Fund into the Growth &
Income Fund shall be approved by the requisite votes of the holders of the
outstanding shares of beneficial interest of the Tax-Sensitive Equity Fund.
10. [Reserved]
11. Waiver of Conditions. Each of the Acquired Fund or the Acquiring Fund,
after consultation with counsel and by consent of the trustees of North
American Funds on its behalf, or an officer authorized by such trustees, may
waive any condition to their respective obligations hereunder, except for the
conditions set forth in Sections 8(a) and 9(a).
12. No Broker, etc. Each of the Acquired Fund and the Acquiring Fund
represents that there is no person who has dealt with it or North American
Funds who by reason of such dealings is entitled to any broker's or finder's or
other similar fee or commission arising out of the transactions contemplated by
this Agreement.
13. Termination. The Acquired Fund and the Acquiring Fund may, by consent of
the trustees of North American Funds on behalf of each Fund, terminate this
Agreement. If the transactions contemplated by this Agreement have not been
substantially completed by [ , 2000], this Agreement shall automatically
terminate on that date unless a later date is agreed to by the Acquired Fund
and the Acquiring Fund.
14. [Reserved]
A-11
<PAGE>
15. Covenants, etc. Deemed Material. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding an investigation made by
them or on their behalf.
16. Sole Agreement; Amendments. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the
subject matter hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement signed by
each party hereto, and shall be construed in accordance with and governed by
the laws of The Commonwealth of Massachusetts.
17. Declaration of Trust. A copy of the Declaration of Trust is on file with
the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the trustees of
North American Funds on behalf of the Acquired Fund and the on behalf Acquiring
Fund, as trustees and not individually and that the obligations of this
instrument are not binding upon any of the trustees, officers or shareholders
of North American Funds individually but are binding only upon the assets and
property of the Acquired Fund and the Acquiring Fund.
NORTH AMERICAN FUNDS,
on behalf of its Equity-Income Fund
series
By: _________________________________
NORTH AMERICAN FUNDS,
on behalf of its Growth & Income
series
By: _________________________________
A-12
<PAGE>
NORTH AMERICAN FUNDS
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
April , 2000
This Joint Statement of Additional Information (the "SAI") relates to
proposed mergers (the "Mergers") of the Equity-Income Fund and the Tax-
Sensitive Equity Fund (each an "Acquired Fund") into the Growth & Income Fund
(the "Acquiring Fund"). Each of the Acquired Funds and the Acquiring Fund is a
series of North American Funds, a Massachusetts business trust.
This SAI contains information which may be of interest to shareholders but
which is not included in the Prospectus/Proxy Statement dated April , 2000
(the "Prospectus/Proxy Statement") of the Acquiring Funds which relates to the
Mergers. As described in the Prospectus/Proxy Statement, the Mergers would
involve the transfer of all the assets of each Acquired Fund in exchange for
shares of the Acquiring Fund and the assumption of all the liabilities of the
Acquired Fund. Each Acquired Fund would distribute the Acquiring Fund shares it
receives to its shareholders in complete liquidation of the Acquired Fund.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission and is available upon request and
without charge by writing to North American Funds, 286 Congress Street, Boston,
Massachusetts 02210 or by calling 1-800-872-8037.
Table of Contents
<TABLE>
<C> <S> <C>
I. Additional Information about the Acquiring Fund and the Acquired
Funds...............................................................
II. Financial Statements................................................
</TABLE>
I. Additional Information about the Acquiring Fund and the Acquired Funds.
Incorporated by reference to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement Form N-1A (filed on March 2, 2000)
(Registration Nos. 33-27958 and 811-5797).
II. Financial Statements.
This SAI is accompanied by the Annual Report for the year ended October 31,
1999 of the Acquiring Fund and Acquired Funds, which contains historical
financial information regarding such Funds. Such report has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
Pro forma financial statements of the Acquiring Fund for its Merger with
North American Equity-Income Fund are provided on the following pages. Pro
forma financial statements of the Acquiring Fund for its Merger with North
American Tax-Sensitive Equity Fund are not provided because the Acquired Fund's
net assets are less than 10% of the Acquiring Fund's net assets.
<PAGE>
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
<TABLE>
<CAPTION>
North American North American
Equity-Income Growth & Pro-forma Pro-forma
ASSETS: Fund Income Fund Adjustments Combined
- ------ ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Investments in securities, at value .............................. $ 115,694,225 $ 298,543,702 $ 414,237,927
Cash ............................................................. 41 538 579
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for
securities on loan, at value ................................ 1,242,600 4,962,600 6,205,200
Receivables:
Fund shares sold ......................................... 219,680 870,080 1,089,760
Dividends ................................................ 266,679 320,593 587,272
Interest ................................................. 42 1,328 1,370
Foreign tax withholding reclaims ......................... 5,829 5,829
Other assets ..................................................... 1,998 2,049 4,047
------------- ------------- ------- -------------
Total assets ...................................... 117,425,265 304,706,719 -- 422,131,984
LIABILITIES:
Collateral on securities loaned, at value ........................ 1,242,600 4,962,600 6,205,200
Payables:
Investments purchased .................................... 844,918 844,918
Fund shares redeemed ..................................... 150,648 484,718 635,366
Dividend and interest withholding tax .................... 36 -- 36
Investment adviser ....................................... 61,661 198,339 260,000
Custodian and transfer agent fees ........................ 19,662 18,309 37,971
Distribution fee ......................................... 29,738 87,817 117,555
Other accrued expenses ................................... 71,697 147,863 219,560
------------- ------------- ------- -------------
Total liabilities ................................. 1,576,042 6,744,564 -- 8,320,606
NET ASSETS ....................................................... $ 115,849,223 $ 297,962,155 $ 0 $ 413,811,378
============= ============= ======= =============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ............... $ 509,106 -- $ 509,106
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ................................ 21,841,836 $ 25,033,619 46,875,455
Unrealized appreciation (depreciation) on:
Investments ....................................... 7,699,450 108,981,644 116,681,094
Futures ........................................... -- --
Foreign currency and forward foreign currency
contracts ....................................... (12) (12)
Capital shares at par value of $.001 ..................... 6,900 10,492 (2,822)/1/ 14,570
Additional paid-in capital ............................... 85,791,931 163,936,412 2,822 /1/ 249,731,165
------------- ------------- ------- -------------
Net assets ........................................ $ 115,849,223 $ 297,962,155 $ 0 $ 413,811,378
============= ============= ======= =============
</TABLE>
/1/ Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
2
<PAGE>
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
<TABLE>
<CAPTION>
North American North American
Equity-Income Growth & Pro-forma Pro-forma
Fund Income Fund Adjustments Combined
---- ----------- ----------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUES:
- -----------------
Class A Shares
Net assets at value ........................................ $ 13,989,760 $ 37,210,426 $ 51,200,186
Shares outstanding ......................................... 827,331 1,293,038 (341,238) 1,779,131
Net asset value (NAV) and redemption price per share ......... $ 16.91 $ 28.78 $ 28.78
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is
reduced .................................................. $ 17.94 $ 30.54 $ 30.54
Class B Shares
Net assets at value ........................................ $ 31,659,383 $104,695,326 $136,354,709
Shares outstanding ......................................... 1,894,670 3,702,446 (775,173) 4,821,943
Net asset value, offering price and
redemption price per share ................................. $ 16.71 $ 28.28 $ 28.28
Class C Shares
Net assets at value ........................................ $ 70,200,080 $156,056,403 $226,256,483
Shares outstanding ......................................... 4,177,566 5,496,180 (1,704,862) 7,968,884
Net asset value, offering price and
redemption price per share ................................. $ 16.80 $ 28.39 $ 28.39
</TABLE>
See Notes to Pro-Forma Financial Statements
3
<PAGE>
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
<TABLE>
<CAPTION>
North American North American
Equity-Income Growth & Pro-forma Pro-forma
Fund Income Fund Adjustments Combined
---- ----------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
- ------------------
Interest ...................................................... $ 127,679 $ 222,376 $ 350,055
Dividends ..................................................... 3,799,150 3,928,924 7,728,074
------------ ------------ ----------- ------------
Total income ........................................... 3,926,829 4,151,300 -- 8,078,129
EXPENSES:
- --------
Distribution for Class A ...................................... 96,309 158,039 254,348
Distribution for Class B ...................................... 363,445 943,742 1,307,187
Distribution for Class C ...................................... 849,454 1,464,659 2,314,113
Investment adviser fee ........................................ 1,060,879 1,912,464 (128,659)/2/ 2,844,684
Custodian fee ................................................. 83,437 140,315 223,752
Transfer agent fee ............................................ 233,528 376,715 610,243
Accounting/administration ..................................... 231,614 434,861 (200,000)/3/ 466,475
Audit and legal fees .......................................... 76,533 148,248 (50,000)/3/ 174,781
Miscellaneous ................................................. 139,534 234,964 (125,000)/3/ 249,498
------------ ------------ ----------- ------------
Expenses before reimbursement by investment adviser ........... 3,134,733 5,814,007 (503,659) 8,445,081
Reimbursement of expenses by investment adviser ............... (277,002) (414,305) 428,659 /4/ (262,648)
------------ ------------ ----------- ------------
Net expenses ................................... 2,857,731 5,399,702 (75,000) 8,182,433
------------ ------------ ----------- ------------
Net investment income/(loss) .................. 1,069,098 (1,248,402) 75,000 (104,304)
------------ ------------ ----------- ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions .................................... 25,209,364 29,073,940 54,283,304
Foreign currency and forward foreign currency contracts .... (11,895) (244) (12,139)
Change in unrealized appreciation (depreciation) on:
Investments ................................................ (19,384,683) 27,366,787 7,982,104
Translation of foreign currency and forward foreign currency
contracts .............................................. 101 153 254
------------ ------------ ----------- ------------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ....... 5,812,887 56,440,636 -- 62,253,523
Net increase in net assets resulting from operations ............... $ 6,881,985 $ 55,192,234 $ 75,000 $ 62,149,219
</TABLE>
/2/ Reflects the surviving fund's Advisory fee rate.
/3/ Reflects expected savings due to economies of scale.
/4/ Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
4
<PAGE>
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
<TABLE>
<CAPTION>
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
NAF NAF NAF NAF
Equity- Growth & Equity- Growth &
Income Income Combined Income Income Combined
------ ------ -------- ------ ------ --------
<C> <C> <C> <S> <C> <C> <C>
Common Stocks
-------------
83,300 83,300 Abbott Laboratories $3,363,238 $3,363,238
71,000 71,000 ACE, Ltd. 1,380,063 1,380,063
38,700 38,700 Allied Signal, Inc. 2,203,481 2,203,481
41,700 41,700 Aluminum Company of America 2,533,275 2,533,275
7,000 7,000 America Online, Inc.* 907,812 907,812
47,400 47,400 American General Corp. $3,516,487 3,516,487
136,100 104,400 240,500 American Home Products Corp. 7,111,225 5,454,900 12,566,125
42,625 42,625 American International Group, Inc. 4,387,711 4,387,711
44,800 44,800 AMR Corporation* 2,844,800 2,844,800
28,400 28,400 Analog Devices, Inc.* 1,508,750 1,508,750
39,900 39,900 Anheuser-Busch Companies, Inc. 2,865,319 2,865,319
111,200 111,200 Associates First Capital Corp. 4,058,800 4,058,800
47,700 47,700 Astrazeneca Plc 2,182,275 2,182,275
36,400 36,400 AT & T Corp. - Liberty Media Group 1,444,625 1,444,625
92,400 92,400 AT & T Corp.* 4,319,700 4,319,700
62,500 62,500 Automatic Data Processing, Inc. 3,011,719 3,011,719
31,800 31,800 Bankamerica Corp. 2,047,125 2,047,125
48,300 49,300 97,600 Baxter International, Inc. 3,133,463 3,198,337 6,331,800
107,750 100,492 208,242 Bell Atlantic Corp. 6,997,016 6,525,699 13,522,715
75,800 45,100 120,900 Bristol-Myers Squibb Co. 5,822,388 3,464,244 9,286,632
38,400 38,400 Cardinal Health, Inc. 1,656,000 1,656,000
33,800 33,800 Caterpillar, Inc. 1,867,450 1,867,450
52,500 36,900 89,400 Chevron Corp. 4,793,906 3,369,431 8,163,337
97,000 97,000 Cisco Systems, Inc.* 7,178,000 7,178,000
170,400 170,400 Citigroup, Inc. 9,222,900 9,222,900
34,000 34,000 Colgate Palmolive Co. 2,057,000 2,057,000
94,600 94,600 Columbia/HCA Healthcare Corp. 2,282,225 2,282,225
37,900 37,900 Computer Sciences Corp.* 2,603,256 2,603,256
16,400 16,400 Corning, Inc. 1,289,450 1,289,450
27,700 27,700 CSX Corp. 1,135,700 1,135,700
78,200 78,200 Dayton Hudson Corp. 5,053,675 5,053,675
45,800 45,800 Duke Energy Do. 2,587,700 2,587,700
37,900 64,400 102,300 E.I. Du Pont de Nemours & Co. 2,442,181 4,149,775 6,591,956
15,000 15,000 Eaton Corporation 1,128,750 1,128,750
26,600 26,600 EMC Corp.* 1,941,800 1,941,800
25,800 91,900 117,700 Exxon Corp. 1,910,812 6,806,344 8,717,156
59,600 59,600 Federal National Mortgage Association 4,216,700 4,216,700
71,200 71,200 First Data Corp. 3,252,950 3,252,950
114,000 70,000 184,000 First Union Corp. 4,866,375 2,988,125 7,854,500
31,200 31,200 Ford Motor Company 1,712,100 1,712,100
54,900 54,900 Gannett, Inc. 4,234,162 4,234,162
87,200 87,200 General Electric Co. 11,821,060 11,821,060
52,800 52,800 General Mills, Inc. 4,603,500 4,603,500
21,000 21,000 General Motors Corp.* 1,529,062 1,529,062
24,500 31,000 55,500 Gillette Company 886,594 1,121,813 2,008,407
47,300 47,300 GTE Corp. 3,547,500 3,547,500
</TABLE>
5
<PAGE>
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
<TABLE>
<CAPTION>
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
NAF NAF NAF NAF
Equity- Growth & Equity- Growth &
Income Income Combined Income Income Combined
------ ------ -------- ------ ------ --------
Common Stocks - continued
-------------------------
<C> <C> <C> <S> <C> <C> <C>
113,300 113,300 H.J. Heinz Co. $5,410,075 $5,410,075
28,800 28,800 Hewlett-Packard Company 2,133,000 2,133,000
25,100 25,100 Illinois Tool Works, Inc. 1,838,575 1,838,575
92,500 92,500 Intel Corp. 7,162,969 7,162,969
56,200 56,200 International Business Machines Corp. 5,528,675 5,528,675
52,807 61,200 114,007 International Paper Co. 2,778,968 3,220,650 5,999,618
34,600 34,600 Johnson & Johnson 3,624,350 3,624,350
91,600 55,800 147,400 Kimberly Clark Corp. 5,782,250 3,522,375 9,304,625
77,100 77,100 Lucent Technologies 4,953,675 4,953,675
53,800 58,700 112,500 Marsh & McLennan Companies, Inc. 4,253,563 4,640,969 8,894,532
45,700 45,700 May Dept Stores 1,585,219 1,585,219
104,100 104,100 McDonald's Corp. 4,294,125 4,294,125
73,900 73,900 MCI WorldCom, Inc.* 6,341,544 6,341,544
184,850 184,850 Mellon Financial Corp. 6,827,897 6,827,897
54,600 54,600 Merck & Company, Inc. 4,344,112 4,344,112
48,800 48,800 Merrill Lynch & Co., Inc. 3,830,800 3,830,800
41,900 41,900 Micron Technology, Inc.* 2,987,994 2,987,994
121,200 121,200 Microsoft Corp.* 11,218,575 11,218,575
42,400 21,800 64,200 Minnesota Mining & Manufacturing Co. 4,030,650 2,072,363 6,103,013
20,000 20,000 Monsanto Co. 770,000 770,000
27,000 27,000 Motorola, Inc. 2,630,813 2,630,813
27,000 27,000 National Fuel Gas Co. NJ 1,319,625 1,319,625
58,400 58,400 Pepsico, Inc. 2,025,750 2,025,750
123,400 72,300 195,700 Pharmacia & Upjohn, Inc. 6,655,888 3,899,681 10,555,569
125,400 92,600 218,000 Philip Morris Companies, Inc. 3,158,512 2,332,363 5,490,875
28,400 28,400 Pinnacle West Capital Corp. 1,047,250 1,047,250
98,900 98,900 Pitney Bowes, Inc. 4,506,131 4,506,131
50,500 50,500 Procter & Gamble Co. 5,296,187 5,296,187
83,600 83,600 Royal Dutch Petroleum Co. 5,010,775 5,010,775
111,754 113,400 225,154 SBC Communications, Inc. 5,692,469 5,776,312 11,468,781
60,500 60,500 Schlumberger, Ltd. 3,664,031 3,664,031
50,700 50,700 Texaco, Inc. 3,111,713 3,111,713
35,600 35,600 Texas Instruments, Inc. 3,195,100 3,195,100
39,800 39,800 Texas Utilities Co. 1,542,250 1,542,250
26,600 26,600 The Chase Manhattan Corp. 2,324,175 2,324,175
11,900 11,900 The Dow Chemical Co. 1,407,175 1,407,175
81,300 81,300 The GAP, Inc. 3,018,263 3,018,263
85,800 85,800 The Walt Disney Co. 2,262,975 2,262,975
16,400 16,400 Time Warner, Inc. 1,142,875 1,142,875
82,600 82,600 Tyco International Ltd. 3,298,838 3,298,838
41,900 105,100 147,000 U.S. Bancorp 1,552,919 3,895,269 5,448,188
65,000 65,000 U.S. West, Inc. 3,969,062 3,969,062
36,300 36,300 Unicom Corp. 1,390,744 1,390,744
32,200 32,200 United Technologies Corp. 1,948,100 1,948,100
37,900 37,900 UNOCAL Corp. 1,307,550 1,307,550
42,500 42,500 Wachovia Corp. 3,665,625 3,665,625
</TABLE>
6
<PAGE>
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
<TABLE>
<CAPTION>
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
NAF NAF NAF NAF
Equity- Growth & Equity- Growth &
Income Income Combined Income Income Combined
------ ------ -------- ------ ------ --------
Common Stocks - continued
-------------------------
<C> <C> <C> <S> <C> <C> <C>
151,500 151,500 Wal-Mart Stores, Inc. $8,588,156 $8,588,156
67,400 67,400 Warner-Lambert Co. 5,379,362 5,379,362
46,650 46,650 Wells Fargo & Co. $2,233,369 2,233,369
21,800 21,800 Weyerhaeuser Co. 1,301,187 1,301,187
94,000 76,200 170,200 Xerox Corp. 2,632,000 2,133,600 4,765,600
Total Common Stocks $115,575,225 $294,432,990$410,008,215
(Cost - $107,875,775, $185,392,058
& $293,267,833, respectively)
Preferred Stocks
----------------
27,900 27,900 Monsanto Corp. $1,056,712 $1,056,712
(Cost - $1,116,000)
<CAPTION>
PAR VALUE MARKET VALUE
- --------------------------------------- --------------------------------------
Short Term
----------
<C> <C> <C> <S> <C> <C> <C>
$3,054,000 $3,054,000 Repurchase Agreement with Paine Webber
dated 10/29/99 at 5.22% to be repurchased
at $3,055,328 on 11/01/99, collateralized by
$2,960,000 U.S. Treasury Bills, 6.75% due
08/15/26 (valued at $3,020,069 including
interest) $3,054,000 $3,054,000
$119,000 119,000 Repurchase Agreement with State Street Bank
& Trust dated 10/29/99 at 4.25%, to be
repurchased at $119,042 on 11/01/99,
collateralized by $125,000 U.S. Treasury
Notes, 5.75% due 08/15/03 (valued at
$126,791, including interest) $119,000 119,000
Total Short Term $119,000 $3,054,000 $3,173,000
(Cost - $119,000, $3,054,000 & $3,173,000
respectively)
TOTAL INVESTMENTS $115,694,225 $298,543,702 $414,237,927
(Cost - $107,994,775, $189,562,058 &
$297,556,883, respectively)
</TABLE>
* Non-income producing
7
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS OF MERGER BETWEEN
NORTH AMERICAN GROWTH & INCOME FUND,
NORTH AMERICAN EQUITY-INCOME FUND AND
October 31, 1999 (unaudited)
1. BASIS OF COMBINATION
North American Growth & Income Fund ("Growth & Income") is a series of North
American Funds, which is a Massachusetts business trust registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The pro-forma combined financial statements
reflect the pro-forma combined financial position of the proposed acquisition of
North American Equity-Income Fund ("Equity-Income") by Growth & Income as if
such acquisition had taken place as of October 31, 1999, and the pro-forma
combined results of operations for the year ended October 31, 1999 as though the
reorganization had occurred as of November 1, 1998.
