As filed with the Securities and Exchange Commission on March 27, 2000
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
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It is proposed that this filing will become effective on April 26, 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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AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2
American General Large Cap Growth Fund
American General Mid Cap Growth Fund
American General Small Cap Growth Fund
American General Large Cap Value Fund
American General Mid Cap Value Fund
American General Small Cap Value Fund
American General Stock Index Fund
American General Mid Cap Index Fund
American General Balanced Fund
American General International Growth Fund
American General International Value Fund
American General Core Bond Fund
American General Domestic Bond Fund
American General Strategic Bond Fund
American General Municipal Bond Fund
American General Money Market Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
June 22, 2000
To the Shareholders:
This is to notify you that a Special Meeting of Shareholders of the American
General Large Cap Growth Fund, the American General Mid Cap Growth Fund, the
American General Small Cap Growth Fund, the American General Large Cap Value
Fund, the American General Mid Cap Value Fund, the American General Small Cap
Value Fund, the American General Stock Index Fund, the American General Mid Cap
Index Fund, the American General Balanced Fund, the American General
International Growth Fund, the American General International Value Fund, the
American General Core Bond Fund, the American General Domestic Bond Fund, the
American General Strategic Bond Fund, the American General Municipal Bond Fund
and the American General Money Market Fund, each a series of American General
Series Portfolio Company 2, will be held on June 22, 2000, at 2:00 p.m.,
Central Time, in Meeting Room 1, Plaza Level, Woodson Tower, at The Variable
Annuity Life Insurance Company, 2919 Allen Parkway, Houston, Texas 77019, for
the following purposes:
1. American General Large Cap Growth Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Large Cap Growth Fund by the North
American Large Cap Growth Fund.
2. American General Mid Cap Growth Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Mid Cap Growth Fund by the North
American Mid Cap Growth Fund.
3. American General Small Cap Growth Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Small Cap Growth Fund by the North
American Small Cap Growth Fund.
4. American General Large Cap Value Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Large Cap Value Fund by the North
American Growth & Income Fund.
5. American General Mid Cap Value Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Mid Cap Value Fund by the North
American Mid Cap Value Fund.
6. American General Small Cap Value Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Small Cap Value Fund by the North
American Mid Cap Value Fund.
7. American General Stock Index Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Stock Index Fund by the North American
Stock Index Fund.
8. American General Mid Cap Index Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Mid Cap Index Fund by the North
American Stock Index Fund.
9. American General Balanced Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Balanced Fund by the North American
Balanced Fund.
10. American General International Growth Fund: To approve an Agreement and
Plan of Reorganization providing for the acquisition of all of the assets
and liabilities of the American General International Growth Fund by the
North American International Equity Fund.
11. American General International Value Fund: To approve an Agreement and Plan
of Reorganization providing for the acquisition of all of the assets and
liabilities of the American General International Value Fund by the North
American International Equity Fund.
12. American General Core Bond Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Core Bond Fund by the North American
Core Bond Fund.
13. American General Domestic Bond Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Domestic Bond Fund by the North
American Core Bond Fund.
14. American General Strategic Bond Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Strategic Bond Fund by the North
American Strategic Income Fund.
15. American General Municipal Bond Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Municipal Bond Fund by the North
American Municipal Bond Fund.
16. American General Money Market Fund: To approve an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the American General Money Market Fund by the North American
Money Market Fund.
17. To transact such other business as may properly come before the meeting.
The Trustees have fixed the close of business on May 1, 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
Alice T. Kane, President
May 12, 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.
PROSPECTUS/PROXY STATEMENT
May 12, 2000
COLUMN 2
COLUMN 1 By and in exchange for
Acquisition of the assets of: shares of:
----------------------------- ---------------------------
Large Cap Growth Fund.......................... Large Cap Growth Fund
Mid Cap Growth Fund............................ Mid Cap Growth Fund
Small Cap Growth Fund.......................... Small Cap Growth Fund
Large Cap Value Fund........................... Growth & Income Fund
Mid Cap Value Fund............................. Mid Cap Value Fund
Small Cap Value Fund........................... Mid Cap Value Fund
Stock Index Fund............................... Stock Index Fund
Mid Cap Index Fund............................. Stock Index Fund
Balanced Fund.................................. Balanced Fund
International Growth Fund...................... International Equity Fund
International Value Fund....................... International Equity Fund
Core Bond Fund................................. Core Bond Fund
Domestic Bond Fund............................. Core Bond Fund
Strategic Bond Fund............................ Strategic Income Fund
Municipal Bond Fund............................ Municipal Bond Fund
Money Market Fund.............................. Money Market Fund
each a series of each a series of
American General Series Portfolio Company 2
("AGSPC2") North American Funds
2929 Allen Parkway 286 Congress Street
Houston, Texas 77019 Boston, Massachusetts 02210
1-877-999-2434 1-800-872-8037
This Prospectus/Proxy Statement relates to the proposed mergers (the
"Mergers") of the AGSPC2 Funds shown in Column 1 above, each an "Acquired
Fund," and each a series of AGSPC2, into, respectively, the North American
Funds shown in Column 2 above, each an "Acquiring Fund," and each a series of
North American Funds. The Acquired Funds and the Acquiring Funds 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
corresponding 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 receive a different
number of shares of the Acquiring Fund than the number of shares of the
Acquired Fund that you 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 that will result in their receiving shares of the Acquiring Funds,
this Proxy Statement also serves as a Prospectus for the Merger Shares of each
Acquiring Fund.
This Prospectus/Proxy Statement explains concisely what you should know
before investing in each Acquiring Fund. Please read it carefully and keep it
for future reference.
1
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 Statement of Additional Information, dated May , 2000, relating to
this Prospectus/Proxy Statement (the "Merger SAI");
. the current Prospectuses, dated March 1, 2000, as supplemented, of the
Acquired Funds (the "AGSPC2 Prospectus");
. the current Prospectus, dated March 1, 2000, of the Acquiring Funds
relating to the relevant class of shares (the "North American
Prospectus");
. the current Statement of Additional Information, dated March 1, 2000, of
the Acquired Funds (the "AGSPC2 SAI");
. the current Statement of Additional Information, dated March 1, 2000, of
the Acquiring Funds (the "North American SAI");
. the Report of Independent Accountants and financial statements in
respect of each Acquired Fund included in the Acquired Funds' Annual
Report to Shareholders for the year ended October 31, 1999 (the "AGSPC2
Annual Report");
. the Report of Independent Accountants and financial statements in
respect of each Acquiring Fund included in the Acquiring Funds' Annual
Report to Shareholders for the year ended October 31, 1999 (the "North
American Annual Report").
This Prospectus/Proxy Statement is accompanied by a copy of the North American
Prospectus. For a free copy of any or all of the Prospectuses, Statements of
Additional Information, or Annual Reports referred to in the foregoing
paragraph, 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 Funds. The Acquiring Funds
may not achieve their goals, and each of the Acquiring Funds is not intended as
a complete investment program. An investment in the Acquiring Funds is not a
deposit in a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
2
OVERVIEW OF MERGERS
The following is a summary of certain background information relating to the
proposed Mergers and is qualified by reference to the more complete information
contained elsewhere in this Prospectus/Proxy Statement and the Merger SAI, the
Prospectuses and SAIs of the Funds, and the Agreement and Plan of
Reorganization, attached to this Prospectus/Proxy Statement as Appendix A, all
of which have been incorporated by reference into this Prospectus/Proxy
Statement. Shareholders should read this entire Prospectus/Proxy Statement
carefully.
Introduction
The Trustees of AGSPC2, on behalf of each Acquired Fund, and the Trustees of
North American Funds, on behalf of each Acquiring Fund, have approved
transactions involving, for each Acquired Fund and the corresponding Acquiring
Fund, the Merger of the 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 for the
assumption by the Acquiring Fund of all the liabilities of the Acquired Fund,
followed by the liquidation of the Acquired Fund.
Background and Reasons for Mergers
The proposed Mergers are a part of a reorganization resulting from the
acquisition by American General Corporation ("AGC") of substantially all of the
outstanding shares of CypressTree Asset Management Corporation, Inc. ("CAM"),
now named American General Asset Management Corp. ("AGAM"), the investment
adviser to the Acquiring Funds.
As described more fully below, the Trustees of AGSPC2 approved the Mergers
based on a thorough examination of North American Funds and, among other
things, a careful review of the investment capabilities, philosophy and
performance of AGAM and the subadvisers. The Trustees of AGSPC2 unanimously
recommend that shareholders of each Acquired Fund approve the Merger for such
Fund. In reaching that conclusion, the Trustees considered that the Mergers
generally offer 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; that AGAM has estimated that
the Mergers should result in Fund operating expenses that are sustainable at
lower rates than the AGSPC2 Funds; and that AGC will be bearing the expense of
the Mergers. In the case of the Mergers of certain Acquired Funds into the
newly created North American Stock Index Fund and the North American Mid Cap
Value Fund, the Trustees considered that the Funds would retain similar
flexibility with respect to corporate governance and that all of the Funds
would be governed under a single set of organizational documents following the
Mergers. See "Proposals--Background and Reasons for the Proposed Mergers."
Investment Advisory Information
AGAM serves as the investment adviser to each Acquiring Fund, other than the
North American Mid Cap Value Fund and the North American Stock Index 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 approval by the shareholders of each
applicable Acquiring Fund,* it is expected that AGAM will continue to serve as
investment adviser to each Acquiring Fund. The North American Mid Cap Value
Fund and the North American Stock Index Fund are newly created funds with AGAM
as their investment adviser.
AGAM has hired the following subadvisers to manage several of the Acquiring
Funds:
Founders Asset Management, LLC
. North American Large Cap Growth Fund
INVESCO Funds Group, Inc.
. North American Balanced Fund
. North American Mid Cap Growth Fund
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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.
3
Credit Suisse Asset Management, LLC
. North American Small Cap Growth Fund
Wellington Management Company, LLP
. North American Growth & Income Fund
Neuberger Berman Management Inc. ("Neuberger Berman")
. North American Mid Cap Value Fund
Morgan Stanley Dean Witter Investment Management Inc.
. North American International Equity Fund
American General Investment Management, L.P. ("AGIM")
. North American Stock Index Fund
. North American Strategic Income Fund
. North American Core Bond Fund
. North American Municipal Bond Fund
. North American Money Market Fund
AGIM serves as subadviser to these Funds under an interim investment
advisory agreement adopted pursuant to Rule 15a-4 that expires on August 7,
2000. It is expected that, subject to the approval of the shareholders of the
relevant Acquiring Funds,* AGIM will continue to serve as subadviser to these
Acquiring Funds.
The Variable Annuity Life Insurance Company ("VALIC") is the investment
adviser to each Acquired Fund. VALIC makes investment decisions for and is
directly responsible for the day-to-day management of the following Acquired
Funds:
. American General Mid Cap Index Fund
. American General Stock Index Fund
. American General Money Market Fund
VALIC has hired subadvisers to manage several of the Acquired Funds:
AGIM
. American General Core Bond Fund
. American General Strategic Bond Fund
. American General Municipal Bond Fund
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* Shareholder approval of the investment subadvisory agreements with AGIM 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.
Capital Guardian Trust Company
. American General International Value Fund
. American General Domestic Bond Fund
. American General Balanced Fund
Goldman Sachs Asset Management
. American General Large Cap Growth Fund
Jacobs Asset Management
. American General International Growth Fund
Brown Capital Management, Inc.
. American General Mid Cap Growth Fund
J.P. Morgan Investment Management, Inc.
. American General Small Cap Growth Fund
State Street Bank & Trust Company/State Street Global Advisors
. American General Large Cap Value Fund
Neuberger Berman
. American General Mid Cap Value Fund
Fiduciary Management Associates, Inc.
. American General Small Cap Value Fund.
Approval by shareholders of a Merger will effectively change the adviser and
subadvisers of the Acquired Fund. However, the Acquiring Funds have investment
objectives and policies that are generally similar to the corresponding
Acquired Funds, and these objectives, policies and certain differences are
explained further below under "Comparison of Investment Objectives, Policies,
Restrictions and Risks."
Overview of the Acquired Funds and the Acquiring Funds
Each of the Acquired Funds and the Acquiring Funds offers Class A and Class
B shares. Each of the Acquired Funds offers Institutional Class I shares except
the American General Stock Index Fund, the American General Mid Cap Index Fund
and the American General Municipal Bond Fund. Institutional Class I shares are
currently offered by all of the Acquiring Funds except the North American
Municipal Bond Fund. Institutional Class II shares of the Acquired Funds and
the Acquiring
4
Funds are offered by the North American Core Bond Fund only. The Class A, Class
B, Institutional Class I and Institutional Class II Merger Shares have similar
characteristics to the corresponding classes of the Acquired Funds.
Class A Shares
. Both the Acquiring Funds' and the Acquired Funds' Class A shares are
generally sold subject to a front-end sales load of up to 5.75%.
. Class A shares of the Acquiring Funds and the Acquired Funds are
generally not subject to a contingent deferred sales charge ("CDSC"),
except for purchases without a sales load of $1 million or more if
redeemed within:
Acquiring Acquired
Fund Fund
--------- --------
1 year....................................................... 1% 1%
2 years...................................................... 0% 0.5%
. Class A shares of the Funds are subject to distribution and servicing
fees of up to the following annual rates:
Acquiring Fund............ 0.35%
Acquired Fund............. 0.25%
Class B Shares
. Class B shares of both the Acquiring Funds and the Acquired Funds are
sold at net asset value, without an initial sales charge, but subject to
a CDSC of up to 5.00% at declining rates if redeemed within six years of
purchase as follows:
6 or
Year 1 2 3 4 5 6 more
---- --- --- --- --- --- --- ----
Acquired Funds.. 5% 4% 3% 2% 1% 0% 0%
Acquiring
Funds......... 5% 5% 4% 3% 2% 1% 0%
. Class B shares of both the Acquiring Funds and Acquired Funds are
subject to distribution and servicing fees at an aggregate annual rate
of 1.00% of assets attributable to Class B shares.
. Class B shares generally convert automatically to Class A shares as
follows:
Acquiring Acquired
Fund Fund
--------- --------
Years after
purchase....... 8 6
Institutional Class I and Institutional Class II Shares
. Institutional Class I and Institutional Class II shares of the Acquiring
Funds and the Acquired Funds are sold without a front-end sales load or
a CDSC.
. Institutional Class I and Institutional Class II shares of the Funds are
not subject to servicing and distribution fees.
. Institutional Class I shares are subject to a 0.25% administrative
services fee.
As a result of each proposed Merger, each Acquired Fund will receive a
number of Class A, Class B, Institutional Class I and Institutional Class II
Merger Shares of the relevant 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, Institutional Class I and Institutional Class II shares of the
Acquired Fund. Following the transfer, (i) the Acquired Fund will distribute to
each of its Class A, Class B, Institutional Class I and Institutional Class II
shareholders a number of full and fractional Class A, Class B, Institutional
Class I and Institutional Class II Merger Shares of the relevant Acquiring Fund
equal in value to the aggregate value of the shareholder's Class A, Class B,
Institutional Class I and Institutional Class II Acquired Fund shares, as the
case may be, and (ii) the Acquired Fund will be liquidated.
You will not be charged a front-end sales load on the issuance of the Merger
Shares or a CDSC on the exchange of Acquired Fund shares for Merger Shares. If
you receive Class B Merger Shares, they will convert to Class A shares of the
relevant Acquiring Fund six years after the date you originally purchased the
Acquired Fund shares (so that the conversion of such shares will effectively be
unchanged by the Mergers). You will be charged a CDSC on redemption of the
Merger Shares to the same extent as you would have been charged on redemption
of the Acquired Fund shares. In other words, the Merger Shares will be treated
as having been purchased on the date on which you originally purchased the
Acquired Fund shares and at the price (adjusted to reflect the Merger) you
originally paid for the Acquired Fund shares. See the North American Prospectus
for more information about the characteristics of Class A, Class B,
Institutional Class I and Institutional Class II shares of the Acquiring Funds.
5
Operating Expenses
As the following tables suggest, because the Acquired Funds are currently
subject to fee waivers and expense reimbursements that VALIC believes are
unlikely to be sustainable, the Mergers are generally expected to result in
sustainable expense levels that, while higher than the net expenses of the
Acquired Funds, are lower than the expenses that would have been borne absent
such fee waivers and expense reimbursements. See "Proposals--Background and
Reasons for the Proposed Mergers." Of course, there can be no assurance that
the Mergers will result in expense savings for shareholders. These tables
summarize, for Class A, Class B, Institutional Class I and Institutional Class
II shares, as applicable, expenses
. that each Acquired Fund incurred in its fiscal year ended October 31,
1999;
. that each Acquiring Fund incurred in its fiscal year ended October 31,
1999;* and
. that each Acquiring Fund would have incurred in its most recent fiscal
year after giving effect on a pro forma combined basis to the proposed
Merger, as if the Merger had occurred as of the beginning of such fiscal
year (based on asset levels as of December 31, 1999).*
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, each Acquiring Fund and each Acquiring Fund on a pro forma
basis, over specified periods. By translating "Total Annual Fund Operating
Expenses" into dollar amounts, these examples may help you compare the costs
of investing in each Fund with the costs of investing in other mutual funds.
- --------
* For the North American Mid Cap Value Fund and the North American Stock
Index Fund, which have no operating history, expenses shown are estimates
for the current fiscal year.
6
Shareholder Fees*
Acquired Acquiring Pro Forma
Fund Fund Combined**
-------- --------- ----------
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering
price)
Equity Funds/1/
Class A................................ 5.75% 5.75% 5.75%
Class B................................ None None None
Other Funds except Money Market Funds
Class A................................ 4.75% 4.75% 4.75%
Class B................................ None None None
Money Market Funds
Class A................................ None None None
Class B................................ None None None
Maximum Deferred Sales Charge (as a
percentage of original purchase price or
redemption price, whichever is lower)
Other Funds except Money Market Funds
Class A................................ 1.00%/2/ 1.00%/3/ 1.00%/2/
Class B................................ 5.00%/4/ 5.00%/5/ 5.00%/4/
Money Market Funds
Class A................................ None None None
Class B................................ 5.00%/4/ None 5.00%/4/
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* Institutional Class I and Institutional Class II shares are not subject to a
front-end sales load or CDSC.
** With respect to Merger Shares.
/1/For the Acquired Funds, includes all Funds except American General Core Bond
Fund, American General Domestic Bond Fund, American General Strategic Bond
Fund, American General Municipal Bond Fund and American General Money Market
Fund. For the Acquiring Funds, includes all Funds except North American Core
Bond Fund, North American Strategic Income Fund, North American Municipal
Bond Fund and North American Money Market Fund.
/2/Purchases of $1 million or more of Acquired Fund shares which are redeemed
within 1 year will be charged a 1% CDSC, and purchases redeemed within 2
years will be charged a 0.50% CDSC.
/3/Purchases of $1 million or more of Acquiring Fund shares which are redeemed
within 1 year will be charged a 1% CDSC.
/4/A CDSC is imposed on the proceeds of Acquired Fund Class B shares redeemed
within 5 years, subject to certain exceptions, and declines from 5% in the
first year that shares are held, to 4% in the second year, 3% in the third
year, 2% in the fourth year, and 1% in the fifth year.
/5/A CDSC is imposed on the proceeds of Acquiring Fund Class B shares redeemed
within 6 years, subject to certain exceptions, and declines from 5% in the
first two years that shares are held, to 4% in the third year, 3% in the
fourth year, 2% in the fifth year, and 1% in the sixth year.
7
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Large Cap Growth Large Cap Growth Large Cap Growth
Fund Fund Fund*
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.55% 0.90% 0.90%
Class B................. 0.55% 0.90% 0.90%
Institutional Class I... 0.55% -- 0.90%
12b-1 Fees
Class A................. 0.25% 0.35% 0.35%
Class B................. 1.00% 1.00% 1.00%
Institutional Class I... None -- None
Other Expenses
Class A................. 1.23% 0.65% 0.57%
Class B................. 0.79% 0.62% 0.57%
Institutional Class I... 1.63% -- 0.82%
Total Fund Operating
Expenses
Class A................. 2.03% 1.90%(1) 1.82%(1)
Class B................. 2.34% 2.52%(1) 2.47%(1)
Institutional Class I... 2.18% -- 1.72%(1)
Expense
Waiver/Reimbursement
Class A................. 0.93% -- --
Class B................. 0.49% -- --
Institutional Class I... 1.20% -- --
Net Expenses
Class A................. 1.10% 1.90%(1) 1.82%(1)
Class B................. 1.85% 2.52%(1) 2.47%(1)
Institutional Class I... 0.98% -- 1.72%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit Fund operating expenses to the annual rates
of 1.77% for Class A shares and 2.42% for Class B shares, and expects to
voluntarily waive fees and/or reimburse expenses to the extent necessary to
limit total Fund operating expenses to the annual rate of 1.67% for
Institutional Class I shares.
8
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:
Pro Forma
Current Expenses Current Expenses Expenses
American General North American North American
Large Cap Growth Large Cap Growth Large Cap Growth
Fund Fund Fund*
---------------- ---------------- ----------------
Class A
1 year.................... $ 681 $ 757 $ 749
3 years................... $ 901 $1,138 $1,115
5 years................... $1,146 $1,542 $1,504
10 years.................. $1,838 $2,669 $2,589
Class B (assuming
redemption at end of
period)
1 year.................... $ 668 $ 755 $ 747
3 years................... $ 882 $1,185 $1,161
5 years................... $1,101 $1,540 $1,501
10 years.................. $1,784(1) $2,701(2) $2,495(1)
Class B (assuming no
redemption)
1 year.................... $ 188 $ 255 $ 247
3 years................... $ 582 $ 785 $ 761
5 years................... $1,002 $1,340 $1,301
10 years.................. $1,784(1) $2,701(2) $2,495(1)
Institutional Class I
1 year.................... $ 100 -- $ 172
3 years................... $ 312 -- $ 533
5 years................... $ 542 -- $ 918
10 years.................. $1,201 -- $1,998
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
9
Current Expenses Current Expenses Pro Forma Expenses
American General Mid North American Mid North American Mid
Cap Growth Fund Cap Growth Fund Cap Growth Fund*
-------------------- ------------------ ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................ 0.65% 0.93% 0.93%
Class B................ 0.65% 0.93% 0.93%
Institutional Class I.. 0.65% -- 0.93%
12b-1 Fees
Class A................ 0.25% 0.35% 0.35%
Class B................ 1.00% 1.00% 1.00%
Institutional Class I.. None -- None
Other Expenses
Class A................ 1.46% 0.61% 0.54%
Class B................ 1.09% 0.61% 0.54%
Institutional Class I.. 1.18% -- 0.79%
Total Fund Operating
Expenses
Class A................ 2.36% 1.89%(1) 1.82%(1)
Class B................ 2.74% 2.54%(1) 2.47%(1)
Institutional Class I.. 1.83% -- 1.72%(1)
Expense
Waiver/Reimbursement
Class A................ 1.32% -- --
Class B................ 0.95% -- --
Institutional Class I.. 0.91% -- --
Net Expenses
Class A................ 1.04% 1.89%(1) 1.82%(1)
Class B................ 1.79% 2.54%(1) 2.47%(1)
Institutional Class I.. 0.92% -- 1.72%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.78% for Class A shares and 2.43% for Class B shares, and expects
to voluntarily waive fees and/or reimburse expenses to the extent necessary
to limit total Fund operating expenses to the annual rate of 1.68% for
Institutional Class I shares.
10
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:
Current Expenses Current Expenses Pro Forma Expenses
American General Mid North American Mid North American Mid
Cap Growth Fund Cap Growth Fund Cap Growth Fund*
-------------------- ------------------ ------------------
Class A
1 year................. $ 675 $ 756 $ 749
3 years................ $ 887 $1,135 $1,115
5 years................ $1,117 $1,538 $1,504
10 years............... $1,777 $2,669 $2,589
Class B (assuming
redemption at end of
period)
1 year................. $ 682 $ 757 $ 750
3 years................ $ 863 $1,191 $1,170
5 years................ $1,070 $1,550 $1,516
10 years............... $1,719(1) $2,714(2) $2,495(1)
Class B (assuming no
redemption)
1 year................. $ 182 $ 257 $ 250
3 years................ $ 564 $ 791 $ 770
5 years................ $ 971 $1,350 $1,316
10 years............... $1,719(1) $2,714(2) $2,495(1)
Institutional Class I
1 year................. $ 94 -- $ 175
3 years................ $ 293 -- $ 542
5 years................ $ 509 -- $ 933
10 years............... $1,131 -- $2,030
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
11
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Small Cap Growth Small Cap Growth Small Cap Growth
Fund Fund Fund*
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.85% 0.95% 0.95%
Class B................. 0.85% 0.95% 0.95%
Institutional Class I... 0.85% -- 0.95%
12b-1 Fees
Class A................. 0.25% 0.35% 0.35%
Class B................. 1.00% 1.00% 1.00%
Institutional Class I... None -- None
Other Expenses
Class A................. 1.34% 5.66% 0.59%
Class B................. 0.98% 5.63% 0.59%
Institutional Class I... 1.57% -- 0.84%
Total Fund Operating
Expenses
Class A................. 2.44% 6.96%(1) 1.89%(1)
Class B................. 2.83% 7.58%(1) 2.54%(1)
Institutional Class I... 2.42% -- 1.79%(1)
Expense
Waiver/Reimbursement
Class A................. 1.04% -- --
Class B................. 0.68% -- --
Institutional Class I... 1.14% -- --
Net Expenses
Class A................. 1.40% 6.96%(1) 1.89%(1)
Class B................. 2.15% 7.58%(1) 2.54%(1)
Institutional Class I... 1.28% -- 1.79%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.82% for Class A shares and 2.47% for Class B shares, and expects
to voluntarily waive fees and/or reimburse expenses to the extent necessary
to limit total Fund operating expenses to the annual rate of 1.72% for
Institutional Class I shares.
12
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:
Pro Forma
Current Expenses Current Expenses Expenses
American General North American North American
Small Cap Growth Small Cap Growth Small Cap Growth
Fund Fund Fund*
---------------- ---------------- ----------------
Class A
1 year.................... $ 709 $1,225 $ 756
3 years................... $ 993 $2,486 $1,135
5 years................... $1,298 $3,698 $1,538
10 years.................. $2,163 $6,527 $2,659
Class B (assuming
redemption at end of
period)
1 year.................... $ 732 $1,248 $ 757
3 years................... $1,000 $2,587 $1,191
5 years................... $1,270 $3,733 $1,550
10 years.................. $2,085(1) $6,573(2) $2,567(1)
Class B (assuming no
redemption)
1 year.................... $ 218 $ 748 $ 257
3 years................... $ 673 $2,187 $ 791
5 years................... $1,155 $3,753 $1,350
10 years.................. $2,085(1) $6,573(2) $2,567(1)
Institutional Class I
1 year.................... $ 130 -- $ 182
3 years................... $ 406 -- $ 563
5 years................... $ 703 -- $ 970
10 years.................. $1,540 -- $2,105
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
13
Current
Current Expenses Expenses Pro Forma Expenses
American General North American North American
Large Cap Value Growth & Income Growth & Income
Fund Fund Fund*
---------------- --------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A.................. 0.50% 0.67% 0.73%
Class B.................. 0.50% 0.67% 0.73%
Institutional Class I.... 0.50% -- 0.73%
12b-1 Fees
Class A.................. 0.25% 0.35% 0.35%
Class B.................. 1.00% 1.00% 1.00%
Institutional Class I.... None -- None
Other Expenses
Class A.................. 1.38% 0.47% 0.31%
Class B.................. 0.98% 0.46% 0.31%
Institutional Class I.... 1.79% -- 0.56%
Total Fund Operating
Expenses
Class A.................. 2.13% 1.49%(1) 1.39%(1)
Class B.................. 2.48% 2.13%(1) 2.04%(1)
Institutional Class I.... 2.29% -- 1.29%(1)
Expense
Waiver/Reimbursement
Class A.................. 1.08% -- --
Class B.................. 0.68% -- --
Institutional Class I.... 1.36% -- --
Net Expenses
Class A.................. 1.05% 1.49%(1) 1.39%(1)
Class B.................. 1.80% 2.13%(1) 2.04%(1)
Institutional Class I.... 0.93% -- 1.29%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.46% for Class A shares and 2.11% for Class B shares, and expects
to voluntarily waive fees and/or reimburse expenses to the extent necessary
to limit total Fund operating expenses to the annual rate of 1.36% for
Institutional Class I shares.
14
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:
Current
Current Expenses Expenses Pro Forma Expenses
American General North American North American
Large Cap Value Growth & Income Growth & Income
Fund Fund Fund*
---------------- --------------- ------------------
Class A
1 year................... $ 676 $ 718 $ 709
3 years.................. $ 890 $1,019 $ 993
5 years.................. $1,122 $1,341 $1,297
10 years................. $1,788 $2,252 $2,158
Class B (assuming
redemption at end of
period)
1 year................... $ 699 $ 716 $ 707
3 years.................. $ 897 $1,057 $1,040
5 years.................. $1,093 $1,344 $1,298
10 years................. $1,708(1) $2,297(2) $2,045(1)
Class B (assuming no
redemption)
1 year................... $ 183 $ 216 $ 207
3 years.................. $ 567 $ 667 $ 640
5 years.................. $ 976 $1,144 $1,098
10 years................. $1,708(1) $2,297(2) $2,045(1)
Institutional Class I
1 year................... $ 95 -- $ 131
3 years.................. $ 296 -- $ 409
5 years.................. $ 515 -- $ 708
10 years................. $1,143 -- $1,556
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
15
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
Mid Cap Small Cap Mid Cap Mid Cap
Value Value Value Value
Fund Fund Fund Fund*
-------- --------- -------- ---------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees
Class A............................... 0.75% 0.75% 0.90% 0.90%
Class B............................... 0.75% 0.75% 0.90% 0.90%
Institutional Class I................. 0.75% 0.75% -- 0.90%
12b-1 Fees
Class A............................... 0.25% 0.25% 0.35% 0.35%
Class B............................... 1.00% 1.00% 1.00% 1.00%
Institutional Class I................. None None -- None
Other Expenses
Class A............................... 1.43% 1.61% 0.60% 0.60%
Class B............................... 1.02% 1.33% 0.60% 0.60%
Institutional Class I................. 1.76% 1.93% -- 0.60%
Total Fund Operating Expenses
Class A............................... 2.43% 2.61% 1.85% 1.85%(1)
Class B............................... 2.77% 3.08% 2.50% 2.50%(1)
Institutional Class I................. 2.51% 2.68% -- 1.75%(1)
Expense Waiver/Reimbursement
Class A............................... 1.14% 1.38% -- --
Class B............................... 0.73% 1.10% -- --
Institutional Class I................. 1.34% 1.57% -- --
Net Expenses
Class A............................... 1.29% 1.23% 1.85% 1.85%(1)
Class B............................... 2.04% 1.98% 2.50% 2.50%(1)
Institutional Class I................. 1.17% 1.11% -- 1.75%(1)
- --------
* With respect to Merger Shares.
(1) AGAM expects to voluntarily waive fees and/or reimburse expenses to the
extent necessary to limit total Fund operating expenses to the annual rates
of 1.78% for Class A shares, 2.43% for Class B shares and 1.68% for
Institutional Class I shares.