The pro-forma statements give effect to the proposed transfer of the assets and
stated liabilities of Equity-Income in exchange for shares of Growth & Income at
net asset value. Under generally accepted accounting principles, the historical
cost of investment securities will be carried forward to the surviving entity
and the results of operations of Growth & Income for pre-combination periods
will not be restated. The pro-forma combined financial statements do not reflect
the expenses of either fund in carrying out its obligation under the proposed
Agreement and Plan or Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of Equity-Income
and Growth & Income which are incorporated by reference in the Statement of
Additional Information.
2. PRO-FORMA COMBINED PORTFOLIO OF INVESTMENTS
Securities held by the two funds have been combined in the accompanying Combined
Portfolio of Investments. Securities are valued using the pricing procedures and
policies of the respective Acquiring Fund or Acquired Fund, as applicable. For
more information, see the North American Funds Annual Reports. Historical cost
amounts represent the combined cost basis of the securities.
3. PRO FORMA COMBINED STATEMENTS OF ASSETS AND LIABILITIES
Shares outstanding have been adjusted to reflect the conversion of Equity-Income
shares into Growth & Income shares based upon the net asset value of the Growth
& Income shares at October 31, 1999.
4. PRO FORMA OPERATIONS
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expenses of the
combined entity. The investment advisor fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for Growth & Income at the time of the Reorganization at the combined
level of average net assets for the twelve month period ended October 31, 1999.
8
<PAGE>
NORTH AMERICAN FUNDS
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Incorporated by reference to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement Form N-1A (filed on March 2, 2000)
(Registration Nos. 33-27958 and 811-5797).
Item 16. Exhibits
<TABLE>
<C> <S>
(1)(a) Amended and Restated Agreement and Declaration of Trust (the
"Declaration of Trust") dated February 18, 1994.(8)
(b) Declaration of Trust Amendment--Establishment of Designation of
Additional Series of Shares for the International Growth and Income
Fund, dated December 28, 1994.(8)
(c) Declaration of Trust Amendment--Establishment and Designation of
Classes A, B and C, dated March 17, 1994.(8)
(d) Declaration of Trust Amendment--Establishment and Designation of
Additional Series of Shares for the Growth Equity, International Small
Cap, and Small/Mid Cap Funds, dated February 28, 1996.(8)
(e) Declaration of Trust Amendment--Redesignation of Series of Shares of
Beneficial Interest known as the Growth Fund, dated February 28,
1996.(8)
(f) Declaration of Trust Amendment--Redesignation of Series of Shares of
Beneficial Interest known as the Global Growth Fund and the Asset
Allocation Fund, dated October 1, 1996.(8)
(g) Declaration of Trust Amendment--Establishment of the Tax-Sensitive
Equity Fund and Emerging Growth Fund series.(10)
(2) By-Laws of North American Funds--previously filed as Exhibit (b)(2) to
North American Funds initial registration statement on Form N-1A (File
No. 33-27958) dated April 5, 1989.(10)
(3) None.
(4) Form of Agreement and Plan of Reorganization--filed as Appendix A to
Part A hereof.
(5)(a) Article IV (Shares) and Article V (Shareholders' Voting Powers and
Meetings) of the Declaration of Trust.
(b) Article 2 (Shareholders) and Article 9 (Issuance of Share
Certificates) of the By-Laws.
(6)(a) Form of Interim Investment Advisory Agreement between North American
Funds and American General Asset Management Corp.(13)
(b) Form of Investment Advisory Agreement between North American Funds and
American General Asset Management Corp.(13)
(c) Form of Subadvisory Agreement between American General Asset
Management Corp. and Founders Asset Management, LLC.(13)
(d) Form of Subadvisory Agreement between American General Asset
Management Corp. and Morgan Stanley Dean Witter Investment Asset
Management Inc.(13)
(e) Form of Subadvisory Agreement between American General Asset
Management Corp. and Wellington Management Company LLP.(13)
</TABLE>
<PAGE>
<TABLE>
<C> <S>
(f) Form of Interim Subadvisory Agreement between American General Asset
Management Corp. and American General Investment Management, L.P.(13)
(g) Form of Subadvisory Agreement between American General Asset
Management Corp. and American General Investment Management, L.P.(13)
(h) Form of Subadvisory Agreement between American General Asset
Management Corp. and INVESCO Funds Group, Inc.(13)
(i) Form of Subadvisory Agreement between American General Asset
Management Corp. and Josephthal & Co. Inc.(13)
(j) Form of Subadvisory Agreement between American General Asset
Management Corp. and Neuberger Berman Management Inc.(13)
(k) Form of Subadvisory Agreement between American General Asset
Management Corp. and T. Rowe Price Associates, Inc.(13)
(7)(a) Distribution Agreement between North American Funds and NASL Financial
Services, Inc.(7)
(b) Amendment dated September 30, 1997 to Distribution Agreement between
North American Funds and NASL Financial Services, Inc. dated as of
January 1, 1996.(9)
(c) Form of Distribution Agreement between North American Funds and
American General Funds Distributors, Inc.(13)
(d) Promotional Agreement among CypressTree Funds Distributors, Inc., Wood
Logan Associates, Inc., and North American Security Life Insurance
Company dated October 1, 1997.(9)
(e) Most Recent Form of Dealer Agreement Among American General Funds
Distributors, Inc. and Selected Broker-Dealers.(13)
(f) Assignment of Dealer Agreement among CypressTree Funds Distributors,
Inc., Wood Logan Associates, Inc. and Manufacturers Securities
Services, LLC dated October 1, 1997.(9)
(g) Form of Notice of Assignment of Dealer Agreement among CypressTree
Funds Distributors, Inc., Wood Logan Associates, Inc. and
Manufacturers Securities Services, LLC.(9)
(8) None.
(9)(a) Custodian Agreement Between North American Funds and Boston Safe
Deposit and Trust Company.(1)
(b) Custodian Agreement Between North American Funds and State Street Bank
and Trust Company.(1)
(c) Transfer and Shareholder Services Contract Between North American
Funds and State Street Bank and Trust Company.(1)
(d) Forms of Sub-Custodian Agreements Between State Street Bank and Trust
Company and the Bank of New York, Chemical Bank and Bankers Trust.(5)
(10)(a) Amended and Restated Rule 12b-1 Distribution Plan for Class A shares
dated September 26, 1997.(9)
(b) Amended and Restated Rule 12b-1 Distribution Plan for Class B shares
dated September 26, 1997.(9)
(c) Amended and Restated Rule 12b-1 Distribution Plan for Class C shares
dated September 26, 1997.(9)
(d) Form of Amended and Restated Rule 18f-3 Plan.(13)
(11) Form of Opinion and consent of counsel as to legality of securities
being registered.(13)
</TABLE>
<PAGE>
<TABLE>
<C> <S>
(12) Opinion of counsel as to tax matters (form of tax opinion filed
herewith).(14)
(13) None.
(14) Consent of PricewaterhouseCoopers LLP.(13)
(15) None.
(16)(a) Power of Attorney.(13)
(b) Power of Attorney of Alice T. Kane.(13)
(17) Form of Proxy.(13)
</TABLE>
- --------
(1) Previously filed as Exhibit to North American Funds' initial registration
statement on Form N-1A No. 33-27958 dated November 1, 1991.
(2) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 1 on Form N-1A (File No. 33-27958) dated December 29, 1989.
(3) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 2 on Form N-1A (File No. 33-27958) dated August 29, 1990.
(4) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 7 on Form N-1A (File No. 33-27958) dated November 1, 1991.
(5) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 17 on Form N-1A (File No. 33-27958) dated April 1, 1994.
(6) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 21 on Form N-1A (File No. 33-27958) dated December 15, 1995.
(7) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 22 on Form N-1A (File No. 33-27958) dated February 23, 1996.
(8) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 25 on Form N-1A (File No. 33-27958) dated December 30, 1996.
(9) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 26 on Form N-1A (File No. 33-27958) dated October 17, 1997.
(10) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 27 on Form N-1A (File No. 33-27958) dated December 30, 1997.
(11) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 28 on Form N-1A (File No. 33-27958) dated December 18, 1998.
(12) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 29 on Form N-1A (File No. 33-27958) dated March 1, 1999.
(13) Filed herewith.
(14) To be filed by post-effective amendment.
Item 17. Undertakings
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
<PAGE>
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment of the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Acts of 1933, each post-
effective amendment shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The Registrant agrees to file, by post-effective amendment, an opinion
of counsel or a copy of an Internal Revenue Service ruling supporting the tax
consequences of the proposed mergers described in this Registration Statement
within a reasonable time after receipt of such opinion or ruling.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant, in the City of Boston and State of
Massachusetts on the 14th day of March, 2000.
North American Funds
*
By: _________________________________
Alice T. Kane, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title(s) Date
---------- -------- ----
<S> <C> <C>
* Trustee March 14, 2000
______________________________________
William F. Achtmeyer
* Trustee March 14, 2000
______________________________________
Don B. Allen
* Trustee March 14, 2000
______________________________________
William F. Devin
* Trustee; Chairman; March 14, 2000
______________________________________ President and Principal
Alice T. Kane Executive Officer
* Trustee March 14, 2000
______________________________________
Kenneth J. Lavery
* Treasurer; Principal March 14, 2000
______________________________________ Financial and Accounting
Thomas J. Brown Officer
/s/ John I. Fitzgerald
*By: _________________________________
John I. Fitzgerald
Attorney-in-Fact, pursuant to
Powers of Attorney filed herewith
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Name
------- ------------
<C> <S>
6(a) Form of Interim Investment Advisory Agreement with American General
Asset Management Corp.
6(b) Form of Investment Advisory Agreement with American General Asset
Management Corp.
6(c) Form of Subadvisory Agreement with Founders Asset Management, LLC.
6(d) Form of Subadvisory Agreement with Morgan Stanley Dean Witter
Investment Management Inc.
6(e) Form of Subadvisory Agreement with Wellington Management Company LLP.
6(f) Form of Interim Subadvisory Agreement with American General Investment
Management, L.P.
6(g) Form of Subadvisory Agreement with American General Investment
Management, L.P.
6(h) Form of Subadvisory Agreement with INVESCO Funds Group, Inc.
6(i) Form of Subadvisory Agreement with Josephthal & Co. Inc.
6(j) Form of Subadvisory Agreement with Neuberger Berman Management Inc.
6(k) Form of Subadvisory Agreement with T. Rowe Price Associates, Inc.
7(c) Form of Distribution Agreement with American General Funds
Distributors, Inc.
7(e) Most Recent Form of Dealer Agreement among American General Funds
Distributors, Inc. and Selected Broker-Dealers.
10(d) Form of Amended and Restated Rule 18f-3 Plan.
11 Form of Opinion of Ropes & Gray.
12 Form of Opinion of Ropes & Gray as to tax matters.
14 Consent of PricewaterhouseCoopers LLP.
16(a) Power of Attorney.
16(b) Power of Attorney of Alice T. Kane.
17 Form of Proxy.
</TABLE>
<PAGE>
Exhibit 6(a)
FORM OF INTERIM INVESTMENT ADVISORY AGREEMENT
INTERIM INVESTMENT ADVISORY AGREEMENT made as of March 1, 2000, between
North American Funds, a Massachusetts business trust (the "Trust"), and American
General Asset Management Corp., a Delaware corporation (the "Adviser"). In
consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF ADVISER
The Trust hereby appoints the Adviser, subject to the supervision of
the Trustees of the Trust and the terms of this Agreement, as the investment
adviser for each of the portfolios of the Trust specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Trust from time to time
(the "Funds"). The Adviser accepts such appointment and agrees to render the
services and to assume the obligations set forth in this Agreement commencing on
its effective date. The Adviser will be an independent contractor and will have
no authority to act for or represent the Trust in any way or otherwise be deemed
an agent unless expressly authorized in this Agreement or another writing by the
Trust and Adviser.
2. DUTIES OF THE ADVISER
a. Subject to the general supervision of the Trustees of the Trust and the
terms of this Agreement, the Adviser will at its own expense select,
contract with, and compensate investment subadvisers ("Subadvisers") to
manage the investments and determine the composition of the assets of
the Funds; provided, that any contract with a Subadviser (the
"Subadvisory Agreement") shall be in compliance with and approved as
required by the Investment Company Act of 1940, as amended ("Investment
Company Act"). Subject always to the direction and control of the
Trustees of the Trust, the Adviser will monitor compliance of each
Subadviser with the investment objectives and related investment
policies, as set forth in the Trust's registration statement as filed
with the Securities and Exchange Commission, of any Fund or Funds under
the management of such Subadviser, and review and report to the
Trustees of the Trust on the performance of such Subadviser.
b. The Adviser will oversee the administration of all aspects of the
Trust's business and affairs and in that connection will furnish to the
Trust the following services:
(1) Office and Other Facilities. The Adviser shall furnish to the
Trust office space in the offices of the Adviser or in such
other place as may be agreed upon by the parties hereto from
time to time and such other office facilities, utilities and
office equipment as are necessary for the Trust's operations.
(2) Trustees and Officers. The Adviser agrees to permit
individuals who are directors, officers or employees of the
Adviser to serve (if duly elected or appointed) as Trustees or
President, Vice President, Treasurer or Secretary of the
Trust, without remuneration from or other cost to the Trust.
-1-
<PAGE>
(3) Other Personnel. The Adviser shall furnish to the Trust, at
the Trust's expense, any other personnel necessary for the
operations of the Trust.
(4) Financial, Accounting, and Administrative Services. The
Adviser shall maintain the existence and records of the Trust;
maintain the registrations and qualifications of Trust shares
under federal and state law; and perform all administrative,
financial, accounting, bookkeeping and recordkeeping functions
of the Trust except for any such functions that may be
performed by a third party pursuant to a custodian, transfer
agency or service agreement executed by the Trust. The Trust
shall reimburse the Adviser for its expenses associated with
all such services, including the compensation and related
personnel expenses and expenses of office space, office
equipment, utilities and miscellaneous office expenses, except
any such expenses directly attributable to officers or
employees of the Adviser who are serving as President, Vice
President, Treasurer or Secretary of the Trust. The Adviser
shall determine the expenses to be reimbursed by the Trust
pursuant to expense allocation procedures established by the
Adviser in accordance with generally accepted accounting
principles.
(5) Liaisons with Agents. The Adviser, at its own expense, shall
maintain liaison with the various agents and other persons
employed by the Trust (including the Trust's transfer agent,
custodian, independent accountants and legal counsel) and
assist in the coordination of their activities on behalf of
the Trust. Fees and expenses of such agents and other persons
will be paid by the Trust.
(6) Reports to Trust. The Adviser shall furnish to or place at the
disposal of the Trust such information, reports, valuations,
analyses and opinions as the Trust may, at any time or from
time to time, reasonably request or as the Adviser may deem
helpful to the Trust, provided that the expenses associated
with any such materials furnished by the Adviser at the
request of the Trust shall be borne by the Trust.
(7) Reports and Other Communications to Trust Shareholders. The
Adviser shall assist the Trust in developing (but not pay for)
all general shareholder communications including regular
shareholder reports.
3. EXPENSES ASSUMED BY THE TRUST
In addition to paying the advisory fee provided for in Section 4, the
Trust will pay all expenses of its organization, operations and business not
specifically assumed or agreed to be paid by the Adviser as provided in this
Agreement, by a Subadviser as provided in a Subadvisory Agreement, or by the
Distributor as provided in the Distribution Agreement. Without limiting the
generality of the foregoing, the Trust, in addition to certain expenses
described in Section 2 above, shall pay or arrange for the payment of the
following:
-2-
<PAGE>
a. Custody and Accounting Services. All expenses of the transfer, receipt,
safekeeping, servicing and accounting for the Trust's cash, securities,
and other property, including all charges of depositories, custodians
and other agents, if any;
b. Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the Trust's transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other
agents, if any;
c. Shareholder Communications. All expenses of preparing, setting in type,
printing, and distributing reports and other communications to
shareholders;
d. Shareholder Meetings. All expenses incidental to holding meetings of
Trust shareholders, including the printing of notices and proxy
material, and proxy solicitation therefor;
e. Prospectuses. All expenses of preparing, setting in type, and printing
of annual or more frequent revisions of the Trust's prospectus and
statement of additional information and any supplements thereto and of
mailing them to shareholders;
f. Pricing. All expenses of computing the net asset value per share for
each of the Funds, including the cost of any equipment or services used
for obtaining price quotations and valuing its investment portfolio;
g. Communication Equipment. All charges for equipment or services used for
communication between the Adviser or the Trust and the custodian,
transfer agent or any other agent selected by the Trust;
h. Legal and Accounting Fees and Expenses. All charges for services and
expenses of the Trust's legal counsel and independent auditors;
i. Trustees and Officers. Except as expressly provided otherwise in
paragraph 2.b.(2), all compensation of Trustees and officers, all
expenses incurred in connection with the service of Trustees and
officers, and all expenses of meetings of the Trustees and Committees
of Trustees;
j. Federal Registration Fees. All fees and expenses of registering and
maintaining the registration of the Trust under the Investment Company
Act and the registration of the Trust's shares under the Securities Act
of 1933, as amended (the "1933 Act"), including all fees and expenses
incurred in connection with the preparation, setting in type, printing
and filing of any registration statement and prospectus under the 1933
Act or the Investment Company Act, and any amendments or supplements
that may be made from time to time;
k. State Registration Fees. All fees and expenses of qualifying and
maintaining qualification of the Trust and of the Trust's shares for
sale under securities laws of various states or jurisdictions, and of
registration and qualification of the Trust under all other laws
applicable to the Trust or its business activities (including
registering the Trust as a broker-dealer, or any officer of the Trust
or any person as agent or salesman of the Trust in any state);
-3-
<PAGE>
l. Issue and Redemption of Trust Shares. All expenses incurred in
connection with the issue, redemption, and transfer of Trust shares,
including the expense of confirming all share transactions, and of
preparing and transmitting certificates for shares of beneficial
interest in the Trust;
m. Bonding and Insurance. All expenses of bond, liability and other
insurance coverage required by law or regulation or deemed advisable by
the Trust's Trustees including, without limitation, such bond,
liability and other insurance expense that may from time to time be
allocated to the Trust in a manner approved by its Trustees;
n. Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale, or lending of the Trust's portfolio
securities;
o. Taxes. All taxes or governmental fees payable by or with respect to the
Trust to federal, state, or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes, and all expenses
incurred in the preparation of tax returns;
p. Trade Association Fees. All fees, dues, and other expenses incurred in
connection with the Trust's membership in any trade association or
other investment organization; and
q. Nonrecurring and Extraordinary Expenses. Such nonrecurring expenses as
may arise, including the costs of actions, suits, or proceedings to
which the Trust is, or is threatened to be made, a party and the
expenses the Trust may incur as a result of its legal obligation to
provide indemnification to its Trustees, officers, agents and
shareholders.
4. COMPENSATION OF ADVISER
For the services provided, the Trust will pay the Adviser with respect
to each Fund the compensation specified in Appendix A of this Agreement (the
"Compensation"). Further:
(a) The Compensation shall be held in an interest-bearing escrow account
with State Street Bank and Trust Company pursuant to an Escrow
Agreement substantially in the form attached hereto;
(b) If a majority of a Fund's outstanding voting securities approve a new
Investment Advisory Agreement with the Adviser before 150 days after
March 1, 2000, the amount in the escrow account (including interest
earned thereon) with respect to such Fund shall be paid to the Adviser;
and
(c) If a majority of a Fund's outstanding voting securities do not approve
a new Investment Advisory Agreement with the Adviser, the Adviser shall
be paid, from the escrow account, the lesser of an amount equal to:
(1) any costs incurred in performing this Agreement (plus interest
earned on that amount in the escrow account); or
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<PAGE>
(2) the total amount in the escrow account (plus interest earned
thereon).
5. NON-EXCLUSIVITY
The services of the Adviser to the Trust are not to be deemed to be
exclusive, and the Adviser shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that the directors, officers, and
employees of the Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors, trustees or employees of any other firm or
corporation, including other investment companies.
6. SUPPLEMENTAL ARRANGEMENTS
The Adviser may enter into arrangements with other persons affiliated
with the Adviser to better enable it to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the Adviser.
7. CONFLICTS OF INTEREST
It is understood that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Adviser as directors, officers,
stockholders, or otherwise; that directors, officers, agents and stockholders of
the Adviser are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; that the Adviser may be interested in the Trust; and
that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Articles of
Incorporation of the Adviser, respectively, or by specific provision of
applicable law.
8. REGULATION
The Adviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
The Adviser will comply in all material respects with Rule 17j-1 under the
Investment Company Act.
9. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective on March 1, 2000 with respect to
each Fund and will continue in effect if a new Investment Advisory Agreement
between the Trust and the Adviser is approved by the shareholders of each of the
Funds or for 150 days, whichever is less. The required shareholder approval of
the new Advisory Agreement or of any continuance of the Agreement shall be
effective with respect to any Fund if a majority of the outstanding voting
securities of the series (as defined in Rule 18f-2(h) under the Investment
Company Act) of shares of that Fund votes to approve the Agreement or its
continuance, notwithstanding that the Agreement or its continuance
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<PAGE>
may not have been approved by a majority of the outstanding voting securities of
(a) any other Fund affected by the Agreement or (b) all the Funds of the Trust.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Fund by the
vote of a majority of the outstanding voting securities of such Fund, on ten
days' written notice to the Adviser, or by the Adviser on sixty days' written
notice to the Trust. This Agreement will automatically terminate, without the
payment of any penalty, in the event of its assignment (as defined in the
Investment Company Act).
10. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Trust in writing of the occurrence
of any of the following events:
a. the Adviser fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction in which
the Adviser is required to be registered as an investment adviser in
order to perform its obligations under this Agreement;
b. the Adviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, involving the affairs of the Trust;
and
c. the chief executive officer or controlling stockholder of the Adviser
or the portfolio manager of any Fund changes.
11. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Funds affected by the amendment and by the vote of a
majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Fund if a majority of the outstanding voting securities of
the series of shares of that Fund vote to approve the amendment, notwithstanding
that the amendment may not have been approved by a majority of the outstanding
voting securities of (a) any other Fund affected by the amendment or (b) all the
Funds of the Trust.
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
13. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
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<PAGE>
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or Adviser
in person or by registered mail or a private mail or delivery service providing
the sender with notice of receipt. Notice shall be deemed given on the date
delivered or mailed in accordance with this section.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
17. LIMITATION OF LIABILITY
The Declaration of Trust establishing the Trust, dated September 29,
1988, as amended and restated February 18, 1994, a copy of which, together with
all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of The Commonwealth of Massachusetts, provides that the name "North
American Funds" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the Trust or any Fund
thereof, but only the assets belonging to the Trust, or to the particular Fund
with which the obligee or claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
North American Funds
By: ________________________
American General Asset Management Corp.
By: ________________________
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<PAGE>
APPENDIX A
1. Equity-Income Fund: .750% of the first $50,000,000, .650% between
$50,000,000 and $200,000,000 and .550% on the excess over $500,000,000
of the average net assets of the Fund.
2. Growth and Income Fund: .725% of the first $50,000,000, .675% between
$50,000,000 and $200,000,000, .625% between $200,000,000 and
$500,000,000 and .55% on the excess over $500,000,000 of the average
net assets of the Fund.
3. Balanced Fund: .775% of the first $50,000,000, .725% between
$50,000,000 and $200,000,000, .675% between $200,000,000 and
$500,000,000 and .625% on the excess over $500,000,000 of the average
net assets of the Fund.
4. U.S. Government Securities Fund: .60% of the first $50,000,000, .60%
between $50,000,000 and $200,000,000 and .525% between $200,000,000 and
$500,000,000 and .475% on the excess over $500,000,000 of the average
net assets of the Fund.
5. Core Bond Fund: .60% of the first $50,000,000, .60% between $50,000,000
and $200,000,000, .525% between $200,000,000 and $500,000,000 and .475%
on the excess over $500,000,000 of the average net assets of the Fund.
6. Money Market Fund: .20% of the first $50,000,000, .20% between
$50,000,000 and $200,000,000, .20% between $200,000,000 and
$500,000,000 and .145% on the excess over $500,000,000 of the average
net assets of the Fund.
7. Global Equity Fund: .90% of the first $50 million, .90% between
$50,000,000 and $200,000,000, .70% between $200,000,000 and
$500,000,000 and .70% on the excess over $500,000,000 of the average
net assets of the Fund.
8. Municipal Bond Fund: .60% of the first $50,000,000, .60% between
$50,000,000 and $200,000,000, .60% between $200,000,000 and
$500,000,000 and .60% on the excess over $500,000,000 of the average
net assets of the Fund.
9. Strategic Income Fund: .75% of the first $50 million, .70% between
$50,000,000 and $200,000,000, .65% between $200,000,000 and
$500,000,000 and .60% on the excess over $500,000,000 of the average
net assets of the Fund.
10. International Equity Fund: .90% of the first $50 million, .85% between
$50,000,000 and $200,000,000, .80% between $200,000,000 and
$500,000,000 and .75% on the excess over $500,000,000 of the average
net assets of the Fund.
11. Mid Cap Growth Fund: .925% of the first $50,000,000, .900% between
$50,000,000 and $200,000,000, .875% between $200,000,000 and
$500,000,000 and .850% on the excess over $500,000,000 of the average
net assets of the Fund.
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<PAGE>
12. International Small Cap Fund: 1.05% of the first $50,000,000, 1.0%
between $50,000,000 and $200,000,000, .900% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
13. Large Cap Growth Fund: .900% of the first $50,000,000, .850% between
$50,000,000 and $200,000,000, .825% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
14. Tax-Sensitive Equity Fund: .850% of the first $50,000,000,.800% between
$50,000,000 and $200,000,000, .775% between $200,000,000 and
$500,000,000 and .700% on the excess over $500,000,000 of the average
net assets of the Fund.
15. Small Cap Growth Fund: .950% of the Fund's average net assets.
16. Mid Cap Value Fund: .900% of the first $100,000,000, .875% between
$100,000,000 and $250,000,000, .850% between $250,000,000 and
$500,000,000, .825% between $500,000,000 and $750,000,000 and .800% on
the excess over $750,000,000 of the average net assets of the Fund.
17. Stock Index Fund: .270% of the first $500,000,000 and .260% on the
excess over $500,000,000 of the average net assets of the Fund.
18. Small Cap Index Fund: .280% of the first $500,000,000 and .270% on the
excess over $500,000,000 of the average net assets of the Fund.
19. Socially Responsible Fund: .650% of the average net assets of the Fund.
20. High Yield Bond Fund : .825% of the first $200,000,000, .725% between
$200,000,000 and $500,000,000, and .675% on the excess over
$500,000,000 of the average net assets of the Fund.
21. Growth Lifestyle Fund: .100% of the average net assets of the Fund.
22. Moderate Growth Lifestyle Fund: .100% of the average net assets of the
Fund.
23. Conservative Growth Lifestyle Fund: .100% of the average net assets of
the Fund.
24. Municipal Money Market Fund: .350% of the average net assets of the
Fund.
25. Science & Technology Fund: .900% of the average net assets of the Fund.
26. Capital Appreciation Fund: .900% of the first $50,000,000, .850%
between $50,000,000 and $200,000,000, .825% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
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<PAGE>
The Percentage Fee for each Fund shall be accrued for each calendar day
and the sum of the daily fee accruals shall be payable monthly to the Adviser.
The daily fee accruals will be computed by multiplying the fraction of one over
the number of calendar days in the year by the applicable annual rate described
in the preceding paragraph, and multiplying this product by the net assets of
the Fund as determined in accordance with the Fund's prospectus and statement of
additional information as of the close of business on the previous business day
on which the Fund was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
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<PAGE>
Exhibit 6(b)
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___ day of _______, 2000, between North American
Funds, a Massachusetts business trust (the "Trust"), and American General Asset
Management Corp., a Delaware corporation (the "Adviser"). In consideration of
the mutual covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF ADVISER
The Trust hereby appoints the Adviser, subject to the supervision of
the Trustees of the Trust and the terms of this Agreement, as the investment
adviser for each of the portfolios of the Trust specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Trust from time to time
(the "Funds"). The Adviser accepts such appointment and agrees to render the
services and to assume the obligations set forth in this Agreement commencing on
its effective date. The Adviser will be an independent contractor and will have
no authority to act for or represent the Trust in any way or otherwise be deemed
an agent unless expressly authorized in this Agreement or another writing by the
Trust and Adviser.
2. DUTIES OF THE ADVISER
a. Subject to the general supervision of the Trustees of the Trust and the
terms of this Agreement, the Adviser will at its own expense select,
contract with, and compensate investment subadvisers ("Subadvisers") to
manage the investments and determine the composition of the assets of
the Funds; provided, that any contract with a Subadviser (the
"Subadvisory Agreement") shall be in compliance with and approved as
required by the Investment Company Act of 1940, as amended ("Investment
Company Act"). Subject always to the direction and control of the
Trustees of the Trust, the Adviser will monitor compliance of each
Subadviser with the investment objectives and related investment
policies, as set forth in the Trust's registration statement as filed
with the Securities and Exchange Commission, of any Fund or Funds under
the management of such Subadviser, and review and report to the
Trustees of the Trust on the performance of such Subadviser.
b. The Adviser will oversee the administration of all aspects of the
Trust's business and affairs and in that connection will furnish to the
Trust the following services:
(1) Office and Other Facilities. The Adviser shall furnish to the
Trust office space in the offices of the Adviser or in such
other place as may be agreed upon by the parties hereto from
time to time and such other office facilities, utilities and
office equipment as are necessary for the Trust's operations.
(2) Trustees and Officers. The Adviser agrees to permit
individuals who are directors, officers or employees of the
Adviser to serve (if duly elected or appointed) as Trustees or
President, Vice President, Treasurer or Secretary of the
Trust, without remuneration from or other cost to the Trust.
(3) Other Personnel. The Adviser shall furnish to the Trust, at
the Trust's expense, any other personnel necessary for the
operations of the Trust.
<PAGE>
(4) Financial, Accounting, and Administrative Services. The
Adviser shall maintain the existence and records of the Trust;
maintain the registrations and qualifications of Trust shares
under federal and state law; and perform all administrative,
financial, accounting, bookkeeping and recordkeeping functions
of the Trust except for any such functions that may be
performed by a third party pursuant to a custodian, transfer
agency or service agreement executed by the Trust. The Trust
shall reimburse the Adviser for its expenses associated with
all such services, including the compensation and related
personnel expenses and expenses of office space, office
equipment, utilities and miscellaneous office expenses, except
any such expenses directly attributable to officers or
employees of the Adviser who are serving as President, Vice
President, Treasurer or Secretary of the Trust. The Adviser
shall determine the expenses to be reimbursed by the Trust
pursuant to expense allocation procedures established by the
Adviser in accordance with generally accepted accounting
principles.
(5) Liaisons with Agents. The Adviser, at its own expense, shall
maintain liaison with the various agents and other persons
employed by the Trust (including the Trust's transfer agent,
custodian, independent accountants and legal counsel) and
assist in the coordination of their activities on behalf of
the Trust. Fees and expenses of such agents and other persons
will be paid by the Trust.
(6) Reports to Trust. The Adviser shall furnish to or place at the
disposal of the Trust such information, reports, valuations,
analyses and opinions as the Trust may, at any time or from
time to time, reasonably request or as the Adviser may deem
helpful to the Trust, provided that the expenses associated
with any such materials furnished by the Adviser at the
request of the Trust shall be borne by the Trust.
(7) Reports and Other Communications to Trust Shareholders. The
Adviser shall assist the Trust in developing (but not pay for)
all general shareholder communications including regular
shareholder reports.