16
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:
Current Expenses Current Expenses Current Expenses Pro Forma Expenses
American General American General North American North American
Mid Cap Value Small Cap Value Mid Cap Value Mid Cap Value
Fund Fund Fund Fund*
---------------- ---------------- ---------------- ------------------
Class A
1 year................. $ 699 $ 693 $ 752 $ 752
3 years................ $ 961 $ 943 $1,123 $1,123
5 years................ $1,242 $1,213 $1,518 $1,518
10 years............... $2,042 $1,983 $2,619 $2,619
Class B (assuming
redemption at end of
period)
1 year................. $ 707 $ 701 $ 753 $ 753
3 years................ $ 940 $ 921 $1,179 $1,179
5 years................ $1,198 $1,164 $1,531 $1,531
10 years............... $1,990(1) $1,925(1) $2,673(2) $2,525(1)
Class B (assuming no
redemption)
1 year................. $ 207 $ 201 $ 253 $ 253
3 years................ $ 640 $ 622 $ 779 $ 779
5 years................ $1,099 $1,068 $1,331 $1,331
10 years............... $1,990(1) $1,925(1) $2,673(2) $2,525(1)
Institutional Class I
1 year................. $ 119 $ 113 $ -- $ 178
3 years................ $ 372 $ 353 $ -- $ 551
5 years................ $ 644 $ 612 $ -- $ 949
10 years............... $1,420 $1,352 $ -- $2,062
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
17
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
Stock Index Mid Cap Index Stock Index Stock Index
Fund Fund Fund Fund*
----------- ------------- ----------- -----------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of average
net assets)
Management Fees
Class A.................... 0.27% 0.28% 0.27% 0.27%
Class B.................... 0.27% 0.28% 0.27% 0.27%
12b-1 Fees
Class A.................... 0.25% 0.25% 0.35% 0.35%
Class B.................... 1.00% 1.00% 1.00% 1.00%
Other Expenses
Class A.................... 1.01% 1.14% 0.66% 0.66%
Class B.................... 0.71% 1.01% 0.66% 0.66%
Total Fund Operating
Expenses
Class A.................... 1.53% 1.67% 1.28% 1.28%(1)
Class B.................... 1.98% 2.29% 1.93% 1.93%(1)
Expense Waiver/Reimbursement
Class A.................... 0.71% 0.84% -- --
Class B.................... 0.41% 0.71% -- --
Net Expenses
Class A.................... 0.82% 0.83% 1.28% 1.28%(1)
Class B.................... 1.57% 1.58% 1.93% 1.93%(1)
- --------
* With respect to Merger Shares.
(1) AGAM expects to voluntarily waive fees and/or reimburse expenses to the
extent necessary to limit total Fund operating expenses to the annual rates
of 1.00% for Class A shares and 1.65% for Class B shares.
18
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:
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
Stock Index Mid Cap Index Stock Index Stock Index
Fund Fund Fund Fund*
----------- ------------- ----------- -----------
Class A
1 year................... $ 654 $ 655 $ 698 $ 698
3 years.................. $ 822 $ 825 $ 958 $ 958
5 years.................. $1,005 $1,010 $ 1,237 $1,237
10 years................. $1,534 $1,545 $ 2,031 $2,031
Class B (assuming
redemption at end of
period)
1 year................... $ 660 $ 661 $ 696 $ 696
3 years.................. $ 796 $ 779 $ 1,006 $1,006
5 years.................. $ 955 $ 960 $ 1,242 $1,242
10 years................. $1,474(1) $1,485(1) $ 2,083(2) $1,925(1)
Class B (assuming no
redemption)
1 year................... $ 160 $ 161 $ 196 $ 196
3 years.................. $ 496 $ 499 $ 606 $ 606
5 years.................. $ 856 $ 861 $ 1,042 $1,042
10 years................. $1,474(1) $1,485(1) $ 2,083(2) $1,925(1)
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
19
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Balanced Fund Balanced Fund Balanced Fund*
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.80% 0.75% 0.78%
Class B................. 0.80% 0.75% 0.78%
Institutional Class I... 0.80% -- 0.78%
12b-1 Fees
Class A................. 0.25% 0.35% 0.35%
Class B................. 1.00% 1.00% 1.00%
Institutional Class I... None -- None
Other Expenses
Class A................. 1.42% 0.50% 0.40%
Class B................. 0.96% 0.50% 0.40%
Institutional Class I... 1.77% -- 0.65%
Total Fund Operating
Expenses
Class A................. 2.47% 1.60%(1) 1.53%(1)
Class B................. 2.76% 2.25%(1) 2.18%(1)
Institutional Class I... 2.57% -- 1.43%(1)
Expense
Waiver/Reimbursement
Class A................. 1.40% -- --
Class B................. 0.94% -- --
Institutional Class I... 1.62% -- --
Net Expenses
Class A................. 1.07% 1.60%(1) 1.53%(1)
Class B................. 1.82% 2.25%(1) 2.18%(1)
Institutional Class I... 0.95% -- 1.43%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.51% for Class A shares and 2.16% for Class B shares, and
expects to voluntarily waive fees and/or reimburse expenses to the extent
necessary to limit total Fund operating expenses to the annual rate of
1.41% for Institutional Class I shares.
20
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:
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Balanced Fund Balanced Fund Balanced Fund*
---------------- ---------------- ------------------
Class A
1 year.................. $ 678 $ 728 $ 722
3 years................. $ 896 $1,051 $1,031
5 years................. $1,132 $1,396 $1,361
10 years................ $1,810 $2,368 $2,294
Class B (assuming
redemption at end of
period)
1 year.................. $ 685 $ 728 $ 721
3 years................. $ 873 $1,103 $1,082
5 years................. $1,085 $1,405 $1,369
10 years................ $1,752(1) $2,419(2) $2,195(1)
Class B (assuming no
redemption)
1 year.................. $ 185 $ 228 $ 221
3 years................. $ 573 $ 703 $ 682
5 years................. $ 986 $1,205 $1,169
10 years................ $1,752(1) $2,419(2) $2,195(1)
Institutional Class I
1 year.................. $ 97 -- $ 146
3 years................. $ 303 -- $ 452
5 years................. $ 525 -- $ 782
10 years................ $1,166 -- $1,713
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
21
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
International International International International
Growth Fund Value Fund Equity Fund Equity Fund*
------------- ------------- ------------- -------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................ 0.90% 1.00% 0.90% 0.90%
Class B................ 0.90% 1.00% 0.90% 0.90%
Institutional Class I.. 0.90% 1.00% -- 0.90%
12b-1 Fees
Class A................ 0.25% 0.25% 0.35% 0.35%
Class B................ 1.00% 1.00% 1.00% 1.00%
Institutional Class I.. None None -- None
Other Expenses
Class A................ 1.53% 1.40% 0.73% 0.66%
Class B................ 1.25% 1.06% 0.73% 0.66%
Institutional Class I.. 1.85% 1.68% -- 0.91%
Total Fund Operating
Expenses
Class A................ 2.68% 2.65% 1.98%(1) 1.91%(1)
Class B................ 3.15% 3.06% 2.63%(1) 2.56%(1)
Institutional Class I.. 2.75% 2.68% -- 1.81%(1)
Expense
Waiver/Reimbursement
Class A................ 1.28% 1.36% -- --
Class B................ 1.00% 1.02% -- --
Institutional Class I.. 1.47% 1.51% -- --
Net Expenses
Class A................ 1.40% 1.29% 1.98%(1) 1.91%(1)
Class B................ 2.15% 2.04% 2.63%(1) 2.56%(1)
Institutional Class I.. 1.28% 1.17% -- 1.81%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.90% for Class A shares and 2.55% for Class B shares, and expects
to voluntarily waive fees and/or reimburse expenses to the extent necessary
to limit total Fund operating expenses to the annual rate of 1.80% for
Institutional Class I shares.
22
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:
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
International International International International
Growth Fund Value Fund Equity Fund Equity Fund*
------------- ------------- ------------- -------------
Class A
1 year................. $ 709 $ 699 $ 764 $ 758
3 years................ $ 993 $ 961 $1,161 $1,141
5 years................ $1,298 $1,243 $1,581 $1,547
10 years............... $2,163 $2,047 $2,749 $2,679
Class B (assuming
redemption at end of
period)
1 year................. $ 718 $ 707 $ 766 $ 759
3 years................ $ 973 $ 940 $1,217 $1,196
5 years................ $1,254 $1,198 $1,595 $1,560
10 years............... $2,107(1) $1,990(1) $2,803(2) $2,587(1)
Class B (assuming no
redemption)
1 year................. $ 218 $ 207 $ 266 $ 259
3 years................ $ 673 $ 640 $ 817 $ 796
5 years................ $1,155 $1,099 $1,395 $1,360
10 years............... $2,107(1) $1,990(1) $2,803(2) $2,587(1)
Institutional Class I
1 year................. $ 130 $ 119 -- $ 183
3 years................ $ 406 $ 372 -- $ 566
5 years................ $ 702 $ 644 -- $ 975
10 years............... $1,545 $1,420 -- $2,116
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
23
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
Core Bond Domestic Bond Core Bond Core Bond
Fund Fund Fund Fund*
--------- ------------- --------- ---------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees
Class A....................... 0.48% 0.60% 0.60% 0.60%
Class B....................... 0.48% 0.60% 0.60% 0.60%
Institutional Class I......... 0.48% 0.60% -- 0.60%
Institutional Class II........ 0.48% 0.60% -- 0.60%
12b-1 Fees
Class A....................... 0.25% 0.25% 0.35% 0.35%
Class B....................... 1.00% 1.00% 1.00% 1.00%
Institutional Class I......... None None -- None
Institutional Class II........ None None -- None
Other Expenses
Class A....................... 0.86% 1.45% 0.75% 0.44%
Class B....................... 0.74% 0.95% 0.79% 0.44%
Institutional Class I......... 1.29% 1.50% -- 0.69%
Institutional Class II........ 0.57% 1.63% -- 0.44%
Total Fund Operating Expenses
Class A....................... 1.59% 2.30% 1.70%(1) 1.39%(1)
Class B....................... 2.22% 2.55% 2.39%(1) 2.04%(1)
Institutional Class I......... 1.77% 2.10% -- 1.29%(1)
Institutional Class II........ 1.05% 2.23% -- 1.04%(1)
Expense Waiver/Reimbursement
Class A....................... 0.54% 1.27% -- --
Class B....................... 0.42% 0.77% -- --
Institutional Class I......... 0.84% 1.19% -- --
Institutional Class II........ 0.37% 1.57% -- --
Net Expenses
Class A....................... 1.05% 1.03% 1.70%(1) 1.39%(1)
Class B....................... 1.80% 1.78% 2.39%(1) 2.04%(1)
Institutional Class I......... 0.93% 0.91% -- 1.29%(1)
Institutional Class II........ 0.68% 0.66% -- 1.04%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.30% for Class A shares and 1.95% for Class B shares, and expects
to voluntarily waive fees and/or reimburse expenses to the extent necessary
to limit total Fund operating expenses to the annual rates of 1.20% for
Institutional Class I shares and 0.95% for Institutional Class II shares.
24
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:
Current Current Current Pro Forma
Expenses Expenses Expenses Expenses
American American North North
General General American American
Core Bond Domestic Bond Core Bond Core Bond
Fund Fund Fund Fund*
--------- ------------- --------- ---------
Class A
1 year...................... $ 577 $ 575 $ 640 $ 610
3 years..................... $ 793 $ 787 $ 985 $ 894
5 years..................... $1,028 $1,017 $1,354 $1,199
10 years.................... $1,701 $1,675 $2,388 $2,064
Class B (assuming redemption
at end of period)
1 year...................... $ 683 $ 681 $ 742 $ 707
3 years..................... $ 866 $ 860 $1,145 $1,040
5 years..................... $1,075 $1,064 $1,475 $1,298
10 years.................... $1,730(1) $1,708(1) $2,552(2) $2,043(1)
Class B (assuming no
redemption)
1 year...................... $ 183 $ 181 $ 242 $ 207
3 years..................... $ 567 $ 561 $ 745 $ 640
5 years..................... $ 976 $ 965 $1,275 $1,098
10 years.................... $1,730(1) $1,708(1) $2,552(2) $2,043(1)
Institutional Class I
1 year...................... $ 95 $ 93 -- $ 131
3 years..................... $ 296 $ 290 -- $ 409
5 years..................... $ 515 $ 504 -- $ 708
10 years.................... $1,143 $1,120 -- $1,556
Institutional Class II
1 year...................... $ 69 $ 67 -- $ 106
3 years..................... $ 218 $ 211 -- $ 331
5 years..................... $ 379 $ 368 -- $ 574
10 years.................... $ 847 $ 822 -- $1,267
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
25
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Strategic Bond Strategic Income Strategic Income
Fund Fund Fund*
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.60% 0.74% 0.75%
Class B................. 0.60% 0.74% 0.75%
Institutional Class I... 0.60% -- 0.75%
12b-1 Fees
Class A................. 0.25% 0.35% 0.35%
Class B................. 1.00% 1.00% 1.00%
Institutional Class I... None -- None
Other Expenses
Class A................. 1.63% 0.58% 0.50%
Class B................. 1.48% 0.58% 0.50%
Institutional Class I... 1.90% -- 0.75%
Total Fund Operating
Expenses
Class A................. 2.48% 1.67%(1) 1.60%(1)
Class B................. 3.08% 2.32%(1) 2.25%(1)
Institutional Class I... 2.50% -- 1.50%(1)
Expense
Waiver/Reimbursement
Class A................. 1.33% -- --
Class B................. 1.18% -- --
Institutional Class I... 1.47% -- --
Net Expenses
Class A................. 1.15% 1.67%(1) 1.60%(1)
Class B................. 1.90% 2.32%(1) 2.25%(1)
Institutional Class I... 1.03% -- 1.50%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.55% for Class A shares and 2.20% for Class B shares, and
expects to voluntarily waive fees and/or reimburse expenses to the extent
necessary to limit total Fund operating expenses to the annual rate of
1.45% for Institutional Class I shares.
26
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:
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Strategic Bond Strategic Income Strategic Income
Fund Fund Fund*
---------------- ---------------- ------------------
Class A
1 year.................. $ 587 $ 637 $ 630
3 years................. $ 823 $ 976 $ 956
5 years................. $1,079 $1,339 $1,304
10 years................ $1,811 $2,357 $2,285
Class B (assuming
redemption at end of
period)
1 year.................. $ 693 $ 735 $ 728
3 years................. $ 897 $1,124 $1,103
5 years................. $1,126 $1,440 $1,405
10 years................ $1,839(1) $2,491(2) $2,265(1)
Class B (assuming no
redemption)
1 year.................. $ 193 $ 235 $ 228
3 years................. $ 597 $ 724 $ 703
5 years................. $1,027 $1,240 $1,205
10 years................ $1,839(1) $2,491(2) $2,265(1)
Institutional Class I
1 year.................. $ 105 -- $ 153
3 years................. $ 328 -- $ 474
5 years................. $ 569 -- $ 818
10 years................ $1,259 -- $1,791
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
27
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Municipal Bond Municipal Bond Municipal Bond
Fund Fund Fund
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.50% 0.60% 0.60%
Class B................. 0.50% 0.60% 0.60%
12b-1 Fees
Class A................. 0.25% 0.15% 0.15%
Class B................. 1.00% 1.00% 1.00%
Other Expenses
Class A................. 1.18% 0.66% 0.59%
Class B................. 1.06% 0.66% 0.59%
Total Fund Operating
Expenses
Class A................. 1.93% 1.41%(1) 1.34%(1)
Class B................. 2.56% 2.26%(1) 2.19%(1)
Expense
Waiver/Reimbursement
Class A................. 0.88% -- --
Class B................. 0.76% -- --
Net Expenses
Class A................. 1.05% 1.41%(1) 1.34%(1)
Class B................. 1.80% 2.26%(1) 2.19%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rates of 1.00% for Class A shares and 1.85% for Class B shares.
28
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:
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Municipal Bond Municipal Bond Municipal Bond
Fund Fund Fund*
---------------- ---------------- ------------------
Class A
1 year.................. $ 577 $ 612 $ 605
3 years................. $ 793 $ 900 $ 879
5 years................. $1,028 $1,209 $1,174
10 years................ $1,701 $2,086 $2,011
Class B (assuming
redemption at end of
period)
1 year.................. $ 683 $ 729 $ 722
3 years................. $ 866 $1,106 $1,085
5 years................. $1,075 $1,410 $1,375
10 years................ $1,730(1) $2,378(2) $2,106(1)
Class B (assuming no
redemption)
1 year.................. $ 183 $ 229 $ 222
3 years................. $ 567 $ 706 $ 685
5 years................. $ 976 $1,210 $1,175
10 years................ $1,730(1) $2,378(2) $2,106(1)
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
(2) Assumes conversion to Class A shares after eight years.
29
Current Expenses Current Expenses Pro Forma Expenses
American General North American North American
Money Market Money Market Money Market
Fund Fund Fund*
---------------- ---------------- ------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees
Class A................. 0.25% 0.20% 0.20%
Class B................. 0.25% 0.20% 0.20%
Institutional Class I... 0.25% -- 0.20%
12b-1 Fees
Class A................. 0.25% None None
Class B................. 1.00% None None
Institutional Class I... None -- None
Other Expenses
Class A................. 0.92% 0.75% 0.72%
Class B................. 0.98% 0.79% 0.72%
Institutional Class I... 1.60% -- 0.97%
Total Fund Operating
Expenses
Class A................. 1.42% 0.95%(1) 0.92%(1)
Class B................. 2.23% 0.99%(1) 0.92%(1)
Institutional Class I... 1.85% -- 1.17%(1)
Expense
Waiver/Reimbursement
Class A................. 0.62% -- --
Class B................. 0.68% -- --
Institutional Class I... 1.17% -- --
Net Expenses
Class A................. 0.80% 0.95%(1) 0.92%(1)
Class B................. 1.55% 0.99%(1) 0.92%(1)
Institutional Class I... 0.68% -- 1.17%(1)
- --------
* With respect to Merger Shares.
(1) AGAM is currently voluntarily waiving fees and/or reimbursing expenses to
the extent necessary to limit total Fund operating expenses to the annual
rate of 0.70% for Class A and Class B shares, and expects to voluntarily
waive fees and/or reimburse expenses to the extent necessary to limit total
Fund operating expenses to the annual rate of 0.95% for Institutional Class
I shares.
30
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:
Current Expenses Current Expenses
American General North American Pro Forma Expenses
Money Market Money Market North American
Fund Fund Money Market Fund*
---------------- ---------------- ------------------
Class A
1 year.................. $ 82 $ 97 $ 94
3 years................. $ 257 $ 303 $ 293
5 years................. $ 447 $ 525 $ 509
10 years................ $ 999 $1,166 $1,128
Class B (assuming
redemption at end of
period)
1 year.................. $ 655 $ 101 $ 94
3 years................. $ 802 $ 315 $ 293
5 years................. $ 945 $ 547 $ 509
10 years................ $1,432(1) $1,213 $1,128(1)
Class B (assuming no
redemption)
1 year.................. $ 155 $ 101 $ 94
3 years................. $ 481 $ 315 $ 293
5 years................. $ 830 $ 547 $ 509
10 years................ $1,432(1) $1,213 $1,128(1)
Institutional Class I
1 year.................. $ 69 -- $ 121
3 years................. $ 218 -- $ 378
5 years................. $ 379 -- $ 654
10 years................ $ 847 -- $1,443
- --------
* With respect to Merger Shares.
(1) Assumes conversion to Class A shares after six years.
31
Federal Income Tax Consequences
For federal income tax purposes, the Mergers of the Acquired Funds other
than the American General Small Cap Value Fund and the American General Mid Cap
Index Fund will be tax-free reorganizations for federal income tax purposes.
Accordingly, no gain or loss will be recognized by these Acquired Funds or by
their shareholders as a result of the Mergers, 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.
For federal income tax purposes, the Merger of the American General Small
Cap Value Fund and the Merger of the American General Mid Cap Index Fund will
likely be tax-free reorganizations. In such a case, the tax consequences will
be as described in the preceding paragraph. However, if either of these Mergers
is a taxable reorganization, the respective Acquired Fund will recognize gain
or loss on the transfer of assets to the Acquiring Fund, and each shareholder
of the Acquired Fund will recognize taxable gain or loss on the receipt of
Merger Shares in an amount equal to the difference between the net asset value
of the Merger Shares received and the shareholder's tax basis in his or her
Acquired Fund shares.
Substantially all the portfolio assets of each of the American General Small
Cap Value Fund and the American General Mid Cap Index Fund will be sold, and a
substantial portion of the portfolio assets of each of the American General
International Growth Fund, the American General International Value Fund, the
American General Large Cap Value Fund and the American General Domestic Bond
fund may be sold, in connection with the Mergers of those Funds into the
respective Acquiring Funds. The actual tax impact of such sales will depend on
the difference between the price at which such portfolio assets are sold and
the selling Fund's basis in such assets. Any capital gains recognized in these
sales will be distributed to the selling Fund's shareholders as capital gain
dividends (to the extent of net realized long term capital gains) and/or
ordinary dividends (to the extent of net realized short-term capital gains)
during or with respect to the year of sale, and such distributions will be
taxable to shareholders.
For more information about the federal income tax consequences of the
Mergers, see "Information About the Mergers--Federal Income Tax Consequences."
Comparison of Investment Objectives, Policies, Restrictions and Risks
As a general matter, the Acquiring Funds have investment objectives and
policies that are similar to those of the corresponding Acquired Funds. The
investment objectives, policies, restrictions and risks of the Acquired Funds
and the Acquiring Funds, and certain differences between them, are summarized
below. The investment objectives of the Acquiring Funds other than the North
American Mid Cap Value Fund and the North American Stock Index Fund cannot be
changed without shareholder approval. The investment objectives of the Acquired
Funds, however, may be changed by a vote of the Trustees. For a more detailed
description of the investment techniques used by the Acquired Funds and the
Acquiring Funds, please see the AGSPC2 Prospectus and the North American
Prospectus. For information concerning the risks associated with investments in
the various Funds, see "Risk Factors," below.
American General Large Cap Growth Fund vs. North American Large Cap Growth
Fund
The North American Large Cap Growth Fund and the American General Large Cap
Growth Fund have similar investment objectives. While the North American Large
Cap Growth Fund seeks long-term capital growth, the American General Large Cap
Growth Fund seeks long-term growth of capital through a broadly diversified
portfolio of equity securities of large-cap U.S. issuers that are expected to
have better prospects for earnings growth than the growth rate of the general
domestic economy. Dividend income is a secondary objective.
The total average annual return for the American General Large Cap Growth
Fund and the North American Large Cap Growth Fund is set forth in the chart
below.
Total Return Comparison
As of 12/31/99*
1 Year Since 11/02/98
------ --------------
American
General
Large
Cap
Growth
Fund... 29.23% 41.24%
1 Year Since 3/04/96
------ -------------
North
American
Large
Cap
Growth
Fund... 30.42% 24.49%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Large Cap Growth Fund's performance, including information
about waivers/reimbursements that affected the Fund's performance, see
Appendix B to this Prospectus/Proxy Statement and the North American
Prospectus. For further information about waivers/reimbursements that
affected the American General Large Cap Growth Fund's performance, see the
AGSPC2 Prospectus.
32
The North American Large Cap Growth Fund typically invests at least 65% of
its total assets in the common stocks of well-established, high-quality growth
companies whose earnings are expected to increase faster than the market
average. The American General Large Cap Growth Fund invests at least 65% of its
total assets in the equity securities of U.S. large cap companies using the
Goldman Sachs & Co. Quantitative Equity Strategy to select its investments and
balance expected returns against portfolio risk. The American General Large Cap
Growth Fund aims to achieve minimum deviation from the sector allocation, risk
statistics and macroeconomic sensitivity of the Russell 1000(R) Growth Index.
The Fund's assets are traded regularly and rebalanced to align its positions
with current market outlooks.
Each of the Funds may invest in other types of equity securities, however,
the American General Large Cap Growth Fund may invest no more than 25% of its
total assets in equity securities other than those of large-cap U.S. issuers.
The American General Large Cap Growth Fund may invest in foreign securities,
but only if those securities are traded in the United States. In contrast, the
North American Large Cap Growth Fund may invest up to 100% of its total assets
in American Depository Receipts (ADRs), and up to 30% in foreign securities
other than ADRs. However, no more than 25% of the North American Large Cap
Growth Fund's assets may be invested in any one foreign country.
Both the North American Large Cap Growth Fund and the American General Large
Cap Growth Fund may invest in investment grade bonds rated Baa or higher by
Moody's Investors Service, Inc. ("Moody's") or BBB or higher by Standard &
Poors ("S&P"). Unlike the American General Large Cap Growth Fund, the North
American Large Cap Growth Fund may invest in lower-rated bonds, provided not
more than 5% of its total assets are invested in unrated or below-investment
grade fixed income securities, with the exception of preferred stocks. Both of
the Funds may invest in derivatives, but only the North American Large Cap
Growth Fund is permitted to use forward foreign currency contracts.
Because the Funds follow similar investment policies, they are generally
subject to the same risks, including the following principal risks:
. Credit Risk
. Currency Risk
. Derivatives Risk
. Equity Risk (including particular risks associated with growth stocks)
. Foreign Investment Risk
. Interest Rate Risk
. Management Risk
Certain of these risks may be greater for the North American Large Cap Growth
Fund. In particular, because the North American Large Cap Growth Fund may
invest in foreign securities and below investment grade bonds to a greater
extent, it may be subject to greater Foreign Investment Risk and Credit Risk.
American General Mid Cap Growth Fund vs. North American Mid Cap Growth Fund
The American General Mid Cap Growth Fund and the North American Mid Cap
Growth Fund have similar investment objectives. The American General Mid Cap
Growth Fund seeks capital appreciation principally through investments in
medium capitalization equity securities, such as common and preferred stocks
and securities convertible into common stocks. Current income is a secondary
objective for the American General Mid Cap Growth Fund. The North American Mid
Cap Growth Fund seeks long term capital appreciation, by typically investing
the majority of its assets in equity securities, including common and preferred
stocks and securities convertible into common stocks of small to medium-size
domestic companies.
The total average annual return for the American General Mid Cap Growth Fund
and the North American Mid Cap Growth Fund is set forth in the chart below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------- --------
American General Mid Cap Growth Fund........................... (2.65)% 9.65%
Since
1 Year 3/04/96
------- --------
North American Mid Cap Growth Fund............................. 24.60% 19.33%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Mid Cap Growth Fund's performance, including information
about waivers/reimbursements that affected the Fund's performance, see
Appendix B and the North American Prospectus. For further information about
waivers/reimbursements that affected the American General Mid Cap Growth
Fund's performance, see the AGSPC2 Prospectus.
33
The North American Mid Cap Growth Fund focuses on investment in the equity
securities of mid-cap issuers, with total market capitalizations of $2 billion
to $15 billion, while the American General Mid Cap Growth Fund invests
primarily in the equity securities of medium capitalization companies,
including those with market capitalizations of $1 billion to $10 billion. Each
Fund may also invest in the securities of larger issuers.
The American General Mid Cap Growth Fund seeks to achieve capital
appreciation through an opportunistic investment strategy with a growth bias.
The Fund will purchase equity securities of companies that the subadviser feels
are undervalued relative to their growth potential in the securities markets,
because the companies are presently out of favor, not well known, or possess
value that is not currently recognized by the investment community. The
subadviser uses a "bottom up" approach to select specific investments,
employing analysis that contains elements of traditional dividend discount and
earnings yield models, establishes predicted relative valuation for equity and
fixed income markets, and determines the attractiveness of individual
securities through evaluation of growth and risk characteristics of the
underlying company relative to the overall securities market.
The North American Mid Cap Growth Fund will invest the core of its portfolio
in securities of established companies that are leaders in attractive growth
markets with a history of strong returns. The remainder of the portfolio will
be invested in securities of companies that show accelerating growth, driven by
product cycles, favorable industry or sector conditions and other factors that
the subadviser believes will lead to rapid sales or earnings growth.
The North American Mid Cap Growth Fund may invest up to 20% of its total
assets in foreign securities, and may also purchase ADRs or U.S. dollar-
denominated securities of foreign issuers that are not included in the 20%
foreign securities limitation, while the American General Mid Cap Growth Fund
may only invest up to 10% of its total assets in foreign equity securities,
including ADRs. The North American Mid Cap Growth Fund may invest in
derivatives, while the American General Mid Cap Growth Fund may not. Unlike the
North American Mid Cap Growth Fund, which may invest up to 15% of its total
assets in fixed-income securities, the American General Mid Cap Growth Fund may
may not invest in investment grade bonds.
Because the Funds follow similar investment policies, they are generally
subject to the same risks, including the following risks:
. Credit Risk
. Currency Risk
. Derivatives Risk (for North American Mid Cap Growth Fund only)
. Equity Risk (including the risks associated with growth stocks)
. Foreign Investment Risk
. Interest Rate Risk
. Liquidity Risk
. Management Risk
Certain of these risks may be greater for the North American Mid Cap Growth
Fund. In particular, because the North American Mid Cap Growth Fund may invest
to a greater extent in foreign investments, bonds and derivatives, it may be
subject to greater Foreign Investment Risk, Credit Risk and Derivatives Risk.
American General Small Cap Growth Fund vs. North American Small Cap Growth
Fund
The American General Small Cap Growth Fund and the North American Small Cap
Growth Fund have similar investment objectives. The American General Small Cap
Growth Fund's investment objective is to provide long-term growth from a
portfolio of equity securities of small capitalization growth companies. The
North American Small Cap Growth Fund seeks maximum capital appreciation and
focuses on emerging growth companies, which are small or medium sized companies
beyond their start-up phase showing positive earnings or the potential for
accelerated earnings growth. The North American Small Cap Growth Fund is not
diversified, which means it may invest in a relatively small number of issuers
of securities, and its value may be affected very significantly by the change
in value of a single security.
34
The total average annual return for the American General Small Cap Growth
Fund and the North American Small Cap Growth Fund is set forth in the chart
below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------ --------
American General Small Cap Growth Fund.......................... 52.89% 64.26%
Since
1 Year 1/06/98
------ -------
North American Small Cap Growth Fund............................. 63.18% 28.58%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Small Cap Growth Fund's performance, including information
about waivers/reimbursements that affected the Fund's performance, see
Appendix B and the North American Prospectus. For further information about
waivers/reimbursements that affected the American General Small Cap Growth
Fund's performance, see the AGSPC2 Prospectus.
Both the American General Small Cap Growth Fund and the North American Small
Cap Growth Fund invest primarily in the equity securities of growth companies.
Both Funds may invest in companies of various sizes, but the American General
Small Cap Growth Fund must invest at least 65% of its total assets in small-
capitalization companies. Unlike the American General Small Cap Growth Fund,
the North American Small Cap Growth Fund is a non-diversified fund, which means
that it may invest in a relatively small number of issuers. The North American
Small Cap Growth Fund will usually invest at least 65% of its assets in small-
or medium-cap growth companies. As a diversified fund, the American General
Small Cap Growth Fund may not invest more than 25% of its assets in the
securities of any single industry, but on an industry-by-industry basis, the
Fund's weightings are similar to those of the Russell 2000(R) Growth Index. The
North American Small Cap Growth Fund may also invest in "special situation"
companies, such as companies undergoing an acquisition, a restructuring, or a
reorganization.
Both Funds may invest in common and preferred stocks, warrants and
convertible securities. The Funds may also invest in derivatives and investment
grade bonds. However, unlike the North American Small Cap Growth Fund, the
American General Small Cap Growth Fund may invest in below investment grade
bonds. Both Funds may invest in foreign securities, but the North American
Small Cap Growth Fund may only invest up to 20% of its assets in such
securities.
Because the Funds follow similar investment policies, they are generally
subject to the same risks, including the following principal risks:
. Concentration Risk
. Credit Risk
. Currency Risk
. Derivatives Risk
. Equity Risk (particularly the risks associated with investing in smaller
companies)
. Interest Rate Risk
. Liquidity Risk
. Foreign Investment Risk
. Management Risk
Certain of these risks may be greater for the North American Small Cap Growth
Fund. Because the North American Small Cap Growth Fund is not diversified, it
may be subject to greater Concentration Risk.
American General Large Cap Value Fund vs. North American Growth & Income Fund
The following compares the investment strategies and performance of the
American General Large Cap Value Fund with those of the North American Growth &
Income Fund. The American General Large Cap Value Fund seeks to provide total
returns that exceed over time the Russell(R) 1000 Value Index through
investment in equity securities. The North American Growth & Income Fund seeks
to provide long-term growth of capital and income consistent with prudent
investment risk by investing mostly in a diversified portfolio of common stocks
that the subadviser believes to be of high quality.
35
The total average annual return for the American General Large Cap Value
Fund and the North American Growth & Income Fund is set forth in the chart
below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 5 Years 11/02/98
------- ------- --------
American General Large Cap Value Fund.................. (0.78)% N/A 6.08%
Since
1 Year 5 Years 4/01/94
------ ------- -------
North American Growth & Income Fund...................... 10.78% 23.47% 20.95%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Growth & Income Fund's performance, including information
about waivers/reimbursements that affected the Fund's performance, see
Appendix B and the North American Prospectus. For more information about
waivers/reimbursements that affected the American General Large Cap Value
Fund's performance, see the AGSPC2 Prospectus.
The American General Large Cap Value Fund invests at least 65% of the Fund's
assets in equity securities of the largest 1,200 companies by market
capitalization traded in the U.S. The portfolio of the Fund is well-
diversified, maintaining industry and sector exposures and macroeconomic and
risk characteristics that are similar to the Russell 1000(R) Value Index, which
measures the performance of the 1,000 largest companies in the Russell 3000(R)
Index focusing on those with lower price-to-book ratios and lower forecasted
growth values. Unlike the American General Large Cap Value Fund, the North
American Growth & Income Fund's investment objective is not related to an
index. The subadviser of the North American Growth & Income Fund seeks to
invest primarily in a diversified portfolio of common stocks of U.S. issuers
with a primary emphasis on dividend paying stocks of larger companies.
While the American General Large Cap Value Fund focuses primarily on equity
securities in the Russell 1000(R) Value Index, the North American Growth &
Income Fund may invest in securities that can be converted into, or include the
right to buy common stocks, including convertible securities issued in the
Euromarket and preferred stocks. In addition, the North American Growth &
Income Fund may invest in marketable debt securities of domestic issuers and
foreign issuers (payable in U.S. dollars) rated at the time of purchase "A" or
better by Moody's or S&P, or unrated securities considered to be of equivalent
quality in the judgment of the subadviser. The North American Growth & Income
Fund may invest up to 20% of its total assets in such foreign securities.
Although the American General Large Cap Value Fund may invest in foreign
securities, it focuses more on U.S. issuers. Both Funds may invest in
derivatives.
Selection of stocks for the North American 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. The 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 subadviser
of the American General Large Cap Value Fund selects stocks by ranking them
according to two separate measures: value and the momentum of Wall Street
sentiment. The value measure compares a company's assets, projected earnings
growth and cash flow growth with the price of its equity securities within the
context of its historical valuation. The measure of Wall Street sentiment
examines changes in Wall Street analysts' earnings estimates and ranks stocks
by the strength and consistency of those changes. These two measures will be
used to create a single composite score of an equity security's attractiveness.
The scores are used to determine the relative attractiveness of different
companies, and sector weights are maintained at a similar level to that of the
Russell 1000(R) Value Index to avoid unintended exposure to factors such as the
direction of the economy, interest rates, energy prices, and inflation.
The Funds are generally subject to similar risks, including the following
principal risks:
. Credit Risk
. Interest Rate Risk
. Derivatives Risk
. Equity Risk (including risks associated with value stocks)
. Foreign Investment Risk
. Currency Risk
. Management Risk
Because the North American Growth & Income Fund may invest to a greater extent
in foreign
36
securities, it may be subject to greater Foreign Investment Risk and Currency
Risk.
American General Mid Cap Value Fund vs. North American Mid Cap Value Fund
The North American Mid Cap Value Fund is a newly created fund that has
adopted investment objectives, policies and restrictions, and will be subject
to investment risks, identical to those of the American General Mid Cap Value
Fund. For more information about the objectives, policies, restrictions and
performance of each of the American General Mid Cap Value Fund and the North
American Mid Cap Value Fund, see the AGSPC2 Prospectus and the North American
Prospectus.
American General Small Cap Value Fund vs. North American Mid Cap Value Fund
The following compares the investment strategies and performances of the
American General Small Cap Value Fund with those of the North American Mid Cap
Value Fund, which is a newly created fund with identical investment objectives,
policies and restrictions as the American General Mid Cap Value Fund. The North
American Mid Cap Value Fund seeks capital growth through investment in equity
securities of medium capitalization companies using a value-oriented investment
approach. The American General Small Cap Value Fund seeks maximum long-term
return, consistent with reasonable risk to principal by investing primarily in
equity securities of small-capitalization companies in terms of revenues and/or
market capitalization.
The total average annual return for the American General Small Cap Value
Fund and the American General Mid Cap Value Fund, which has been managed in
accordance with investment objectives and policies identical to those of the
North American Mid Cap Value Fund, is set forth in the chart below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------ --------
American General Small Cap Value Fund........................ (10.23)% (6.14)%
American General Mid Cap Value Value Fund.................... 16.83% 21.53%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about each of
the Fund's performance, including information about waivers/reimbursements
that affected each Fund's performance, see the AGSPC2 Prospectus.
The American General Small Cap Value Fund invests at least 65% of its assets
in the equity securities of small-cap companies, which generally have market
capitalizations between $150 million and $1.25 billion. One portion of the Fund
is actively managed, and its investments are selected by evaluating certain
fundamental criteria, including low price-to-earnings ratios, strong cash
flows, good credit lines and clean or improving balance sheets. The other
portion of the Fund is passively managed. It is comprised of investments in a
sampling of companies contained in the Russell 2000(R) Index. Unlike the
American General Small Cap Value Fund, the total portfolio of the North
American Mid Cap Value Fund is actively managed. The North American Mid Cap
Value Fund invests primarily in mid-cap companies, which include those listed
in the Russell Midcap(TM) Index. As of June 30, 1999, the target companies
included in the Russell Midcap(TM) Index had an average market capitalization
of approximately $3.9 billion. Like the actively managed portion of the
American General Small Cap Value Fund, the North American Mid Cap Value Fund
looks for strong fundamentals in companies that it believes are undervalued,
including low price-to-earnings ratio, consistent cash flow, and a company's
record through all parts of the market cycle. The North American Mid Cap Value
Fund has an active trading strategy which results in a higher portfolio
turnover rate. A high rate of portfolio turnover generally involves greater
brokerage commission expenses and thus, increased operating expenses.
The American General Small Cap Value Fund, in addition to investing in
small-cap equity securities, may invest up to 35% of its assets in domestic and
foreign short-term fixed income investments. The North American Mid Cap Value
Fund may invest up to 35% of its assets in other equity securities, including
common and preferred stocks, convertible securities and related equities. Both
Funds may invest in below investment grade bonds. While both Funds may invest
in foreign securities, the North American Mid Cap Value Fund may not invest
more than 10% of its net assets in foreign issuers, not including ADRs. Unlike
the American General Small Cap Value Fund, the North American Mid Cap Value
Fund may buy foreign currencies. Both Funds may invest in derivatives.
37
Because the Funds follow similar investment policies, they are generally
subject to the same risks, including the following principal risks:
. Concentration Risk
. Management Risk
. Credit Risk (particularly risks associated with below investment grade
fixed income securities)
. Derivatives Risk
. Equity Risk (particularly risks associated with value stocks and
investing in smaller companies)
. Foreign Investment Risk
. Currency Risk
Because the North American Mid Cap Value Fund may buy foreign currencies, it
may be subject to greater Currency Risk.
American General Stock Index Fund vs. North American Stock Index Fund
The North American Stock Index Fund is a newly created fund that has adopted
investment objectives, policies and restrictions, and will be subject to
investment risks, identical to those of the American General Stock Index Fund.
For more information about the objectives, policies, restrictions and
performance of each of the American General Stock Index Fund and the North
American Stock Index Fund, see the AGSPC2 Prospectus and the North American
Prospectus.
American General Mid Cap Index Fund vs. North American Stock Index Fund
The following compares the investment strategies and performances of the
American General Mid Cap Index Fund with those of the North American Stock
Index Fund, which is a newly created fund with identical investment objectives,
policies and restrictions as the American General Stock Index Fund. The North
American Stock Index Fund seeks to provide investment results that, before
expenses, correspond to the total return of common stocks publicly traded in
the United States, as represented by the S&P 500 Index. The American General
Mid Cap Index Fund seeks to provide investment results that, before expenses,
correspond to the total return of common stocks that, as a group, are expected
to provide investment results closely corresponding to the performance of the
S&P Mid Cap 400 Index.
The total average annual return for the American General Mid Cap Index Fund
and the American General Stock Index Fund, which has the same subadviser and
has been managed in accordance with investment objectives and policies
identical to those of the North American Stock Index Fund, is set forth in the
chart below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------ --------
American General Mid Cap Index Fund............................. 7.30% 20.59%
American General Stock Index Fund............................... 13.46% 21.94%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For more information about each of the
Fund's performance, including information about waivers/reimbursements that
affected each Fund's performance, see the AGSPC2 Prospectus.
The North American Stock Index Fund seeks to track the performance of the
S&P 500 Index, which includes the common stock of many large, well-established
companies. The American General Mid Cap Index Fund seeks to track the
performance of the S&P Mid Cap 400 Index, which contains the stock of many
medium-sized companies. Both the North American Stock Index Fund and the
American General Mid Cap Index Fund invest in a sampling of common stocks from
their respective target indexes that, each taken as a group, should reflect the
performance of those indexes. The common stocks to be included in each of the
Funds will be selected using a statistical sampling technique known as
"optimization." This process selects common stocks for the North American Stock
Index Fund and American General Mid Cap Index Fund so that various industry
weightings, market capitalizations, and fundamental characteristics (e.g.,
price-to-book, price-to-earnings, debt-to-asset ratios and dividend yields)
closely approximate those of the S&P 500 Index and S&P Mid Cap 400 Index,
respectively. Both Funds may invest in derivatives.
The Funds are generally subject to similar risks, including the following
principal risks:
. Derivatives Risk
. Equity Risk
. Index Risk
. Foreign Investment Risk
. Management Risk
38
American General Balanced Fund vs. North American Balanced Fund
The North American Balanced Fund and the American General Balanced Fund
have similar investment objectives. The American General Balanced Fund aims to
conserve principal and achieve long-term growth of capital and income while
the North American Balanced Fund seeks current income and capital
appreciation. Both Funds aim to meet their investment objectives by investing
in a mixture of equity securities and fixed income securities.
The total average annual return for the American General Balanced Fund and
the North American Balanced Fund is set forth in the chart below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 5 Years 11/02/98
------- ------- --------
American
General
Balanced
Fund... 5.59% N/A 11.63%
Since
1 Year 5 Years 4/01/94
------- ------- --------
North
American
Balanced
Fund... (8.68)% 10.91% 9.19%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Balanced Fund's performance, including information about
waivers/ reimbursements that affected the Fund's performance, see Appendix B
and the North American Prospectus. For more information about
waivers/reimbursements that affected the American General Balanced Fund's
performance, see the AGSPC2 Prospectus.
For the fixed income portion of its portfolio, the American General
Balanced Fund may invest up to 75% of its total assets in fixed income
securities rated A or better by Moody's or S&P or of comparable quality. At
all times, the Fund must have at least 25% of its total assets invested in
fixed-income senior securities, but up to 20% may be invested in below
investment grade bonds. At least 75% of the value of the Fund's fixed income
investments will come from among the following categories: U.S. Government
securities, Canadian Government securities, mortgage-related securities of
governmental issuers, Government National Mortgage Association ("GNMA")
certificates of private issuers, collateralized mortgage obligations,
mortgage-backed bonds, and commercial paper. In contrast, the North American
Balanced Fund will maintain a minimum of 25% of its total assets in investment
grade debt securities, however, the Fund may not invest more than 5% of its
assets in fixed income securities that are below investment grade.
For the equity portion of its portfolio, the American General Balanced Fund
may invest up to 75% of the Fund's total assets in equity securities listed on
national securities exchanges or in the over the counter market. The Fund may
also invest up to 10% of its total assets in U.S. small capitalization
companies. The North American Balanced Fund may also invest up to 75% of its
total assets in equity securities, but there is no requirement that the
securities be listed on an exchange or in the over the counter market. The
North American Balanced Fund invests in equity securities that include common
stocks, convertible corporate securities and preferred stocks and emphasizes
investments in dividend paying common stocks. As current income is a component
of total return, the subadviser considers companies' dividend payout records.
Unlike the American General Balanced Fund, there is no percentage limit on
investment in small capitalization companies.
Both Funds may invest in ADRs and securities of foreign issuers denominated
in foreign currencies, however, the North American Balanced Fund may invest up
to 30% of its net assets in foreign securities other than ADRs. In addition,
no more than 25% of the North American Balanced Fund's assets may be invested
in the securities of issuers of any single foreign country. Both Funds may
invest in derivatives.
Because the Funds follow similar investment policies, they are generally
subject to the same risks, including the following principal risks:
. Credit Risk (including risks associated with below investment grade
fixed income securities)
. Currency Risk
. Derivatives Risk
. Equity Risk (including particular risks associated with value stocks and
investing in smaller companies)
. Foreign Investment Risk
. Interest Rate Risk
. Management Risk
American General International Growth Fund vs. North American International
Equity Fund
The following compares the investment objectives, strategies and
performances of the American General International Growth Fund and the North
American International Equity Fund. The American General International Growth
Fund seeks
39
to provide long-term capital appreciation by investing in equity securities of
non-U.S. companies, the majority of which are expected to be in developed
markets. The North American International Equity Fund seeks long-term capital
appreciation and invests primarily in equity securities of non-U.S. issuers
which, in the aggregate, replicate broad market indices.
The total average annual return for the American General International
Growth Fund and the North American International Equity Fund is set forth in
the chart below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------- --------
American General International Growth Fund.................... 47.07% 41.10%
Since
1 Year 1/09/95
------- --------
North American International Equity Fund...................... 20.91% 9.55%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American International Equity Fund's performance, including
information about waivers/reimbursements that affected the Fund's
performance, see Appendix B and the North American Prospectus. For more
information about waivers/reimbursements that affected the American General
International Growth Fund's performance, see the AGSPC2 Prospectus.
The American General International Growth Fund uses a flexible, value-
oriented approach to selecting investments, focusing on companies rather than
on countries or markets. The American General International Growth Fund's goal
is to identify stocks selling at the greatest discount to their intrinsic
future value, as ascertained through an analysis of price/cash flow, enterprise
value/cash flow, and price/future earnings. The North American International
Equity Fund invests with a top-down approach that emphasizes country and sector
selection and weighting rather than individual stock selection. The North
American International Equity Fund's managers intend to capitalize on the
significance of country and sector selecting in international equity portfolio
returns by over- and underweighting countries based on three factors:
(i) valuation; (ii) fundamental change; and (iii) market momentum/technicals.
The North American International Equity Fund intends to invest its assets in
the securities of non-U.S. issuers only, whereas the American General
International Growth Fund intends to invest a minimum of 65% of its total
assets in such securities. Both Funds may invest in emerging market countries,
but the American General International Growth Fund may only invest up to 40% of
its assets in such securities. Unlike the North American International Equity
Fund, the American General International Growth Fund emphasizes smaller
capitalization stocks, allowing up to 50% of the total assets to be invested in
such stocks. While the North American International Equity Fund may use
derivatives for hedging and non-hedging purposes, including futures, options,
forward contracts, swaps and structured notes, the American General
International Growth Fund may not invest in derivatives.
The Funds are generally subject to similar risks, including the following
principal risks:
. Currency Risk
. Derivatives Risk (for North American Fund only)
. Equity Risk (including particular risks associated with value stocks)
. Foreign Investment Risk
. Liquidity Risk
. Management Risk
Certain of these risks may be greater for the North American International
Equity Fund. Because the Fund intends to invest in non-U.S. issuers only, it
may be subject to greater Foreign Investment Risk and Currency Risk. Also,
because the North American International Equity Fund may invest in derivatives
while the American General International Growth Fund may not, it may be subject
to greater Derivatives Risk.
American General International Value Fund vs. North American International
Equity Fund
The following compares the investment objectives, strategies and
performances of the American General International Value Fund and the North
American International Equity Fund. The American General International Value
Fund seeks to provide growth of capital and future income through investments
primarily in securities of non-U.S. issuers and securities whose principal
markets
40
are outside the United States. The North American International Equity Fund
seeks long-term capital appreciation, investing primarily in equity securities
of non-U.S. issuers which, in the aggregate, replicate broad market indices.
The total average annual return for the American General International Value
Fund and the North American International Equity Fund is set forth in the chart
below.
Total Return Comparison
As of 12/31/99*
Since
1 Year 11/02/98
------- --------
American General International Value Fund..................... 56.45% 54.35%
Since
1 Year 1/09/95
------- --------
North American International Equity Fund...................... 20.91% 9.55%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American International Equity Fund's performance, including
information about waivers/reimbursements that affected the Fund's
performance, see Appendix B and the North American Prospectus. For more
information about waivers/reimbursements that affected the American General
International Value Fund, see the AGSPC2 Prospectus.
The American General International Value Fund invests in a portfolio
consisting primarily of equity and fixed income securities of non-U.S. issuers.
While the Fund may invest with geographical flexibility, the emphasis is on
securities of companies located in Europe, Canada, Australia and the Far East,
giving due consideration to economic, social and political developments,
currency risks and the liquidity of various national markets. The North
American International Equity Fund invests with a top-down approach that
emphasizes country and sector selection and weighting rather than individual
stock selection. The North American International Equity Fund's managers intend
to capitalize on the significance of country and sector selecting in
international equity portfolio returns by over- and underweighting countries
based on three factors: (i) valuation; (ii) fundamental change; and (iii)
market momentum/technicals.
The North American International Equity Fund intends to invest its assets in
the equity securities of non-U.S. issuers only, whereas the American General
International Value Fund intends to invest a minimum of 65% of its total assets
in such securities. Both of the Funds may invest in emerging market countries,
but the American General International Value Fund is restricted to investing up
to 10% of its assets in securities of foreign small capitalization companies.
Both of the Funds may use derivatives. The American General International
Value Fund may invest up to 90% of its total assets in futures and options on
foreign currency contracts. The North American International Equity Fund may
use derivatives for non-hedging purposes up to 33 1/3% of total assets.
The Funds are generally subject to similar risks, including the following
principal risks:
. Credit Risk
. Currency Risk
. Derivatives Risk
. Equity Risk
. Foreign Investment Risk
. Interest Rate Risk
. Liquidity Risk
. Management Risk
Certain of these risks may be greater for the North American International
Equity Fund. Because the Fund intends to invest in non-U.S. issuers only, it
may be subject to greater Foreign Investment Risk and Currency Risk. Also,
because the North American International Fund may invest to a greater extent in
small capitalization companies, it may be subject to greater Equity Risk.
American General Core Bond Fund vs. North American Core Bond Fund
The American General Core Bond Fund and the North American Core Bond Fund
have identical investment objectives, policies and restrictions. An investment
in the North American Core Bond Fund involves the same risks as an investment
in the American General Core Bond Fund. For more information regarding the
investment objectives, policies, restrictions, risks and performance of the
North American Core Bond Fund, see the North American Prospectus and the AGSPC2
Prospectus.
41
American General Domestic Bond Fund vs. North American Core Bond Fund
The American General Domestic Bond Fund and the North American Core Bond
Fund have similar investment objectives. The American General Domestic Bond
Fund seeks the highest possible total return consistent with conservation of
capital through investments primarily in investment grade fixed-income
securities and other income-producing securities. The North American Core Bond
Fund seeks the highest possible total return consistent with conservation of
capital through investments in medium to investment grade fixed-income
securities. In order to increase earning potential, both the American General
Domestic Bond Fund and the North American Core Bond Fund may use a part of
their portfolio assets to make some higher-risk investments.
The total average annual return for the American General Domestic Bond Fund
and the North American Core Bond Fund is set forth in the chart below.
Total Return Comparison
As of 12/31/99*
5 Since
1 Year Years 11/02/98
-------- ------ --------
American General Domestic Bond Fund................. (7.90)% N/A (5.67)%
5 Since
1 Year Years 5/01/91
-------- ------ --------
North American Core Bond Fund....................... (8.15)% 5.56% 5.89%
- --------
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. For further information about the
North American Core Bond Fund's performance, including information about
expense waivers/reimbursements that affected the Fund's performance, see
Appendix B and the North American Prospectus. For more information about
waivers/reimbursements that affected the American General Domestic Bond
Fund's performance, see the AGSPC2 Prospectus.
The American General Domestic Bond Fund invests at least 65% of its assets
in investment grade U.S. corporate fixed-income securities rated at least A by
Moody's or S&P, securities issued or guaranteed by the U.S. Government, Yankee
bonds, asset-backed bonds and mortgage-backed bonds. The North American Core
Bond Fund invests at least 65% of its total assets in investment grade
intermediate and long-term corporate fixed income securities rated at least
Baa3 by Moody's or BBB- by S&P or of comparable quality, securities issued or
guaranteed by the U.S. Government, and mortgage-backed and other asset-backed
securities.
With respect to foreign issuers, the North American Core Bond Fund may
invest a portion of the 65% of the Fund's total assets in U.S. dollar-
denominated fixed income securities issued by foreign issuers. The Fund
currently intends to limit such securities to no more than 40% of total assets.
The American General Domestic Bond Fund, on the other hand, may invest up to
35% of its assets in non-U.S. investment grade intermediate and long-term
corporate fixed income securities rated at least A by Moody's or S&P or of
comparable quality, Eurodollar fixed income securities (which the Fund
currently intends to limit to no more than 20% of its total portfolio),
securities issued or guaranteed by the Canadian Government, its provinces or
their instrumentalities, and interest bearing short-term investments (up to
100% of its assets for temporary defensive purposes). While the American
General Domestic Bond Fund may invest in foreign securities denominated in
foreign currencies, the North American Core Bond Fund may only invest in
securities of foreign issuers that are traded in the United States.
The American General Domestic Bond Fund may invest up to 25% of its assets
in lesser quality fixed-income securities, including corporate bonds rated less
than A by Moody's or S&P, mortgage-related securities, and high-yield, high-
risk bonds. In contrast, the North American Core Bond Fund may invest up to 10%
of its assets in other fixed-income securities, including corporate bonds rated
below Baa3 by Moody's and BBB- by S&P. Unlike the American General Domestic
Bond Fund, the North American Core Bond Fund may invest up to 20% of its assets
in equity securities, including common or preferred stocks, convertible
securities and warrants. Both of the Funds may invest up to 35% of total assets
in interest bearing short term investments. Both Funds may invest in
derivatives.
42
The Funds are generally subject to similar risks, including the following
principal risks:
. Currency Risk (for the American General Domestic Bond Fund only)
. Credit Risk (including risks associated with investment in below
investment grade fixed income securities)
. Foreign Investment Risk
. Liquidity Risk
. Interest Rate Risk
. Management Risk
. Derivatives Risk
Unlike the American General Domestic Bond Fund, the North American Core
Bond Fund is actively traded, which means it has a high rate of portfolio
turnover. A high portfolio turnover rate generally corresponds with greater
brokerage commissions expenses and thus, greater operating expenses. Also, the
North American Core Bond Fund's active trading strategy may cause the Fund to
have a relatively high amount of short-term capital gains, which are taxable
at ordinary income tax rates.
American General Strategic Bond Fund vs. North American Strategic Income Fund
The North American Strategic Income Fund has adopted investment objectives,
policies, restrictions, and will be subject to investment risks, identical to
those of the American General Strategic Bond Fund. For more information about
the investment strategies and performance of the North American Strategic
Income Fund, see the North American Prospectus and the AGSPC2 Prospectus.
American General Municipal Bond Fund vs. North American Municipal Bond Fund
The North American Municipal Bond Fund has adopted investment objectives,
policies and restrictions, and will be subject to investment risks, identical
to those of the American General Municipal Bond Fund. For more information
about the investment strategies and performance of the North American
Municipal Bond Fund, see the North American Prospectus and the AGSPC2
Prospectus.
American General Money Market Fund vs. North American Money Market Fund
The North American Money Market Fund has adopted investment objectives,
policies and restrictions, and will be subject to investment risks, identical
to those of the American General Money Market Fund. For more information about
the investment strategies and performance of the North American Money Market
Fund, see the North American Prospectus and the AGSPC2 Prospectus.
43
Risk Factors
Certain risks associated with an investment in the Acquiring Funds are
summarized below. Because each Acquiring Fund and the corresponding Acquired
Fund share certain policies described more fully above under "Overview of
Mergers--Comparison of Investment Objectives, Policies, Restrictions and
Risks," many of the risks of an investment in the Acquiring Fund are similar to
the risks of an investment in the corresponding Acquired Fund. A more detailed
description of the risks associated with an investment in the Acquiring Fund
may be found in the North American Prospectus under the caption "More
Information About Investment Strategies and Risks" and "Other Risks of
Investing" and in the North American SAI under the caption "Investment Policies
and Risks."
The values of all securities and other instruments held by the Acquiring
Funds vary from time to time in response to a wide variety of market factors.
Consequently, the net asset value per share of the Acquiring Funds 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.
Credit Risk. Credit risk is the risk that the issuer or the guarantor (the
entity that agrees to pay the debt if the issuer cannot) of a debt or fixed
income security, or the counterparty to a derivatives contract or a securities
loan, will not repay the principal and interest owed to the investors or
otherwise honor its obligations. There are different levels of credit risk.
Funds that invest in lower-rated securities have higher levels of credit risk.
Lower-rated or unrated securities of equivalent quality (generally known as
junk bonds) have very high levels of credit risk. Securities that are highly
rated have lower levels of credit risk.
Funds may be subject to greater credit risk because they may invest in debt
securities issued in connection with corporate restructurings by highly
leveraged (indebted) issuers and in debt securities not current in the payment
of interest or principal, or in default.
Funds that invest in foreign securities are also subject to increased credit
risk because of the difficulties of requiring foreign entities, including
issuers of sovereign (national) debt, to honor their contractual commitments,
and because a number of foreign governments and other issuers are already in
default.
Currency Risk. Funds that invest in securities that are denominated in
and/or are receiving revenues in foreign currencies are subject to currency
risk. Currency risk is the risk that foreign currencies will decline in value
relative to the U.S. dollar. In the case of hedging positions, it is the risk
that the U.S. dollar will decline in value relative to the currency hedged.
Derivatives Risk. Derivatives are financial contracts between two parties
whose value depends on, or is derived from, the change in value of an
underlying asset, reference rate or index. When the value of the underlying
security or index changes, the value of the derivative changes as well. As a
result, derivatives can lose all of their value very quickly. Derivatives also
offer the opportunity for great increases in value. Because derivatives are
contracts between parties, there is also some credit risk associated with using
derivatives. Additional risks associated with derivatives include mispricing
and improper valuation. 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.
Growth stocks are the stocks of companies that have earnings that are
expected to grow relatively rapidly. As a result the values of growth stocks
may be more sensitive to changes in current or expected earnings than the
values of other stocks.
Value stocks are the stocks of companies that are not expected to experience
significant earnings growth, but that are undervalued, or are inexpensive
44
relative to the value of the companies and their 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 a
company over time, the price of its stock may fall, or simply may not increase
as expected.
Market capitalization refers to the total value of a company's outstanding
stock. Smaller companies with market capitalizations of less than $1 billion or
so are more likely than larger companies to have limited product lines, smaller
markets for their products and services, and they may depend on a small or
inexperienced management group. Small company stocks may not trade very
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 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 issue the bonds.
Index Risk. The S&P 500 Index includes the common stock of many large, well-
established companies. However, the value of any common stock can rise and fall
over short and long periods of time. The North American Stock Index Fund does
not attempt to outperform the index, and its performance may fail to match that
of the index for a variety of reasons, including payment of Fund expenses and
transaction costs.
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 securities 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 adviser or 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
Distributions. The Acquiring Funds declare and pay dividends as follows:
Declare daily and pay monthly:
. North American Strategic Income Fund
. North American Core Bond Fund
. North American Municipal Bond Fund
. North American Money Market Fund
Quarterly:
. North American Mid Cap Value Fund
. North American Stock Index Fund
Semi-annually:
. North American International Equity Fund
. North American Growth & Income Fund
Annually:
. North American Large Cap Growth Fund
45
. North American Mid Cap Growth Fund
. North American Small Cap Growth Fund
. North American Balanced Fund
The Acquired Funds declare and pay dividends as follows:
Daily:
. American General Money Market Fund
Declare daily and pay monthly:
. American General Core Bond Fund
. American General Domestic Bond Fund
. American General Municipal Bond Fund
. American General Strategic Bond Fund
Quarterly:
. American General Balanced Fund
. American General Large Cap Growth Fund
. American General Large Cap Value Fund
. American General Mid Cap Growth Fund
. American General Mid Cap Value Fund
. American General Mid Cap Index Fund
. American General Small Cap Growth Fund
. American General Small Cap Value Fund
. American General Stock Index Fund
Semi-annually:
. American General International Growth Fund
. American General International Value Fund
Each Acquired Fund and each Acquiring Fund, except for the North American
Money Market Fund, distributes any net realized capital gains annually.
Purchases. The Acquired Funds and the Acquiring Funds have similar
procedures for purchasing shares. Class A and Class B shares of the Acquired
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
Distributors, Inc. ("AGD"), the principal underwriter of the Acquired Funds.
Acquired Fund Institutional Class I and Institutional Class II shares may only
be purchased through AGD. Class A and Class B shares of the Acquiring 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"), the principal underwriter of the Acquiring Funds.
Institutional Class I shares of each of the Acquiring Funds, except the North
American Municipal Bond Fund, and Institutional Class II shares of the North
American Core Bond Fund are currently available to be purchased only through
qualifying employer plans. In addition, shares of the Acquired Funds and the
Acquiring Funds may be purchased through other broker-dealers that have dealer
agreements with AGD and AGFD, as the case may be.
Class B shares of the Acquiring Funds are subject to a CDSC at declining
rates if redeemed within six years of purchase. Class B Merger Shares will be
subject to a CDSC on redemption to the same extent that the 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.
Redemptions. Redemption procedures for the Acquired Funds and the Acquiring
Funds are similar. Shares of a Fund may be redeemed at their net asset value
next determined after receipt of a redemption request, less any applicable
CDSC, on any day the New York Stock Exchange is open. You can redeem shares by
contacting the relevant Fund by mail, by telephone, and in the case of the
Acquiring Funds, through broker dealers if a dealer arrangement is in place or
by wire communication.
The Acquired Funds generally require a minimum initial investment of $2,000.
If a shareholder's account falls below the minimum, the account may be closed,
and the shares may be involuntarily redeemed. The Acquiring Funds require a
minimum initial investment of $1,000 and a minimum account balance of $500. If
a shareholder's account falls below $500, the shares may be involuntarily
redeemed.
46
Exchanges. Shares of each Acquired Fund can be exchanged for shares of the
same class of any other fund of AGSPC2. Shares of the Acquiring Funds can
generally be exchanged for shares of the same class of any fund of North
American Funds. However, only the North American Core Bond Fund and the North
American High Yield Bond Fund offer Institutional Class II shares. For more
details, see the North American Prospectus and the North American SAI.
General. See the North American Prospectus for further information regarding
the Acquiring Funds' distribution policies and purchase, exchange and
redemption procedures.
47
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 22,
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 corresponding Acquiring
Fund by the transfer of all of the Acquired Fund's assets and liabilities to
the Acquiring Fund. The Mergers will be voted on separately by each Fund's
shareholders. The approval of each Merger is not a condition to the Mergers of
the other Funds, except that:
. The approval of the Merger of the American General Small Cap Value Fund
into the North American Mid Cap Value Fund is a condition to the Merger
of the American General Mid Cap Value Fund into the North American Mid
Cap Value Fund and vice versa.