3. EXPENSES ASSUMED BY THE TRUST
In addition to paying the advisory fee provided for in Section 4, the
Trust will pay all expenses of its organization, operations and business not
specifically assumed or agreed to be paid by the Adviser as provided in this
Agreement, by a Subadviser as provided in a Subadvisory Agreement, or by the
Distributor as provided in the Distribution Agreement. Without limiting the
generality of the foregoing, the Trust, in addition to certain expenses
described in Section 2 above, shall pay or arrange for the payment of the
following:
a. Custody and Accounting Services. All expenses of the transfer, receipt,
safekeeping, servicing and accounting for the Trust's cash, securities,
and other property, including all charges of depositories, custodians
and other agents, if any;
b. Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the Trust's transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other
agents, if any;
c. Shareholder Communications. All expenses of preparing, setting in type,
printing, and distributing reports and other communications to
shareholders;
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<PAGE>
d. Shareholder Meetings. All expenses incidental to holding meetings of
Trust shareholders, including the printing of notices and proxy
material, and proxy solicitation therefor;
e. Prospectuses. All expenses of preparing, setting in type, and printing
of annual or more frequent revisions of the Trust's prospectus and
statement of additional information and any supplements thereto and of
mailing them to shareholders;
f. Pricing. All expenses of computing the net asset value per share for
each of the Funds, including the cost of any equipment or services used
for obtaining price quotations and valuing its investment portfolio;
g. Communication Equipment. All charges for equipment or services used for
communication between the Adviser or the Trust and the custodian,
transfer agent or any other agent selected by the Trust;
h. Legal and Accounting Fees and Expenses. All charges for services and
expenses of the Trust's legal counsel and independent auditors;
i. Trustees and Officers. Except as expressly provided otherwise in
paragraph 2.b.(2), all compensation of Trustees and officers, all
expenses incurred in connection with the service of Trustees and
officers, and all expenses of meetings of the Trustees and Committees
of Trustees;
j. Federal Registration Fees. All fees and expenses of registering and
maintaining the registration of the Trust under the Investment Company
Act and the registration of the Trust's shares under the Securities Act
of 1933, as amended (the "1933 Act"), including all fees and expenses
incurred in connection with the preparation, setting in type, printing
and filing of any registration statement and prospectus under the 1933
Act or the Investment Company Act, and any amendments or supplements
that may be made from time to time;
k. State Registration Fees. All fees and expenses of qualifying and
maintaining qualification of the Trust and of the Trust's shares for
sale under securities laws of various states or jurisdictions, and of
registration and qualification of the Trust under all other laws
applicable to the Trust or its business activities (including
registering the Trust as a broker-dealer, or any officer of the Trust
or any person as agent or salesman of the Trust in any state);
l. Issue and Redemption of Trust Shares. All expenses incurred in
connection with the issue, redemption, and transfer of Trust shares,
including the expense of confirming all share transactions, and of
preparing and transmitting certificates for shares of beneficial
interest in the Trust;
m. Bonding and Insurance. All expenses of bond, liability and other
insurance coverage required by law or regulation or deemed advisable by
the Trust's Trustees including, without limitation, such bond,
liability and other insurance expense that may from time to time be
allocated to the Trust in a manner approved by its Trustees;
n. Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale, or lending of the Trust's portfolio
securities;
o. Taxes. All taxes or governmental fees payable by or with respect to the
Trust to federal, state, or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes, and all expenses
incurred in the preparation of tax returns;
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<PAGE>
p. Trade Association Fees. All fees, dues, and other expenses incurred in
connection with the Trust's membership in any trade association or
other investment organization; and
q. Nonrecurring and Extraordinary Expenses. Such nonrecurring expenses as
may arise, including the costs of actions, suits, or proceedings to
which the Trust is, or is threatened to be made, a party and the
expenses the Trust may incur as a result of its legal obligation to
provide indemnification to its Trustees, officers, agents and
shareholders.
4. COMPENSATION OF ADVISER
For the services provided, the Trust will pay the Adviser with respect
to each Fund the compensation specified in Appendix A of this Agreement.
5. NON-EXCLUSIVITY
The services of the Adviser to the Trust are not to be deemed to be
exclusive, and the Adviser shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that the directors, officers, and
employees of the Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors, trustees or employees of any other firm or
corporation, including other investment companies.
6. SUPPLEMENTAL ARRANGEMENTS
The Adviser may enter into arrangements with other persons affiliated
with the Adviser to better enable it to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the Adviser.
7. CONFLICTS OF INTEREST
It is understood that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Adviser as directors, officers,
stockholders, or otherwise; that directors, officers, agents and stockholders of
the Adviser are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; that the Adviser may be interested in the Trust; and
that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Articles of
Incorporation of the Adviser, respectively, or by specific provision of
applicable law.
8. REGULATION
The Adviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
The Adviser will comply in all material respects with Rule 17j-1 under the
Investment Company Act.
9. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective on the later of (i) its execution
and (ii) date of the meeting of the shareholders of the Trust, at which meeting
this New Advisory Agreement is approved by the vote of a majority of the
outstanding voting securities (as defined in the Investment Company Act) of each
of the Funds. The Agreement will continue in effect for a period more than two
years from the date of its
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execution only so long as such continuance is specifically approved at least
annually either by the Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of each of the Funds, provided that in either
event such continuance shall also be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Fund if a majority of the outstanding
voting securities of the series (as defined in Rule 18f-2(h) under the
Investment Company Act) of shares of that Fund votes to approve the Agreement or
its continuance, notwithstanding that the Agreement or its continuance may not
have been approved by a majority of the outstanding voting securities of (a) any
other Fund affected by the Agreement or (b) all the Funds of the Trust.
If the shareholders of any Fund fail to approve the Agreement or any
continuance of the Agreement, the Adviser will continue to act as investment
adviser with respect to such Fund pending the required approval of the Agreement
or its continuance or of a new contract with the Adviser or a different adviser
or other definitive action; provided, that the compensation received by the
Adviser in respect of such Fund during such period is in compliance with Rule
15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Fund by the
vote of a majority of the outstanding voting securities of such Fund, on sixty
days' written notice to the Adviser, or by the Adviser on sixty days' written
notice to the Trust. This Agreement will automatically terminate, without the
payment of any penalty, in the event of its assignment (as defined in the
Investment Company Act).
10. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Trust in writing of the occurrence
of any of the following events:
a. the Adviser fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction in which
the Adviser is required to be registered as an investment adviser in
order to perform its obligations under this Agreement;
b. the Adviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, involving the affairs of the Trust;
and
c. the chief executive officer or controlling stockholder of the Adviser
or the Fund manager of any Fund changes.
11. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Funds affected by the amendment and by the vote of a
majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Fund if a majority of the outstanding voting securities of
the series of shares of that Fund vote to approve the amendment, notwithstanding
that the amendment may not have been approved by a majority of the outstanding
voting securities of (a) any other Fund affected by the amendment or (b) all the
Funds of the Trust.
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<PAGE>
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
13. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or Adviser
in person or by registered mail or a private mail or delivery service providing
the sender with notice of receipt. Notice shall be deemed given on the date
delivered or mailed in accordance with this section.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
17. LIMITATION OF LIABILITY
The Declaration of Trust establishing the Trust, dated September 29,
1988, as amended and restated February 18, 1994, a copy of which, together with
all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of The Commonwealth of Massachusetts, provides that the name "North
American Funds" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the Trust or any
Portfolio thereof, but only the assets belonging to the Trust, or to the
particular Portfolio with which the obligee or claimant dealt, shall be liable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
North American Funds
By: ________________________
American General Asset Management Corp.
By: ________________________
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<PAGE>
As Amended: ___________ ___, 2000
APPENDIX A
1. Growth and Income Fund: .725% of the first $50,000,000, .675% between
$50,000,000 and $200,000,000, .625% between $200,000,000 and
$500,000,000 and .55% on the excess over $500,000,000 of the average
net assets of the Fund.
2. Balanced Fund: .775% of the first $50,000,000, .725% between
$50,000,000 and $200,000,000, .675% between $200,000,000 and
$500,000,000 and .625% on the excess over $500,000,000 of the average
net assets of the Fund.
3. U.S. Government Securities Fund: .60% of the first $200,000,000, .525%
between $200,000,000 and $500,000,000 and .475% on the excess over
$500,000,000 of the average net assets of the Fund.
4. Core Bond Fund: .60% of the first $200,000,000, .525% between
$200,000,000 and $500,000,000 and .475% on the excess over $500,000,000
of the average net assets of the Fund.
5. Money Market Fund: .20% of the first $50,000,000, .20% between
$50,000,000 and $200,000,000, .20% between $200,000,000 and
$500,000,000 and .145% on the excess over $500,000,000 of the average
net assets of the Fund.
6. Global Equity Fund: .90% of the first $50 million, .90% between
$50,000,000 and $200,000,000, .70% between $200,000,000 and
$500,000,000 and .70% on the excess over $500,000,000 of the average
net assets of the Fund.
7. Municipal Bond Fund: .60% of the first $50,000,000, .60% between
$50,000,000 and $200,000,000, .60% between $200,000,000 and
$500,000,000 and .60% on the excess over $500,000,000 of the net assets
of the Fund.
8. Strategic Income Fund: .75% of the first $50 million, .70% between
$50,000,000 and $200,000,000, .65% between $200,000,000 and
$500,000,000 and .60% on the excess over $500,000,000 of the average
net assets of the Fund.
9. International Equity Fund: .90% of the first $50 million, .85% between
$50,000,000 and $200,000,000, .80% between $200,000,000 and
$500,000,000 and .75% on the excess over $500,000,000 of the average
net assets of the Fund.
10. Mid Cap Growth Fund: .925% of the first $50,000,000, .900% between
$50,000,000 and $200,000,000, .875% between $200,000,000 and
$500,000,000 and .850% on the excess over $500,000,000 of the average
net assets of the Fund.
11. International Small Cap Fund: 1.05% of the first $50,000,000, 1.0%
between $50,000,000 and $200,000,000, .900% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
12. Large Cap Growth Fund: .900% of the first $50,000,000, .850% between
$50,000,000 and $200,000,000, .825% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
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<PAGE>
13. Small Cap Growth Portfolio: 950% of the average net assets of the Fund.
14. Mid Cap Value Fund: .900% of the first $100,000,000, .875% between
$100,000,000 and $250,000,000, .850% between $250,000,000 and
$500,000,000, .825% between $500,000,000 and $750,000,000 and .800% on
the excess over $750,000,000 of the average net assets of the Fund.
15. Stock Index Fund: .270% of the first $500,000,000 and .260% on the
excess over $500,000,000 of the average net assets of the Fund.
16. Small Cap Index Fund: .280% of the first $500,000,000 and .270% on the
excess over $500,000,000 of the average net assets of the Fund.
17. Socially Responsible Fund: .650% of the average net assets of the Fund.
18. High Yield Bond Fund: .825% of the first $200,000,000, .725% between
$200,000,000 and $500,000,000, and .675% on the excess over
$500,000,000 of the average net assets of the Fund.
19. Growth Lifestyle Fund: .100% of the average net assets of the Fund.
20. Moderate Growth Lifestyle Fund: .100% of the average net assets of the
Fund.
21. Conservative Growth Lifestyle Fund: .100% of the average net assets of
the Fund.
22. Municipal Money Market Fund: .350% of the average net assets of the
Fund.
23. Science & Technology Fund: .900% of the average net assets of the Fund.
24. Capital Appreciation Fund: .900% of the first $50,000,000, .850%
between $50,000,000 and $200,000,000, .825% between $200,000,000 and
$500,000,000 and .800% on the excess over $500,000,000 of the average
net assets of the Fund.
The Percentage Fee for each Fund shall be accrued for each calendar day
and the sum of the daily fee accruals shall be payable monthly to the Adviser.
The daily fee accruals will be computed by multiplying the fraction of one over
the number of calendar days in the year by the applicable annual rate described
in the preceding paragraph, and multiplying this product by the net assets of
the Fund as determined in accordance with the Fund's prospectus and statement of
additional information as of the close of business on the previous business day
on which the Fund was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
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<PAGE>
Exhibit 6(c)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made this March __, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and Founders Asset
Management LLC, a Delaware limited liability company (the "Subadviser"). In
consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subjectalways to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the individual companies or
industries the securities of which are included in the
Portfolios or are under consideration for inclusion in the
Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide recommendations, in accordance with procedures and
methods established by the Trustees of the Trust, of the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Subadviser.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions
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<PAGE>
for the Portfolios in accordance with such policies or practices as may
be established by the Trustees and described in the Trust's
registration statement as amended. To the extent permitted by Section
28(e) of the Securities Exchange Act of 1934, the Subadviser may pay a
broker-dealer which provides research and brokerage services a higher
spread or commission for a particular transaction than otherwise might
have been charged by another broker-dealer, if the Subadviser
determines that the higher spread or commission is reasonable in
relation to the value of the brokerage and research services that such
broker-dealer provides, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with respect
to accounts managed by the Subadviser. The Subadviser may use for the
benefit of the Subadviser's other clients, or make available to
companies affiliated with the Subadviser or to its members, officers or
directors for the benefit of its clients, any such brokerage and
research services that the Subadviser obtains from brokers or dealers.
d. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios in connection with the Subadviser's provision
of services under this Agreement as are required of an investment
adviser of a registered investment company pursuant to the Investment
Company Act of 1940 (the "Investment Company Act") and Investment
Advisers Act of 1940 (the "Investment Advisers Act") and the rules
thereunder.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. The Subadviser agrees to observe and comply with Rule 17j-1 under the
Investment Company Act, as the same may be amended from time to time
("Rule 17j-1"), and with Subadviser's Code of Ethics (which shall
comply in all material respects with Rule 17j-1). The Subadviser also
shall use its best efforts to cause its Access Persons (as defined in
subsection (e) of Rule 17j-1) to observe and comply with Rule 17j-1 and
its Code of Ethics. On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Fund or (ii) identify any material violations which have occurred with
respect to the Fund. In addition, the Subadviser will report at least
annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics concerning the Portfolios which required
significant remedial action and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its members or employees shall be
liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any error of judgment made in the good faith exercise of the
Subadviser's investment discretion in connection with selecting Portfolio
investments except for losses resulting from willful misfeasance, bad faith or
gross negligence of, or from reckless disregard of the duties of, the Subadviser
or any of its members or employees; and neither the Subadviser nor any of its
members or employees shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates (i.e., those other matters specified in Sections 2 and 8 of
this Agreement), except for losses resulting from willful misfeasance, bad
faith, or negligence in the performance of, or from disregard of the duties of,
the Subadviser or any of its members or employees.
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<PAGE>
5. SUPPLEMENTAL AND OTHER ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
The services of the Subadviser to the Trust are not to be deemed to be
exclusive, the Subadviser and any person controlled by or under common control
with the Subadviser being free to render investment advisory and other services
to any other person or entity.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and members of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of Formation
and Operating Agreement of the Subadviser, respectively, or by specific
provision of applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
Unless sooner terminated, this Agreement will continue in effect with
respect to each Portfolio for a period more than two years from the date of its
initial effectiveness only so long as such continuance is specifically approved
at least annually either by the Trustees of the Trust or by a majority of the
outstanding voting securities of such Portfolio, provided that in either event
such continuance shall also be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust or, with respect to any Portfolio, by
the vote of a majority of the outstanding voting securities of such Portfolio on
sixty days' written notice to the Adviser and the Subadviser, or, with respect
to any or all Portfolios, by the Adviser or Subadviser on sixty days' written
notice to the Trust and the other party. This agreement will automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in the Investment Company Act) or with respect to a Portfolio in the
event the Advisory Agreement between the Adviser and the Trust terminates with
respect to such Portfolio for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
-3-
<PAGE>
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. the managing member or controlling member of the Subadviser or the
portfolio manager of any Portfolio changes.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the Trustees of the Trust who
are not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and, if required by
applicable law, by the vote of a majority of the outstanding securities of each
Portfolio affected by the amendment.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
14. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
15. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
16. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
American General Asset Management Corp.
by: _____________________________
Founders Asset Management LLC
by: _____________________________
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<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
Portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
International Small Cap Fund: .500% of the first $300,000,000, .450%
between $300,000,000 and $500,000,000 and .400% on the excess over
$500,000,000 of the average net assets of the Fund;
Large Cap Growth Fund: .500% of the first $50,000,000, .450% between
$50,000,000 and $200,000,000, .425% between $200,000,000 and
$500,000,000, .400% between $500,000,000 and $850,000,000 and .350% on
the excess over $850,000,000 of the average net assets of the Fund;
Global Equity Fund: .500% of the first $50,000,000, .450% between
$50,000,000 and $200,000,000, .400% between $200,000,000 and
$500,000,000 and .350% on the excess over $500,000,000 of the average
net assets of the Fund.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day this Agreement is in force and the sum of the daily fee
accruals shall be paid monthly to the Subadviser. The daily fee accruals will be
computed by multiplying the fraction of one over the number of calendar days in
the year by the applicable annual rate described in the preceding paragraph, and
multiplying this product by the net assets of the Portfolio as determined in
accordance with the Trust's prospectus and statement of additional information
as of the close of business on the previous business day on which the Trust was
open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
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<PAGE>
Exhibit 6(d)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March ___, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and Morgan Stanley
Dean Witter Investment Management Inc., a Delaware corporation (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher
<PAGE>
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers. In accordance with Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a-2-2(T)
thereunder, and subject to any other applicable laws and regulations
including Section 17(e) of the Investment Company Act of 1940 (the
"Investment Company Act") and Rule 17e-1 thereunder, the Subadviser may
engage its affiliates as broker-dealers to effect portfolio
transactions in securities for the Portfolios.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act
and Investment Advisers Act of 1940 (the "Investment Advisers Act") and
the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its affiliates, officers, partners or
employees, nor anyone who controls the Subadviser (or any of its affiliates,
officers, partners or employees) within the meaning of Section 15 of the
Securities Act of 1933 (the "1933 Act"), shall be liable to the Adviser or Trust
for any loss suffered by the Adviser or Trust resulting from any error of
judgment made in the good faith exercise of the Subadviser's investment
discretion in connection with selecting Portfolio investments except for losses
resulting from willful misfeasance, bad faith or gross negligence of, or from
reckless disregard of, the duties of the Subadviser or any of its affiliates,
partners or employees; and neither the Subadviser nor any of its affiliates,
officers, partners or employees, nor anyone who controls the Subadviser (or any
of its affiliates, officers, partners or employees) within the meaning of
Section 15 of the 1933 Act, shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates (i.e., those other matters specified in Sections 2 and 8 of
this Agreement), except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of, or from disregard of, the
duties of the Subadviser or any of its affiliates, partners or employees.
2
<PAGE>
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
Unless sooner terminated, this Agreement will continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually either by the Trustees of
the Trust or by a majority of the outstanding voting securities of each of the
Portfolios, provided that in either event such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons (as defined in the Investment Company Act) of any party to
this Agreement cast in person at a meeting called for the purpose of voting on
such approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Portfolio if
a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of that Portfolio
votes to approve the Agreement or its continuance, notwithstanding that the
Agreement or its continuance may not have been approved by a majority of the
outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the Sub-Advisory
Agreement or any continuance of the New Sub-Advisory Agreement that is submitted
to shareholders for approval, the Subadviser will continue to act as investment
subadviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of any contract with the Subadviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Subadviser in respect of such Portfolio during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
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a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control of the Subadviser, which constitutes an
assignment of this Agreement under the Investment Company Act or the
portfolio manager of any Portfolio.