. The approval of the Merger of the American General Mid Cap Index Fund
into the North American Stock Index Fund is a condition to the Merger of
the
American General Stock Index Fund into the North American Stock Index
Fund and vice versa.
. The approval of the Merger of the American General International Value
Fund into the North American International Equity Fund is a condition to
the Merger of the American General International Growth Fund into the
North American International Equity Fund and vice versa.
. The approval of the Merger of the American General Domestic Bond Fund
into the North American Core Bond Fund is a condition to the Merger of
the American General Core Bond Fund into the North American Core Bond
Fund and vice versa.
This Prospectus/Proxy Statement and the enclosed form of proxy are being
mailed to shareholders on or about May 12, 2000.
The Trustees of AGSPC2 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.
48
THE PROPOSALS:
Approval or Disapproval of Agreement and Plan of Reorganization
Shareholders are being asked to approve or disapprove the Mergers between
various funds as shown on page 1. 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, Institutional Class I and Institutional Class II Merger
Shares, the number of which will be calculated based on the value of the net
assets attributable to the Class A, Class B, Institutional Class I and
Institutional Class II shares, respectively, of the Acquired Fund acquired by
the Acquiring Fund and the net asset value per Class A, Class B, Institutional
Class I and Institutional Class II 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, the 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 Institutional Class I
Merger Shares to be distributed to its Institutional Class I shareholders and
the Institutional Class II Merger Shares to be distributed to its Class II
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, Institutional Class I and Institutional Class II Merger Shares equal in
value at the date of the exchange to the aggregate value of the shareholder's
Class A, Class B, Institutional Class I and Institutional Class II Acquired
Fund shares, as the case may be.
Board of Trustees' Recommendations. The Board of Trustees of AGSPC2 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 each proposed Merger for each
Acquired Fund will require the affirmative vote of a majority of all
outstanding shares of the relevant Acquired Fund, voting together as a single
class, present and entitled to vote, provided a quorum is present. The holders
of a majority of the Class A, Class B, Institutional Class I and Institutional
Class II 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.
Background and Reasons for the Proposed Mergers
The Board of Trustees of AGSPC2 including all of its Trustees who are not
"interested persons" of AGSPC2 (the "Independent Trustees"), has unanimously
determined that each Merger would be in the best interests of the relevant
Acquired Fund, and that the interests of the Acquired Fund's shareholders would
not be diluted as a result of effecting the Merger. At meetings held on March 1
and March 2, 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. Among other things,
the Trustees received reports relating to AGAM's ability to manage the
Acquiring Funds, reviewed the ability of AGAM's affiliates to provide or
procure administrative and distribution services and met with the Chairman and
Chief Executive Officer of AGAM. 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 and the subadvisers, the
portfolio managers of the Acquiring Funds and the other service providers to
the Acquiring Funds, as well as AGFD's plans for distribution of the Funds
following the Mergers. The Board also took into account that existing fee
waivers and expense reimbursements for the Acquired Funds (which had
substantially reduced net investment advisory revenues) were unlikely to be
sustainable. In addition, the Board took into account the relative historical
investment performance of the Acquiring
49
Funds, on the one hand, and the Acquired Funds, on the other hand.
The principal reasons why the Board of Trustees is recommending the Mergers
are as follows:
(i) Enhanced distribution network. The combined organization is expected to
have a more effective distribution and distribution support network, which may
result in long term growth potential and economies of scale. The combined
organization is also expected to have improved client servicing and operational
capabilities.
(ii) Sustainable decreases in overall expenses. The Mergers are expected to
result generally in sustainable expense ratios that are lower than what the
expense ratios of the Acquired Funds would be absent the fee waivers and
expense reimbursements currently in effect, 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.
(iii) Larger, more integrated fund complex. The Mergers will create a
larger, more diverse family of funds with increased potential for lower
expenses. The Mergers will also give shareholders exchange privileges among a
wider array of funds.
(iv) Appropriate investment objectives, diversification, etc. The investment
objective, policies, and restrictions of each Acquiring Fund are generally
compatible with those of the corresponding Acquired Fund, and the Trustees
believe that an investment in shares of each Acquiring Fund (whose portfolio
will have been combined with that of the Acquired Fund, except for the newly
created North American Stock Index Fund and the North American Mid Cap Value
Fund) will provide shareholders with an investment opportunity comparable to
that currently afforded by the Acquired Fund with the potential for reduced
investment risk because of the opportunities for additional diversification of
portfolio investments through increased Fund assets.
(v) Uniform organizational documents. The Mergers of certain Acquired Funds
into the newly created North American Stock Index Fund and the North American
Mid Cap Value Fund will allow all of the Funds to be governed under a single
set of organizational documents following the Mergers.
INFORMATION ABOUT THE MERGERS
Agreement and Plan of Reorganization. Each proposed Agreement provides that
the relevant Acquiring Fund will acquire all of the assets of the corresponding
Acquired Fund in exchange for the issuance of the Class A, Class B,
Institutional Class I and Institutional Class II 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. 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 corresponding
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, (iii) a number of full and fractional Institutional Class I
Merger Shares having an aggregate net asset value equal to the value of the
assets of the Acquired Fund attributable to its Institutional Class I shares,
less the value of the liabilities of the Acquired Fund assumed by the Acquiring
Fund attributable to the Institutional Class I shares of the Acquired Fund, and
(iv) a number of full and fractional Institutional Class II Merger Shares
having an aggregate net asset value equal to the value of the assets of the
Acquired Fund attributable to its Class II shares, less the value of the
liabilities of the Acquired Fund assumed by the Acquiring Fund attributable to
the Institutional Class II shares of the Acquired Fund.
Immediately following the Exchange Date (defined in each Agreement to be
March 31, 2000 or such other date as may be agreed upon by the Acquiring Fund
and the Acquired Fund), each Acquired Fund will distribute pro rata to its
shareholders of record as of the close of business on
50
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, Institutional Class I Merger
Shares being distributed to holders of Institutional Class I shares of the
Acquired Fund and Institutional Class II Merger Shares being distributed to
holders of Institutional Class II shares of the Acquired Fund. As a result of
the proposed transaction, each holder of Class A, Class B, Institutional Class
I and Institutional Class II shares of the Acquired Fund will receive a number
of Class A, Class B, Institutional Class I and Institutional Class II Merger
Shares equal in aggregate value at the Exchange Date to the value of the Class
A, Class B, Institutional Class I and Institutional Class II 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 corresponding
Acquiring Fund in the names of the Acquired Fund shareholders, each account
representing the respective number of full and fractional Class A, Class B,
Institutional Class I and Institutional Class II Merger Shares due to such
shareholder. Because the shares of the Acquiring Funds 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. The obligations of each Acquired Fund under the Agreement are
conditioned upon the approval by the shareholders of each Acquiring Fund of the
investment advisory agreement between AGAM and the corresponding Acquiring Fund
that is the subject of a separate proxy statement to Acquiring Fund
shareholders dated April , 2000. The consummation of each Merger is also
conditioned upon the receipt of an SEC order exempting the proposed Mergers
from Section 17(a) of the 1940 Act, which limits transactions between
investment companies and affiliated persons, or any affiliate of an affiliated
person. Because, as described below, AGC and VALIC own more than 5% of the
outstanding shares of most Acquired Funds, they may be deemed affiliated
persons of both the Acquired Funds and the Acquiring Funds, and, absent an
exemption, the Mergers may be prohibited. AGC, North American Funds and VALIC
have applied for exemptive relief from the SEC to permit the Mergers. 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, accounting, printing and other fees and expenses incurred in
connection with the consummation of the transactions contemplated by the
Agreement will be borne by AGC, 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. You will be issued full and fractional
Merger Shares in accordance with the procedure under the Agreement as described
above. The Merger Shares that you receive have characteristics similar to those
of the corresponding class of Acquired Fund shares with respect to sales
charges, CDSCs, conversion and 12b-1 servicing and distribution fees.
Comparison of Rights of Security Holders
Organizational Documents. 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
Class B Merger Shares convert automatically into Class A shares as described
above in "Overview--Overview of the Acquired Funds and the Acquiring Funds."
The Amended and Restated Agreement and Declaration of Trust of North American
Funds, as amended (the "North American 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. Each Acquiring Fund's shares are
currently divided into five classes.
51
The following is a summary of the major differences between the governing
documents and laws applicable to each of the Acquiring Funds and the Acquired
Funds. AGSPC2 is organized as a Delaware business trust, while North American
Funds is organized as a Massachusetts business trust. Except as otherwise noted
below, the provisions of Massachusetts law, the North American Declaration of
Trust and By-laws (the "North American By-laws") are similar to those of
Delaware law, the Agreement and Declaration of Trust, as amended (the "AGSPC2
Declaration of Trust") and Bylaws (the "AGSPC2 Bylaws") of AGSPC2. Each of the
Acquiring Funds and the Acquired Funds is subject to the 1940 Act.
Meetings of Shareholders. The AGSPC2 Declaration of Trust provides that the
Trustees may call a meeting of the shareholders. However, if the Trustees fail
to call a meeting after written application by shareholders holding at least
ten percent of the shares requesting that a meeting be called for a purpose
requiring shareholder action, shareholders holding at least 10% of the shares
may call the meeting. By contrast, the North American Declaration of Trust
gives the Trustees and shareholders holding at least 25% of the shares then
outstanding the right to call a meeting of the shareholders.
Quorums. The AGSPC2 Declaration of Trust and the AGSPC2 Bylaws provide that
a majority of the shares entitled to vote shall be a quorum for the transaction
of business at a shareholders meeting of AGSPC2. The North American Declaration
of Trust provides that thirty percent of the shares entitled to vote
constitutes a quorum at all meetings of the shareholders. The Declarations of
Trust and the Bylaws of both AGSPC2 and North American Funds provide that a
majority of Trustees then in office constitutes a quorum for a meeting of the
Trustees.
Required Vote. Under the North American Declaration of Trust, a plurality of
the shares voted at a meeting at which a quorum is present elects a trustee. A
majority of the shares voted decides any other questions, except that a vote of
a "majority of the outstanding shares" as defined in Section 2(a)(42) of the
1940 Act is required for purposes of the termination of the Trust, the merger,
consolidation or sale of substantially all of the assets of the Trust, or the
amendment of the Declaration of Trust to adversely affect the rights of certain
shareholders. Under the 1940 Act, a vote of a "majority of the outstanding
shares" means (i) 67% or more of the shares present at a meeting if the holders
of more than 50% of the shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Trust.
Under the AGSPC2 Declaration of Trust, a majority shareholder vote decides
any question, including an amendment to the Declaration of Trust if the
amendment adversely affects the rights of shareholders and the reorganization
or termination of the Trust, except that a plurality is required for the
election of a Trustee and a vote of the "majority of the outstanding shares" as
defined in the 1940 Act is required for the liquidation of the Trust.
Trustees. The North American Declaration of Trust requires that the number
of Trustees shall be no less than three, while the AGSPC2 Declaration of Trust
states that the number of Trustees shall be no more than twelve and no less
than the number determined by a written instrument signed by a majority of the
Trustees. Pursuant to the AGSPC2 Declaration of Trust, any Trustee may be
removed by (i) a vote of a majority of the shares cast in person or by proxy at
any meeting called for that purpose, or (ii) a written declaration signed by
the holders of not less than a majority of the shares. The North American
Declaration of Trust provides that a Trustee may be removed with or without
cause at any time by (i) action of two-thirds of the Trustees or (ii) a vote of
shareholders holding not less than two-thirds of the shares then outstanding,
cast in person or by proxy at any meeting called for the purpose of removal.
Indemnification. The AGSPC2 Declaration of Trust provides that the Trust
will indemnify Trustees and officers against all liabilities incurred in
connection with any action in which the Trustee or officer was involved by
reason of having been a Trustee or officer. However, the Trust will not
indemnify any Trustee or officer for a criminal proceeding or with respect to
any matter for which a determination has been made that the Trustee or officer
(i) did not act in good faith, or (ii) acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties of the Trustee or
officer. Such a determination will be made by either a vote of a majority of a
quorum of disinterested
52
Trustees or by independent legal counsel in a written opinion.
The North American Declaration of Trust provides that the Trustees and
officers shall be indemnified against all liabilities incurred while in office
or thereafter by reason of being a Trustee or officer except for liabilities
concerning acts with respect to which it has been determined that such person
did not act in the best interest of the Trust or acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of such person's
duties. A determination of indemnification may be made by a majority of a
quorum of disinterested Trustees or by independent legal counsel.
Personal Liability. Under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the North American Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust
and/or the Acquiring Funds and requires that notice of such disclaimer be given
each agreement, undertaking, or obligation entered into or executed by the
Trust, the Acquiring Funds or the Trustees. The North American Declaration of
Trust provides for indemnification out of Acquiring Fund property for all loss
and expense of any shareholder held personally liable for the obligations of
the Acquiring Fund. Thus, the risk of a shareholder's incurring financial loss
from shareholder liability is limited to circumstances in which the Acquiring
Fund would be unable to meet its obligations. The likelihood of such a
circumstance is considered remote. Unlike Massachusetts law, the applicable
Delaware statute expressly provides for limited liability of shareholders of
business trusts.
Termination. The AGSPC2 Declaration of Trust allows for the termination of
the Trust at any time by a vote of a majority of the Trustees, subject to the
vote of not less than a majority of the shares or by an instrument in writing
without a meeting consented to by the holders of not less than a majority of
the shares. The North American Declaration of Trust provides that the Trust or
any series may be terminated by a majority of the Trustees by written notice to
the shareholders or by a vote of the lesser of (i) 67% or more of the shares if
the holders of more than 50% of the outstanding shares are present or
represented by proxy at the meeting, or (ii) more than 50% of the outstanding
shares provided a quorum is present at the meeting.
Amendments. The North American Declaration of Trust may be amended by a
majority of the Trustees so long as the amendment does not adversely affect the
rights of any shareholder. An amendment that would adversely affect the rights
of the shareholders may be adopted by a vote of the lesser of (i) 67% of shares
if the holders of more than 50% of the outstanding shares are present or
represented by proxy at the meeting, or (ii) more than 50% of the outstanding
shares provided a quorum is present at the meeting. If an amendment would not
affect all of the shareholders of the Trust, such a majority vote is only
required by the shareholders affected.
The AGSPC2 Declaration of Trust may be amended at any time by a written
instrument signed by a majority of the Trustees or by an officer pursuant to a
vote by a majority of the Trustees so long an the amendment does not adversely
affect the rights of any shareholder. If the amendment would adversely affect
the rights of all of the shareholders, the amendment may be adopted by a vote
of a majority of all of the shares and a written instrument signed by a
majority of the Trustees or by an officer pursuant to a vote by a majority of
the Trustees. If the amendment would adversely affect the rights of less than
all of the shareholders, it may be adopted by a vote of the holders of a
majority of the shares so affected. The AGSPC2 Bylaws may be amended by a vote
of a majority of the shareholders or by a vote of a majority of the Trustees.
The North American By-laws may only be amended by a majority of the Trustees.
Federal Income Tax Consequences. Except with respect to the American General
Small Cap Value Fund and the American General Mid Cap Index Fund, the Mergers
of the Acquired Funds into the Acquiring Funds will be tax-free
reorganizations; those two reorganizations will likely be tax-free. As a
condition to the obligation of each Acquired Fund other than the American
General Small Cap Value Fund and the American General Mid Cap Index Fund, and
of each Acquiring Fund other than the North American Mid Cap Value Fund and the
North American Stock Index Fund, to consummate the Merger, each such Acquired
Fund and Acquiring 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
53
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 AGSPC2 and North American
Funds, and will also be based on customary assumptions.
The Merger of the American General Small Cap Value Fund and the Merger of
the American General Mid Cap Index Fund will likely be tax-free
reorganizations. In such a case, the tax consequences will be as described in
the preceding paragraph. However, the federal income tax treatment of these two
Mergers is not free from doubt. As a condition to the obligation of each of
these two Acquired Funds, and of each of the North American Mid Cap Value Fund
and the North American Stock Index Fund, to consummate the Merger, each such
Acquired Fund and Acquiring 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 the tax results described in the
preceding paragraph are more likely than not to obtain. The opinion will be
based on certain factual certifications made by officers of AGSPC2 and North
American Funds, and will also be based on customary assumptions.
Although the Acquired Funds will take the position that all the Mergers are
tax-free reorganizations, the Internal Revenue Service may nevertheless assert
that one or more of these Mergers (including in particular the Merger of the
American General Small Cap Value Fund into North American Mid Cap Value Fund
and the Merger of the American General Mid Cap Index Fund into North American
Stock Index Fund) are taxable. If a Merger is a taxable reorganization, the
Acquired Fund will recognize gain or loss on the transfer of its assets to the
Acquiring Fund, and each shareholder of the Acquired Fund will recognize
taxable gain or loss on the receipt of Merger Shares in an amount equal to the
difference between the net asset value of the Merger Shares received and the
shareholder's tax basis in his or her Acquired Fund shares. An Acquiring Fund's
tax basis in each security acquired from an Acquired Fund in a Merger that is a
taxable reorganization will be the fair market value of such security at the
time of the Merger (rather than the Acquired Fund's tax basis, as in the case
of a tax-free reorganization). Shareholders who are "individuals" (as defined
in the Code) will be able to use any capital losses arising from the Merger to
offset other realized capital gains or to offset ordinary income in the current
year up to $3,000, and will also be able to carry forward losses indefinitely
to offset future realized capital gains. Shareholders who are not "individuals"
will be able to use realized capital losses to offset realized capital gains in
the current year and will also be able to carry forward or carry back losses to
offset future or past realized gains, subject to the limitations in the Code.
Substantially all the portfolio assets of each of the American General Small
Cap Value Fund and the American General Mid Cap Index Fund will be sold, and a
substantial portion of the portfolio assets of each of the American General
International Growth Fund, the American General International Value Fund, the
American General Large Cap Value Fund and the American General Domestic Bond
Fund may be sold, in connection with the Mergers of those Funds into the
respective Acquiring Funds. The actual tax impact of such sales will depend on
the difference between the price at which such portfolio assets are sold and
the selling Fund's basis
54
in such assets. Any capital gains recognized in these sales will be distributed
to the selling Fund's shareholders as capital gain dividends (to the extent of
net realized long term capital gains) and/or ordinary dividends (to the extent
of net realized short-term capital gains) during or with respect to the year of
sale, and such distributions will be taxable to shareholders.
Prior to the Exchange Date, each Acquired Fund and each Acquiring 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.
The foregoing description of the federal income tax consequences of the
Mergers is made without regard to the particular facts and circumstances of any
shareholder. Shareholders are urged to consult their own tax adviser as to the
specific consequences to them of the Mergers, including the applicability and
effect of state, local, foreign and other tax laws.
Capital Loss Carry-Forwards and Unrealized Capital Appreciation. The
following tables show the capital loss carry-forwards and the unrealized
capital appreciation for each Acquired Fund and each Acquiring Fund, in each
case as a percentage of the Fund's total net assets. However, capital loss
carry-forwards and unrealized capital appreciation that are less than $50,000
or less than 0.01% of net assets are not shown. The percentages of capital loss
carry-forwards and unrealized capital appreciation as of October 31, 1999 were
as follows:
Unrealized Capital
Capital Loss Appreciation (Depreciation)
Carry-Forwards (as a (as a percentage of
Fund percentage of total net assets) total net assets)
---- ------------------------------- ---------------------------
American General Small
Cap Value Fund......... 2.44% (4.38)%
American General
Domestic Bond Fund..... 1.36% (2.13)%
North American Core Bond
Fund................... 2.16% (2.62)%
American General
Strategic Bond Fund.... 2.16% (1.99)%
North American Strategic
Income Fund............ 7.57% (8.24)%
American General
Municipal Bond Fund.... 0.30% (8.86)%
North American Municipal
Bond Fund.............. 0.80% 0.10%
North American Money
Market Fund............ 0.01% --
55
Capitalization. The following tables show the capitalization of each
Acquiring Fund and each Acquired Fund as of , and of each 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:
Capitalization Tables
,
(Unaudited)
American General North American Pro Forma
Large Cap Growth Fund Large Cap Growth Fund Combined
- -------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- -------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- -------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- -------------------------------------------------------------------------------
American General Mid North American Pro Forma
Cap Growth Fund Mid Cap Growth Fund Combined
- -------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- -------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- -------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
56
American General North American
Small Cap Growth Fund Small Cap Growth Fund Pro Forma Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net assets value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
American General North American Growth
Large Cap Growth Fund & Income Fund Pro Forma Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net assets value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
American General North American North American Pro Forma
Mid Cap Value Fund Small Cap Value Fund Mid Cap Value Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net assets value per
share
Class A................ $ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
57
American General American General North American Pro Forma
Stock Index Fund Mid Cap Index Fund Stock Index Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $ $
Class B................
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $ $
Class B................
Total..................
- --------------------------------------------------------------------------------
American General North American Pro Forma
Balanced Fund Balanced Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
American General American General North American
International International International Pro Forma
Growth Fund Value Fund Equity Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
58
American General North American North American Pro Forma
Core Bond Fund Domestic Bond Fund Core Bond Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $ $
Class B................
Institutional Class I..
Institutional Class
II....................
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Institutional Class
II....................
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $ $
Class B................
Institutional Class I..
Institutional Class
II....................
Total..................
- --------------------------------------------------------------------------------
American General North American Pro Forma
Strategic Bond Fund Strategic Income Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $
Class B................
Institutional Class I..
Total..................
- --------------------------------------------------------------------------------
American General North American Pro Forma
Municipal Bond Fund Municipal Bond Fund Combined
- --------------------------------------------------------------------------------
Net assets (000's
omitted)
Class A................ $ $ $
Class B................
Total..................
- --------------------------------------------------------------------------------
Shares outstanding
(000's omitted)
Class A................
Class B................
Total..................
- --------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ $ $
Class B................
Total..................
- --------------------------------------------------------------------------------
59
American General North American Pro Forma
Money Market Fund Money Market Fund Combined
- ------------------------------------------------------------------------------
Net assets (000's omitted)
Class A........................ $ $ $
Class B........................
Institutional Class I..........
Total..........................
- ------------------------------------------------------------------------------
Shares outstanding (000's
omitted)
Class A........................
Class B........................
Institutional Class I..........
Total..........................
- ------------------------------------------------------------------------------
Net asset value per share
Class A........................ $ $ $
Class B........................
Institutional Class I..........
Total..........................
- --------------------------------------------------------------------------------
Pro forma financial statements of the Acquiring Fund's investment
the Acquiring Funds as of and for objective and policies will remain
the fiscal year ended October 31, unchanged, the pro forma financial
1999 are included in the Merger SAI. statements reflect the transfer of
Because each Agreement provides that the assets and liabilities of the
the Acquiring Fund will be the Acquired Fund to the Acquiring Fund
surviving Fund following the Merger as contemplated by the Agreement.
and because
60
- --------------------------------------------------------------------------------
INFORMATION ABOUT THE ACQUIRED FUNDS
Other information regarding the Acquired Funds, including information with
respect to their investment objectives, policies and restrictions and financial
history, may be found in the Merger SAI, the AGSPC2 Prospectus, the AGSPC2 SAI
and the AGSPC2 Annual Report, which are available upon request by calling
1-877-999-2434.
Other information filed by AGSPC2 with respect to the Acquired 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 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."
- --------------------------------------------------------------------------------
INFORMATION ABOUT THE ACQUIRING FUNDS
Other information relating to the Acquiring Funds, including information in
respect of their investment objectives, policies and restrictions and financial
history may be found in the North American Prospectus, which accompanies this
Prospectus/Proxy Statement, and in the Merger SAI, the North American SAI and
the North American Annual Reports, which are available upon request by calling
1-800-872-8037. To the extent that any information in respect of the Acquiring
Funds found in any such document is inconsistent with the information contained
in this Prospectus/Proxy Statement, this Prospectus/Proxy Statement should be
deemed to supersede such other document. Certain information and commentary from
the Acquiring Funds' most recent annual reports relating to the Acquiring Funds'
recent investment performance is set forth in Appendix B to this
Prospectus/Proxy Statement.
Other information filed by the Acquiring 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 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 May 1, 2000 (the "Record Date") will
be entitled to notice of and to vote at the Meeting or any adjournment thereof.
The holders of a majority 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. All 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 AGSPC2 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.
61
Shares outstanding and beneficial ownership. As of the Record Date, as shown
on the books of the Acquired Funds, there were issued and outstanding the
following number of shares of beneficial interest of each class of each
Acquired Fund:
Class Institutional Class
Class A B I Institutional Class II
------- ----- ------------------- ----------------------
American General Large
Cap Growth Fund........
American General Mid Cap
Growth Fund............
American General Small
Cap Growth Fund........
American General Large
Cap Value Fund.........
American General Mid Cap
Value Fund.............
American General Small
Cap Value Fund.........
American General Stock
Index Fund.............
American General Mid Cap
Index Fund.............
American General
Balanced Fund..........
American General
International Growth
Fund...................
American General
International Value
Fund...................
American General Core
Bond Fund..............
American General
Domestic Bond Fund.....
American General
Strategic Bond Fund....
American General
Municipal Bond Fund....
American General Money
Market Fund............
As of the Record Date, the officers and Trustees of AGSPC2 and 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 Acquiring Fund. As of April 30,
2000, in the case of the Acquired Funds and , in the case of the
Acquiring Funds, to the best of the knowledge of AGSPC2 and 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 Funds:
Insert 5% owners table
Solicitation of Proxies. Solicitation of proxies by personal interview,
mail, fax, telephone and internet may be made by officers and Trustees of
AGSPC2, and the officers and Trustees of North American Funds and employees of
VALIC, AGAM and their affiliates. In addition, the firm of [ ] has been
retained to assist in the solicitation of proxies. The costs for solicitation
of proxies, like the other costs associated with the Mergers, will be borne by
AGC. See "Information About the Mergers."
Revocation of proxies. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary of AGSPC2 at the principal office
of AGSPC2 at 2929 Allen Parkway, Houston, Texas 77019) or in person at the
Meeting, by executing a superseding proxy, or by submitting a notice of
revocation to the Secretary of AGSPC2. 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 Proposals 1-16 of the
Notice of Meeting) to implement the Merger with respect to the relevant
Acquired Fund.
Shareholder proposals at future meetings of shareholders. AGSPC2 Declaration
of Trust does not provide for annual meetings of shareholders, and AGSPC2 does
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
AGSPC2 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.
May 12, 2000.
62
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
March 31, 2000 in Boston, Massachusetts, by and between American General Series
Portfolio Company 2, a Delaware business trust, on behalf of its American
General [ ] Fund series (the "Acquired Fund") and North American Funds, a
Massachusetts business trust (the "North American Funds"), on behalf of its
[ ] Fund series (the "Acquiring Fund").
Plan of Reorganization
(a) On the Exchange Date (as defined in Section 6), the Acquired Fund will
sell, assign, convey, transfer and deliver to the Acquiring Fund 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 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 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 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 Class B shares of the Acquired Fund assumed by the
Acquiring Fund on that date, [(iii) a number of full and fractional
Institutional Class I shares of beneficial interest of the Acquiring Fund (the
"Class I Merger Shares") having an aggregate net asset value equal to the value
of the assets of the Acquired Fund attributable to Institutional Class I 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 Institutional
Class I shares of the Acquired Fund assumed by the Acquiring Fund on that date
and (iv) a number of full and fractional Institutional Class II shares of
beneficial interest of the Acquiring Fund (the "Institutional Class II Merger
Shares") having an aggregate net asset value equal to the value of the assets
of the Acquired Fund attributable to Institutional Class II 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 Institutional Class II
shares of the Acquired Fund assumed by the Acquiring Fund on that date.] (The
Class A Merger Shares, the Class B Merger Shares, [the Institutional Class I
Merger Shares and the Institutional Class II Merger Shares] shall be referred
to collectively as the "Merger Shares.") It is intended that the reorganization
described in this Agreement shall be a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, the Acquired Fund shall distribute in complete liquidation to
its Class A, Class B, [Institutional Class I and Institutional Class II]
shareholders of record as of the Exchange Date the Class A, Class B,
[Institutional Class I and Institutional Class II] Merger Shares of the
Acquiring Fund, each such shareholder being entitled to receive that proportion
of such Class A, Class B, [Institutional Class I and Institutional Class II]
Merger Shares which the number of Class A, Class B, [Institutional Class I and
Institutional Class II] shares of beneficial interest of the Acquired Fund held
by such shareholder bears to the number of Class A, Class B, [Institutional
Class I and Institutional Class II] shares of the Acquired Fund outstanding on
such date. Certificates representing the Merger Shares will not be issued. All
issued and outstanding 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 provision of
the Agreement and Declaration of Trust, as amended, of American General Series
Portfolio Company 2 (the "AGSPC2 Declaration of Trust") 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.
A-1
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:
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. Each of North American Funds and the Acquiring Fund 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. North American Funds is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company, and such registration has not been revoked or rescinded and is in
full force and effect.
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 prospectus and statement of additional information of the
Acquiring Fund, each dated March 1, 2000 (collectively, the "North American
Prospectus"), previously furnished to the Acquired Fund, did not as of such
date and does not as of the date hereof, with respect to North American
Funds or the Acquiring Fund, 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.
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 North American Funds or 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
A-2
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 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 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
or North American Funds 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 North
American 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 American General Series Portfolio
Company 2, a Delaware business trust duly established and validly existing
under the laws of the State of Delaware, and has power to own all of its
properties and assets and to carry out this Agreement. Each of American
General Series Portfolio Company 2 and the Acquired Fund is registered in
every jurisdiction where required, except to
A-3
the extent that failure to so register would not have a material adverse
effect on American General Series Portfolio Company 2. Each of American
General Series Portfolio Company 2 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. American General Series Portfolio Company 2 is registered under the
1940 Act as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and
effect.
c. A statement of assets and liabilities, statements of operations,
statements of changes in net assets and a schedule of investments
(indicating their market values) of the Acquired Fund as of and for the
year 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 their 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
American General Series Portfolio Company 2, dated March 1, 2000
(collectively, the "AGSPC2 Prospectus"), which has been previously
furnished to the Acquiring Fund, did not as of such dates and does not as
of the date of this Agreement contain, with respect to American General
Series Portfolio Company 2 or 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 American General Series Portfolio Company 2
or the Acquired Fund, threatened against American General Series Portfolio
Company 2 or the Acquired Fund, which assert liability on the part of
American General Series Portfolio Company 2 or 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 American General Series
Portfolio Company 2's registration statement on Form N-1A or the AGSPC2
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
American General Series Portfolio Company 2's 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, American General Series Portfolio Company 2, 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
A-4
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 the Investments were, as of the time of such transfer, the
subject of a public distribution by either 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.
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 American General Series Portfolio Company 2
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)(l) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the North American
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.