10. INDEMNIFICATION
a. The Adviser agrees to indemnify and hold harmless the Subadviser from
and against any and all claims, losses, liabilities or damages
(including reasonable attorneys' fees and other related expenses)
("Losses") arising from or in connection with this Agreement or the
performance by the Subadviser of its duties hereunder; provided,
however, that the Subadviser shall not be indemnified hereunder for
Losses arising from or in connection with this Agreement or the
performance by the Subadviser of its duties hereunder resulting from
the Subadviser's or any of its employees' willful misfeasance, bad
faith, gross negligence or reckless disregard.
b. The Subadviser agrees to indemnify and hold harmless the Adviser from
and against any and all Losses arising from the Subadviser's, or any of
its employees', affiliates', officers', or parties', willful
malfeasance, bad faith, gross negligence, or reckless disregard in
connection with this Agreement or the performance by the Subadviser of
its duties hereunder; provided, however, that the Adviser shall not be
indemnified hereunder for Losses arising from or in connection with
this Agreement or the performance by the Adviser for its duties
hereunder resulting from the Adviser's or any of its employees' willful
misfeasance, bad faith, gross negligence, or reckless disregard.
11. DISCLOSURE
Except as otherwise provided by applicable law or this Agreement,
neither the Trust nor the Adviser shall, without the prior written consent of
the Subadviser (such consent not to be unreasonably withheld or delayed), make
available to the general public any representations regarding or references to
the Subadviser or any of its affiliates (in each case, "Disclosure") in any
disclosure document; provided, however, that the Subadviser shall be deemed to
have consented to the use of any Disclosure if (i) the Advisor has submitted
such Disclosure to the Subadviser for its approval a reasonable period of time
prior to any regulatory filing date or other deadline for the use of the
Disclosure and (ii) the Subadviser does not, within five (5) business days of
the Subadviser's receipt of such Disclosure (or such other period of time as
agreed to by the Adviser and the Subadviser), provide the Adviser with notice of
its disapproval of such Disclosure. Notwithstanding the preceding sentence, the
Adviser shall not be required to obtain the Subadviser's approval of any
Disclosure if obtaining such approval by the process described in the preceding
sentence would cause the Trust or the Adviser to violate any applicable law,
rule or regulation as reasonably determined by the Adviser or the Trustees of
the Trust. For the purposes of this Section 11, the term "affiliate" shall mean
any person controlling, controlled by or under common control with the
Subadviser.
12. ADV
The Adviser acknowledges receipt of the most recent current Form ADV of
the Subadviser.
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13. PROXY VOTING
The Adviser shall be responsible for voting all proxies received by the Trust in
connection with any of the securities held in the Portfolios managed by the
Subadviser.
14. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
16. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
17. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
18. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
19. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
20. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the
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Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of the Trust shall be held
to any personal liability, nor shall resort be had to their private property,
for the satisfaction of any obligation or claim, in connection with the affairs
of the Trust or any portfolio thereof, but only the assets belonging to the
Trust, or to the particular portfolio with which the obligee or claimant dealt,
shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
American General Asset Management Corp.
by: _________________
Morgan Stanley Dean Witter Investment
Management Inc.
by: _________________
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APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
International Equity Portfolio: .50% of the first $50,000,000, .45%
between $50,000,000 and $200,000,000, .40% between $200,000,000 and
$500,000,000 and .35% on the excess over $500,000,000 of the average
net assets of the Portfolio;
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rate described in the preceding paragraph, and multiplying this product
by the net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
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Exhibit 6(e)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March ___, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and Wellington
Management Company, LLP, a Massachusetts limited liability partnership (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian in accordance with
procedures and methods established by the Trustess of the
Trust regarding the fair value of securities held by the
Portfolios for which market quotations are not readily
available for purposes of enabling the Trust's Custodian to
calculate net asset value; and
vi. Vote proxies in accordance with the Subadviser's Proxy Voting
Policy.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser shall have full and complete discretion to establish
brokerage accounts with one or more brokers, dealers or other financial
intermediaries as the Subadviser may select. The Subadviser will select
brokers and dealers to effect all transactions subject to the following
conditions: The Subadviser will place all orders with brokers, dealers,
or issuers, and will negotiate brokerage commissions if applicable. The
Subadviser is directed at all times to seek to execute brokerage
transactions for the Portfolios in accordance
<PAGE>
with the Subadviser's Statement of Policy on Brokerage Practices and
such policies or practices as may be established by the Trustees and
described in the Trust's registration statement as amended. The
Subadviser may pay a broker-dealer which provides research and
brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms of
either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the Subadviser.
The Subadviser may use for the benefit of the Subadviser's other
clients, or make available to companies affiliated with the Subadviser
or to its directors for the benefit of its clients, any such brokerage
and research services that the Subadviser obtains from brokers or
dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of a Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) of Rule 31a-1 under the Investment Company Act
of 1940 (the "Investment Company Act") and such other records as are
required of an investment adviser of a registered investment company
pursuant to the Investment Advisers Act of 1940 (the "Investment
Advisers Act") and the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its officers or employees shall be
liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any error of judgment made in the good faith exercise of the
Subadviser's investment discretion in connection with selecting Portfolio
investments except for losses resulting from willful misfeasance, bad faith or
gross negligence of, or from reckless disregard of, the duties of the Subadviser
or any of its officers or employees; and neither the Subadviser nor any of its
officers or employees shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates (i.e., those other matters specified in Sections 2 and 8 of
this Agreement), except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of, or from disregard of, the
duties of the Subadviser or any of its officers or employees.
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5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Partnership Agreement of
the Subadviser, respectively, or by specific provision of applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
Unless sooner terminated, this Agreement will continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually either by the Trustees of
the Trust or by a majority of the outstanding voting securities of each of the
Portfolios, provided that in either event such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons (as defined in the Investment Company Act) of any party to
this Agreement cast in person at a meeting called for the purpose of voting on
such approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Portfolio if
a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of that Portfolio
votes to approve the Agreement or its continuance, notwithstanding that the
Agreement or its continuance may not have been approved by a majority of the
outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the Sub-Advisory
Agreement the Subadviser will continue to act as investment subadviser with
respect to such Portfolio pending the required approval of the Agreement or its
continuance or of any contract with the Subadviser or a different adviser or
subadviser or other definitive action; provided, that the compensation received
by the Subadviser in respect of such Portfolio during such period is in
compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
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a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
During the term of this Agreement, the Adviser shall furnish the
Subadviser with copies of the Trust's Prospectus and Statement of Additional
Information and any supplements thereto, proxy statements, reports to
shareholders, sales literature or other materials prepared for distribution to
shareholders, or the public that refer to the Subadviser for the Subadviser's
review and approval. The Subadviser shall be deemed to have approved all such
materials unless the Subadviser reasonably objects by giving notice to the
Adviser in writing within five business days (or such other period as may be
mutually agreed) after receipt thereof. The Subadviser's right to object to such
materials is limited to the portions of such materials that expressly relate to
the Subadviser, its services and its clients. The Adviser agrees to use its
reasonable best efforts to ensure that materials prepared by its employees or
agents or its affiliates that refer to the Subadviser or its clients in any way
are consistent with those materials previously approved by the Subadviser as
referenced in this paragraph. Sales literature may be furnished to the
Subadviser by first class or overnight mail, facsimile transmission or hand
delivery. The Adviser shall furnish the Subadviser with any further documents,
materials or information that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portoflio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own acounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
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14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
American General Asset Management Corp.
by: _________________
Wellington Management Company, LLP
by: _________________
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APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
Growth and Income Fund: .325% of the first $50,000,000, .275% for the
next $150,000,000, .225% for the next $300,000,000 and .15% on the
excess over $500,000,000 of the average net assets of the Fund.
Tax-Sensitive Equity Fund: .450% of the first $50,000,000; .400%
between $50,0000,000 and $200,000,000; .375% between $200,000,000 and
$500,000,000 and .300% on the excess of the average net assets of the
Fund.
Equity-Income Fund: .375% of the first $50,000,000, .275% between
$50,000,000 and $200,000,000, .200% between $200,000,000 and
$500,000,000 and .200% on the excess over $500,000,000 of the average
net assets of the Fund.
The Subadviser Percentage Fee for each Portfolio shall be accrued by
the Portfolio's custodian for each calendar day and the sum of the daily fee
accruals shall be paid monthly to the Subadviser. The daily fee accruals will be
computed by multiplying the fraction of one over the number of calendar days in
the year by the applicable annual rate described in the preceding paragraph, and
multiplying this product by the net assets of the Portfolio as determined in
accordance with the Trust's prospectus and statement of additional information
as of the close of business on the previous business day on which the Trust was
open for business.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
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Exhibit 6(f)
FORM OF
NORTH AMERICAN FUNDS
INTERIM SUBADVISORY AGREEMENT
INTERIM AGREEMENT made as of March ___, 2000, between American General
Asset Management Corp., a Delaware corporation (the "Adviser"), and American
General Investment Management L.P., a Delaware limited partnership (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the series of the Trust specified in Appendix A to this Agreement
as it shall be amended by the Adviser and the Subadviser from time to time (the
"Funds"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Funds in accordance with the Funds'
registration statement, as amended. In fulfilling its obligations to
manage the investments and reinvestments of the assets of the Funds,
the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Funds or are under consideration for inclusion
in the Funds;
ii. formulate and implement a continuous investment program for
each Fund consistent with the investment objectives and
related investment policies for each such Fund as described in
the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Funds for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Funds (excluding determination of net asset value and
shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Funds in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which
<PAGE>
provides research and brokerage services a higher spread or commission
for a particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Funds as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940, as amended (the "Investment Company Act") and Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act") and the rules
thereunder.
f. The Subadviser agrees to comply with Rule 17j-1 under the Investment
Company Act. On a quarterly basis, the Subadviser will either (i)
certify to the Adviser that the Subadviser and its Access Persons have
complied with the Subadviser's Code of Ethics with respect to the Fund
or (ii) identify any material violations which have occurred with
respect to the Fund. In addition, the Subadviser will report at least
annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Fund the
compensation specified in Appendix A to this Agreement (the "Compensation").
Further:
(a) The Compensation shall be held in an interest-bearing escrow account
with State Street Bank and Trust Company pursuant to an Escrow
Agreement substantially in the form attached hereto;
(b) If a majority of a Fund's outstanding voting securities approve a
Subadvisory Agreement with the Subadviser before 150 days after March
1, 2000, the amount in the escrow account (including interest earned
thereon) with respect to such Fund shall be paid to the Subadviser;
and
(c) If a majority of a Fund's outstanding voting securities do not
approve a new Subadvisory Agreement with the Subadviser, the
Subadviser shall be paid from the escrow account, the lesser of an
amount equal to:
(1) any costs incurred in performing this Agreement (plus interest
earned on that amount in the escrow account); or
(2) the total amount in the escrow account (plus interest earned
thereon).
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered
2
<PAGE>
by the Adviser or Trust resulting from any error of judgment made in the good
faith exercise of the Subadviser's investment discretion in connection with
selecting Fund investments except for losses resulting from willful misfeasance,
bad faith or gross negligence of, or from reckless disregard of, the duties of
the Subadviser or any of its partners or employees; and neither the Subadviser
nor any of its employees shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates (i.e., those other matters specified in Sections 2 and 8 of
this Agreement), except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of, or from disregard of, the
duties of the Subadviser or any of its partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective on March ___, 2000 with respect
to each Fund and continue in effect until a new Sub-Advisory Agreement between
Adviser and Subadviser is approved by shareholders of each of the Funds, or for
150 days, whichever is less.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Fund by the
vote of a majority of the outstanding voting securities of such Fund, on ten
days' written notice to the Adviser and the Subadviser, or by the Adviser or
Subadviser on sixty days' written notice to the Trust and the other party. This
agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act) or in the
event the Advisory Agreement between the Adviser and the Trust terminates for
any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
3
<PAGE>
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Fund.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or information that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the Fund.
The Subadviser is not obligated to initiate transaction for the Fund in any
security which the Subadviser, its principals, affiliates or employees may
purchase or sell for their own accounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Funds affected by the amendment and by the vote of a
majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Fund if a majority of the outstanding voting securities of
that Fund vote to approve the amendment, notwithstanding that the amendment may
not have been approved by a majority of the outstanding voting securities of (a)
any other Fund affected by the amendment or (b) all the series of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement
4
<PAGE>
shall be construed, insofar as is possible, as if such portion had never been
contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
American General Asset Management Corp.
by: _________________
American General Investment Management, L.P.
by: _________________
5
<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
Funds of the Trust. The Adviser will pay the Subadviser, as full compensation
for all services provided under this Agreement, the fee computed separately for
each such Fund at an annual rate as follows (the "Subadviser Percentage Fee"):
1. U.S. Government Securities Fund: .225% of the first
$200,000,000, .15% between $200,000,000 and $500,000,000 and
.10% on the excess over $500,000,000 of the average net assets
of the Fund.
2. Municipal Bond Fund: .25% of the first $50,000,000, .25%
between $50,000,000 and $200,000,000, .25% between
$200,000,000 and $500,000,000 and .25% on the excess over
$500,000,000 of the average net assets of the Fund.
3. Strategic Income Fund: .35% of the first $50 million, .30%
between $50,000,000 and $200,000,000, .25% between
$200,000,000 and $500,000,000 and .20% on the excess over
$500,000,000 of the average net assets of the Fund.
4. Money Market Fund: .075% of the first $500,000,000 and .020%
on the excess over $500,000,000 of the average net assets of
the Fund.
5. Core Bond Fund: .225% of the first $200,000,000, .15% between
$200,000,000 and $500,000,000 and .10% on the excess over
$500,000,000 of the average net assets of the Fund.
6. High Yield Bond Fund: .450% of the first $200,000,000; .350%
between $200,000,000 and $500,000,000 and.300% on the excess
over $500,000,000 of the average net assets of the Fund.
7. Municipal Money Market Fund: .250% of the first $200,000,000;
.200% between $200,000,000 and $500,000,000 and .150% on the
excess over $500,000,000 of the average net assets of the
Fund.
8. Stock Index Fund: .020% of the first $2 billion and .010% on
the excess over $2 billion of the average net assets of the
Fund.
9. Small Cap Index Fund: .030% of the first $150,000,000 and
.020% on the excess over $150,000,000 of the average net
assets of the Fund.
10. Socially Responsible Fund: .250% of the Fund's average daily
assets.
11. Growth Lifestyle Fund: .100% of the Fund's average daily
assets.
12. Moderate Growth Lifestyle Fund: .100% of the Fund's average
daily assets.
13. Conservative Growth Lifestyle Fund: .100% of the Fund's
average daily assets.
The Subadviser Percentage Fee for each Fund shall be accrued for each
calendar day and the sum of the daily fee accruals shall be paid monthly to the
Subadviser. The daily fee accruals will be computed by multiplying the fraction
of one over the number of calendar days in the year by the applicable annual
rate described in the preceding paragraph, and multiplying this product by the
net assets of the Fund as determined in accordance with the Trust's prospectus
and statement of additional information as of the close of business on the
previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE>
Exhibit 6(g)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March ___, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and American General
Investment Management L.P., a Delaware limited partnership (the "Subadviser").
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the series of the Trust specified in Appendix A to this Agreement
as it shall be amended by the Adviser and the Subadviser from time to time (the
"Funds"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Funds in accordance with the Funds'
registration statement, as amended. In fulfilling its obligations to
manage the investments and reinvestments of the assets of the Funds,
the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Funds or are under consideration for inclusion
in the Funds;
ii. formulate and implement a continuous investment program for
each Fund consistent with the investment objectives and
related investment policies for each such Fund as described in
the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Funds for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Funds (excluding determination of net asset value and
shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Funds in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which
<PAGE>
provides research and brokerage services a higher spread or commission
for a particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Funds as are required of an investment adviser of a
registered investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act") and Investment Advisers Act
of 1940, as amended (the "Investment Advisers Act") and the rules
thereunder.
f. The Subadviser agrees to observe and comply with Rule 17j-1under the
Investment Company Act and its Code of Ethics (which shall comply in
all material respects with Rule 17j-1, as the same may be amended from
time to time). On a quarterly basis, the Subadviser will either (i)
certify to the Adviser that the Subadviser and its Access Persons have
complied with the Subadviser's Code of Ethics with respect to the Fund
or (ii) identify any material violations which have occurred with
respect to the Fund. In addition, the Subadviser will report at least
annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Fund the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Fund investments except for
losses resulting from willful misfeasance, bad faith or gross negligence of, or
from reckless disregard of, the duties of the Subadviser or any of its partners
or employees; and neither the Subadviser nor any of its employees shall be
liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (i.e., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
2
<PAGE>
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Fund on the
later of (i) its execution, and (ii) the date of the meeting of the shareholders
of the Fund, at which meeting this Agreement is approved by the vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Fund. The Agreement will continue in effect for a period
more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually either by the Trustees of
the Trust or by a majority of the outstanding voting securities of each of the
Funds, provided that in either event such continuance shall also be approved by
the vote of a majority of the Trustees of the Trust who are not interested
persons (as defined in the Investment Company Act) of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Fund if a
majority of the outstanding voting securities of the series (as defined in Rule
18f-2(h) under the Investment Company Act) of shares of that Fund votes to
approve the Agreement or its continuance, notwithstanding that the Agreement or
its continuance may not have been approved by a majority of the outstanding
voting securities of (a) any other Fund affected by the Agreement or (b) all the
series of the Trust.
If the shareholders of any Fund fail to approve the New Sub-Advisory
Agreement the Subadviser will continue to act as investment subadviser with
respect to such Fund pending the required approval of the Agreement or its
continuance or of any contract with the Subadviser or a different adviser or
subadviser or other definitive action; provided, that the compensation received
by the Subadviser in respect of such Fund during such period is in compliance
with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Fund by the
vote of a majority of the outstanding voting securities of such Fund, on sixty
days' written notice to the Adviser and the Subadviser, or by the Adviser or
Subadviser on sixty days' written notice to the Trust and the other party. This
agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act) or in the
event the Advisory Agreement between the Adviser and the Trust terminates for
any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
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<PAGE>
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Fund.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or information that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the Fund.