A-5
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 obligations 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 Merger Shares received by it to the
shareholders of the Acquired Fund in exchange for their Class A, Class B,
[Institutional Class I and Institutional Class II] 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 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. Transaction. 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 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 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 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 Class B shares of the Acquired
Fund assumed by the Acquiring Fund on that date, [(iii) a number of full and
fractional Institutional Class I Merger Shares having an aggregate net asset
value equal to the value of the assets of the Acquired Fund attributable to
Institutional Class I 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 Institutional Class I shares of the Acquired Fund assumed by
the Acquiring Fund on that date, (iv) a number of full and fractional
Institutional Class II Merger Shares having an aggregate net asset value equal
to the value of the assets of the Acquired Fund attributable to Institutional
Class II 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
Institutional Class II shares of the Acquired Fund assumed by the Acquiring
Fund on that date] determined as hereinafter provided in this Section 4.
a. The net asset value of the Merger Shares to be delivered to the
Acquired Fund, the value of the assets attributable to the shares of the
Acquired Fund, and the value of the liabilities attributable to the Class
A, Class B, [Institutional Class I and Institutional Class II] 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, [Institutional Class I
and Institutional Class II] Merger Shares shall be computed in the manner
set forth in the North American Prospectus. The value of
A-6
the assets and liabilities of the Class A, Class B, [Institutional Class I
and Institutional Class II] 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 Class A Merger Shares to the
Class A 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 Class A Acquired Fund shareholder
in accordance with such written instructions. The Acquired Fund shall
distribute the Class B Merger Shares to the Class B 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 Class B Acquired Fund shareholder in accordance with such written
instructions. [The Acquired Fund shall distribute the Institutional Class I
Merger Shares to the Institutional Class I 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
Institutional Class I Acquired Fund shareholder in accordance with such
written instructions. The Acquired Fund shall distribute the Institutional
Class II Merger Shares to the Institutional Class II 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 Institutional Class II 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. Expense, Fees, etc.
a. The parties hereto understand and agree that the transactions
contemplated by this Agreement are being undertaken contemporaneously with
a general consolidation of certain of the registered investment companies
advised by American General Asset Management Corp. ("AGAM"), formerly named
CypressTree Asset Management, Inc. and The Variable Annuity Life Insurance
Company ("VALIC") and their affiliates; and that in connection therewith
the costs of all such transactions are being borne by American General
Corporation ("AGC"). Notwithstanding any of 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 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, AGC 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,
neither 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 March 31, 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."
A-7
7. Meetings of Shareholders; Dissolution.
a. American General Series Portfolio Company 2, 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 the Acquired
Fund's assets to and the assumption of all of its liabilities by the
Acquiring Fund as herein provided, adopting this Agreement, and authorizing
the liquidation and dissolution of the Acquired Fund.
b. The Acquired Fund agrees that the liquidation and dissolution of the
Acquired Fund will be effected in the manner provided in the American
General Series Portfolio Company 2 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 the President, or any Vice
President, and Treasurer, or any Assistant Treasurer, of American General
Series Portfolio Company 2, 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 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 the President, or any Vice
President, and Treasurer, or any Assistant Treasurer, of American General
Series Portfolio Company 2, 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 that 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. That the Acquired Fund shall have delivered to the Acquiring Fund a
letter from Ernst & Young LLP dated the Exchange Date reporting on the
results of applying certain procedures agreed upon by the Acquiring Fund
and described in such letter, which limited procedures relate to schedules
of the tax provisions and qualifying tests for regulated investment
companies as prepared for the fiscal year ended October 31, 1999 and the
period November 1, 1999 to the Exchange Date (the latter period being based
on unaudited data).
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 Sullivan &
Worcester LLP, counsel to the Acquired Fund, in form satisfactory to
counsel to the Acquiring Fund, and dated the Exchange Date, to the effect
that (i) American General Series Portfolio Company 2 is a Delaware business
trust duly formed and is validly existing under the laws of the State of
Delaware and has the power to own all its
A-8
properties and to carry on its business as presently conducted; (ii) this
Agreement has been duly authorized, executed and delivered by American
General Series Portfolio Company 2 on behalf of the Acquired Fund and,
assuming that the Registration Statement, the North American 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 American General Series Portfolio Company
2 and the Acquired Fund; (iii) American General Series Portfolio Company 2,
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 American General
Series Portfolio Company 2 Declaration of Trust or Bylaws or any provision
of any agreement known to such counsel to which American General Series
Portfolio Company 2 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 American General Series Portfolio Company 2 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. [Except in the cases of the Mergers of American General Small Cap
Value Fund into North American Mid Cap Value Fund, and American General Mid
Cap Index Fund into North American Stock Index Fund], 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 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. [In the cases of the Mergers of American General Small Cap
Value Fund into North American Mid Cap Value Fund, and American General Mid
Cap Index Fund into North American Stock Index Fund, 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 court
decisions, for federal income tax purposes, the above-described results are
more likely than not to obtain.]
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.
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 American General Series Portfolio
Company 2 or the Acquiring Fund, threatened by the Commission.
k. That American General Series Portfolio Company 2 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
A-9
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 American General Series Portfolio Company 2
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) (computed 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 both 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 Treasurer,
or any Assistant Treasurer, of American General Series Portfolio Company 2,
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. That 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 state securities or blue sky laws (including
any applicable exemptions therefrom) and, to the extent that any audit of
the records of the Acquired Fund or its transfer agent by the Acquiring
Fund or its agents shall have revealed otherwise, either (i) the Acquired
Fund shall have taken all actions that in the opinion of the Acquiring Fund
or its counsel are necessary to remedy any prior failure on the part of the
Acquired Fund to have offered for sale and sold such shares in conformity
with such laws or (ii) the Acquired Fund shall have furnished (or caused to
be furnished) surety, or deposited (or caused to be deposited) assets in
escrow, for the benefit of the Acquiring Fund in amounts sufficient and
upon terms satisfactory, in the opinion of the Acquiring Fund or its
counsel, to indemnify the Acquiring Fund against any expense, loss, claim,
damage or liability whatsoever that may be asserted or threatened by reason
of such failure on the part of the Acquired Fund to have offered and sold
such shares in conformity with such laws.
r. That the Acquiring Fund shall have received from
PricewaterhouseCoopers LLP a letter addressed to the Acquiring Fund dated
as of the Exchange Date satisfactory in form and substance to the Acquiring
Fund reporting on the results of applying limited procedures agreed upon by
the Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), which limited
procedures relate as of the Valuation Time to the procedures customarily
utilized by the Acquired Fund in valuing its assets and issuing its shares.
s. [That the Merger of the American General [ ] Fund into the North
American [ ] Fund shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the American
General [ ] Fund entitled to vote.]
A-10
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.
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 the President, or any Vice
President, and Treasurer, or any Assistant Treasurer, of North American
Funds, 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 AGAM shall have
furnished to the Acquired Fund a statement, dated the Exchange Date, signed
by an officer of AGAM, certifying that as of the Valuation Time and as of
the Exchange Date, to the best of AGAM's 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, except as described in
the North American Prospectus, non-assessable by North American Funds and
the Acquiring Fund and that 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 North
American 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
American General Series Portfolio Company 2 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
North American Funds' Amended and Restated Agreement and Declaration of
Trust, as amended (the "North American 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.
A-11
f. [Except in the cases of the Mergers of American General Small Cap
Value Fund into North American Mid Cap Value Fund, and American General Mid
Cap Index Fund into North American Stock Index Fund] 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. [In the cases of the Mergers
of American General Small Cap Value Fund into North American Mid Cap Value
Fund, and American General Mid Cap Index Fund into North American Stock
Index Fund, 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 court decisions, for federal income tax purposes, the above-
described results are more likely than not to obtain.]
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 and
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 investment advisory agreement between American General Asset
Management, Inc. and the Acquiring Fund that is the subject of the Proxy
Statement to Acquiring Fund shareholders dated April , 2000 shall have
been approved by the shareholders of the Acquiring Fund.
k. [That the Merger of the American General [ ] Fund into the North
American [ ] Fund shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the American
General [ ] Fund entitled to vote.]
10. Reserved
11. Waiver of Conditions. The Acquired Fund or the Acquiring Fund,
after consultation with counsel and by consent of the trustees of American
General Series Portfolio Company 2 and the trustees of North American Funds
on behalf of each Fund, 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, North American
Funds or American General Series Portfolio Company 2 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.
A-12
13. Termination. The Acquired Fund and the Acquiring Fund may, by
mutual consent of the trustees of American General Series Portfolio Company
2 and 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 November 27, 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
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 any
investigation made by or on behalf of either of them.
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 North American 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
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 Acquiring Fund.
AMERICAN GENERAL SERIES PORTFOLIO
COMPANY 2,
on behalf of its [ ] series
By: _________________________________
NORTH AMERICAN FUNDS,
on behalf of its [ ] series
By: _________________________________
A-13
APPENDIX B
Excerpts from the Annual Report of North American Funds for the year ended
October 31, 1999 regarding the investment performance of the Acquiring Funds
are provided on the following pages. Please note that certain of the investment
strategies of the Mid Cap Growth Fund (formerly the Small/Mid Cap Fund), the
Balanced Fund, the Strategic Income Fund, the Core Bond Fund (formerly the
Investment Quality Bond Fund) and the Municipal Bond Fund (formerly the
National Municipal Bond Fund) have changed since October 31, 1999. As the Stock
Index Fund and the Mid Cap Value Fund are new Funds created after October 31,
1999, the Annual Report does not include the investment performance for these
two Funds. Corresponding information for the Money Market Fund is not required
to be included in the Annual Report.
B-1
International Equity Fund
(formerly the International Growth and Income Fund)
Investment Seeks to provide long-term capital appreciation by
Objective: investing primarily in accordance with country and sector
weightings determined by MSAM in equity securities of
non-U.S. issuers which, in the aggregate, replicate broad
market indices.
Subadvisor: Morgan Stanley Asset Management (MSAM)
Portfolio Barton M. Biggs, Ann Thivierge
Manager:
Inception Date: January 9, 1995/6/
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
International Equity Fund
Growth of Growth of
$10,000 $10,000
Invested in Invested in
Class A Class A
shares at shares with
Net Asset of the Int'l
Value Growth &
of the Int'l Income
Growth & Fund MSCI All
Income Fund 5.75% Sales Customized 85/15 75/15/10 Country MSCA
Month Ended NAV Charge Benchmark Composite Composite ex U.S. EAFE
Dec-
94 $10,000 $9,425 $10,000 $10,000 $10,000 $10,000 $10,000
Jan-
95 $9,800 $9,237 $9,766 $9,766 $9,690 $9,546 $9,616
Feb-
95 $9,590 $9,039 $9,795 $9,795 $9,662 $9,494 $9,588
Mar-
95 $10,030 $9,453 $10,473 $10,473 $10,277 $10,031 $10,186
Apr-
95 $10,350 $9,755 $10,840 $10,840 $10,658 $10,422 $10,569
May-
95 $10,150 $9,566 $10,761 $10,761 $10,636 $10,376 $10,444
Jun-
95 $9,977 $9,403 $10,608 $10,608 $10,511 $10,233 $10,261
Jul-
95 $10,488 $9,885 $11,163 $11,163 $11,020 $10,813 $10,900
Aug-
95 $10,228 $9,639 $10,692 $10,692 $10,579 $10,438 $10,485
Sep-
95 $10,308 $9,715 $10,916 $10,916 $10,778 $10,616 $10,689
Oct-
95 $10,137 $9,554 $10,662 $10,662 $10,519 $10,333 $10,402
Nov-
95 $10,338 $9,743 $10,926 $10,926 $10,727 $10,576 $10,691
Dec-
95 $10,786 $10,165 $11,307 $11,307 $11,102 $10,994 $11,122
Jan-
96 $10,888 $10,262 $11,299 $11,299 $11,176 $11,145 $11,167
Feb-
96 $10,857 $10,233 $11,331 $11,331 $11,175 $11,145 $11,205
Mar-
96 $11,041 $10,406 $11,509 $11,509 $11,327 $11,353 $11,443
Apr-
96 $11,265 $10,617 $11,709 $11,709 $11,541 $11,697 $11,776
May-
96 $11,235 $10,589 $11,617 $11,617 $11,465 $11,521 $11,559
Jun-
96 $11,367 $10,714 $11,681 $11,681 $11,529 $11,580 $11,624
Jul-
96 $11,102 $10,464 $11,482 $11,482 $11,281 $11,195 $11,285
Aug-
96 $11,214 $10,569 $11,617 $11,617 $11,420 $11,261 $11,309
Sep-
96 $11,510 $10,848 $11,856 $11,856 $11,635 $11,541 $11,610
Oct-
96 $11,581 $10,916 $11,902 $11,902 $11,637 $11,425 $11,492
Nov-
96 $12,010 $11,319 $12,357 $12,357 $12,046 $11,865 $11,949
Dec-
96 $12,093 $11,397 $12,296 $12,296 $11,996 $11,728 $11,795
Jan-
97 $11,849 $11,167 $11,941 $11,941 $11,776 $11,513 $11,382
Feb-
97 $11,926 $11,241 $12,126 $12,126 $11,959 $11,724 $11,569
Mar-
97 $12,004 $11,314 $12,145 $12,146 $11,978 $11,699 $11,610
Apr-
97 $11,993 $11,303 $12,167 $12,168 $12,000 $11,798 $11,672
May-
97 $12,503 $11,784 $12,831 $12,832 $12,655 $12,526 $12,432
Jun-
97 $12,947 $12,203 $13,448 $13,445 $13,263 $13,218 $13,117
Jul-
97 $13,091 $12,339 $13,664 $13,660 $13,476 $13,485 $13,329
Aug-
97 $12,270 $11,565 $12,774 $12,771 $12,598 $12,424 $12,334
Sep-
97 $12,736 $12,004 $13,464 $13,461 $13,279 $13,096 $13,024
Oct-
97 $11,993 $11,303 $12,530 $12,526 $12,357 $11,981 $12,023
Nov-
97 $11,838 $11,157 $12,387 $12,383 $12,216 $11,831 $11,900
Dec-
97 $12,036 $11,344 $12,499 $12,495 $12,327 $11,968 $12,004
Jan-
98 $12,368 $11,657 $12,874 $12,869 $12,671 $12,326 $12,552
Feb-
98 $13,166 $12,409 $13,732 $13,728 $13,419 $13,148 $13,358
Mar-
98 $13,707 $12,919 $14,207 $14,201 $13,763 $13,602 $13,769
Apr-
98 $13,940 $13,139 $14,309 $14,303 $13,881 $13,700 $13,878
May-
98 $13,756 $12,965 $14,049 $14,043 $13,619 $13,451 $13,810
Jun-
98 $13,559 $12,780 $13,997 $13,991 $13,560 $13,401 $13,915
Jul-
98 $13,608 $12,826 $14,129 $14,123 $13,701 $13,528 $14,056
Aug-
98 $11,312 $10,661 $12,137 $12,132 $12,097 $11,620 $12,314
Sep-
98 $10,771 $10,152 $11,880 $11,875 $12,019 $11,375 $11,936
Oct-
98 $12,073 $11,379 $13,125 $13,119 $13,191 $12,566 $13,180
Nov-
98 $12,712 $11,981 $13,830 $13,824 $13,764 $13,242 $13,855
Dec-
98 $13,022 $12,273 $14,307 $14,300 $14,199 $13,698 $14,401
Jan-
99 $13,219 $12,459 $14,291 $14,285 $14,118 $13,683 $14,357
Feb-
99 $12,837 $12,099 $13,971 $13,965 $13,806 $13,377 $14,016
Mar-
99 $13,601 $12,819 $14,646 $14,640 $14,475 $14,023 $14,600
Apr-
99 $14,032 $13,225 $15,239 $15,372 $15,093 $14,724 $15,192
May-
99 $13,305 $12,540 $16,024 $14,650 $14,456 $14,032 $15,974
Jun-
99 $13,823 $13,028 $16,649 $15,323 $15,009 $14,677 $16,597
Jul-
99 $14,143 $13,330 $17,144 $15,682 $15,384 $15,022 $17,090
Aug-
99 $14,192 $13,376 $17,207 $15,737 $15,451 $15,074 $17,153
Sep-
99 $14,266 $13,446 $17,381 $15,843 $15,538 $15,176 $17,326
Oct-
99 $14,648 $13,806 $18,033 $16,433 $15,999 $15,740 $17,976
Performance Table
Average Annual Cumulative
Total Return Total Return
------------------------ -----------------
Periods Ending October 31, 1999 1 Since Since/6 Since Since/6
Year Inception / Inception /
------ --------- 4/1/99 --------- 4/1/99
------- -------
Customized Benchmark/1/,/2/ 37.39% 12.95% 23.12% 80.33% 23.12%
85%/15% Composite Index/1/,/3/ 25.26% 10.81% 12.25% 64.33% 12.25%
75%/15%/10% Composite Index/1/,/7/ 21.29% 10.20% 10.53% 59.99% 10.53%
MSCI All Country World ex
U.S./1/,/7/ 25.26% 9.83% 12.25% 57.40% 12.25%
MSCI EAFE/1/,/8/ 36.39% 12.88% 23.12% 79.76% 23.12%
International Equity Fund A (NAV) 21.33% 8.26% 7.70% 46.48% 7.70%
International Equity Fund Class A
(net of 5.75%
sales charge) 14.35% 6.94% 1.51% 38.06% 1.51%
International Equity Fund Class B
(NAV) 20.53% 7.66% 7.31% 42.66% 7.31%
International Equity Fund Class B
(net of CDSC)/4/ 15.53% 7.35% 2.31% 40.66% 2.31%
International Equity Fund Class C
(NAV) 20.53% 7.65% 7.31% 42.56% 7.31%
International Equity Fund Class C
(net of CDSC)/5/ 19.53% 7.65% 6.31% 42.56% 6.31%
- ---------------------
/1/ All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/ Comprised of 75% of the return of the MSCI EAFE Index, 15% of the return of
the Salomon Brothers Non-$ WGBI 10 Index, and 10% of the MSCI Emerging
Markets Free ex Malaysia Index. In February of 1997, the 85%/15% Composite
Index was adjusted to reflect the addition of the MSCI Emerging Markets Free
ex Malaysia Index. In January 1998, this index was changed to the MSCI All
Country World ex U.S. Index to accurately reflect the Fund's investment
objective.
/3/ Comprised of 85% of the return of the MSCI EAFE and 15% of the return of
the Salmon Brothers Non-$ WGBI 10 Index.
/4/ The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/5/ The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/6/ Current investment subadvisor assignment became effective 4/1/99.
/7/ Composite composed of 75% MSCI EAFE, 15% the Salomon Brothers Non-$ WGBI 10
Index, both fixed weighted Japan at 25%, and 10% Emerging Markets Free ex
Malaysia from February 1, 1997 to December 31, 1997, then MSCI All Country
World Free (ex US) Index.
/8/ The benchmark became MSCI EAFE Index on 4/1/99 when Morgan Stanley Asset
Management assumed management of the Fund.
B-2
Portfolio Managers' Commentary
The International Equity Fund's Class A performance for the year-ended October
31, 1999 was 21.33% as compared to the Composite Index* return of 37.39% for
the same period.
International markets made good progress in the fourth quarter of 1998 as they
recovered from volatility in the third quarter. Central bank easings around
the world helped equities rebound. Although European stocks lagged the U.S.
during the quarter, they still posted a strong gain of 20.5%. Continued
optimism over corporate restructuring contributed to the strength of these
markets. Japan was up 5.1% for the quarter, in spite of a continued recession.
An injection of capital into the Japanese banking sector contributed to the
market's return. The emerging markets had a strong quarter, as stocks were
boosted by global interest rate cuts.
In the first quarter of 1999, the Fund's Japanese holdings fared particularly
well, as the market in this region outperformed all other stock markets
worldwide in February and March. Investors became more optimistic that
Japanese economic growth could resume, and corporate restructuring began to
proliferate. In Europe, investors continue to be concerned about slowing
economic activity and pressure on corporate profits, which have overshadowed
an upsurge in mergers and acquisitions. For the quarter, Europe lagged both
the U.S. and Japan. Emerging markets provided strong returns for the quarter,
marked by a recovery in Brazil.
In April, 1999, Morgan Stanley Asset Management took over management of the
Fund. For much of the second quarter, the Fund was defensively positioned and
the emphasis on Japan and Asia positively affected the Fund. Although European
economic growth was picking up, we were concerned about high valuation levels.
Thus we still preferred Asia and remained underweight in Europe.
For the past several months, global markets have churned on worries about
interest rates and central bank policies. However, the October release of the
moderate U.S. 3rd quarter economic growth numbers and a lower than expected
employment cost index increased the probability of a soft landing in the U.S.
This scenario has increased our confidence that global markets will be strong.
Japan and Asia are just emerging from devastating depression and bear markets,
and Europe is in the early stages of what could be a prolonged period of
growth. We believe EAFE is well positioned versus the S&P 500 not for months,
but for years.
B-3
Emerging Growth Fund
(currently named the Small Cap Growth Fund)
Investment Seeks to provide maximum capital appreciation by
Objective: investing primarily in a portfolio of equity securities
of domestic companies. Under normal conditions, the Fund
will be mainly invested in common stocks or warrants of
emerging growth companies that represent attractive
opportunities for maximum capital appreciation.
Subadvisor: Warburg Pincus Asset Management, Inc.
Portfolio Elizabeth B. Dater, Stephen J. Lurito
Manager:
Inception Date: January 6, 1998
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Emerging Growth Fund
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 5.75% charge Investment in the
Month Ended of the Emerging Growth Fund of the Emerging Growth Fund Russell 2000 Growth
Month Ended NAV 5.75% Sales Charge Russell 2000 Growth
1/6/98 $10,000 $9,425 $10,000
Jan-
98 $9,990 $9,416 $9,867
Feb-
98 $10,690 $10,075 $10,738
Mar-
98 $11,160 $10,518 $11,189
Apr-
98 $11,270 $10,622 $11,258
May-
98 $10,640 $10,028 $10,440
Jun-
98 $10,940 $10,311 $10,547
Jul-
98 $9,910 $9,340 $9,666
Aug-
98 $7,890 $7,436 $7,435
Sep-
98 $8,470 $7,983 $8,189
Oct-
98 $8,880 $8,369 $8,617
Nov-
98 $9,410 $8,869 $9,285
Dec-
98 $10,090 $9,510 $10,125
Jan-
99 $10,350 $9,755 $10,581
Feb-
99 $9,530 $8,982 $9,613
Mar-
99 $10,090 $9,510 $9,955
Apr-
99 $10,290 $9,698 $10,834
May-
99 $10,350 $9,755 $10,852
Jun-
99 $11,630 $10,961 $11,423
Jul-
99 $11,530 $10,867 $11,070
Aug-
99 $11,450 $10,792 $10,656
Sep-
99 $11,970 $11,282 $10,862
Oct-
99 $12,810 $12,073 $11,137
Performance Table
Average Annual Cumulative
Total Return Total Return
---------------- ------------
1 Since Since
Year Inception Inception
Periods Ending October 31, 1999 ------ --------- ------------
Russell 2000 Growth/1/ 29.98% 6.05% 11.37%
Emerging Growth Fund A (NAV) 44.26% 14.61% 28.10%
Emerging Growth Fund Class A (net of 5.75% sales
charge) 35.97% 10.93% 20.73%
Emerging Growth Fund Class B (NAV) 42.36% 13.42% 25.70%
Emerging Growth Fund Class B (net of CDSC)/2/ 37.36% 10.91% 20.70%
Emerging Growth Fund Class C (NAV) 42.19% 13.42% 25.70%
Emerging Growth Fund Class C (net of CDSC)/3/ 41.19% 13.42% 25.70%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/3/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
B-4
Portfolio Manager's Commentary
Supported by optimism over interest rates and earnings, small-cap and
emerging-growth stocks had generally good showings in October, with the
Russell 2000 Growth and Russell 2500 Growth indexes up 2.56% and 4.87%,
respectively. North American Emerging Growth Fund had a gain of 7.02% for the
month, a solid return both in absolute terms and compared to those of its
benchmarks. The Emerging Growth Fund's Class A performance for the year-ended
October 31, 1999, was 44.26% as compared to the Russell 2000 Growth Index
return of 29.98% for the same period. Factors that helped the Fund included
its overweightings in the buoyant technology and communications areas.
In terms of general strategy, we remained focused on well-managed companies
offering innovative products and services. And with respect to major
investment themes, we continued to emphasize companies that stand to benefit
from a global push for enhanced productivity, as well as those standing to
benefit from a maturing and increasingly wealthy population. In this context,
our primary areas of concentration remained technology, communications,
business services, leisure & entertainment and health-care stocks.
The recent decline in smaller-cap and aggressive-growth stocks
notwithstanding, we see ample grounds for optimism regarding their longer-term
prospects. The main reason for our bullishness is the stocks' relative
valuations. By almost any relevant measure, smaller companies are selling
extremely cheaply vs. larger companies, trading at multiples well below their
20-year averages. Assuming that investors ultimately care about value - and
historically they have - smaller caps could see a material pickup in buying
interest at some point in the months ahead.
Adding to the stocks' potential appeal is these companies' relatively strong
earnings prospects. Analysts are currently calling for small-cap earnings
growth of roughly 12% in the third quarter, a healthy gain albeit a less-
robust one than that expected for larger companies. The fourth quarter looks
far better for smaller caps, though, both in relative and absolute terms, with
estimates calling for year-over-year growth of as much as 30%, vs. 20% or
thereabouts for larger companies. The medium- to longer-term outlook is
positive as well, with many analysts expecting smaller companies' earnings
growth to handily exceed that of larger companies over the next three to five
years. Assuming these projections, especially the longer-range ones, are
accurate (admittedly, a big assumption), they make small-cap stocks' current
low multiples that much more compelling.
A third factor that could spark and sustain interest in the group is the near
certainty of ongoing acquisition activity. Smaller companies have been gobbled
up by larger ones at a furious clip so far in 1999, with the total number of
deals for the year likely to be the highest in a decade. The effect on the
share prices of targeted firms has been, in most cases, considerable, and the
likelihood of continued such activity could, at some point, prove too strong a
lure for investors to continue to ignore.
Given the above, we remain positive on the asset class. Given a catalyst, such
as an easing of interest-rate concerns or a broadening of market leadership,
we think small caps could see their fortunes improve considerably, and in
fairly short order. In the meantime, we remain focused on identifying the most
promising companies, since we expect wide differences in share-price
performance between the ultimate winners and losers in the group.
B-5
Small/Mid Cap Fund
(currently named the Mid Cap Growth Fund)
Seeks to provide long-term capital appreciation by
Investment investing at least 65% of its assets in the stocks of
Objective: small-to-mid size companies that have total market
capitalization between $500 million and $5 billion.
Subadvisor: Fred Alger Management, Inc.
Portfolio David D. Alger
Manager: March 4, 1996
Inception Date:
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Small/Mid Cap Fund
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 5.75% charge Investment in the Russell
Month Ended of the Small/Mid Cap Fund of the Small/Mid Cap Fund 2000 Growth Index
Month Ended NAV 5.75% Sales Charge Russell 2000 Growth Index
Feb-
96 $10,000 $9,425 $10,000
Mar-
96 $10,168 $9,583 $10,198
Apr-
96 $10,584 $9,975 $10,981
May-
96 $10,768 $10,149 $11,545
Jun-
96 $10,352 $9,757 $10,794
Jul-
96 $9,312 $8,777 $9,476
Aug-
96 $9,792 $9,229 $10,177
Sep-
96 $10,328 $9,734 $10,702
Oct-
96 $10,096 $9,515 $10,240
Nov-
96 $10,696 $10,081 $10,525
Dec-
96 $10,504 $9,900 $10,730
Jan-
97 $10,944 $10,315 $10,990
Feb-
97 $10,240 $9,651 $10,326
Mar-
97 $9,688 $9,131 $9,598
Apr-
97 $9,832 $9,267 $9,487
May-
97 $10,600 $9,991 $10,913
Jun-
97 $11,248 $10,601 $11,283
Jul-
97 $12,328 $11,619 $11,860
Aug-
97 $12,184 $11,483 $12,216
Sep-
97 $13,080 $12,328 $13,191
Oct-
97 $12,408 $11,695 $12,398
Nov-
97 $12,448 $11,732 $12,103
Dec-
97 $12,173 $11,473 $12,110
Jan-
98 $12,156 $11,457 $11,949
Feb-
98 $13,287 $12,523 $13,004
Mar-
98 $14,166 $13,352 $13,551
Apr-
98 $14,109 $13,298 $13,633
May-
98 $13,653 $12,868 $12,642
Jun-
98 $14,695 $13,850 $12,771
Jul-
98 $14,410 $13,582 $11,705
Aug-
98 $11,489 $10,828 $9,003
Sep-
98 $12,286 $11,580 $9,916
Oct-
98 $13,092 $12,339 $10,434
Nov-
98 $14,052 $13,244 $11,243
Dec-
98 $15,782 $14,875 $12,261
Jan-
99 $15,623 $14,724 $12,813
Feb-
99 $14,869 $14,014 $11,640
Mar-
99 $16,146 $15,218 $12,055
Apr-
99 $16,217 $15,285 $13,119
May-
99 $16,323 $15,385 $13,14
Performance Table
Average Annual Cumulative
Total Return Total Return
-------------- -------------------------
1 Since Since
Periods Ending October 31, 1999 Year Inception/1/ Inception/1/
-------------- ------------ ------------
S&P Mid Cap 400 Index 20.96% 18.09% 83.99%
Russell 2000 Growth Index 29.98% 8.52% 34.97%
50%/50% Composite Index/2/ 25.47% 13.31% 59.48%
Small/Mid Cap Fund A (NAV) 25.50% 14.53% 64.30%
Small/Mid Cap Fund Class A (net of
5.75% sales charge) 18.28% 12.69% 54.85%
Small/Mid Cap Fund Class B (NAV) 24.62% 13.69% 59.95%
Small/Mid Cap Fund Class B (net of
CDSC)/3/ 19.62% 13.10% 56.95%
Small/Mid Cap Fund Class C (NAV) 24.65% 13.74% 60.18%
Small/Mid Cap Fund Class C (net of
CDSC)/4/ 23.65% 13.74% 60.18%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/Comprised of 50% of the return of the S&P MidCap 400 Index and 50% of the
return of the Russell 2000 Growth Index.
/3/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/4/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
B-6
Portfolio Manager's Commentary
Despite being invested primarily in small-cap and mid-cap stocks - which
vastly underperformed large-cap stocks during the recent fiscal year - the
Small/MidCap Fund posted solid results. The Small/Mid Cap Fund Class A posted
a return of 25.50%, slightly underperforming the Composite Index (Russell 2000
Growth/S&P 400) return of 25.47% for the same period, but easily outperforming
the S&P MidCap 400 Index return of 20.96%. A heavy technology weighting, a
growth stock orientation and the strong performance of a few key holdings
allowed the Fund to outperform the small-cap and mid-cap markets.
The fiscal year ended October 31, 1999 began in the midst of a dramatic
recovery from the July/August 1998 market correction caused by the Asian
financial crisis. The third of three interest rate cuts by the Fed took place
in November 1998, adding momentum to the market's revival. During the first
half of the year, large-cap stocks marched forward without a notable setback,
while their smaller counterparts struggled. All of the major large-cap indices
continuously set new highs, and the Dow Jones Industrial Average closed over
10,000 for the first time on March 29, 1999.
May and June saw consolidation and profit taking in the equity markets. An
ongoing fear of rising interest rates was realized on June 30 when the Fed
"took back" one of three previous interest rate cuts by hiking the Fed Funds
Rate to 5%. Nonetheless, the market shrugged off the rate hike and took solace
in the Fed's return to a "neutral bias." Large-cap stocks continued to rally,
and the S&P 500 reached an intra-day high of 1420.33 on July 19.
The fourth quarter of the recent fiscal year was marked by extreme market
volatility, an overall downward trend, and ultimately, a dramatic rebound. The
market slipped steadily downward from its mid-July peak and failed to match
its previous highs during August and September. In October, mounting fears of
rising interest rates, an upward spike in the price of gold and a series of
threatening economic reports forced the yield on the long bond to 6.40%.
Equity markets reacted strongly. The Dow Jones dropped more than 1,000 points
in less than a month, briefly dipping below the 10,000 level on October 18th.
As is so often the case, however, the market recovered when it appeared to be
at its weakest. As inflation jitters and interest rate fears subsided with the
release of benign economic data, the final two weeks of October saw dramatic
gains throughout both the bond and equity markets. The long bond once again
approached 6%, and the Dow Jones neared 11,000.
The stock market is seemingly in the midst of a strong recovery. Recently, out
of favor industries such as financials and pharmaceuticals have also begun to
act well. According to David Alger, regardless of whether the Fed raises rates
on November 16th, the market may continue to rally. If the Fed does raise
rates, it will be viewed as the last in a set of three. If it does not, that
will be considered bullish.
B-7
Growth Equity Fund
(currently named the Large Cap Growth Fund)
Investment Seeks to provide long-term growth of capital by investing
Objective: at least 65% of its assets in common stocks of well-
established, high-quality growth companies.
Founders Asset Management LLC
Subadvisor:
Portfolio
Manager: Thomas Arrington, Scott Chapman
March 4, 1996
Inception Date:
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Growth Equity Fund
Growth of $10,000 Growth of $10,000
Invested in Invested in
Class A shares at Class A shares with
Net Asset Value of 5.75% charge Growth of $10,000
the Growth of the Growth Investment
Equity Fund Equity Fund in the
Month Ended NAV 5.75% Sales Charge S&P 500
Feb-96 $10,000 $9,425 $10,000
Mar-96 $10,080 $9,500 $10,098
Apr-96 $10,680 $10,066 $10,252
May-96 $11,168 $10,526 $10,504
Jun-96 $11,040 $10,405 $10,547
Jul-96 $10,216 $9,629 $10,081
Aug-96 $10,560 $9,953 $10,294
Sep-96 $11,104 $10,466 $10,873
Oct-96 $11,024 $10,390 $11,173
Nov-96 $11,712 $11,039 $12,018
Dec-96 $11,305 $10,655 $11,780
Jan-97 $11,994 $11,304 $12,516
Feb-97 $11,702 $11,029 $12,614
Mar-97 $11,329 $10,678 $12,095
Apr-97 $11,872 $11,190 $12,816
May-97 $12,578 $11,855 $13,595
Jun-97 $13,243 $12,481 $14,205
Jul-97 $14,419 $13,590 $15,334
Aug-97 $13,713 $12,925 $14,475
Sep-97 $14,419 $13,590 $15,267
Oct-97 $13,794 $13,001 $14,757
Nov-97 $13,932 $13,131 $15,440
Dec-97 $14,173 $13,358 $15,706
Jan-98 $14,323 $13,500 $15,880
Feb-98 $15,253 $14,376 $17,025
Mar-98 $16,068 $15,144 $17,897
Apr-98 $16,325 $15,386 $18,078
May-98 $16,086 $15,161 $17,767
Jun-98 $16,945 $15,971 $18,488
Jul-98 $16,644 $15,687 $18,292
Aug-98 $13,756 $12,965 $15,651
Sep-98 $14,615 $13,775 $16,654
Oct-98 $15,705 $14,802 $18,008
Nov-98 $16,476 $15,528 $19,099
Dec-98 $17,734 $16,714 $20,199
Jan-99 $18,959 $17,868 $21,043
Feb-99 $18,450 $17,389 $20,389
Mar-99 $19,467 $18,348 $21,205
Apr-99 $19,185 $18,081 $22,025
May-99 $18,375 $17,318 $21,505
Jun-99 $19,627 $18,499 $22,699
Jul-99 $18,949 $17,860 $21,991
Aug-99 $18,977 $17,886 $21,881
Sep-99 $18,657 $17,584 $21,281
Oct-99 $20,192 $19,031 $22,614
Performance Table
Average Annual Cumulative
Total Return Total Return
---------------- ------------
1 Since Since
Year Inception Inception
Periods Ending October 31, 1999 ------ --------- ------------
S&P 500/1/ 25.58% 24.92% 126.14%
Growth Equity Fund A (NAV) 28.57% 21.17% 101.92%
Growth Equity Fund Class A (net of 5.75% sales
charge) 21.18% 19.23% 90.31%
Growth Equity Fund Class B (NAV) 27.77% 20.41% 97.33%
Growth Equity Fund Class B (net of CDSC)/2/ 22.77% 19.90% 94.33%
Growth Equity Fund Class C (NAV) 27.75% 20.38% 97.18%
Growth Equity Fund Class C (net of CDSC)/3/ 26.75% 20.38% 97.18%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/3/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
B-8
Portfolio Manager's Commentary
The Growth Equity Fund's Class A performance for the year-ended October 31,
1999 was 28.57% as compared to the S&P 500 Index return of 25.58% for the same
period. In December 1998, Thomas Arrington and Scott Chapman became co-
managers of the Fund.
While the first half of the year saw strong performance in mid- to large-cap
equities, the U.S. stock market experienced a summer pullback. This was driven
initially by investors' concern that the Federal Reserve would further raise
short-term interest rates, a fear that was realized in the form of August's
hikes in the Federal Funds and discount rates.
Specifically, the performance of the Fund during the second quarter was
adversely affected by a major shift in investor preference away from large-
cap, consistent growth companies toward economically sensitive companies. This
shift occurred primarily because the United States' economy grew faster than
expected while, at the same time, Asian economies appeared to be stabilizing.
Consequently, the Fund faced strong headwinds in the second quarter as
cyclical, mid-cap and small-cap stocks rebounded with a vengeance from their
multi-year performance dormancy and traders took profits in large cap growth
stocks. Traders became more confident of a robust economic outlook which gave
them courage to buy companies with less certain longer-term outlooks.
Despite the market shift during the quarter, the Fund remained true to its
investment discipline. We focus on companies that we believe have the
potential to deliver consistent earnings growth in all-weather economic
environments, not on companies that are inextricably tied to the health of the
economy. The Fund emphasizes a diversified portfolio of brand-name large- and
mid-capitalization growth companies with a demonstrated track record of
reliable earnings growth. In the third quarter, this focus led us to be
slightly overweight in the healthcare and technology sectors, positioning that
served the Fund well. The imperatives of consumers investing in Internet
access and companies investing in e-commerce capabilities also contributed to
the gains in the technology sector. Both stock selection and an overweight
position in the sector contributed to our performance.
B-9
Growth and Income Fund
Investment Seeks to provide long-term growth of capital and income
Objective: consistent with prudent investment risk by investing
primarily in a diversified portfolio of common stocks of
United States issuers which the portfolio manager
believes are of high quality.
Wellington Management Company LLP
Subadvisor:
Portfolio
Manager: Matthew E. Megargel
May 1, 1991
Inception Date:
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Growth and Income Fund
Growth of $10,000 Invested in Growth of $10,000 Invested in
Class A shares at Net Asset Value Class A shares with 5.75% charge Growth of $10,000
of the Growth & Income Fund of the Growth & Income Fund Investment in the
Month Ended NAV 5.75% Sales Charge S&P 500
Apr-
91 $10,000 $9,425 $10,000
May-
91 $10,240 $9,651 $10,428
Jun-
91 $9,879 $9,311 $9,951
Jul-
91 $10,201 $9,614 $10,417
Aug-
91 $10,352 $9,757 $10,662
Sep-
91 $10,205 $9,618 $10,487
Oct-
91 $10,588 $9,979 $10,628
Nov-
91 $10,175 $9,590 $10,198
Dec-
91 $11,088 $10,450 $11,364
Jan-
92 $10,775 $10,155 $11,153
Feb-
92 $10,876 $10,250 $11,295
Mar-
92 $10,642 $10,030 $11,074
Apr-
92 $10,805 $10,183 $11,396
May-
92 $10,845 $10,222 $11,458
Jun-
92 $10,779 $10,159 $11,292
Jul-
92 $11,217 $10,572 $11,747
Aug-
92 $11,146 $10,505 $11,509
Sep-
92 $11,400 $10,745 $11,642
Oct-
92 $11,480 $10,820 $11,684
Nov-
92 $11,777 $11,100 $12,077
Dec-
92 $12,007 $11,317 $12,236
Jan-
93 $12,162 $11,463 $12,325
Feb-
93 $12,286 $11,579 $12,491
Mar-
93 $12,677 $11,948 $12,760
Apr-
93 $12,430 $11,715 $12,447
May-
93 $12,657 $11,929 $12,783
Jun-
93 $12,656 $11,928 $12,826
Jul-
93 $12,625 $11,899 $12,765
Aug-
93 $13,008 $12,260 $13,252
Sep-
93 $12,956 $12,211 $13,154
Oct-
93 $13,153 $12,396 $13,421
Nov-
93 $12,884 $12,143 $13,294
Dec-
93 $13,112 $12,358 $13,458
Jan-
94 $13,574 $12,793 $13,909
Feb-
94 $13,406 $12,635 $13,533
Mar-
94 $12,892 $12,150 $12,945
Apr-
94 $13,028 $12,279 $13,113
May-
94 $13,259 $12,497 $13,327
Jun-
94 $12,932 $12,188 $12,997
Jul-
94 $13,481 $12,706 $13,428
Aug-
94 $13,871 $13,074 $13,974
Sep-
94 $13,607 $12,825 $13,637
Oct-
94 $13,819 $13,024 $13,950
Nov-
94 $13,196 $12,437 $13,438
Dec-94 $13,421
Performance Table
Average Annual Cumulative
Total Return Total Return
----------------------- ------------
5 Since Since
Periods Ending October 31, 1999 1 Year Years Inception Inception
------ ------ --------- ------------
S&P 500/1/ 25.58% 25.99% 19.13% 342.70%
Growth and Income Fund A (NAV)/4/ 23.11% 22.91% 2.78% 200.63%
Growth and Income Fund Class A (net of
5.75% sales charge)/4/ 16.03% 21.46% 20.49% 183.95%
Growth and Income Fund Class B (NAV)/4/ 22.28% 22.21% 21.14% 191.96%
Growth and Income Fund Class B (net of
CDSC)/2/,/4/ 17.28% 22.03% 21.07% 190.96%
Growth and Income Fund Class C (NAV) 22.28% 22.17% 16.82% 275.34%
Growth and Income Fund Class C (net of
CDSC)/3/ 21.28% 22.17% 16.82% 275.34%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/3/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/4/The inception date of Class A and Class B shares is 4/1/94.
B-10
Portfolio Manager's Commentary
The Growth and Income Fund's Class A performance for the year-ended October
31, 1999 was 23.11% as compared to the S&P 500 Stock Index return of 25.58%
for the same period. This performance compares favorably to the average growth
and income fund, as reported by Lipper Analytical Services, Inc., that climbed
17.55% over the same period. Fund performance was helped by select energy,
information technology, and industrial and commercial stocks and by being
underweight in finance and consumer discretionary stocks. Relative performance
was limited by select health care and consumer staples holdings.
At the start of the fiscal year investors were concerned with tightening
credit conditions sparked by the Russian default and the near collapse of a
highly leveraged bond hedge fund. Fearing deflation and a global bear market,
cautious investors created an upheaval in the capital markets. Investors
sought refuge in safer issues, particularly U.S. Treasury securities and
large, highly liquid stocks. Fortunately, the U.S. economy continued to
perform well allowing interest rate spreads (the difference between yields on
Treasury securities and bonds of lesser quality) to narrow from historically
wide gaps. In addition, Japan, the Pacific Rim area, most of Europe, and some
Latin America nations recovered or stabilized. Ratifying investor sentiment,
the Dow broke 10,000 for the first time in March.
Looking ahead, an accelerating world economy is central to our investment
outlook. We believe improving Japanese consumer confidence, a growth rebound
in much of Asia, greater stability in Latin America, a stronger Europe, and
slower, but solid growth in the U.S. should leave the world poised for growth.
We continue to believe that longer-term economic conditions for equities are
favorable. Despite the recent rise in energy prices, we expect inflation to
remain low. Technological innovation has boosted productivity and helped keep
inflation under wraps in the recent past. That trend should continue. While we
are anticipating moderating GDP growth, we would not be surprised by one or
two Federal Reserve rate hikes in the next six months. We are intrigued by
pending deregulation in the financial services industry and may see renewed
interest in the sector sparked by consolidation activity. While values appear
to be emerging in some sectors such as health care and finance, it may take
time for the overall market to establish a firm base from which to move
higher.
B-11
Balanced Fund
To provide current income and capital appreciation by
Investment investing in a balanced portfolio of common stocks, U.S.
Objective: and foreign government obligations and a variety of
corporate fixed-income securities.
Subadvisor: Founders Asset Management LLC
Portfolio Brian F. Kelly
Manager: August 28, 1989/5/
Inception Date:
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Balanced Fund
Growth of $10,000 Invested in Growth of $10,000 Invested in Growth of $10,000
Class A shares at Net Asset Value Class A shares with 5.75% charge Investment in the
Month Ended of the Balanced Fund of the Balanced Fund S&P 500
Month Ended NAV 5.75% Sales Charge S&P 500
Oct-
89 $10,000 $9,425 $10,000
Nov-
89 $10,061 $9,482 $10,204
Dec-
89 $10,117 $9,535 $10,449
Jan-
90 $9,492 $8,946 $9,748
Feb-
90 $9,586 $9,035 $9,874
Mar-
90 $9,586 $9,035 $10,135
Apr-
90 $9,346 $8,809 $9,882
May-
90 $9,846 $9,280 $10,845
Jun-
90 $9,799 $9,235 $10,772
Jul-
90 $9,682 $9,125 $10,737
Aug-
90 $9,026 $8,507 $9,766
Sep-
90 $8,687 $8,188 $9,291
Oct-
90 $8,603 $8,108 $9,251
Nov-
90 $8,941 $8,427 $9,848
Dec-
90 $9,235 $8,704 $10,123
Jan-
91 $9,527 $8,979 $10,565
Feb-
91 $9,991 $9,417 $11,320
Mar-
91 $10,110 $9,529 $11,594
Apr-
91 $10,175 $9,590 $11,622
May-
91 $10,293 $9,702 $12,119
Jun-
91 $10,043 $9,466 $11,565
Jul-
91 $10,329 $9,735 $12,107
Aug-
91 $10,559 $9,952 $12,391
Sep-
91 $10,537 $9,932 $12,188
Oct-
91 $10,713 $10,097 $12,351
Nov-
91 $10,570 $9,963 $11,852
Dec-
91 $11,216 $10,571 $13,207
Jan-
92 $11,271 $10,623 $12,961
Feb-
92 $11,537 $10,874 $13,127
Mar-
92 $11,382 $10,728 $12,870
Apr-
92 $11,570 $10,905 $13,244
May-
92 $11,803 $11,124 $13,316
Jun-
92 $11,626 $10,957 $13,123
Jul-
92 $11,884 $11,200 $13,652
Aug-
92 $12,877 $12,137 $13,376
Sep-
92 $11,825 $11,145 $13,530
Oct-
92 $11,919 $11,233 $13,578
Nov-
92 $12,386 $11,674 $14,036
Dec-
92 $12,662 $11,934 $14,220
Jan-
93 $12,793 $12,057 $14,324
Feb-
93 $12,733 $12,001 $14,517
Mar-
93 $13,078 $12,326 $14,829
Apr-93
Performance Table
Average Annual Cumulative
Total Return Total Return
-------------------------------- -------------------
Periods Ending October 1 5 10 Since/5/ 10 Since/5/
31, 1999 Year Years Years 10/1/96 Years 10/1/96
------ ------ ------ -------- ------- --------
S&P 500/1/ 25.58% 25.99% 17.80% 26.80% 414.49% 107.94%
Lehman Brothers Aggregate
Bond Index/1/ 0.53% 7.94% 7.88% 6.76% 113.49% 22.36%
50%/50% Composite/1/,/2/ 13.06% 16.97% 12.84% 16.78% 264.00% 66.15%
Balanced Fund A (NAV) 1.20% 11.98% 10.78%/6/ 10.37% 77.19%/6/ 35.54%
Class A (net of 5.75%
sales charge) -4.62% 10.66% 9.62%/6/ 8.27% 67.01%/6/ 27.75%
Balanced Fund Class B
(NAV) 0.57% 11.29% 10.15%/6/ 9.67% 71.64%/6/ 32.91%
Class B (net of CDSC)/3/ -4.43% 11.03% 10.04%/6/ 8.86% 70.64%/6/ 29.91%
Balanced Fund Class C
(NAV) 0.58% 11.27% 8.94% 9.67% 135.42% 32.91%
Class C (net of CDSC)/4/ -0.42% 11.27% 8.94% 9.67% 135.42% 32.91%
- -------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/Comprised of 50% of the return of the S&P 500 and 50% of the return of the
Lehman Brothers Aggregate Bond Index.
/3/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/4/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/5/Current investment subadvisor assignment became effective 10/1/96.
/6/Returns are since inception. The inception date of Class A and Class B
shares is 4/1/94.
B-12
Portfolio Manager's Commentary
The Balanced Fund's Class A performance for the year-ended October 31, 1999,
was 1.20% as compared to the 50% S&P/50% Lehman Brothers Aggregate Bond Index
return of 13.06% for the same period.
The Fund maintains the flexibility to strategically shift its composition to
take advantage of market conditions. In building the equity portion of the
Balanced Fund, we follow a growth philosophy, looking for those firms whose
fundamental strengths suggest the potential for consistent streams of
corporate earnings. To the extent that our research process does not identify
attractive equity opportunities, our exposure to bonds or cash may increase.
We continue to take a conservative approach to the Fund and have been closely
monitoring the number of stocks in the Fund. At the end of the third quarter,
approximately 48% of the Fund was invested in equities.
The Fund has carried a heavier weighting in bonds than the average balanced
fund because we have been concerned about the high absolute and relative
valuations the market currently awards many of the quality large-cap
companies.
We are confident in the equities we own and have taken larger positions in a
smaller number of names as a way of targeting those companies that we believe
offer the best opportunities for earnings growth. We believe that this
structure best positions the Balanced Fund in the current environment to
pursue income and capital appreciation.
We have been pleased with XL Capital Ltd. (4.51% of the Fund), a Bermuda-based
corporation that provides liability insurance coverage. XL Capital has a low
p/e, and its dividend looks secure. Analysts expect the pricing environment
for reinsurance companies to improve after prices hit relative lows, and we
believe XL Capital could benefit from this improved climate.
The Fund has been overweight vs. the S&P 500 Index in pharmaceuticals and
unfortunately, as a group, they have lagged the market. Pharmaceutical
companies are introducing many new products and generally have delivered on
their earnings. Although not inexpensive, this appears to be a sector of the
market that can grow into its current valuation. This sector has shown steady
earnings growth, and multiples are one-half or less than those of many
technology stocks. We continue to believe in the long-term fundamentals of our
drug holdings and will monitor their growth rates and valuations closely.
As we concentrate the number of stocks in the Fund, we've moved additional
assets into the Fund's fixed-income allocation. Since interest rates across
all durations of U.S. Treasury instruments have generally increased in 1999,
the value of bonds has dropped. Consequently, this portion of the Fund has
adversely affected performance on a year-to-date basis.
B-13
Strategic Income Fund
Investment Seeks to provide a high level of total return consistent
Objective: with the preservation of capital. The Fund invests in
certain segments of the fixed-income market based on
current economic and market conditions and on the
relative risks and opportunities in the different market
segments.
Subadvisor: Salomon Brothers Asset Management Inc.
Portfolio Robert Lavan, Peter Wilby, David J. Scott
Manager:
Inception Date: November 1, 1993
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
Strategic Income Fund
Growth of $10,000 Growth of $10,000
Invested in Invested in Growth of $10,000
Class A shares at Class A shares with Investment in the
Net Asset Value 5.75% charge Lehman Brothers
of the Strategic of the Strategic Aggregate Bond Index
Month Ended Income Fund Income Fund LB Aggregate
Month Ended NAV 5.75% Sales Charge Bond Index
Oct-93 $10,000 $9,525 $10,000
Nov-93 $10,019 $9,543 $9,915
Dec-93 $10,122 $9,641 $9,969
Jan-94 $10,283 $9,795 $10,103
Feb-94 $10,001 $9,525 $9,927
Mar-94 $9,539 $9,086 $9,682
Apr-94 $9,444 $8,996 $9,605
May-94 $9,567 $9,113 $9,604
Jun-94 $9,522 $9,070 $9,583
Jul-94 $9,564 $9,110 $9,773
Aug-94 $9,615 $9,158 $9,785
Sep-94 $9,638 $9,180 $9,641
Oct-94 $9,621 $9,164 $9,632
Nov-94 $9,561 $9,107 $9,611
Dec-94 $9,435 $8,986 $9,678
Jan-95 $9,448 $8,999 $9,869
Feb-95 $9,543 $9,090 $10,104
Mar-95 $9,592 $9,136 $10,166
Apr-95 $9,899 $9,429 $10,308
May-95 $10,244 $9,758 $10,707
Jun-95 $10,381 $9,888 $10,785
Jul-95 $10,428 $9,933 $10,761
Aug-95 $10,463 $9,966 $10,892
Sep-95 $10,642 $10,137 $10,997
Oct-95 $10,720 $10,211 $11,140
Nov-95 $10,905 $10,387 $11,307
Dec-95 $11,187 $10,655 $11,466
Jan-96 $11,685 $11,130 $11,544
Feb-96 $11,497 $10,951 $11,343
Mar-96 $11,502 $10,956 $11,263
Apr-96 $11,645 $11,091 $11,200
May-96 $11,737 $11,180 $11,178
Jun-96 $11,868 $11,304 $11,328
Jul-96 $11,924 $11,358 $11,358
Aug-96 $12,107 $11,532 $11,339
Sep-96 $12,494 $11,901 $11,536
Oct-96 $12,580 $11,982 $11,792
Nov-96 $12,812 $12,204 $11,994
Dec-96 $12,845 $12,234 $11,882
Jan-97 $13,005 $12,387 $11,919
Feb-97 $13,153 $12,528 $11,949
Mar-97 $12,926 $12,312 $11,816
Apr-97 $13,072 $12,451 $11,994
May-97 $13,356 $12,721 $12,108
Jun-97 $13,518 $12,876 $12,252
Jul-97 $13,886 $13,227 $12,583
Aug-97 $13,835 $13,178 $12,476
Sep-97 $14,112 $13,441 $12,660
Oct-97 $13,910 $13,249 $12,844
Nov-97 $14,090 $13,421 $12,903
Dec-97 $14,142 $13,470 $13,033
Jan-98 $14,298 $13,619 $13,200
Feb-98 $14,412 $13,728 $13,189
Mar-98 $14,482 $13,794 $13,234
Apr-98 $14,516 $13,827 $13,303
May-98 $14,513 $13,824 $13,429
Jun-98 $14,475 $13,788 $13,544
Jul-98 $14,529 $13,839 $13,572
Aug-98 $13,537 $12,894 $13,793
Sep-98 $13,942 $13,280 $14,116
Oct-98 $13,859 $13,201 $14,041
Nov-98 $14,220 $13,545 $14,121
Dec-98 $14,244 $13,567 $14,164
Jan-99 $14,190 $13,516 $14,264
Feb-99 $14,104 $13,434 $14,015
Mar-99 $14,319 $13,639 $14,092
Apr-99 $14,590 $13,897 $14,137
May-99 $14,271 $13,593 $14,012
Jun-99 $14,225 $13,549 $13,968
Jul-99 $14,147 $13,475 $13,909
Aug-99 $13,987 $13,323 $13,902
Sep-99 $14,126 $13,455 $14,063
Oct-99 $14,234 $13,558
Performance Table
Average Annual Cumulative
Total Return Total Return
---------------------- ------------
1 5 Since Since
Periods Ending October 31, 1999 Year Years Inception Inception
------ ----- --------- ---------
Lehman Brothers Aggregate Bond Index/1/ 0.53% 7.94% 5.91% 41.12%
Strategic Income Fund Class A (NAV)/4/ 2.10% 8.15% 6.06% 42.34%
Strategic Income Fund Class A (net of
4.75% sales charge)/4/ -3.77% 6.88% 5.02% 34.16%
Strategic Income Fund Class B (NAV)/4/ 1.56% 7.48% 6.75% 44.06%
Strategic Income Fund Class B (net of
CDSC)/2/,/4/ -3.44% 7.18% 6.62% 43.06%
Strategic Income Fund Class C (NAV) 1.56% 7.48% 6.75% 44.03%
Strategic Income Fund Class C (net of
CDSC)/3/ 0.56% 7.48% 6.75% 44.03%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/3/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/4/The inception date of Class A and Class B shares is 4/1/94.
B-14
Portfolio Manager's Commentary
In a rather lackluster year for bonds, the Strategic Income Fund's Class A
returned 2.10% for the year ending October 31, 1999, as compared to the Lehman
Brothers Aggregate Bond Index return of 0.53% for the same time period.
The fiscal year began on a strong note as the Fund snapped back strongly in
November when it became apparent to investors that the financial market crisis
of the previous months was stabilizing. As investor confidence grew, a flight
to risk developed, causing spreads to narrow and prices to increase on
emerging market debt and high yield securities. Despite the rebound, the
Federal Reserve opted for a third 25 basis point rate cut during the Fund's
fiscal year at their November meeting.
After the first of the year, the U.S. bond market suffered as U.S. economic
growth remained surprisingly robust while Europe and Asia began to rebound
from the recession. Soaring oil prices and a rising CRB Index pushed bond
prices lower and yields higher. By the end of February, the yield on the 30-
year Treasury rose to 5.56%, the highest level in more than six months.
Corporates and mortgages outperformed Treasuries as investors looked to add
more yield to their portfolios. High yield bonds and emerging market debt
performed well through the second quarter. Strong domestic economic growth
continued through the third quarter heightening fears about the prospect of
higher inflation. The Federal Reserve took a proactive stance and began to
unwind the 75 basis point reduction of the previous fall with two subsequent
increases in the Federal Funds Rate. The Federal Funds Rate currently stands
at 5.25% and the Federal Reserve is likely to push it modestly higher over the
next few months.
In general, we expect continued financial market volatility from Y2K concerns
going forward, though we don't necessarily expect a major correction. In terms
of the bond market, we expect the next 12 months will bring significantly
higher returns than those witnessed thus far in 1999.
Our view is that the Federal Reserve has engineered a nice balance between
strong economic growth and low inflation and that any further rise in bond
yields will be modest. Those factors, coupled with strong expected company
earnings, should provide a favorable environment for the Fund.
B-15
Investment Quality Bond Fund
(currently named the Core Bond Fund)
Seeks to provide a high level of current income
Investment consistent with the maintenance of principal and
Objective: liquidity by investing primarily in a diversified
portfolio of investment grade corporate bonds and U.S.
Government bonds with intermediate to longer term
maturities.
Subadvisor: Wellington Management Company LLP
Portfolio Thomas L. Pappas
Manager: May 1, 1991
Inception Date:
[GRAPH]
Performance Table
Average Annual Cumulative
Total Return Total Return
---------------------- ------------
1 5 Since Since
Periods Ending October 31, 1999 Year Years Inception Inception
------ ----- --------- ------------
Lehman Brothers Aggregate Bond Index/1/ 0.53% 7.94% 7.59% 86.27%
50%/50% Composite/1/,/2/ -0.30% 8.06% 7.85% 90.08%
Investment Quality Bond Fund A (NAV) -1.08% 6.97% 6.76% 74.47%
Investment Quality Bond Fund Class A (net
of 4.75%
sales charge) -6.76% 5.71% 6.02% 64.43%
Investment Quality Bond Fund Class B
(NAV)/5/ -1.56% 6.35% 5.32% 33.59%
Investment Quality Bond Fund Class B (net
of CDSC)/3/,/5/ -6.48% 6.04% 5.18% 32.59%
Investment Quality Bond Fund Class C
(NAV)/5/ -1.56% 6.35% 5.32% 33.59%
Investment Quality Bond Fund Class C (net
of CDSC)/4/,/5/ -2.54% 6.35% 5.32% 33.59%
- ----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/Comprised of 50% of the return of the Lehman Brothers Corporate Bond Index
and 50% of the return of the Lehman Brothers Government Bond Index.
/3/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/4/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/5/The inception date of Class B and Class C shares is 4/1/94.
B-16
Portfolio Manager's Commentary
The Investment Quality Bond Fund's Class A performance for the year-ended
October 31, 1999 was -1.08% as compared to -0.30% for the Composite Index
comprised of Lehman Government Bond Index and Lehman Corporate Bond Index.
The past fiscal year was difficult for fixed income investors. Yields
increased approximately 1.5% across the maturity spectrum. Particularly hard
hit (based on yield changes) were bonds with two to ten years until maturity.
The year began with turmoil in the credit markets due to the Russian default
and the near collapse of a large fixed income hedge fund. Investors worldwide
were anxious about holding anything but US Treasury securities. This flight to
quality expanded the yield gap (spread) between US Treasuries and bonds of
lesser quality to an uncharacteristically wide margin, given the strong
economic environment. The yield spread has contracted somewhat since then, but
is still larger than usual.
In addition to US Treasuries, the Fund may hold corporate bonds, mortgage
securities, and high yield issues. We took advantage of the lower prices and
higher yields of non-Treasury debt because we felt these bonds would
eventually return to favor once investors realized the world was not headed
toward a depression. Currently, we are sticking with our above-index
allocations of these securities. We do not know where yield spreads will be
one month or so from now, particularly with the Y2K wildcard thrown in.
However, looking into next year, it is highly unlikely that spreads will stay
as wide as they currently are. Fundamentals, such as strong interest coverage
and a growing economy, favor corporate bonds, while mortgages benefit from low
volatility and diminished refinancings.
The Treasury yield curve is priced to reflect a view that inflation is more
likely to go up than down, and that economic growth is a bit stronger than the
Fed would like. Over the next year, we believe growth will be lower, but
inflation higher, and without knowing which one will lead the way, we are not
betting that interest rates will move significantly one way or the other from
their current levels.
B-17
National Municipal Bond Fund
(currently named the Municipal Bond Fund)
Investment Seeks to provide a high level of current income which is
Objective: exempt from regular federal income taxes, consistent with
the preservation of capital, by investing primarily in a
portfolio of municipal obligations. The Fund will not
invest in municipal obligations that are rated below
investment grade at the time of purchase.
Subadvisor: Salomon Brothers Asset Management Inc.
Portfolio Robert Amodeo
Manager:
Inception Date: July 6, 1993
[GRAPH]
Change in Value of $10,000 Investment and Comparative Indices
National Municipal Bond Fund
Growth of Growth of
$10,000 Invested $10,000 Invested
in Class A in Class A Growth of
shares at shares with $10,000 Investment
Net Asset Value 5.75% charge in the
of the National of the National Lehman Bros.