The Subadviser is not obligated to initiate transaction for the Portfolio in any
security which the Subadviser, its principals, affiliates or employees may
purchase or sell for their own accounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Funds affected by the amendment and by the vote of a
majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Fund if a majority of the outstanding voting securities of
that Fund vote to approve the amendment, notwithstanding that the amendment may
not have been approved by a majority of the outstanding voting securities of (a)
any other Fund affected by the amendment or (b) all the series of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
4
<PAGE>
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
AMERICAN GENERAL ASSET MANAGEMENT CORP.
by: ____________________________
AMERICAN GENERAL INVESTMENT
MANAGEMENT, L.P.
by: ____________________________
5
<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
Funds of the Trust. The Adviser will pay the Subadviser, as full compensation
for all services provided under this Agreement, the fee computed separately for
each such Fund at an annual rate as follows (the "Subadviser Percentage Fee"):
1. U.S. Government Securities Fund: .225% of the first
$200,000,000, .15% between $200,000,000 and $500,000,000 and
.10% on the excess over $500,000,000 of the average net assets
of the Fund.
2. Municipal Bond Fund: .25% of the first $200,000,000, .20%
between $200,000,000 and $500,000,000 and .15% on the excess
over $500,000,000 of the average net assets of the Fund.
3. Strategic Income Fund: .35% of the first $200,000,000, .25%
between $200,000,000 and $500,000,000 and .20% on the excess
over $500,000,000 of the average net assets of the Fund.
4. Money Market Fund: .075% of the first $500,000,000 and .020%
on the excess over $500,000,000 o f the average net assets of
the Fund.
5. Core Bond Fund: .25% of the first $200,000,000, .20% between
$200,000,000 and $500,000,000 and .15% on the excess over
$500,000,000 of the average net assets of the Fund.
6. High Yield Bond Fund: .450% of the first $200,000,000; .350%
between $200,000,000 and $500,000,000 and .300% on the excess
over $500,000,000 of the average net assets of the Fund.
7. Municipal Money Market Fund: .250% of the first $200,000,000;
.200% between $200,000,000 and $500,000,000 and .150% on the
excess over $500,000,000 of the average net assets of the
Fund.
8. Stock Index Fund: .020% of the first $2 billion and .010% on
the excess over $2 billion of the average net assets of the
Fund.
9. Small Cap Index Fund: .030% of the first $150,000,000 and
.020% on the excess over $150,000,000 of the average net
assets of the Fund.
10. Socially Responsible Fund: .250% of the Fund's average daily
assets.
11. Growth Lifestyle Fund: .100% of the Fund's average daily
assets.
12. Moderate Growth Lifestyle Fund: .100% of the Fund's average
daily assets.
13. Conservative Growth Lifestyle Fund: .100% of the Fund's
average daily assets.
The Subadviser Percentage Fee for each Fund shall be accrued for each
calendar day and the sum of the daily fee accruals shall be paid monthly to the
Subadviser. The daily fee accruals will be computed by multiplying the fraction
of one over the number of calendar days in the year by the applicable annual
rate described in the preceding paragraph, and multiplying this product by the
net assets of the Fund as determined in accordance with the Trust's prospectus
and statement of additional information as of the close of business on the
previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE>
Exhibit 6(h)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March ____, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and INVESCO Funds
Group, Inc., a Delaware corporation (the "Subadviser"). In consideration of the
mutual covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such
<PAGE>
broker-dealer provides, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with respect
to accounts managed by the Subadviser. The Subadviser may use for the
benefit of the Subadviser's other clients, or make available to
companies affiliated with the Subadviser or to its directors for the
benefit of its clients, any such brokerage and research services that
the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required by paragraphs (b)(5), (6),
(7), (9), (10) and (11) of Rule 31a-1 under the Investment Company Act
of 1940 (the "Investment Company Act") and Investment Advisers Act of
1940 (the "Investment Advisers Act") and the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Portfolio investments except
for losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
partners or employees; and neither the Subadviser nor any of its employees shall
be liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (i.e., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
2
<PAGE>
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
Unless sooner terminated, this Agreement will continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually either by the Trustees of
the Trust or by a majority of the outstanding voting securities of each of the
Portfolios, provided that in either event such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons (as defined in the Investment Company Act) of any party to
this Agreement cast in person at a meeting called for the purpose of voting on
such approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Portfolio if
a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of that Portfolio
votes to approve the Agreement or its continuance, notwithstanding that the
Agreement or its continuance may not have been approved by a majority of the
outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the New
Sub-Advisory Agreement the Subadviser will continue to act as investment
subadviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of any contract with the Subadviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Subadviser in respect of such Portfolio during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
3
<PAGE>
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or informaiton that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portoflio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own acounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
4
<PAGE>
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first mentioned
above.
American General Asset Management Corp.
by: _________________
` INVESCO Funds Group, Inc.
by: _________________
5
<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
Mid Cap Growth Fund: .550% of the first $50,000,000, .500% between
$50,000,000 and $100,000,000, .450% between $100,000,000 and
$250,000,000, .400% between $250,000,000 and $500,000,000 and .350% on
the excess over $500,000,000 of the average net assets of the Fund.
Balanced Fund: .400% of the first $50,000,000, .400% between
$50,000,000 and $100,000,000, .350% between $100,000,000 and
$250,000,000 and .300% on the excess over $250,000,000 of the average
net assets of the Fund.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rate described in the preceding paragraph, and multiplying this product
by the net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
6
<PAGE>
Exhibit 6(i)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of ______ ___, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and Josephthal & Co.,
Inc., a [ ] corporation (the "Subadviser"). In consideration of the mutual
covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than
<PAGE>
otherwise might have been charged by another broker-dealer, if the
Subadviser determines that the higher spread or commission is
reasonable in relation to the value of the brokerage and research
services that such broker-dealer provides, viewed in terms of either
the particular transaction or the Subadviser's overall responsibilities
with respect to accounts managed by the Subadviser. The Subadviser may
use for the benefit of the Subadviser's other clients, or make
available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and
research services that the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Portfolio investments except
for losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
partners or employees; and neither the Subadviser nor any of its employees shall
be liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (i.e., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
2
<PAGE>
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of March 1, 2000. The
Agreement will continue in effect for a period more than two years from the date
of its execution only so long as such continuance is specifically approved at
least annually either by the Trustees of the Trust or by a majority of the
outstanding voting securities of each of the Portfolios, provided that in either
event such continuance shall also be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f-2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the New
Sub-Advisory Agreement the Subadviser will continue to act as investment
subadviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of any contract with the Subadviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Subadviser in respect of such Portfolio during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
3
<PAGE>
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or informaiton that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portoflio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own acounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
4
<PAGE>
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first mentioned
above.
American General Asset Management Corp.
by: _________________
` Josephthal & Co., Inc.
by: _________________
5
<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
.500% of the first $50,000,000, .450% between $50,000,000 and
$200,000,000, .425% between $200,000,000 and $500,000,000 and .400% on
the excess over $500,000,000 of the average net assets of the Fund.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rate described in the preceding paragraph, and multiplying this product
by the net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
6
<PAGE>
Exhibit 6(j)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March 1, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and Neuberger, Berman,
a [ ] corporation (the "Subadviser"). In consideration of the mutual covenants
contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than
<PAGE>
otherwise might have been charged by another broker-dealer, if the
Subadviser determines that the higher spread or commission is
reasonable in relation to the value of the brokerage and research
services that such broker-dealer provides, viewed in terms of either
the particular transaction or the Subadviser's overall responsibilities
with respect to accounts managed by the Subadviser. The Subadviser may
use for the benefit of the Subadviser's other clients, or make
available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and
research services that the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Portfolio investments except
for losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
partners or employees; and neither the Subadviser nor any of its employees shall
be liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (i.e., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
2
<PAGE>
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of March 1, 2000. The
Agreement will continue in effect for a period more than two years from the date
of its execution only so long as such continuance is specifically approved at
least annually either by the Trustees of the Trust or by a majority of the
outstanding voting securities of each of the Portfolios, provided that in either
event such continuance shall also be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f-2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the New
Sub-Advisory Agreement the Subadviser will continue to act as investment
subadviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of any contract with the Subadviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Subadviser in respect of such Portfolio during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
3
<PAGE>
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or informaiton that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portoflio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own acounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
4
<PAGE>
16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first mentioned
above.
American General Asset Management Corp.
by: _________________
Neuberger, Berman
by: _________________
5
<PAGE>
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
Mid Cap Value Fund: .500% of the first $100,000,000, .475% between
$100,000,000 and $250,000,000, .450% between $250,000,000 and
$500,000,000, .425% between $500,000,000 and $750,000,000 and .400% on
the excess over $750,000,000 of the average net assets of the
Portfolio.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rate described in the preceding paragraph, and multiplying this product
by the net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
6
<PAGE>
Exhibit 6(k)
FORM OF
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of March 1, 2000, between American General Asset
Management Corp., a Delaware corporation (the "Adviser"), and T. Rowe Price
Associates, Inc. a [ ] corporation (the "Subadviser"). In consideration of the
mutual covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolios specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value; and
vi. vote proxies in accordance with the Proxy Voting Policy of the
Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than
<PAGE>
otherwise might have been charged by another broker-dealer, if the
Subadviser determines that the higher spread or commission is
reasonable in relation to the value of the brokerage and research
services that such broker-dealer provides, viewed in terms of either
the particular transaction or the Subadviser's overall responsibilities
with respect to accounts managed by the Subadviser. The Subadviser may
use for the benefit of the Subadviser's other clients, or make
available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and
research services that the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. The Subadviser, including its Access Persons (as defined in subsection
(e) of Rule 17j-1 under the Investment Company Act), agrees to observe
and comply with Rule 17j-1 and its Code of Ethics (which shall comply
in all material respects with Rule 17j-1, as the same may be amended
from time to time). On a quarterly basis, the Subadviser will either
(i) certify to the Adviser that the Subadviser and its Access Persons
have complied with the Subadviser's Code of Ethics with respect to the
Portfolio or (ii) identify any material violations which have occurred
with respect to the Portfolio. In addition, the Subadviser will report
at least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics which required significant remedial action
and which were not previously reported.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Portfolio investments except
for losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
partners or employees; and neither the Subadviser nor any of its employees shall
be liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (i.e., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
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6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of March 1, 2000. The
Agreement will continue in effect for a period more than two years from the date
of its execution only so long as such continuance is specifically approved at
least annually either by the Trustees of the Trust or by a majority of the
outstanding voting securities of each of the Portfolios, provided that in either
event such continuance shall also be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f-2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the New
Sub-Advisory Agreement the Subadviser will continue to act as investment
subadviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of any contract with the Subadviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Subadviser in respect of such Portfolio during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
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b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or informaiton that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement.
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portoflio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own acounts or other clients.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
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16. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
17. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
18. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth of
Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio thereof, but only the assets
belonging to the Trust, or to the particular portfolio with which the obligee or
claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
American General Asset Management Corp.
by: _________________
T. Rowe Price Associates, Inc.
by: _________________
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APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
Science & Technology Fund: .600% of the first $500,000,000 and .550% on
the excess over $500,000,000 of the average net assets of the Portfolio.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rate described in the preceding paragraph, and multiplying this product
by the net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
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Exhibit 7(c)
FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT made as of ___________ ___, 2000, by and between North
American Funds (the "Trust"), a Massachusetts business trust which intends to
engage in business as an open-end investment company under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and American
General Funds Distributors, Inc. (the "Distributor"), a Delaware corporation
registered under the Securities Exchange Act of 1934, as amended, as a
broker-dealer.
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as the principal underwriter and exclusive distributor of shares of
each series of shares of beneficial interest of the Trust (the "Shares") and the
Distributor hereby accepts that appointment.
2. Sale of Shares Through Distributor.
(a) The Trust hereby grants to the Distributor the exclusive right to
sell, as agent for the Trust not as principal, and to arrange for the sale of
Shares upon the terms herein set forth. The exclusive right hereby granted shall
not apply to Shares issued or transferred or sold: (i) in connection with the
merger or consolidation of any other investment company or personal holding
company with the Trust or one of its portfolio series or the acquisition by
purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company by the Trust or one of its portfolio
series; or (ii) pursuant to reinvestment of dividends or capital gains
distributions; or (iii) pursuant to any reinstatement privilege afforded
redeeming shareholders. It is understood that shares may be purchased directly
through the Trust's transfer and dividend disbursing agent in the manner set
forth in the Trust's prospectus.
(b) The Distributor, either directly or through a promotional agent
selected and compensated by the Distributor, will devote research, time and
effort to effect sales of Shares through dealers, and will assist those dealers
and their associated persons to the extent and in whatever manner the
Distributor deems appropriate in order to enhance the sale of Shares, but the
Distributor does not undertake to arrange for the sale of any specific number of
Shares. Neither the Distributor nor any selected dealer nor any other person is
authorized by the Trust to
<PAGE>
give any information or to make any representations, other than those contained
in the registration statement or related prospectus and statement of additional
information and any sales literature specifically approved by the Trust. The
services of the Distributor to the Trust hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into like arrangements with other investment companies so long as the
performance of its obligations hereunder is not impaired thereby.
(c) The Distributor shall have the right, as agent of the Trust, to
order from the Trust the Shares needed, but not more than the Shares needed
(except for reasonable allowances for clerical errors, delays and errors of
transmission and cancellation of orders), to fill unconditional orders for
Shares received by the Distributor from dealers and investors. The price which
shall be paid to the Trust for the Shares so purchased shall be the net asset
value, determined as set forth in Section 2(e) hereof.
(d) The price at which the Distributor or dealer purchasing shares
through the Distributor may sell Shares to the public shall be the public
offering price determined in accordance with the method set forth in the Trust's
prospectus and statement of additional information.
(e) The net asset value of Shares of the Trust shall be determined by
the Trust or any agent of the Trust in accordance with the method set forth in
the prospectus and statement of additional information of the Trust and
guidelines established by the trustees of the Trust (the "Trustees").
(f) The Trust shall have the right to suspend the sale of its Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 8(c) hereof. The Trust shall also have the right to suspend the sale of
its Shares if a banking moratorium shall have been declared by federal or
applicable state authorities, or if there shall have been some other event,
which, in the judgment of the Trustees, makes it impracticable or inadvisable to
sell the Shares.
(g) The Trust, or any agent of the Trust designated in writing by the
Trust, shall be advised promptly of all purchase orders for Shares received by
the Distributor. Any order may be rejected by the Trust; provided, however, that
the Trust will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Shares. The Trust (or its
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agent) will confirm orders upon their receipt, will make appropriate book
entries and, upon receipt by the Trust (or its agent) of payment therefor, will
deliver deposit receipts or certificates for such Shares pursuant to the
instructions of the Distributor.
3. Sales Charges.
(a) For the purposes of this Section 3, "Distribution Fees" shall mean,
collectively, (A) the sales charges payable to the Distributor as set forth in
Section 3(b), below, and (B) the amounts payable to the Distributor under the
Distribution Plans as set forth in Section 3(c) and "Effective Date" shall mean
the date hereof.
(b) The Distributor shall have the right to receive the sales charges
(including, without limitation, contingent deferred sales charges) in respect of
Shares (i) sold during the term of this Agreement or any continuation hereof,
(ii) later issued in connection with the reinvestment of dividends (whether
ordinary, capital gain or tax exempt dividends, or return of capital) paid in
respect of Shares described in clause (i) or this clause (ii), (iii) later
acquired by a holder of Shares described in clause (i) or clause (ii) upon a
free exchange of such Shares for shares of another Fund or (iv) later issued in
connection with a reinvestment of dividends paid in respect of Shares described
in clause (iii) (collectively, "New Distributor Shares"), in each case under the
circumstances, upon the terms and conditions and in the amounts set forth in the
Trust's prospectus at the time of the sale, but excluding "Former Distributor
Shares" (as that term is defined in Section 3 of the Distribution Agreement
between NASL Financial Services, Inc. and the Trust dated January 1, 1996, as
amended on September 30, 1997 and as in effect on the date hereof). The
Distributor shall have no right to receive sales charges (including, without
limitation, contingent deferred sales charges) in respect of Former Distributor
Shares.
(c) So long as the Trust's Distribution Plans pursuant to Rule 12b-1
under the Investment Company Act remain in effect:
(i) with respect to assets attributable to Former Distributor
Shares, the Distributor, in its capacity as distributor, shall not have
the right to receive any amounts payable under such Distribution Plans;
and
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(ii) with respect to assets attributable to New Distributor
Shares, the Distributor shall have the right to receive one hundred
percent (100%) of the amounts payable under such Distribution Plans.
(d) The Distributor may transfer its right to receive Distribution Fees
(but not its obligations under this Agreement), and such transfer shall be
effective upon written notice from the Distributor to the Trust. In connection
with the foregoing, the Trust is authorized to pay all or a part of the
Distribution Fees directly to such transferee of the Distributor.
(e) The right of the Distributor to receive Distribution Fees with
respect to New Distributor Shares shall survive the termination of this
Agreement.
4. Duties of the Trust. The Trust shall:
(a) Furnish to the Distributor copies of its prospectus and statement
of additional information, its annual and interim reports, and other
information, financial statements and papers, including one certified copy of
all financial statements prepared for the Trust by independent public
accountants, to the extent reasonably requested by the Distributor for use in
connection with the distribution of Shares of the Trust.
(b) Take, from time to time, any steps necessary to register the Shares
under the Securities Act of 1933 (the "Securities Act"), so that there will be
available for sale as many Shares as the Distributor reasonably may be expected
to sell.
(c) Use its best efforts to qualify and maintain the qualification of
an appropriate number of its Shares for sale under the securities laws of those
states approved by the Distributor and the Trust, and, if necessary or
appropriate in connection therewith, to qualify and maintain the qualification
of the Trust as a broker-dealer in those states; provided that any such
qualification may be terminated or withdrawn by the Trust at any time in its
discretion. The Distributor shall furnish information and other material
relating to its affairs and activities reasonably required by the Trust in
connection with any such qualification(s).
5. Duties of the Distributor. The Distributor shall:
(a) Use its best efforts in all respects duly to conform with the
requirements of all federal and state laws relating to the sale of the Shares of
the Trust and with all applicable rules
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and regulations of all regulatory bodies, including the National Association of
Securities Dealers, Inc. (the "NASD").
(b) Use its best efforts to obtain any approval or clearance required
from the NASD or other regulatory authorities with respect to sales material for
the Trust or any of its portfolio series.
6. Selected Dealer Agreements. The Distributor shall:
(a) Have the right to enter into selected dealer agreements with
securities dealers of its choice ("selected dealers") for the sale of Shares.
Shares sold to selected dealers shall be for resale by the selected dealers only
at the public offering price determined as set forth in Section 2(d) hereof. Any
agreement with selected dealers pertaining to sales of the Shares shall be
approved by the Trustees.
(b) Offer and sell Shares, within the United States, only to selected
dealers that are members in good standing of the NASD.
(c) Act only as principal and not as agent for the Trust in making
agreements with selected dealers.
7. Payment of Expenses.
(a) The Trust shall bear all costs and expenses of the Trust, except
for those expenses assumed by any investment adviser or subadviser of the Trust
or any other party contracting with the Trust or by the Distributor pursuant to
Section 7(b) of this Agreement.
(b) The Distributor shall bear the costs and expenses of: (i) any
payments made to selected dealers; (ii) the printing and distributing of any
copies of prospectuses, statements of additional information and annual and
interim reports to be used in connection with the offering of Shares to selected
dealers or prospective investors pursuant to this Agreement after the same have
been prepared and set in type and copies have been printed and distributed to
regulatory bodies and existing shareholders as deemed necessary; (iii)
preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by selected dealers in connection with
the offering of the Shares for sale to the public; (iv) any advertising expenses
incurred by the Distributor in connection with the offering; and (v) the
registration or
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qualification of the Distributor as a broker-dealer under federal and states
laws and of continuing those registrations or qualifications.
8. Redemption of Shares. Any of the outstanding Shares may be tendered
for redemption at any time, and the Trust agrees to redeem the Shares so
tendered in accordance with its obligations as set forth in Article IV of its
Agreement and Declaration of Trust, as amended from time to time, in accordance
with the applicable provisions set forth in the prospectus and statement of
additional information of the Trust, and subject to the following conditions:
(a) The price to be paid to redeem the Shares shall be equal to the net
asset value calculated in accordance with the provisions of Section 2(e) hereof.
(b) The Trust shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
on or before the seventh day subsequent to receiving the notice of redemption in
proper form.
(c) Redemption of Shares or payment may be suspended at times when the
New York Stock Exchange is closed, when trading on that Exchange is suspended or
restricted, when an emergency exists as a result of which disposal by a
portfolio series of the Trust of its investment securities is not reasonably
practicable or it is not reasonably practicable for a portfolio series of the
Trust fairly to determine the value of its net assets, or during any other
period when the Securities and Exchange Commission, by order, so permits.
9. Repurchase of Shares. The Trust hereby authorizes the Distributor to
repurchase upon the terms and conditions set forth in the Trust's prospectus and
statement of additional information (as supplemented by written instructions
given by the Trust to the Distributor from time to time), as the Trust's agent
and for the Trust's account, such Shares as may be offered for sale to the Trust
from time to time by holders of those Shares or their agents. No offers for sale
of Shares to the Trust shall be accepted by the Distributor during any time when
the redemption of Shares by the Trust shall have been suspended.
10. Indemnification.
(a) The Trust shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor, against any loss, liability,
claim, damage or expense
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(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), arising by reason of any person acquiring any Shares,
which may be based upon the Securities Act, or on any other statute or at common
law, on the ground that the registration statement or related prospectus and
statement of additional information, as from time to time amended and
supplemented, or an annual or interim report to shareholders of the Trust,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, unless that statement or omission was made in reliance
upon, and in conformity with, information furnished to the Trust in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of the Trust in favor of the Distributor and/or its
controlling persons to be deemed to protect the Distributor or any controlling
persons thereof against any liability to the Trust or its security holders to
which the Distributor or any of its controlling persons would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Trust to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or its controlling persons, unless the
Distributor or its controlling persons, as the case may be, shall have notified
the Trust in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or its controlling persons (or after the Distributor
or its controlling persons shall have received notice of service on any
designated agent), but failure to notify the Trust of any claim shall not
relieve the Trust from any liability which it may have to the person against
whom the action is brought otherwise than on account of the indemnity agreement
contained in this paragraph. The Trust will be entitled to participate at its
own expense in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, that defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or the Distributor's controlling person or
persons, defendant or defendants in the suit. In the event the Trust elects to
assume the defense of a suit and retain satisfactory counsel, the
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Distributor or its controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Trust does not elect to assume the defense of such a
suit, it will reimburse the Distributor or the Distributor's controlling person
or persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Trust shall promptly notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or Trustees in connection with the issuance or sale of any
of the Shares.
(b) The Distributor shall indemnify and hold harmless the Trust and
each of its Trustees and officers and each person, if any, who controls the
Trust against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section 10, but only
with respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Trust by or on behalf of the Distributor for
use in connection with the registration statement or related prospectus and
statement of additional information, as from time to time amended, or the annual
or interim reports to shareholders. In case any action shall be brought against
the Trust or any person so indemnified, in respect of which indemnity may be
sought against the Distributor, the Distributor shall have the rights and duties
given to the Trust, and the Trust and each person so indemnified shall have the
rights and duties given to the Distributor by the provisions of subsection (a)
of this Section 10.
11. Continuation, Amendment or Termination of the Agreement.
(a) This Agreement shall become effective as of the date first written
above and shall continue in full force and effect from year to year so long as
continuance is approved at least annually (i) by the Trustees or by vote of a
majority of the outstanding voting securities of the Trust and (ii) by vote of a
majority of the Trustees who are not interested persons of the Distributor or of
the Trust cast in person at a meeting called for the purpose of voting on such
approval, provided, however, that (a) this Agreement may at any time be
terminated without the payment of any penalty either by vote of the Trustees or
by vote of a majority of the outstanding voting securities of the Trust, on
sixty (60) days' notice to the Distributor; (b) this Agreement shall immediately
terminate in the event of its assignment; and (c) this Agreement may be
terminated by the Distributor on ninety (90) days' written notice to the Trust.
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(b) This Agreement may be amended at any time by mutual consent of the
parties, provided that the consent on the part of the Trust shall have been
approved (i) by the Trustees or by vote of a majority of the outstanding voting
securities of the Trust and (ii) by vote of a majority of the Trustees who are
not interested persons of the Distributor or of the Trust cast in person at a
meeting called for the purpose of voting on the amendment.
(c) Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of the other party.
12. Definitions. For the purposes of this Agreement, the terms "vote of
a majority of the outstanding voting securities," "interested person" and
"assignment" shall have the respective meanings specified in the Investment
Company Act.
13. Agreement and Declaration of Trust. The Agreement and Declaration
of Trust establishing the Trust, dated September 28, 1988, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name "North American Security Trust" or "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or any portfolio series thereof, but only the
assets belonging to the Trust, or to the particular portfolio series with which
the obligee or claimant dealt, shall be liable.
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IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.
NORTH AMERICAN FUNDS
By:______________________________________
AMERICAN GENERAL
FUNDS DISTRIBUTORS, INC.
By:______________________________________
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Exhibit 7(e)
FORM OF
DEALER AGREEMENT
AGREEMENT dated as of __________, 2000 by and among American General Funds
Distributors, Inc. ("AGFD"), a Delaware corporation and
______________________________ ("Selling Dealer"), each of whom is registered as
a broker-dealer under the Securities and Exchange Act of 1934, as amended, and
is a member of the National Association of Securities Dealers, Inc. ("NASD").
I. INTRODUCTION
WHEREAS, AGFD has been appointed Principal Underwriter of the shares of one or
more management investment companies (open-end or closed-end) registered under
the Investment Company Act of 1940 (the "Act") engaged in a continuous offering
of shares ("Fund" or "Funds") and has the rights as agent for the Funds to sell
shares of the Funds; and
WHEREAS, Selling dealer wishes to participate in the distribution of the shares
of the Funds;
NOW THEREFORE, in consideration of the premises of the mutual covenants
hereinafter contained, the parties hereto agree as follows:
II. AGREEMENT TO SELL
Subject to the terms of and conditions set forth in the Agreement, AGFD shall,
acting as agent for the Funds and not as principal, sell shares of the Funds to
Selling Dealer which shall, acting as principal (dealer) for its own account and
not as broker or agent for, or employee of, AGFD or the Fund, resell such shares
to the public.
III. TERMS AND CONDITIONS
All transactions in shares of the Funds shall be subject to the following terms
and conditions:
1. Shares will be offered pursuant to the then current prospectus of a
Fund. If such prospectus contains provisions inconsistent with this Agreement,
the prospectus shall control.
2. Orders received from Selling Dealer will be accepted through AGFD
only at the public offering price applicable to each order as set forth in the
then current prospectus of a
<PAGE>
Fund. All orders from Selling Dealer will be confirmed by or on behalf of a Fund
in writing. Procedures for processing orders shall be determined by AGFD and
instructions relating thereto shall be forwarded to selling Dealer from time to
time. A Fund and AGFD each may accept or reject any order in their sole
discretion.
3. AGFD will pay to Selling Dealer from its own assets, and not from
Fund assets, such discounts or commission payments as specified in Schedule A
hereto and in the circumstances set forth in the then current prospectus of a
Fund.
4. If any shares of a Fund sold to Selling Dealer under the terms of
this Agreement are tendered for redemption or repurchase within seven business
days after the date of the confirmation of the original purchase by Selling
Dealer, Selling Dealer shall forfeit its rights to any discount or commission
with respect to such shares. AGFD shall notify Selling Dealer of any such
redemption or repurchase within ten business days from the date on which the
request for redemption or repurchase is delivered to AGFD or to a Fund, and
Selling Dealer shall immediately refund to AGFD any discount or commission
allowed or paid in connection with such sale. In the event of any such
redemption or repurchase, AGFD shall refund to a Fund its share of the sales
charge.
5. Selling Dealer shall purchase shares of a Fund only from the Fund
through AGFD and from Selling Dealer's customers. It is expressly understood
that Selling Dealer will not purchase shares subject to a periodic repurchase
offer from its customers. If shares are purchased from a Fund, Selling Dealer
agrees that all such purchases shall be made only to cover orders already
received by Selling Dealer or for its own bona fide investment. If shares are
purchased from customers, Selling Dealer agrees to pay such customers not less
than the price to be paid by a Fund with respect to purchase accepted through
AGFD at such time.
6. Selling Dealer shall sell shares only: (a) to customers at the
public offering price which is the next determined net asset value per share
after the order is received, in states where shares of the Fund may be legally
sold by Selling Dealer and in accordance with the terms of the then current
prospectus, registrations and permits of the Fund; and (b) to the Fund upon
tender for redemption or repurchase, which redemption or repurchase shall be
effected in the manner set forth in the then current prospectus of a Fund. In
the event of such a tender,
2
<PAGE>
excluding those pursuant to Rule 23c-3 under the Act, Selling Dealer may act as
principal for its own account, it agrees to pay its customer not less than the
price received from a Fund or AGFD acting for a Fund. If selling Dealer acts as
agent for its customer, it agrees not to charge the customer more than a fair
commission for handling the transaction.
7. All sales of shares of a Fund by Selling Dealer shall be made at the
public offering price as determined as set forth in the then current prospectus
of a Fund, and the Selling Dealer shall not withhold orders from AGFD so as to
profit as a result of such withholding.
8. AGFD will not forward to a Fund for acceptance any conditional order
from Selling Dealer for the sale, repurchase or redemption of shares of the
Fund.
9. Payment for shares ordered by Selling Dealer must be received by a
Fund's transfer agent by the later of: (a) three business days after Selling
Dealer receives such customer's purchase order; or (b) one business day after
Selling Dealer receives payment from the customer. If such payment is not so
received, a Fund or AGFD as agent for a Fund reserves the right, without notice,
to immediately cancel the sale, in which case Selling Dealer shall be held
responsible for any loss, including loss of profit, suffered by AGFD or a Fund
resulting from the failure of Selling Dealer to make payment as specified above.
10. Unless other arrangements for payment and delivery are made, shares
of a Fund sold to Selling Dealer pursuant to this Agreement shall be available
for delivery, against payment, at the office of State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110, unless otherwise
agreed to by AGFD.
11. No person is authorized to make any representations concerning the
shares of a Fund except those contained in the then current prospectus of a Fund
and in such other printed information subsequently issued by a Fund of AGFD as
information supplemental to such prospectus. Any such supplemental materials
shall not be modified by Selling Dealer without the prior written consent of
AGFD. Moreover, Selling Dealer shall not make use of any advertisement or sales
literature which refers specifically to a Fund unless such material has been
approved in writing by AGFD prior to its first use by Selling Dealer. In
purchasing shares of a Fund from AGFD, Selling Dealer shall rely solely on the
representations contained in the
3
<PAGE>
then current prospectus of a Fund and supplemental information referred to
above.
12. AGFD shall provide Selling Dealer upon request, without any expense
to Selling Dealer, copies in reasonable numbers of the then current prospectus
of a Fund, any information issued supplementing such prospectus and such other
material as AGFD determines is necessary or desirable for use in connection with
sales of the shares of a Fund.
13. A Fund and AGFD each reserve the right in their discretion, without
notice, to suspend sales or withdraw the offering of the shares of a Fund
entirely.
14. AGFD will, upon request, inform Selling Dealer as to the states in
which shares of a Fund have been qualified for sale under, or are exempt from
the requirements of, applicable state securities laws. AGFD assumes no
responsibility or obligation, however, as to Selling Dealer's right to sell
shares of a Fund in any jurisdiction.
15. Selling Dealer appoints a Fund's transfer agent as its agent to
execute the purchase transactions of shares of a Fund in accordance with the
terms and provisions of any account, program, plan, or service established or
used by Selling Dealer's customers and to confirm each purchase to such
customers on Selling Dealer's behalf. Selling Dealer guarantees the legal
capacity of its customers purchasing shares of a Fund and any other person or
entity in whose name shares are to be registered.
16. In the event of a tender pursuant to a Rule 23c-3 periodic
repurchase offer conducted in accordance with procedures described in a Fund's
prospectus, Selling Dealer may act as principal for its own account or as agent
for its customer. Selling Dealer shall notify AGFD daily during the pendency of
a repurchase offer of the number of shares tendered by its customers, or by
itself acting as principal, for repurchase. Selling Dealer will be responsible
for the receipt of tendered shares by its customers, and forwarding such tenders
to a Fund or AGFD in a timely fashion, according to the terms of the repurchase
offer, and shall indemnify and hold harmless AGFD from any claims relating to a
customer's participation in a repurchase offer or failure to so participate.
Selling Dealer agrees to cooperate reasonably with a Fund, AGFD or any affiliate
of a Fund or AGFD, in the conduct of repurchase offers.
4
<PAGE>
17. Selling Dealer agrees that it will not sell any shares of a Fund
subject to a periodic repurchase offer to any account over which it exercises
discretionary authority.
GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
terms and conditions of this Agreement shall not be construed as a waiver of any
of the terms and conditions, but the same shall remain in full force and effect.
No waiver of any of the provisions of this Agreement shall be deemed to be, or
shall constitute, a waiver of any other provisions, whether or not similar, nor
shall any waiver constitute a continuing waiver.
B. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
parties to it and respective successors and assigns, provided that Selling
Dealer may assign this Agreement or any of the rights and obligations hereunder
only with the prior written consent of AGFD.
C. REGULATIONS
All parties agree to observe and comply with the existing laws, rules
and regulations of applicable local, state, and federal regulatory authorities
and with those which may be enacted or adopted while this Agreement is in force
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
D. DISPUTES
All parties agree to this Agreement agree to abide by the NASD's
Business Conduct Rules and agree that any dispute arising hereunder shall be
submitted to arbitration held in Boston, Massachusetts in accordance with the
Code of Arbitration Procedure of the NASD, or similar rules or codes, in effect
at the time of submission of any such dispute.
5
<PAGE>
E. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
F. AMENDMENT OF AGREEMENT
AGFD reserves the right to amend this Agreement at any time and Selling
Dealer agrees that an order to purchase shares of a Fund placed after notice of
any such amendment shall constitute Selling Dealer's consent to any such
amendment.
G. TERMINATION
Each of the parties to this Agreement has the right to cancel this
Agreement with or without cause on notice to the other party. Each of the
parties represents that it is a member in good standing of the NASD and agrees
that termination or suspension of such membership at any time shall immediately
terminate this Agreement.
H. LIABILITY
AGFD shall have full authority to take such action as it may deem
advisable in respect of all matters pertaining to the continuous offering. AGFD
shall be under no liability to Selling Dealer except for lack of good faith,
gross negligence, willful misconduct, and for obligations expressly assumed by
AGFD in this Agreement. Nothing contained in this paragraph is intended to
operate as, and the provisions of this paragraph shall not in any way whatsoever
constitute, a waiver by Selling Dealer of compliance with any provision of the
Securities Act, or of the rules and regulations of the Securities and exchange
Commission issued under the Securities Act.
I. PROSPECTUS
If the Prospectus contains any provisions inconsistent with the terms
of the Agreement, the Prospectus shall control.
J. NOTICES
All notices or communications shall be sent to the address shown below,
or to such other address as the party may request by giving written notice to
the other party.
6
<PAGE>
For American General Funds Distributors, Inc.
286 Congress Street
Boston, MA 02110
(800) 872-8037
Attention: Thomas J. Brown
For Selling Dealer
--------------------------------
--------------------------------
--------------------------------
Tel.
--------------------------------
Attention:
--------------------------
I. SIGNATURES
American General Funds Distributors, Inc.