Muni Fund Muni Fund Municipal
Month Ended NAV 5.75% Sales Charge Bond Index
Jun-93 $10,000 $9,525 $10,000
Jul-93 $10,020 $9,544 $10,013
Aug-93 $10,261 $9,774 $10,221
Sep-93 $10,373 $9,881 $10,338
Oct-93 $10,417 $9,922 $10,357
Nov-93 $10,300 $9,811 $10,266
Dec-93 $10,457 $9,960 $10,483
Jan-94 $10,616 $10,112 $10,602
Feb-94 $10,302 $9,813 $10,328
Mar-94 $9,665 $9,206 $9,907
Apr-94 $9,742 $9,280 $9,992
May-94 $9,839 $9,372 $10,079
Jun-94 $9,756 $9,293 $10,020
Jul-94 $9,944 $9,472 $10,204
Aug-94 $9,943 $9,471 $10,239
Sep-94 $9,709 $9,248 $10,089
Oct-94 $9,454 $9,005 $9,909
Nov-94 $9,158 $8,723 $9,730
Dec-94 $9,494 $9,043 $9,944
Jan-95 $9,766 $9,302 $10,228
Feb-95 $10,106 $9,626 $10,526
Mar-95 $10,195 $9,711 $10,647
Apr-95 $10,209 $9,724 $10,660
May-95 $10,587 $10,085 $11,000
Jun-95 $10,435 $9,939 $10,904
Jul-95 $10,514 $10,015 $11,008
Aug-95 $10,649 $10,143 $11,147
Sep-95 $10,717 $10,208 $11,218
Oct-95 $10,897 $10,380 $11,380
Nov-95 $11,147 $10,618 $11,569
Dec-95 $11,273 $10,737 $11,680
Jan-96 $11,307 $10,770 $11,769
Feb-96 $11,227 $10,694 $11,689
Mar-96 $11,055 $10,530 $11,539
Apr-96 $10,998 $10,475 $11,507
May-96 $11,009 $10,486 $11,503
Jun-96 $11,149 $10,619 $11,628
Jul-96 $11,242 $10,708 $11,734
Aug-96 $11,254 $10,719 $11,731
Sep-96 $11,443 $10,899 $11,896
Oct-96 $11,585 $11,035 $12,030
Nov-96 $11,787 $11,227 $12,250
Dec-96 $11,739 $11,182 $12,199
Jan-97 $11,727 $11,170 $12,222
Feb-97 $11,837 $11,274 $12,334
Mar-97 $11,727 $11,170 $12,170
Apr-97 $11,837 $11,274 $12,273
May-97 $11,995 $11,425 $12,457
Jun-97 $12,130 $11,554 $12,590
Jul-97 $12,486 $11,893 $12,939
Aug-97 $12,375 $11,787 $12,817
Sep-97 $12,511 $11,917 $12,970
Oct-97 $12,610 $12,011 $13,053
Nov-97 $12,672 $12,070 $13,130
Dec-97 $12,872 $12,260 $13,321
Jan-98 $13,009 $12,391 $13,458
Feb-98 $12,996 $12,379 $13,462
Mar-98 $13,020 $12,401 $13,475
Apr-98 $12,955 $12,340 $13,414
May-98 $13,146 $12,522 $13,626
Jun-98 $13,197 $12,570 $13,679
Jul-98 $13,118 $12,495 $13,713
Aug-98 $13,324 $12,691 $13,926
Sep-98 $13,427 $12,789 $14,100
Oct-98 $13,372 $12,737 $14,100
Nov-98 $13,343 $12,709 $14,149
Dec-98 $13,390 $12,754 $14,185
Jan-99 $13,531 $12,889 $14,353
Feb-99 $13,462 $12,822 $14,290
Mar-99 $13,445 $12,806 $14,310
Apr-99 $13,494 $12,853 $14,346
May-99 $13,397 $12,761 $14,263
Jun-99 $13,233 $12,604 $14,057
Jul-99 $13,257 $12,627 $14,108
Aug-99 $13,145 $12,521 $13,995
Sep-99 $13,130 $12,506 $1
Performance Table
Average Annual Cumulative
Total Return Total Return
---------------------- ------------
1 5 Since Since
Year Years Inception Inception
Periods Ending October 31, 1999 ------ ----- --------- ------------
Lehman Brothers Municipal Bond Index/1/ -1.78% 6.93% 5.28% 38.50%
National Municipal Bond Fund A (NAV) -2.95% 6.53% 4.20% 29.70%
National Municipal Bond Fund Class A (net
of 4.75% sales charge) -8.53% 5.27% 3.23% 22.24%
National Municipal Bond Fund Class B
(NAV)/4/ -3.77% 5.67% 4.55% 28.20%
National Municipal Bond Fund Class B (net
of CDSC)/2/,/4/ -8.58% 5.34% 4.40% 27.20%
National Municipal Bond Fund Class C
(NAV)/4/ -3.77% 5.67% 4.55% 28.19%
National Municipal Bond Fund Class C (net
of CDSC)/3/,/4/ -4.73% 5.67% 4.45% 28.19%
- -----------------------------------------------
/1/All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Fund.
/2/The returns reflect the applicable sliding Contingent Deferred Sales Charge
of 5%, 5%, 4%, 3%, 2%, 1%.
/3/The returns reflect the applicable Contingent Deferred Sales Charge of 1%.
/4/The inception date of Class B and Class C shares is 4/1/94.
B-18
Portfolio Manager's Commentary
The National Municipal Bond Fund's Class A performance for the year-ended
October 31, 1999 was -2.95% as compared to the Lehman Brothers Municipal Bond
Index return of -1.78% for the same period.
During the last three months of 1998 investor confidence grew following a 25
basis points decrease in the Federal Funds rate in October. This move injected
stability into an unstable market. As a result a flight to risk emerged,
causing credit spreads to narrow and prices to increase on emerging markets'
debt and high yield securities. Despite the rallies, the Fed opted to take out
additional insurance against inflation concerns in the form of another 25
basis point rate cut at its November 1998 meeting.
Most fixed income securities achieved modest returns during the month of
December as another large upturn in the equity markets captured greater
investor attention. Municipal bonds began the year on a positive note.
After closing 1998 at near record issuance levels, state and local governments
borrowed just $13.8 billion of new debt during January 1999. That represents a
24% decrease over the same period last year. This lower than expected
municipal new issue calendar, coupled with an influx of cash from January 1st
maturities and coupon payments, created a favorable environment for municipal
bonds as demand outpaced supply. The imbalance enabled tax-exempts to smartly
outperform Treasuries in January. Tax-exempts continued to benefit from the
continued decline in new issue volume that enabled them to outperform
Treasuries for the first three months of the year. The next three months were
characterized by higher interest rates, highlighted by an increase in the Fed
Funds Rate 25 basis points to 5.00% at the conclusion of the June 30th FOMC
meeting. Prices for tax-exempts retreated during the quarter as a lack of
support from institutional buyers caused municipal dealers' inventories to
swell. July was the largest bond redemption month of the year with nearly $25
billion redeemed, which lent support to a manageable municipal new issue
calendar. The specter of impending increases in short-term interest rates by
the Fed unsettled the fixed income markets during the four months ending
October 31st. The Fed did raise the federal funds rate 25 basis points to
5.25% during August.
At its meeting on October 5, 1999, the Fed adopted a bias toward the future
possibility of raising interest rates. This resulted in a sell-off in the
fixed income markets, which continued through the first several weeks of
October. The market, however, was able to pare some of those losses during the
last week of the month. The catalyst for the bounce back was data displaying
strong economic growth with little threat of inflation. Prices for municipal
bonds were lower during the four-month period ending October, but setbacks
were not as pronounced as those were in Treasuries. A notable exception was
tax-exempt bonds that mature beyond twenty years, where losses where magnified
due to continued lack of sponsorship from institutional buyers. Individual
investors remained a constant in the marketplace due to high nominal yields
and the relative attractiveness of tax-exempts as compared to Treasuries.
B-19
TABLE OF CONTENTS
Page
----
OVERVIEW OF MERGERS....................................................... 3
Introduction............................................................. 3
Background and Reasons for Mergers....................................... 3
Investment Advisory Information.......................................... 3
Overview of the Acquired Funds and the Acquiring Funds................... 4
Operating Expenses....................................................... 6
Federal Income Tax Consequences.......................................... 32
Comparison of Investment Objectives, Policies, Restrictions and Risks.... 32
Risk Factors............................................................. 44
Comparison of Distribution Policies and Purchase, Exchange and Redemption
Procedures.............................................................. 45
SPECIAL MEETING OF SHAREHOLDERS........................................... 48
THE PROPOSALS:
Approval or Disapproval of Agreement and Plan of Reorganization.......... 49
Board of Trustees' Recommendations...................................... 49
Required Shareholder Vote............................................... 49
Background and Reasons for the Proposed Mergers.......................... 49
INFORMATION ABOUT THE MERGERS............................................. 50
Agreement and Plan of Reorganization..................................... 50
Description of the Merger Shares......................................... 51
Comparision of Rights of Security Holders................................ 51
Organizational Documents................................................ 51
Meetings of Shareholders................................................ 52
Quorums................................................................. 52
Required Vote........................................................... 52
Trustees................................................................ 52
Indemnification......................................................... 52
Personal Liability...................................................... 53
Termination............................................................. 53
Amendments.............................................................. 53
Federal Income Tax Consequences.......................................... 53
Capital Loss Carry-Forwards and Unrealized Capital Appreciation.......... 55
Capitalization........................................................... 56
INFORMATION ABOUT THE ACQUIRED FUNDS...................................... 61
INFORMATION ABOUT THE ACQUIRING FUNDS..................................... 61
VOTING INFORMATION........................................................ 61
Record date, quorum and method of tabulation............................. 61
Shares outstanding and beneficial ownership.............................. 62
Solicitation of proxies.................................................. 62
Revocation of proxies.................................................... 62
Shareholder proposals at future meetings of shareholders................. 62
Adjournment.............................................................. 62
NORTH AMERICAN FUNDS
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
May 12, 2000
This Joint Statement of Additional Information (the "SAI") relates to
proposed mergers (the "Mergers") of the American General Large Cap Growth Fund;
the American General Mid Cap Growth Fund; the American General Small Cap Growth
Fund; the American General Large Cap Value Fund; the American General Mid Cap
Value Fund and the American General Small Cap Value Fund; the American General
Stock Index Fund and the American General Mid Cap Index Fund; the American
General Balanced Fund; the American General International Growth Fund and the
American General International Value Fund; the American General Core Bond Fund
and the American General Domestic Bond Fund; the American General Strategic
Bond Fund; the American General Municipal Bond Fund; and the American General
Money Market Fund (each an "Acquired Fund"), each a series of American General
Series Portfolio Company 2, a Delaware business trust, into, respectively, the
Large Cap Growth Fund (the "North American Large Cap Growth Fund"); the Mid Cap
Growth Fund (the "North American Mid Cap Growth Fund"); the Small Cap Growth
Fund (the "North American Small Cap Growth Fund"); the Growth & Income Fund
(the "North American Growth & Income Fund"); the Mid Cap Value Fund (the "North
American Mid Cap Value Fund"); the Stock Index Fund (the "North American Stock
Index Fund"); the Balanced Fund (the "North American Balanced Fund"); the
International Equity Fund (the "North American International Equity Fund"); the
Core Bond Fund (the "North American Core Bond Fund"); the Strategic Income Fund
(the "North American Strategic Income Fund"); the Municipal Bond Fund (the
"North American Municipal Bond Fund"); and the Money Market Fund (the "North
American Money Market Fund") (each an "Acquiring Fund"), each 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 May 12, 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 corresponding Acquiring Fund and the assumption of all the
liabilities of the Acquired Fund. Each Acquired Fund would distribute the
Acquiring Fund shares it received 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. You may obtain the Prospectus/Proxy Statement by writing to
North American Funds, 286 Congress Street, Boston, Massachusetts 02210, or by
calling 1-800-872-8037.
Table of Contents
I. Additional Information about the Acquiring Funds and the Acquired
Funds...............................................................
II. Financial Statements................................................
I.Additional Information about the Acquiring Funds and the Acquired Funds.
Incorporated by reference to Post-Effective Amendment No. 31 to the Acquired
Funds' Registration Statement Form N-1A (filed on March 2, 2000) (Registration
Nos. 33-27958 and 811-5797).
Incorporated by reference to Post-Effective Amendment No. 4 to the Acquired
Funds' Registration Statement Form N-1A (filed on March 1, 2000) (Registration
Nos. 333-58979 and 811-08875).
II.Financial Statements.
This SAI is accompanied by the Annual Report for the year ended October 31,
1999, of the Acquiring Funds, which contains historical financial information
regarding the Acquiring Funds. Such report has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The Annual
Report for the fiscal year ended October 31, 1999, of the Acquired Funds, which
contains historical financial information regarding the Acquired Funds, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference.
Pro forma financial statements of the Acquiring Funds for the Mergers are
provided on the following pages. Pro forma financial statements of the North
American Growth & Income Fund for its Merger with the American General Large
Cap Value Fund are not provided because the Acquired Fund's net assets are less
than 10% of the Acquiring Fund's net assets.
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Large Cap Large Cap Pro-forma Pro-forma
ASSETS: Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
Investments in securities, at value ................................ $16,130,979 $42,533,943 $58,664,922
Cash ............................................................... 986 986
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for securities on
loan, at value .................................................. 5,048,747 5,048,747
Receivables:
Investments sold ............................................. 895,240 895,240
Fund shares sold ............................................. 87,035 326,104 413,139
Dividends .................................................... 4,461 15,603 20,064
Interest ..................................................... 525 525
Foreign tax withholding reclaims ............................. 101 101
Other assets ....................................................... 25,129 26,860 51,989
----------- ----------- ----------- -----------
Total assets ........................................ 16,247,604 48,848,109 -- 65,095,713
LIABILITIES:
Collateral on securities loaned, at value .......................... 5,048,747 5,048,747
Payables:
Investments purchased ........................................ 1,324,957 1,324,957
Fund shares redeemed ......................................... 46 134,298 134,344
Dividend and interest withholding tax ........................ 5 5
Investment adviser ........................................... 53,640 22,375 76,015
Custodian and transfer agent fees ............................ 2,959 2,959
Distribution fee ............................................. 5,780 15,810 21,590
Other accrued expenses ....................................... 50,933 8,306 59,239
----------- ----------- ----------- -----------
Total liabilities ...................................... 110,399 6,557,457 -- 6,667,856
NET ASSETS ......................................................... $16,137,205 $42,290,652 $0 $58,427,857
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ........................................ $127,111 $5,692,446 5,819,557
Unrealized appreciation (depreciation) on:
Investments ............................................... 2,179,329 6,079,643 8,258,972
Futures ................................................... 3,735 3,735
Foreign currency and forward foreign currency contracts ... (2) (2)
Capital shares at par value of $.001 ......................... 11,925 2,013 (11,158)(1) 2,780
Additional paid-in capital ................................... 13,815,105 30,516,552 11,158 (1) 44,342,815
----------- ----------- ----------- -----------
Net assets ............................................. $16,137,205 $42,290,652 $0 $58,427,857
=========== =========== =========== ===========
** Formerly the Growth Equity Fund
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
4
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Large Cap Large Cap Pro-forma Pro-forma
NET ASSET VALUES: Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
Class A Shares
Net assets at value ........................................... $ 2,759,889 $ 5,656,237 $ 8,416,126
Shares outstanding ............................................ 202,908 263,876 (74,182) 392,602
Net asset value (NAV) and redemption price per share ............ $ 13.60 $ 21.44 $ 21.44
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced .... $ 14.43 $ 22.75 $ 22.75
Class B Shares
Net assets at value ........................................... $ 8,853,396 $ 17,171,410 $ 26,024,806
Shares outstanding ............................................ 657,052 819,152 584,495 1,241,547
Net asset value, offering price and redemption price per share .. $ 13.47 $ 20.96 $ 20.96
Class C Shares
Net assets at value ........................................... $ 19,463,005 $ 19,463,005
Shares outstanding ............................................ 930,076 930,076
Net asset value, offering price and redemption price per share .. $ 20.93 $ 20.93
Class I Shares
Net assets at value ........................................... $ 2,922,583 0 $ 2,922,583
Shares outstanding ............................................ 214,815 0 (75,179) 139,636
Net asset value, offering price and redemption price per share .. $ 13.61 $ -- $ 20.93
Class II Shares
Net assets at value ........................................... $ 1,601,337 $ -- $ 1,601,337
Shares outstanding ............................................ 117,732 (41,223) 76,509
Net asset value, offering price and redemption price per share .. $ 13.60 $ 20.93
** Formerly the Growth Equity Fund
See Notes to Pro-Forma Financial Statements
5
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series
Portfolio 2 North American
Large Cap Large Cap Pro-forma Pro-forma
Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
INVESTMENT INCOME:
Interest ......................................................... $23,739 $68,723 $92,462
Dividends ........................................................ 66,485 196,785 263,270
----------- ----------- ----------- -----------
Total income .................................................. 90,224 265,508 -- 355,732
----------- ----------- ----------- -----------
EXPENSES:
Distribution for Class A ......................................... 4,860 17,231 1,944(1) 24,035
Distribution for Class B ......................................... 34,739 149,211 183,950
Distribution for Class C ......................................... -- 174,643 174,643
Investment adviser fee ........................................... 49,471 335,777 35,979(2) 421,227
Custodian fee .................................................... 11,079 36,522 47,601
Transfer agent fee ............................................... 23,366 89,017 112,383
Accounting/administration ........................................ 4,169 56,337 (4,200)(3) 56,306
Audit and legal fees ............................................. 5,217 19,331 (5,000)(3) 19,548
Miscellaneous .................................................... 64,352 32,101 (60,000)(4) 36,453
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ............. 197,253 910,170 (31,277) 1,076,146
Reimbursement of expenses by investment adviser .................. (76,495) (84,102) 70,000(5) (90,597)
----------- ----------- ----------- -----------
Net expenses ............................................... 120,758 826,068 38,723 985,549
----------- ----------- ----------- -----------
Net investment income/(loss) ............................... (30,534) (560,560) (38,723) (629,817)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ....................................... 289,999 6,256,855 6,546,854
Futures contracts ............................................. (127,454) (127,454)
Foreign currency and forward foreign currency contracts ....... (2,574) (2,574)
Change in unrealized appreciation (depreciation) on:
Investments ................................................... 2,179,329 2,622,980 4,802,309
Futures contracts ............................................. 3,735 3,735
Translation of foreign currency and forward foreign currency
contracts .................................................. (7) (7)
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts .................. 2,345,609 8,877,254 -- 11,222,863
Net increase in net assets resulting from operations ................ $2,315,075 $8,316,694 ($38,723) $10,593,046
* formerly the Growth Equity Fund
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds are
combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
6
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES VALUE
- ---------------------------------------- ------------------------------------
AGSPC2 NAF AGSPC2 NAF
Large Cap Large Cap Large Cap Large Cap
Growth Growth Combined Growth Growth Combined
------ ------ -------- ------ ------ --------
Common Stocks
900 900 Abbott Laboratories $36,338 $36,338
400 400 Adaptec, Inc. 18,000 18,000
500 500 Allergan, Inc. 53,688 53,688
1,400 1,400 ALLTEL Corp. 116,549 116,549
500 500 Amazon.com, Inc. 35,313 35,313
1,225 1,225 Amdocs Limited* 34,070 34,070
2,700 4,175 6,875 America Online, Inc. 350,155 541,445 891,600
1,705 1,705 American Express Company 262,570 262,570
600 600 American Home Products Corp. 31,350 31,350
1,600 6,065 7,665 American International Group, Inc. 164,700 624,316 789,016
100 100 Ameritrade Holding Corp., Class A 1,625 1,625
12,138 12,138 AMFM, Inc.* 849,660 849,660
2,500 1,243 3,743 Amgen, Inc. 199,375 99,129 298,504
400 400 Andrx Corp. 19,100 19,100
400 400 Anheuser-Busch Companies, Inc. 28,725 28,725
2,100 5,200 7,300 Apple Computer, Inc. 168,263 416,650 584,913
1,100 1,100 Applied Materials, Inc. 98,794 98,794
600 3,100 3,700 Applied Micro Circuits Corp. 46,688 241,219 287,907
200 9,196 9,396 Associates First Capital Corp. 7,300 335,654 342,954
400 400 At Home Corp. 14,950 14,950
3,500 3,500 AT&T Corp. 163,624 163,624
1,200 15,600 16,800 AT&T Corp. - Liberty Media Group 47,625 619,125 666,750
1,000 8,492 9,492 Automatic Data Processing, Inc. 48,188 409,208 457,396
400 400 AXA Financial, Inc. 12,825 12,825
7,250 7,250 Bank America Corporation 466,719 466,719
1,500 1,500 Baxter International, Inc. 97,313 97,313
200 200 BCE, Inc. 12,050 12,050
406 406 Berkshire Hathaway, Inc.* 848,540 848,540
1,000 1,000 Best Buy Co., Inc. 55,563 55,563
1,000 1,000 Biogen, Inc. 74,125 74,125
1,800 1,800 BMC Software, Inc.* 115,538 115,538
5,400 10,702 16,102 Bristol Myers Squibb Co. 414,787 822,047 1,236,834
200 200 Broadcom Corp. 25,563 25,563
600 600 Calpine Corp. 34,575 34,575
300 2,003 2,303 Carnival Corp., Class A 13,350 89,133 102,483
200 200 Champion International Corp. 11,563 11,563
1,700 6,144 7,844 Charles Schwab Corp. 66,194 239,232 305,426
100 100 Checkfree Holdings Corp. 3,738 3,738
2,700 2,700 CIENA Corp. 95,175 95,175
4,728 4,728 Cintas Corporation 284,862 284,862
2,200 2,200 Circuit City Stores, Inc. 93,913 93,913
9,200 22,259 31,459 Cisco Systems, Inc. 680,800 1,647,166 2,327,966
2,000 10,468 12,468 Citigroup, Inc. 108,250 566,580 674,830
300 300 Clear Channel Communications, Inc. 24,113 24,113
2,450 2,450 Clorox Company 100,297 100,297
200 200 CMGI, Inc. 21,887 21,887
100 100 C-Net, Inc. 4,719 4,719
2,800 17,049 19,849 Coca-Cola Co. 165,200 1,005,891 1,171,091
5,564 5,564 Colgate Palmolive Co. 336,622 336,622
1,500 15,549 17,049 Comcast Corp., Class A 63,188 655,002 718,190
500 5,783 6,283 Computer Sciences Corp. 34,344 397,220 431,564
2,325 2,325 Comverse Technology, Inc.* 263,887 263,887
2,100 2,100 ConAgra, Inc. 54,730 54,730
7
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES VALUE
- ---------------------------------------- ------------------------------------
AGSPC2 NAF AGSPC2 NAF
Large Cap Large Cap Large Cap Large Cap
Growth Growth Combined Growth Growth Combined
------ ------ -------- ------ ------ --------
Common Stocks- continued
300 9,550 9,850 Costco Wholesale Corp. $ 24,093 $ 766,984 $ 791,077
100 100 Covad Communications Group, Inc. 4,800 4,800
2,000 2,000 CVS Corp. 86,875 86,875
124 124 Daimlerchrysler AG 9,641 9,641
3,324 3,324 Danaher Corporation 160,591 160,591
700 700 Dayton Hudson Corp. 45,238 45,238
2,200 2,200 Dell Computer Corp. 88,275 88,275
6,782 6,782 Devry, Inc.* 142,846 142,846
11,410 11,410 Dial Corporation 266,709 266,709
800 800 Donaldson, Lufkin & Jenrette, Inc. - DLJ 41,400 41,400
100 100 Doubleclick, Inc. 14,000 14,000
500 500 Dow Chemical Co. 59,125 59,125
1,500 1,500 DST Systems, Inc. 95,531 95,531
400 400 E*Trade Group, Inc. 9,525 9,525
1,400 1,400 Eastman Kodak Co. 96,513 96,513
100 1,300 1,400 Ebay, Inc. 13,513 175,663 189,176
2,398 2,398 EchoStar Communications Corporation* 148,376 148,376
200 200 Electronic Data Systems Corp. 11,700 11,700
500 500 Eli Lilly and Co. 34,438 34,438
1,400 7,445 8,845 EMC Corp. 102,200 543,485 645,685
200 200 Emerson Electric Co. 12,013 12,013
200 200 Exodus Communications, Inc. 17,200 17,200
200 200 Exxon Corp. 14,813 14,813
500 500 Federal Home Loan Mortgage Corp. 27,031 27,031
300 6,331 6,631 Federal National Mortgage Association 21,225 447,918 469,143
3,000 3,000 Federated Dept Stores, Inc. 128,062 128,062
2,854 2,854 Fifth Third Bancorp 210,661 210,661
1,500 1,500 First Data Corp. 68,530 68,530
200 200 Fleet Financial Group, Inc. 8,725 8,725
1,500 1,500 Fortune Brands, Inc. 53,156 53,156
6,777 6,777 Gannett, Inc. 522,676 522,676
7,900 11,963 19,863 General Electric Co. 1,070,943 1,621,734 2,692,677
2,375 2,375 General Instrument Corportion* 127,805 127,805
100 100 General Mills, Inc. 8,719 8,719
1,100 8,175 9,275 General Motors Corp., Class H 80,093 595,242 675,335
1,075 1,075 Genetech, Inc.* 156,681 156,681
400 400 Genzyme Corp. 15,300 15,300
1,100 1,100 Georgia-Pacific Corp. 43,656 43,656
5,252 5,252 Gillette Company 190,057 190,057
200 2,600 2,800 GTE Corp. 15,000 195,000 210,000
500 3,300 3,800 Guidant Corp. 24,688 162,938 187,626
200 200 H J Heinz Co. 9,550 9,550
2,053 2,053 Harley Davidson, Inc. 121,769 121,769
500 500 Hartford Life Inc., Class A 26,124 26,124
800 800 Hasbro, Inc. 16,500 16,500
1,400 1,400 Hertz Corp., Class A 60,725 60,725
2,600 2,600 Hewlett Packard Co. 192,562 192,562
3,300 9,163 12,463 Home Depot, Inc. 249,150 691,806 940,956
300 300 Hormel Foods Corp. 12,938 12,938
5,300 5,300 IBP, Inc. 126,868 126,868
300 300 Immunex Corp. 18,900 18,900
100 100 Infoseek Corp. 3,169 3,169
17,458 17,458 IMS Health, Inc. 506,282 506,282
8
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES VALUE
- ---------------------------------------- ------------------------------------
AGSPC2 NAF AGSPC2 NAF
Large Cap Large Cap Large Cap Large Cap
Growth Growth Combined Growth Growth Combined
------ ------ -------- ------ ------ --------
Common Stocks- continued
100 975 1,075 Inktomi Corp. $ 10,144 $ 98,902 $ 109,046
5,500 16,702 22,202 Intel Corp. 425,906 1,293,361 1,719,267
5,000 5,000 International Business Machines 491,874 491,874
9,399 9,399 Interpublic Group Companies, Inc. 381,834 381,834
1,300 2,178 3,478 Intimate Brands, Inc. 53,300 89,298 142,598
400 400 Intuit, Inc. 11,650 11,650
2,450 2,450 Jabil Circuit, Inc.* 128,012 128,012
300 5,150 5,450 JDS Uniphase Corp. 50,063 859,406 909,469
3,800 4,705 8,505 Johnson & Johnson 398,050 492,849 890,899
500 500 Kimberly-Clark Corp. 31,562 31,562
3,578 3,578 Kohl's Corporation* 267,679 267,679
1,000 1,000 Kroger Co. 20,813 20,813
1,600 1,600 Lancaster Colony Corp. 55,900 55,900
600 600 Lehman Brothers Holdings, Inc. 44,212 44,212
800 800 Level 3 Communications, Inc. 54,700 54,700
1,700 1,700 Lexmark International Group, Inc. 132,706 132,706
3,350 3,350 Linear Technology Corporation 234,291 234,291
1,000 1,000 Lowe's Companies, Inc. 55,000 55,000
300 300 LSI Logic Corp. 15,956 15,956
4,500 9,479 13,979 Lucent Technologies, Inc. 289,125 609,026 898,151
100 100 Lycos, Inc. 5,350 5,350
100 100 Macromedia, Inc. 6,444 6,444
3,500 3,500 Marriott International, Inc. 117,906 117,906
400 5,858 6,258 Marsh & McLennan Companies, Inc. 31,625 463,148 494,773
500 500 MBNA Corp. 13,813 13,813
800 4,733 5,533 McDonald's Corp. 33,000 195,236 228,236
2,700 2,634 5,334 MCI Worldcom, Inc. 231,694 226,030 457,724
1,500 1,500 Media One Group, Inc. 106,594 106,594
925 925 MedImmune, Inc.* 103,600 103,600
1,600 7,770 9,370 Medtronic, Inc. 55,400 269,036 324,436
5,600 8,904 14,504 Merck & Co., Inc. 445,550 708,425 1,153,975
1,000 2,725 3,725 Merrill Lynch & Co., Inc. 78,500 213,912 292,412
121 121 MGM Grand, Inc. 6,171 6,171
10,000 16,181 26,181 Microsoft Corp. 925,624 1,497,754 2,423,378
22 22 Momentum Business Applications* 171 171
1,000 1,000 Monsanto Co. 38,500 38,500
1,900 1,900 Morgan Stanley Dean Witter & Co. 209,594 209,594
100 1,115 1,215 Motorola, Inc. 9,744 108,643 118,387
6,100 6,100 Nabisco Group Holdings Corp. 78,156 78,156
900 900 Nabisco Holdings Corp., Class A 33,638 33,638
100 100 Networks Associates, Inc. 1,831 1,831
2,775 2,775 Nextel Communications, Inc.* 239,170 239,170
200 200 NEXTLINK Communications, Inc. 11,963 11,963
600 600 NIKE, Inc., Class B 33,863 33,863
4,529 4,529 Nokia Corporation 523,383 523,383
3,400 2,400 5,800 Nortel Networks Corp. 210,588 148,650 359,238
849 849 Northern Trust Corporation 81,982 81,982
1,500 1,500 Novell, Inc . 30,094 30,094
200 200 Omnicom Group, Inc. 17,600 17,600
2,250 2,250 Oracle Corp. 107,016 107,016
1,400 1,400 PacifiCare Health Systems, Inc., Class A 55,213 55,213
1,800 1,800 PepsiCo, Inc. 62,437 62,437
3,782 3,782 Perkin Elmer Corporation 245,357 245,357
9
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES VALUE
- ---------------------------------------- ------------------------------------
AGSPC2 NAF AGSPC2 NAF
Large Cap Large Cap Large Cap Large Cap
Growth Growth Combined Growth Growth Combined
------ ------ -------- ------ ------ --------
Common Stocks- continued
4,900 22,116 27,016 Pfizer, Inc. $ 193,550 $ 873,582 $1,067,132
3,200 3,200 Philip Morris Companies, Inc. 80,600 80,600
200 200 Pitney Bowes, Inc. 9,113 9,113
1,000 1,925 2,925 PMC-Sierra, Inc. 94,250 181,431 275,681
100 100 Priceline.com, Inc. 6,025 6,025
5,600 5,250 10,850 Procter & Gamble Co. 587,300 550,594 1,137,894
750 750 Providian Financial Corp. 81,750 81,750
200 200 PsiNet, Inc. 7,200 7,200
1,000 1,050 2,050 QUALCOMM, Inc. 222,750 233,887 456,637
1,300 1,300 Qwest Communications International, Inc. 46,800 46,800
100 100 RCN Corp. 4,788 4,788
100 1,350 1,450 Realnetworks, Inc. 10,969 148,078 159,047
4,700 4,700 Republic Services, Inc., Class A 57,575 57,575
4,525 4,525 RF Micro Devices, Inc.* 233,603 233,603
100 100 Rhythms Netconnections, Inc. 2,919 2,919
1,200 1,200 Royal Dutch Petroleum Co. 71,924 71,924
100 100 Sabre Holdings Corp. 4,444 4,444
6,400 6,400 SBC Communications, Inc. 326,000 326,000
1,200 14,089 15,289 Schering-Plough Corp. 59,400 697,405 756,805
600 600 Schlumberger, Ltd. 36,338 36,338
1,700 1,700 Scientific-Atlanta, Inc. 97,324 97,324
700 700 Seagram Co., Ltd. 34,563 34,563
1,350 1,350 Siebel Systems, Inc.* 148,247 148,247
3,500 1,415 4,915 Solectron Corp. 263,375 106,479 369,854
400 2,625 3,025 Sprint Corp. FON Group 29,725 217,711 247,436
279 279 Standard & Poor's Depositary Receipts 38,153 38,153
100 100 Sterling Commerce, Inc. 2,344 2,344
1,800 1,800 Summit Technology, Inc. 28,013 28,013
3,100 4,143 7,243 Sun Microsystems, Inc. 328,019 438,381 766,400
225 225 Sycamore Networks, Inc.* 48,375 48,375
4,739 4,739 Tellabs, Inc.* 299,742 299,742
3,200 3,200 Teradyne, Inc. 123,200 123,200
1,000 8,850 9,850 Texas Instruments, Inc. 89,750 794,287 884,037
1,000 1,000 Tiffany & Co. 59,500 59,500
800 13,665 14,465 Time Warner, Inc. 55,750 952,280 1,008,030
100 100 TMP Worldwide, Inc. 6,244 6,244
2,392 2,392 Tootsie Roll Industries, Inc. 75,797 75,797
600 600 Travelers Prop. Causualty Corp. 21,600 21,600
1,200 1,200 Tricon Global Restaurants, Inc. 48,225 48,225
2,800 5,018 7,818 Tyco International, Ltd. 111,825 200,406 312,231
1,003 1,003 Unilever NV - ADR 66,887 66,887
1,000 1,000 Unisys Corp. 24,250 24,250
4,300 4,300 United HealthCare Corp. 222,255 222,255
700 700 United Technologies Corp. 42,350 42,350
4,825 4,825 USA Networks, Inc.* 217,427 217,427
200 200 USWeb Corp. 7,750 7,750
100 100 Verio, Inc. 3,730 3,730
100 1,150 1,250 VeriSign, Inc. 12,350 142,025 154,375
1,225 1,225 VERITAS Software Corporation* 132,147 132,147
800 800 Viacom, Inc., Class B 35,800 35,800
4,550 4,550 Vitesse Semiconductor Corporation* 208,731 208,731
8,720 8,720 Vodaphone Airtouch PLC 418,015 418,015
3,000 3,000 VoiceStream Wireless Corporation* 296,250 296,250
10
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES VALUE
- ---------------------------------------- --------------------------------------
AGSPC2 NAF AGSPC2 NAF
Large Cap Large Cap Large Cap Large Cap
Growth Growth Combined Growth Growth Combined
------ ------ -------- ------ ------ --------
Common Stocks- continued
4,200 15,796 19,996 Wal-Mart Stores, Inc. $ 239,925 $ 895,436 $ 1,135,361
3,922 3,922 Walt Disney Company 103,443 103,443
800 10,460 11,260 Warner-Lambert Co. 63,850 834,839 898,689
150 150 Washington Post Company 79,809 79,809
3,800 3,800 Wellpoint Health Networks, Inc. 220,400 220,400
11,306 11,306 Wells Fargo & Company 541,275 541,275
2,825 2,825 Western Wireless Corporation* 149,372 149,372
2,200 2,200 Whirlpool Corp. 153,313 153,313
3,700 3,700 Williams Communications Group* 117,937 117,937
500 500 Xilinx, Inc. 39,313 39,313
300 3,821 4,121 Yahoo!, Inc. 53,719 684,198 737,917
Total Common Stocks $15,871,294 $41,062,943 $56,934,237
(Cost - $13,691,964, $34,938,300
& $48,630,264 respectively)
PAR VALUE VALUE
- ---------------------------------------- --------------------------------------
US Treasury Bills
$20,000 $20,000 4.51% due 12/09/99 $19,905 $19,905
25,000 25,000 4.44% due 12/09/99 24,883 24,883
10,000 10,000 4.43% due 12/09/99 9,953 9,953
10,000 10,000 4.40% due 11/04/99 9,996 9,996
25,000 25,000 4.35% due 11/18/99 24,948 24,948
Total US Treasury Bills $89,685 $0 $89,685
(Cost - $89,685)
Short Term
$170,000 $170,000 State Street Bank Repurchase Agreement,
5.15%, dated 10/31/99, to be
repurchased at $170,073 on 11/01/99,
collateralized by U.S. Treasury Note,
5.38%, 07/31/00, with a par value of
$175,000 (Cost $170,000) $170,000 $170,000
1,470,000 1,470,000 Repurchase Agreement with State Street Bank
& Trust dated 10/29/99 at 4.25%, to be
repurchased at $1,470,521 on 11/01/99,
collateralized by $1,495,000 U.S. Treasury
Notes, 4.00% due 10/31/00 (valued at
$1,555,652, including interest) 1,470,000 1,470,000
1,000 1,000 SSGA Money Market Fund 1,000 1,000
Total Short Term $170,000 $1,471,000 $1,641,000
(Cost - $170,000, $1,471,000 &
$1,641,000 respectively)
TOTAL INVESTMENTS $16,130,979 $42,533,943 $58,664,922
(Cost - $13,951,649, $36,454,300
& $50,405,949 respectively)
*Non-income producing
11
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Large Cap Growth Fund and
American General Series Portfolio Company 2 Large Cap Growth Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Large Cap Growth Fund ("NAF") (formerly the North American Growth
Equity Fund) is a series of North American Funds, 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 American General Series Portfolio Company 2 Large Cap
Growth Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
12
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series Portfolio 2 North American
Mid Cap Growth Mid Cap Growth Pro-forma Pro-forma
ASSETS: Fund Fund** Adjustments Combined
- ------- ------------------ -------------- ----------- --------
Investments in securities, at value ............................ $ 13,965,341 $ 42,595,851 $ 56,561,192
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for securities on
loan, at value .............................................. -- 8,104,967 8,104,967
Receivables:
Investments sold .......................................... -- 302,604 302,604
Fund shares sold .......................................... 31,213 217,049 248,262
Dividends ................................................. 1,352 152 1,504
Interest .................................................. -- 1,895 1,895
Other assets ................................................... 28,174 44,274 72,448
------------ ------------ ---------- ------------
Total assets ........................................... 14,026,080 51,266,792 -- 65,292,872
LIABILITIES:
Collateral on securities loaned, at value ...................... -- 8,104,967 8,104,967
Payables:
Investments purchased ..................................... 197,121 921,815 1,118,936
Fund shares redeemed ...................................... 1,178 79,914 81,092
Investment adviser ........................................ 62,490 22,397 84,887
Custodian and transfer agent fees ......................... -- 3,750 3,750
Distribution fee .......................................... 2,994 31,258 34,252
Other accrued expenses .................................... 31,230 9,716 40,946
------------ ------------ ---------- ------------
Total liabilities ...................................... 295,013 9,173,817 -- 9,468,830
NET ASSETS ..................................................... $ 13,731,067 $ 42,092,975 $ 0 $ 55,824,042
============ ============ ========== ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) .................. $ 0
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ..................................... $ 400,484 $ 7,120,712 $ 7,521,196
Unrealized appreciation (depreciation) on:
Investments ............................................ (1,141,693) 3,570,546 2,428,853
Capital shares at par value of $.001 ........................ 13,347 2,329 (12,587)(1) 3,089
Additional paid-in capital .................................. 14,458,929 31,399,388 12,587 (1) 45,870,904
------------ ------------ ---------- ------------
Net assets ............................................. $ 13,731,067 $ 42,092,975 $ 0 $ 55,824,042
============ ============ ========== ============
** Formerly the Small/Mid Cap Fund
(1) Reflects change in shares due to merger exchange and par value
differences.