By:
--------------------------------------
Name and Title (Please Print)
- -----------------------------------------
Signature
Selling Dealer:
------------------------------------
By:
--------------------------------------
Name and Title (Please Print)
- -----------------------------------------
Signature
- -----------------------------------------
Back Office/Operations Contact
Tel:
-------------------------------------
7
<PAGE>
Exhibit 10(d)
FORM OF
NORTH AMERICAN FUNDS
AMENDED AND RESTATED
MULTICLASS PLAN PURSUANT TO RULE 18F-3
UNDER THE INVESTMENT COMPANY ACT OF 1940
March ___, 2000
I. Background
This amended and restated plan (the "Plan") pertains to the issuance by
the North American Funds (the "Trust") on behalf of the investment portfolios
listed on Schedule A hereto (each a "Fund") of multiple classes of shares of
beneficial interest and is being adopted by the Trust pursuant to Rule 18f-3
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Plan
amends and restates the Trust's previous Amended and Restated Multiclass Plan
(dated December 16, 1997) in order to modify the conversion features of the
Funds' Class C shares, add an additional class of shares and additional
portfolios, as described herein. The Plan does not effect any other changes to
the Trust's existing multiple class structure (other than the addition of a new
class of shares, Class D) including its distribution/service arrangements and
expense allocations. These distribution/service arrangements and expense
allocations were previously approved by the Trust's Board of Trustees in
accordance with an exemptive order (the "Order") granted by the Securities and
Exchange Commission to the Trust on February 28, 1994 and, along with other
features of the Trust's multiple class structure, are set forth below. REFERENCE
SHOULD BE MADE TO THE TRUST'S PROSPECTUS FOR FURTHER INFORMATION ABOUT THE
TRUST'S MULTIPLE CLASS STRUCTURE.
II. Creation of Classes
The Trust's Declaration of Trust authorizes the Trust to issue multiple
classes of shares. Pursuant to action taken by the Board of Trustees of the
Trust at its March 17-18, 1994 meeting and in accordance with the terms of the
Order, the Trust on April 1, 1994 established three classes of shares for each
of the Funds, designated "Class A" shares, "Class B" shares and "Class C"
shares. The shares of the Strategic Income, Investment Quality Bond, U.S.
Government Securities, National Municipal Bond and Money Market Funds
outstanding on April 1, 1994 were reclassified as "Class A" shares and the
shares of the Global Growth, Growth, Growth and Income and Asset Allocation
Funds outstanding on April 1, 1994 were reclassified as "Class C" shares.
Pursuant to action taken by the Board of Trustees of the Trust at its
December 12-13, 1996 meeting, the Trust on December 31, 1996 established an
additional class of shares for each of the Funds (other than the five Lifestyle
Funds), designated "Class D" shares.
Pursuant to action taken by the Board of Trustees of the Trust at its
December 16, 1997 meeting, the Trust on December 16, 1997 established additional
portfolios: Emerging Growth and Tax-Sensitive Equity Funds with "Class A"
shares, "Class B" shares and "Class C" shares.
Pursuant to action taken by the Board of Trustees of the Trust at its
June 8, 1999 meeting, the Trustees effective July 1, 1999 eliminated the
conversion of Class C shares purchased on or
-1-
<PAGE>
after July 1, 1999, including shares purchased through reinvestment of dividends
and distributions, into Class A shares after ten years.
III. Sales Charges
Class A shares are offered for sale at net asset value per share plus a
front end sales charge (with the exception of Class A shares of the Money Market
Fund, which are offered without a sales charge). Certain purchases of Class A
shares qualify for a waived or reduced front end sales charge. In addition,
purchases of Class A shares above a certain dollar amount are offered for sale
at net asset value subject to a CDSC (currently 1% of the dollar amount subject
thereto during the first year after purchase).
Class B shares are sold at net asset value per share without a front
end sales charge but are subject to a CDSC (currently 5% of the dollar amount
subject thereto during the first and second year after purchase, and declining
by 1% each year thereafter to 0% after the sixth year (with the exception of
Class B shares of the Money Market Fund, which are not subject to any CDSC upon
redemption)).
Class C shares are sold at net asset value without a front end sales
charge but for Class C shares purchased after May 1, 1995 subject to a CDSC
(currently 1% of the dollar amount subject thereto on redemptions made within
one year of purchase (with the exception of Class C shares of the Money Market
Fund, which are not subject to any CDSC upon redemption)).
Class D shares are sold at net asset value without a front end sales
charge or CDSC.
Institutional Class I and Institutional Class II shares are sold at net
asset value without a front end sales charge or CDSC.
The CDSC for each class of shares is assessed in compliance with Rule
6c-10 under the 1940 Act.
IV. Distribution and Service Fees
According to a plan adopted pursuant to Rule 12b-1 under the 1940 Act
("Rule 12b-1"), Class A shares are subject to a service fee and a distribution
fee (with the exception of Class A shares of the Money Market Fund, which bear
no such fees).
According to a plan adopted pursuant to Rule 12b-1, Class B shares are
subject to a service fee and a distribution fee which is higher than the Class A
service and distribution fee (with the exception of Class B shares of the Money
Market Fund, which bear no such fees).
According to a plan adopted pursuant to Rule 12b-1, Class C shares are
subject to a service fee and a distribution fee which is higher than the Class A
service and distribution fee (with the exception of Class C shares of the Money
Market Fund, which bear no such fees).
Class D shares are not subject to any Rule 12b-1 service fee or
distribution fee.
-2-
<PAGE>
Institutional Class I and Institutional Class II shares are not subject
to any Rule 12b-1 service fee or distribution fee. Institutional Class I and
Class II shares may, however, be subject to an administrative service fee as
described in the Trust's Registration Statement.
V. Exchange and Conversion Features
Shares of a particular class of a Fund are exchangeable for shares of
the same class of another Fund as set forth in the Trust's Registration
Statement.
Class B shares (except for shares of the Money Market Fund) purchased
prior to October 1, 1997 will automatically convert, based upon relative net
asset value, to Class A shares of the same Fund six years after purchase. Class
B shares (except for shares of the Money Market Fund) purchased on or after
October 1, 1997 will automatically convert, based upon relative net asset value,
to Class A shares of the same Fund eight years after purchase. Upon conversion,
these shares will no longer be subject to the higher 12b-1 service and
distribution fee of Class B shares.
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 earliest being redeemed
or exchanged first, unless a shareholder specifically requests that specific
shares are redeemed or exchanged.
There are no automatic conversion features for Class A shares, Class D
shares, Institutional Class I shares or Institutional Class II shares.
VI. Allocation of Expenses
Expenses of each Fund are borne by the various classes of the Fund on
the basis of relative net assets. The fees identified as "class expenses" (see
below) are to be allocated to each class based on actual expenses incurred, to
the extent that such expenses can properly be so allocated. To the extent that
such expenses cannot be properly allocated, such expenses are to be borne by all
classes on the basis of relative net assets.
The following are "class expenses":
(i) transfer and shareholder servicing agent fees and
shareholder servicing costs;
(ii) printing and postage expenses related to preparing and
distributing to the shareholders of a specific class materials such as
shareholder reports, prospectuses and proxies;
(iii) Blue Sky and SEC registration fees incurred by a class;
(iv) professional fees relating solely to such class;
(v) Trustees' fees, including independent counsel fees,
relating to one class; and
-3-
<PAGE>
(vi) shareholder meeting expenses for meetings of a particular
class.
VI. Voting Rights
All shares of each Fund have equal voting rights and will be voted in
the aggregate, and not by class, except where voting by class is required by law
or by the Declaration of Trust.
VII. Amendments
No material amendment to this Plan may be made unless it is first
approved by a majority of both (a) the full Board of Trustees of the Trust and
(b) those Trustees who are not "interested persons" of the Trust, as that term
is defined in the 1940 Act.
-4-
<PAGE>
SCHEDULE A
INVESTMENT PORTFOLIOS
Global Equity
Growth & Income Fund
Tax-Sensitive Equity Fund
Equity-Income Fund
International Equity Fund
Balanced Fund
Strategic Income Fund
U.S. Government Securities Fund
Municipal Bond Fund
Money Market Fund
International Small Cap Fund
Large Cap Growth Fund
Mid Cap Growth Fund
Small Cap Growth Fund
Core Bond Fund
Mid Cap Value Fund
Stock Index Fund
Small Cap Index Fund
Socially Responsible Fund
High Yield Bond Fund
Growth Lifestyle Fund
Moderate Growth Lifestyle Fund
Conservative Growth Lifestyle Fund
Municipal Money Market Fund
Science & Technology Fund
Capital Appreciation Fund
-5-
<PAGE>
Exhibit 11
[Ropes & Gray Letterhead]
[FORM OF OPINION]
Date
North American Funds
286 Congress Street
Boston, Massachusetts 02210
Ladies and Gentlemen:
You have informed us that you propose to register under the Securities Act
of 1933, as amended (the "Act"), on Form N-14 and offer and sell shares of
beneficial interest, $.001 par value, of your Growth & Income Fund, (the
"Shares"), at not less than net asset value.
We have examined an executed copy of your Amended and Restated Agreement
and Declaration of Trust, as amended (the "Declaration of Trust"), on file in
the office of the Secretary of The Commonwealth of Massachusetts and the Clerk
of the City of Boston, and certified copies of the resolutions adopted by your
trustees to authorize the issue and exchange of Shares for the assets of your
Equity-Income Fund and Tax-Sensitive Equity Fund. We have further examined a
copy of your By-Laws and such other documents and records as we have deemed
necessary for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that the beneficial
interest in each of your series is divided into an unlimited number of Shares
and the issue and sale of the authorized but unissued Shares has been duly
authorized under Massachusetts law. Upon the original issue and sale of any
such authorized but unissued Shares and upon receipt of the authorized
consideration therefor in an amount not less than the applicable net asset
value, the Shares so issued will be validly issued, fully paid and nonassessable
by the Trust.
North American Funds (the "Trust") is an entity of the type commonly known
as a "Massachusetts business trust." Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or its trustees. The Declaration of Trust
provides for indemnification out of the property of each series of the Trust
(the "Series") for all loss and expense of any shareholder of the Series held
personally liable solely by reason of his or her being or having been such a
shareholder. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which the Series
itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
registration of an indefinite number of shares for offering and sale pursuant to
the Act. We consent to the filing of this opinion with and as part of your
Registration Statement on Form N-14 relating to such offering and sale.
Very truly yours,
Ropes & Gray
<PAGE>
Exhibit 12
[Ropes & Gray Letterhead]
[FORM OF TAX OPINION]
DATE
Acquired Fund
Acquired Fund Address
Acquiring Fund
Acquiring Fund Address
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of DATE, between North American Funds,
a Massachusetts business trust, on behalf of its Acquired Fund ("Acquired
Fund"), and North American Funds, on behalf of its Acquiring Fund ("Acquiring
Fund"). The Agreement describes a proposed transaction (the "Transaction") to
occur today (the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of the Acquired Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Merger Shares") and the assumption
by Acquiring Fund of all of the liabilities of Acquired Fund following which the
Merger Shares received by Acquired Fund will be distributed by Acquired Fund to
its shareholders in liquidation and termination of Acquired Fund. This opinion
as to certain federal income tax consequences of the Transaction is furnished to
you pursuant to Section ___ of the Agreement. Capitalized terms not defined
herein are used herein as defined in the Agreement.
Acquired Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company.
Shares of Acquired Fund are redeemable at net asset value at each shareholder's
option. Acquired Fund has elected to be a regulated investment company for
federal income tax purposes under Section 851 of the Internal Revenue Code of
1986, as amended (the "Code").
Acquiring Fund is registered under the 1940 Act as an open-end
management investment company. Shares of Acquiring Fund are redeemable at net
asset value at each shareholder's option. Acquiring Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Code.
For purposes of this opinion, we have considered the Agreement, the
Acquired Fund Proxy Statement, the Registration Statement (including the items
incorporated by reference therein), and such other items as we have deemed
necessary to render this opinion. In addition, you have
<PAGE>
Acquired Fund DATE
Acquiring Fund
-2-
provided us with letters dated as of the date hereof, representing as to certain
facts, occurrences and information upon which you have indicated that we may
rely in rendering this opinion (whether or not contained or reflected in the
documents and items referred to above) (the "Acquiring Fund Rep Letter" and
"Acquired Fund Rep Letter").
We have also assumed, for purposes of this opinion, that any
redemptions that are made when either Acquired Fund's or Acquiring Fund's shares
are presented to each of them respectively for redemption pursuant to section
22(e) of the Investment Company Act which appear to be made in connection with
the Transaction will not, when aggregated with the redemptions and distributions
described in paragraph 6 of the Acquiring Fund Rep Letter and paragraph 5 of the
Acquired Fund Rep Letter, exceed 50% of the value (without giving effect to such
redemptions or distributions) of all of the outstanding stock of the Acquired
Fund on the date of the Transaction.
Based on the foregoing representations and assumption and our review of
the documents and items referred to above, we are of the opinion that for
federal income tax purposes:
(i) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Acquired Fund in exchange for Merger
Shares and the assumption by Acquiring Fund of the liabilities
of Acquired Fund;
(ii) The basis in the hands of Acquiring Fund of the assets of
Acquired Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Acquired Fund immediately prior to the transfer;
(iii) The holding periods of the assets of Acquired Fund in the
hands of Acquiring Fund will include the periods during which
such assets were held by Acquired Fund;
(iv) No gain or loss will be recognized by Acquired Fund upon the
transfer of Acquired Fund's assets to Acquiring Fund in
exchange for Merger Shares and the assumption by Acquiring
Fund of the liabilities of Acquired Fund, or upon the
distribution of Merger Shares by Acquired Fund to its
shareholders in liquidation;
(v) No gain or loss will be recognized by Acquired Fund
shareholders upon the exchange of their Acquired Fund Shares
for Merger Shares;
(vi) The basis of Merger Shares that an Acquired Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Acquired Fund Shares exchanged
therefor; and
<PAGE>
Acquired Fund DATE
Acquiring Fund
-3-
(vii) An Acquired Fund shareholder's holding period for his or her
Merger Shares will be determined by including the period for
which he or she held the Acquired Fund Shares exchanged
therefor, provided that he or she held such Acquired Fund
Shares as capital assets.
Very truly yours,
Ropes & Gray
<PAGE>
Exhibit 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-14 (the "Registration Statement") of our report dated
December 20, 1999, relating to the financial statements and financial highlights
of North American Growth & Income Fund, North American Equity-Income Fund and
North American Tax-Sensitive Equity Fund appearing in the October 31, 1999
Annual Report to Shareholders of North American Funds, which is also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in the Prospectus
of the North American Funds dated March 1, 2000 and under the heading
"Independent Accountants" in the Statement of Additional Information of the
North American Funds dated March 1, 2000 which are incorporated by reference
into the Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 15, 2000
<PAGE>
Exhibit 16(a)
POWER OF ATTORNEY
-----------------
We, the undersigned Officers and Trustees of North American Funds (the
"Trust"), hereby severally constitute and appoint Joseph T. Grause, Jr., John I.
Fitzgerald, and Thomas J. Brown, and each of them singly, our true and lawful
attorneys, with full power to them and each of them, to sign for us, and in our
names and in the capacities indicated below, any Registration Statement on Form
N-14 of the Trust and any and all amendments (including post-effective
amendments) to said Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said attorneys, and each
of them acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, and herby ratify and
confirm all that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.
WITNESS our hands and common seal on the date set forth below.
Signature Title Date
- --------- ----- ----
/s/ Bradford K. Gallagher Chairman; Trustee; February 28, 2000
- ---------------------------- President; Principal
Bradford K. Gallagher Executive Officer
/s/ Don B. Allen Trustee February 28, 2000
- ----------------------------
Don B. Allen
/s/ William F. Achtmeyer Trustee February 28, 2000
- ----------------------------
William F. Achtmeyer
/s/ William F. Devin Trustee February 28, 2000
- ----------------------------
William F. Devin
/s/ Kenneth J. Lavery Trustee February 28, 2000
- ----------------------------
Kenneth J. Lavery
/s/ Thomas J. Brown Treasurer, Principal February 28, 2000
- ---------------------------- Financial and
Thomas J. Brown Accounting Officer
<PAGE>
Exhibit 16(b)
POWER OF ATTORNEY
-----------------
We, the undersigned Officers and Trustees of North American Funds (the
"Trust"), hereby severally constitute and appoint Joseph T. Grause, Jr., John I.
Fitzgerald, and Thomas J. Brown, and each of them singly, our true and lawful
attorneys, with full power to them and each of them, to sign for us, and in our
names and in the capacities indicated below, any Registration Statement on Form
N-14 of the Trust and any and all amendments (including post-effective
amendments) to said Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said
attorneys, and each of them acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in the
premises, as fully to all intents and purposes as he might or could do in
person, and herby ratify and confirm all that said attorneys or any of them may
lawfully do or cause to be done by virtue thereof.
WITNESS our hands and common seal on the date set forth below.
Signature Title Date
- --------- ----- ----
/s/ Alice T. Kane Chairman; Trustee; March 14, 2000
- ------------------------ President; Principal
Alice T. Kane Executive Officer
<PAGE>
Exhibit 17
FORM OF PROXY
FUND
A SERIES OF NORTH AMERICAN FUNDS
PROXY SOLICITED BY THE BOARD OF TRUSTEES
FOR SPECIAL MEETING OF SHAREHOLDERS -- June 1, 2000
The undersigned hereby appoints John I. Fitzgerald, John N. Packs and Cathy
Z. Angellis, and each of them separately, proxies with power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Special Meeting (the "Meeting") of Shareholders of the Fund indicated
above to be held at the offices of American General Asset Management Corp. on
June 1, 2000 at 10:00 a.m. (Eastern Time) and at any adjournment thereof, all
of the shares of the Fund which the undersigned would be entitled to vote if
personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH PROPOSAL.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. The Trustees recommend a vote
FOR the proposals.
TO VOTE BY MAIL, PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
TO VOTE BY FAX, PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND FAX THE PROXY CARD TO .
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD. All
joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, name and indicate the
signer's office. If a partner, sign
in the partnership name.
_____________________________________
Signature
_____________________________________
Signature (if held jointly)
_____________________________________
Date
I. Proposal to approve the Merger of FOR AGAINST ABSTAIN
the Fund named on the reverse
side of this card, as described
in the Prospectus/Proxy Statement
and the relevant Agreement and
Plan of Reorganization.
[_] [_] [_]
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