See Notes to Pro-Forma Statements
13
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series Portfolio 2 North American
Mid Cap Growth Mid Cap Growth Pro-forma Pro-forma
ASSETS: Fund Fund** Adjustments Combined
- ------- ------------------ -------------- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value ........................................ $ 1,769,056 $ 5,970,129 $ 7,739,185
Shares outstanding ......................................... 171,762 322,314 (76,241)(1) 417,835
Net asset value (NAV) and redemption price per share ......... $ 10.30 $ 18.52 $ 18.52
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced . $ 10.93 $ 19.65 $ 19.65
Class B Shares
Net assets at value ........................................ $ 3,652,246 $17,184,297 $20,836,543
Shares outstanding ......................................... 357,659 955,434 (154,644)(1) 1,158,449
Net asset value, offering price and redemption price per share $ 10.21 $ 17.99 $ 17.99
Class C Shares
Net assets at value ........................................ $ -- $18,938,549 $18,938,549
Shares outstanding ......................................... -- 1,051,128 -- 1,051,128
Net asset value, offering price and redemption price per share $ -- $ 18.02 $ 18.02
Class I Shares
Net assets at value ........................................ $ 7,010,178 0 $ 7,010,178
Shares outstanding ......................................... 679,507 0 (290,485)(1) 389,022
Net asset value, offering price and redemption price per share $ 10.32 $ -- $ 18.02
Class II Shares
Net assets at value ........................................ $ 1,299,587 $ -- $ 1,299,587
Shares outstanding ......................................... 125,787 (53,668)(1) 72,119
Net asset value, offering price and redemption price per share $ 10.33 $ -- -- $ 18.02
** Formerly the Small/Mid Cap Fund
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Statements
14
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series Portfolio 2 North American
Mid Cap Growth Mid Cap Growth Pro-forma Pro-forma
Fund Fund** Adjustments Combined
------------------ -------------- ----------- --------
INVESTMENT INCOME:
Interest .................................................... $ 37,473 $ 134,064 $ 171,537
Dividends ................................................... 25,427 85,506 110,933
----------- ----------- ----------- -----------
Total income ...................................... 62,900 219,570 0 282,470
EXPENSES:
Distribution for Class A .................................... 3,680 20,192 1,472(1) 25,344
Distribution for Class B .................................... 21,310 171,666 192,976
Distribution for Class C .................................... -- 193,223 193,223
Investment adviser fee ...................................... 54,371 390,888 20,386(2) 465,645
Custodian fee ............................................... 8,898 36,554 45,452
Transfer agent fee .......................................... 22,972 102,694 125,666
Accounting/administration ................................... 10,631 63,966 (10,000)(3) 64,597
Audit and legal fees ........................................ 4,832 21,821 (3,500)(3) 23,153
Miscellaneous ............................................... 61,102 35,939 (50,000)(4) 47,041
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ........ 187,796 1,036,943 (41,642) 1,183,097
Reimbursement of expenses by investment adviser ............. (92,124) (91,998) 81,642(5) (102,480)
----------- ----------- ----------- -----------
Net expenses ...................................... 95,672 944,945 40,000 1,080,617
----------- ----------- ----------- -----------
Net investment income/(loss) ..................... (32,772) (725,375) (40,000) (798,147)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ............................... 436,028 8,025,646 8,461,674
Foreign currency and forward foreign currency contracts -- 8 8
Change in unrealized appreciation (depreciation) on:
Investments ........................................... (1,141,693) 1,370,689 228,996
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ......... (705,665) 9,396,343 -- 8,690,678
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations .......... ($ 738,437) $ 8,670,968 ($ 40,000) $ 7,892,531
----------- ----------- ----------- -----------
** Formerly the Small/Mid Cap Fund
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds
are combined.
(5) Reflects adjustment to level of the acquiring fund's expense
reimbursement.
See Notes to Pro-Forma Statements
15
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ------------------------------------------ ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Mid Cap Small/Mid Mid Cap Small/Mid
Growth Fund Cap Fund Combined Growth Fund Cap Fund Combined
----------- -------- -------- ----------- -------- --------
COMMON STOCK
------------
- 25,000 25,000 Abercrombie & Fitch Co. - $681,250 $681,250
12,800 - 12,800 Acxiom Corp. $211,200 - 211,200
6,800 - 6,800 ADC Communications, Inc. 324,275 - 324,275
2,300 - 2,300 Advent Software, Inc. 138,288 - 138,288
6,200 - 6,200 AFLAC, Inc. 316,975 - 316,975
- 15,600 15,600 Altera Corp. - 758,550 758,550
9,300 - 9,300 Altera Corp. 452,213 - 452,213
4,900 - 4,900 ALZA Corp. 209,781 - 209,781
- 10,000 10,000 Amdocs Limited - 278,125 278,125
2,400 - 2,400 Amdocs, Ltd. 66,750 - 66,750
- 5,000 5,000 ASM Lithography Holding NV - 363,125 363,125
- 11,200 11,200 ATMI, Inc. - 301,700 301,700
- 27,500 27,500 B.J. Services Co. - 943,594 943,594
- 41,100 41,100 Bed, Bath & Beyond, Inc. - 1,369,144 1,369,144
- 10,800 10,800 Biogen, Inc. - 800,550 800,550
5,200 - 5,200 BISYS Group, Inc. 265,200 - 265,200
- 34,000 34,000 BJ's Wholesale Club, Inc. - 1,047,625 1,047,625
8,500 - 8,500 BMC Software, Inc. 545,594 - 545,594
7,000 - 7,000 Boston Scientific Corp. 140,875 - 140,875
- 12,000 12,000 Calpine Corp. - 691,500 691,500
7,700 - 7,700 Cardinal Health, Inc. 332,062 - 332,062
4,100 - 4,100 Catalina Marketing Corp. 383,863 - 383,863
- 29,505 29,505 Charter One Financial, Inc. - 724,717 724,717
- 12,900 12,900 Cintas Corp. - 777,225 777,225
5,600 - 5,600 Cintas Corp. 337,400 - 337,400
- 34,400 34,400 Cnet, Inc. - 1,623,250 1,623,250
11,600 - 11,600 Compuware Corp. 322,625 - 322,625
- 2,900 2,900 Conexant Systems, Inc. - 270,787 270,787
13,200 - 13,200 Covance, Inc. 127,875 - 127,875
- 4,100 4,100 CSG Systems International, Inc. - 140,681 140,681
1,000 - 1,000 Danaher Corp. 48,313 - 48,313
- 5,500 5,500 Dean Foods Co. - 254,375 254,375
- 10,200 10,200 Devon Energy Corp. - 396,525 396,525
10,500 - 10,500 Dial Corp. 245,438 - 245,438
12,825 - 12,825 Dollar General Corp. 338,259 - 338,259
10,100 - 10,100 Dollar Tree Stores, Inc. 439,981 - 439,981
- 7,000 7,000 DST Systems, Inc. - 445,812 445,812
- 5,000 5,000 DuPont Photomasks, Inc. - 247,500 247,500
5,000 - 5,000 EMC Corp. 365,000 - 365,000
- 11,500 11,500 EOG Resources, Inc. - 239,344 239,344
10,200 - 10,200 Equifax, Inc. 275,400 - 275,400
- 4,000 4,000 Exodus Communications, Inc. - 344,000 344,000
- 15,300 15,300 Express Scripts, Inc. - 751,612 751,612
- 39,000 39,000 Family Dollar Stores, Inc. - 804,375 804,375
9,300 - 9,300 Fastenal Co. 337,125 - 337,125
- 30,250 30,250 Fiserv, Inc. - 968,000 968,000
8,700 - 8,700 Fiserv, Inc. 278,400 - 278,400
- 12,000 12,000 Flextronics Enternateonal, Ltd. - 852,000 852,000
- 33,500 33,500 Forest Laboratories, Inc. - 1,536,812 1,536,812
12,400 - 12,400 Franklin Resources, Inc. $434,000 - 434,000
16
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ------------------------------------------ ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Mid Cap Small/Mid Mid Cap Small/Mid
Growth Fund Cap Fund Combined Growth Fund Cap Fund Combined
----------- -------- -------- ----------- -------- --------
Common Stock - continued
4,500 - 4,500 G & K Services, Inc., Class A $ 169,031 - $ 169,031
- 14,700 14,700 Gucci Group NV - 1,187,025 1,187,025
4,900 - 4,900 Guidant Corp. 241,937 - 241,937
5,400 - 5,400 Harley-Davidson, Inc. 320,288 - 320,288
12,600 - 12,600 HCR Manor Care Inc. 198,450 - 198,450
30,000 - 30,000 Health Management Association 266,250 - 266,250
8,500 - 8,500 Interim Services, Inc. 139,719 - 139,719
- 50,400 50,400 Intuit, Inc. - 1,467,900 1,467,900
2,700 - 2,700 Jabil Circut, Inc. 141,075 - 141,075
- 25,000 25,000 Kansas City Southern Industries, Inc. - 1,185,938 1,185,938
8,800 - 8,800 Keane, Inc. 206,800 - 206,800
1,700 - 1,700 Kohl's Corp. 127,181 - 127,181
- 5,300 5,300 Lamar Advertising Co. - 286,200 286,200
- 4,100 4,100 Legato Systems, Inc. - 220,375 220,375
10,100 - 10,100 Legg Mason, Inc. 367,387 - 367,387
- 3,800 3,800 Linear Technology Corp - 265,763 265,763
- 19,400 19,400 Linens 'N Things, Inc. - 771,150 771,150
- 44,559 44,559 Mandalay Resort Group - 829,911 829,911
- 8,600 8,600 Maxim Integrated Products, Inc. - 678,863 678,863
- 8,900 8,900 Medimmune, Inc. - 996,800 996,800
- 5,900 5,900 Medquist, Inc. - 188,800 188,800
- 16,900 16,900 Microchip Technology, Inc. - 1,125,962 1,125,962
- 41,700 41,700 Nabors Industries, Inc. - 946,069 946,069
19,500 - 19,500 Networks Associates, Inc. 357,094 - 357,094
9,100 - 9,100 Newell Rubbermaid, Inc. 315,088 - 315,088
11,200 - 11,200 Omnicare, Inc. 103,600 - 103,600
- 48,250 48,250 Outback Steakhouse, Inc. - 1,109,750 1,109,750
- 21,000 21,000 Paine Webber Group, Inc. - 855,750 855,750
10,100 - 10,100 Parametric Technology Corp. 192,531 - 192,531
12,200 - 12,200 Paychex, Inc. 480,375 - 480,375
7,400 - 7,400 PE Corp - PE Biosystems Group 480,075 - 480,075
13,700 - 13,700 Price (T Rowe) Associates 486,350 - 486,350
7,300 - 7,300 Quintiles Transnational Corp. 135,506 - 135,506
4,600 - 4,600 Robert Half International, Inc. 124,488 - 124,488
3,700 - 3,700 Sanmina Corp. 333,230 - 333,230
- 12,800 12,800 Sanmina Corp. - 1,152,800 1,152,800
- 7,900 7,900 Sepracor, Inc. - 657,181 657,181
8,300 - 8,300 SLM Holding Corp. 406,181 - 406,181
1,000 - 1,000 Smith International, Inc. 34,563 - 34,563
600 - 600 Solectron Corp. 45,150 - 45,150
- 4,500 4,500 SPX Corp. - 381,375 381,375
6,100 - 6,100 Staples, Inc. 135,344 - 135,344
3,400 - 3,400 Sterling Commerce, Inc. 79,688 - 79,688
11,800 - 11,800 Sterling Software, Inc. 258,862 - 258,862
11,100 - 11,100 Sylvan Learning Systems, Inc. 143,606 - 143,606
- 11,000 11,000 Tiffany & Company - 654,500 654,500
4,800 - 4,800 Transaction Systems Architects,
Inc., Class A 147,600 - 147,600
- 69,600 69,600 U.S. Foodservice - 1,335,450 1,335,450
- 13,600 13,600 Union Pacific Res Group, Inc. - 197,200 197,200
- 4,800 4,800 Vitesse Semiconductor Corp. - 220,200 220,200
- 22,800 22,800 Waters Corp. - 1,211,250 1,211,250
17
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
COMMON STOCK (continued)
------------------------
SHARES MARKET VALUE
- ------------------------------------------ ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Mid Cap Small/Mid Mid Cap Small/Mid
Growth Fund Cap Fund Combined Growth Fund Cap Fund Combined
----------- -------- -------- ----------- -------- --------
Common Stock - continued
- 17,400 17,400 Williams Sonoma, Inc. - $935,250 $ 935,250
- 8,800 8,800 Xilinx, Inc. - 691,900 691,900
- 1,605 1,605 Yahoo, Inc. - 287,395 287,395
- 19,000 19,000 Young & Rubicam, Inc. - 869,250 869,250
---- ------- -------
TOTAL COMMON STOCK $13,374,341 $38,322,185 $51,696,526
------------------ ----------- ----------- -----------
(Cost $14,516,034, $35,045,078 and $49,561,112 respectively)
RIGHTS & WARRANTS
-----------------
Electric Components
Teradyne, Inc.
- 36,200 36,200 Callable through 03/26/00 - $1,393,700 $1,393,700
Motor Vehicles - 0.70%
- 5,000 5,000 Harley Davidson, Inc. - 296,563 296,563
TOTAL RIGHTS & WARRANTS - $1,690,263 $1,690,263
----------------------- - ---------- ----------
(Cost $0, $1,396,824 and $1,396,824 respectively)
Principal SHORT TERM INVESTMENTS Value
- ------------------------------------------ ---------------------- --------------------------------------------
- $600,000 $600,000 Atlantis One Funding Corp. - $599,378 $599,378
- 400,000 400,000 Enterprise Funding Corp. - 398,934 398,934
- 1,500,000 1,500,000 Ford Motor Credit Corp. - 1,496,731 1,496,731
- 88,360 88,360 SSGA Money Market Fund - 88,360 88,360
State Street Bank Repurchase Agreement
5.15%, dated 10/31/99 to be
repurchased at $591,254 on 11/01/99
collaterized by U.S. Treasury Note,
5.38%, 07/31/00, with a par value of
- 591,000 591,000 $600,000(Cost $591,000) 591,000 - 591,000
-------- ----------- ----------
TOTAL SHORT TERM INVESTMENTS $591,000 $2,583,403 $3,174,403
---------------------------- -------- ----------- ----------
(Cost $591,000, $2,853,403 amd $3,174,403 respectively)
TOTAL INVESTMENTS $13,965,341 $42,595,851 $56,561,192
----------------- ============ ============ ===========
(Cost $15,107,034, $39,025,305 and $54,132,339 respectively)
18
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Mid Cap Growth Fund and
American General Series Portfolio Company 2 Mid Cap Growth Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Mid Cap Growth Fund ("NAF") (formerly the North American
Small/Mid Cap Fund) is a series of North American Funds, 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 American General Series Portfolio Company 2 Mid Cap
Growth Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
19
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Small Cap Small Cap Pro-forma Pro-forma
ASSETS: Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
Investments in securities, at value ....................... $13,260,526 $1,230,782 $14,491,308
Deferred organization costs ............................... 20,842
Receivables:
Investments sold ....................................... 90,771 16,313 107,084
Fund shares sold ....................................... 61,291 15,486 76,777
Dividends .............................................. 2,632 -- 2,632
Interest ............................................... -- 82 82
From adviser ........................................... 3,956
Other assets .............................................. 37,617 47,653 85,270
----------- ----------- ----------- -----------
Total assets ........................................ 13,452,837 1,335,114 -- 14,787,951
LIABILITIES:
Payables:
Investments purchased .................................. 381,294 3,735 385,029
Fund shares redeemed ................................... 5,678 2,450 8,128
Investment adviser ..................................... 67,134 -- 67,134
Custodian and transfer agent fees ...................... -- 3,687 3,687
Distribution fee ....................................... 3,446 911 4,357
Other accrued expenses ................................. 44,022 -- 44,022
----------- ----------- ----------- -----------
Total liabilities ................................... 501,574 10,783 -- 512,357
NET ASSETS ................................................ $12,951,263 $1,324,331 $0 $14,275,594
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ............. $0
Accumulated undistributed net realized gain (loss) on
investments ......................................... $547,782 $10,382 $558,164
Unrealized appreciation (depreciation) on:
Investments ......................................... 2,124,738 248,604 2,373,342
Capital shares at par value of $.001 ................... 9,165 104 (8,137)(1) 1,132
Additional paid-in capital ............................. 10,269,578 1,065,241 8,137 (1) 11,342,956
----------- ----------- ----------- -----------
Net assets .......................................... $12,951,263 $1,324,331 $0 $14,275,594
=========== =========== =========== ===========
** Formerly the Emerging Growth Fund
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
20
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Small Cap Small Cap Pro-forma Pro-forma
Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value ........................................... $ 2,423,974 $ 223,641 $ 2,647,615
Shares outstanding ............................................ 171,014 17,458 18,211 206,683
Net asset value (NAV) and redemption price per share ............ $ 14.17 $ 12.81 $ 12.81
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced .... $ 15.03 $ 13.59 $ 13.59
Class B Shares
Net assets at value ........................................... $ 5,170,136 $ 660,471 $ 5,830,607
Shares outstanding ............................................ 368,206 52,556 43,102 463,864
Net asset value, offering price and redemption price per share .. $ 14.04 $ 12.57 $ 12.57
Class C Shares
Net assets at value ........................................... $ -- $ 440,219 $ 440,219
Shares outstanding ............................................ -- 35,019 -- 35,019
Net asset value, offering price and redemption price per share .. $ -- $ 12.57 $ 12.57
Class I Shares
Net assets at value ........................................... $ 3,626,347 -- $ 3,626,347
Shares outstanding ............................................ 255,597 -- 32,895 288,492
Net asset value, offering price and redemption price per share .. $ 14.19 $ -- $ 12.57
Class II Shares
Net assets at value ........................................... $ 1,730,806 $ -- $ 1,730,806
Shares outstanding ............................................ 121,661 16,032 137,693
Net asset value, offering price and redemption price per share .. $ 14.23 $ -- -- $ 12.57
** Formerly the Emerging Growth Fund
See Notes to Pro-Forma Financial Statements
21
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series
Portfolio 2 North American
Small Cap Small Cap Pro-forma Pro-forma
Growth Fund Growth Fund** Adjustments Combined
----------- ------------- ----------- --------
INVESTMENT INCOME:
Interest .............................................. $29,856 $2,455 $32,311
Dividends ............................................. 22,380 558 22,938
----------- ----------- ----------- -----------
Total income ....................................... 52,236 3,013 0 55,249
EXPENSES:
Distribution for Class A .............................. 4,060 687 1,624(1) 6,371
Distribution for Class B .............................. 22,970 5,043 28,013
Distribution for Class C .............................. -- 3,007 3,007
Investment adviser fee ................................ 62,829 9,513 7,392(2) 79,734
Custodian fee ......................................... 9,142 36,014 45,156
Transfer agent fee .................................... 19,233 9,187 28,420
Accounting/administration ............................. 6,527 1,488 (8,000)(3) 15
Audit and legal fees .................................. 4,360 514 (4,000)(3) 874
Amortization of organization costs .................... -- 6,581 -- 6,581
Miscellaneous ......................................... 59,556 2,984 (50,000)(4) 12,540
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ... 188,677 75,018 (52,984) 210,711
Reimbursement of expenses by investment adviser ....... (73,594) (52,756) 64,984(5) (61,366)
----------- ----------- ----------- -----------
Net expenses ............................... 115,083 22,262 12,000 149,345
----------- ----------- ----------- -----------
Net investment income/(loss) ............... (62,847) (19,249) (12,000) (94,096)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on:
Investment transactions ............................ 610,629 63,202 673,831
Change in unrealized appreciation (depreciation) on:
Investments ........................................ 2,124,738 309,851 2,434,589
----------- ----------- ----------- -----------
Net gain/(loss) on investments ............. 2,735,367 373,053 -- 3,108,420
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ..... $2,672,520 $353,804 ($12,000) $3,014,324
** Formerly the Emerging Growth Fund
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds are
combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
22
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK
3,775 - 3,775 24/7 Media, Inc. $163,032 - $163,032
5,400 - 5,400 3DO Co. 40,500 - 40,500
0 150 150 99 Cents Only Stores - $4,481 4,481
4,025 - 4,025 Action Performance Co., Inc. 81,884 - 81,884
1,900 - 1,900 Actuate Software Corp. 64,600 - 64,600
0 840 840 Acxiom Corp. - 13,860 13,860
0 300 300 Adaptive Broadband Corp. - 11,081 11,081
0 500 500 Advanced Energy Industries, Inc. - 20,562 20,562
0 800 800 Advanced Fibre Communications - 17,500 17,500
3,750 - 3,750 Advanced Fibre
Communications, Inc. 82,031 - 82,031
0 300 300 Advanced Paradigm, Inc. - 12,788 12,788
0 200 200 Aether Systems, Inc. - 13,912 13,912
1,150 - 1,150 Affymetrix, Inc. 101,344 - 101,344
1,950 - 1,950 AGCO Corp. 20,962 - 20,962
0 600 600 Aironet Wireless Communication - 21,450 21,450
375 - 375 Akamai Technologies, Inc. 54,445 - 54,445
5,175 - 5,175 Albemarle Corp. 91,856 - 91,856
0 400 400 Alkermes, Inc. - 14,125 14,125
3,100 - 3,100 Allegiance Telecom, Inc. 213,900 - 213,900
2,650 - 2,650 Allied Capital Corp. 53,166 - 53,166
3,850 - 3,850 Allscripts, Inc. 60,155 - 60,155
0 300 300 Alpha Industries, Inc. - 16,575 16,575
225 - 225 Alteon Websystems, Inc. 16,143 - 16,143
575 - 575 AMCORE Financial, Inc. 13,584 - 13,584
0 500 500 American Classic Voyages Co. - 12,500 12,500
1,425 - 1,425 American Classic Voyages Co. 35,625 - 35,625
575 - 575 American Italian Pasta Co.,
Class A 14,447 - 14,447
5,225 - 5,225 American Mobile Satellite Corp. 58,128 - 58,128
0 300 300 Ames Department Stores, Inc. - 9,506 9,506
2,175 - 2,175 Anchor Gaming 132,675 - 132,675
0 200 200 Ann Taylor Stores Corp. - 8,512 8,512
2,250 - 2,250 Ann Taylor Stores Corp. 95,766 - 95,766
0 400 400 Antec Corp. - 19,400 19,400
1,300 - 1,300 Applied Micro Circuits Corp. 101,156 - 101,156
0 400 400 Applied Power, Inc. - 11,625 11,625
3,000 - 3,000 AppNet Systems, Inc. 130,688 - 130,688
450 - 450 Art Technology Group, Inc. 24,300 - 24,300
0 300 300 Aspect Dev , Inc. - 10,612 10,612
6,100 - 6,100 Aspen Technology, Inc. 77,774 - 77,774
1,725 - 1,725 Asyst Technologies, Inc. 66,843 - 66,843
5,700 - 5,700 ATMI, Inc. 153,544 - 153,544
0 300 300 AudioCodes, Ltd. - 18,150 18,150
0 500 500 Avant! Corp. - 6,438 6,438
1,375 - 1,375 Aztar Corp. 13,320 - 13,320
1,600 - 1,600 Azurix Corp. 22,500 - 22,500
2,300 - 2,300 Bank United Corp. 89,699 - 89,699
23
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
2,375 - 2,375 Bebe Stores, Inc. $ 62,641 - $ 62,641
0 500 500 Ben & Jerry's Homemade, Inc. - $8,438 8,438
0 400 400 BJ Services Company - 13,725 13,725
1,200 - 1,200 Blackrock, Inc. 18,300 - 18,300
225 - 225 Breakaway Solutions, Inc. 11,967 - 11,967
1,950 - 1,950 Brooks Automation, Inc. 37,050 - 37,050
0 400 400 Burr-Brown Corp. - 15,725 15,725
800 - 800 Bush Boake Allen, Inc. 18,700 - 18,700
0 300 300 Business Objects SA - 21,600 21,600
3,375 - 3,375 Caprock Communications Corp. 97,244 - 97,244
900 - 900 Careinsite, Inc. 39,375 - 39,375
1,475 - 1,475 Catalina Marketing Corp. 138,097 - 138,097
1,450 - 1,450 CBT Group, Plc. - ADR 29,906 - 29,906
0 400 400 C-Cube Microsystems, Inc. - 17,800 17,800
575 - 575 Central Parking Corp. 15,417 - 15,417
800 - 800 Checkfree Holdings Corp. 29,900 - 29,900
0 400 400 ChiRex, Inc. - 11,300 11,300
4,700 - 4,700 Cinar Corp. 81,663 - 81,663
1,150 - 1,150 City National Corp. 44,562 - 44,562
900 - 900 Cognex Corp. 26,944 - 26,944
1,025 - 1,025 Cole, K. Productions, Inc.,
Class A 40,103 - 40,103
575 - 575 Colonial BancGroup, Inc. 6,864 - 6,864
1,500 - 1,500 Commercial Federal Corp. 29,438 - 29,438
0 500 500 Concentric Network Corp. - 12,813 12,813
7,250 - 7,250 Concentric Network Corp. 185,781 - 185,781
0 300 300 Concord Communications, Inc. - 15,581 15,581
450 - 450 CONMED Corp. 11,222 - 11,222
0 300 300 Cooper Cameron Corp. - 11,606 11,606
1,950 - 1,950 Cooper Cameron Corp. 75,441 - 75,441
2,062 - 2,062 Cost Plus, Inc. 75,263 - 75,263
975 - 975 Covad Communications Group,Inc 46,800 - 46,800
2,175 - 2,175 Creative Technology, Ltd. 26,100 - 26,100
650 - 650 Creditrust Corp. 11,578 - 11,578
1,975 - 1,975 Cyberonics, Inc. 27,774 - 27,774
2,875 - 2,875 Cymer, Inc. 106,195 - 106,195
7,350 - 7,350 Cypress Semiconductor Corp. 187,884 - 187,884
0 300 300 Cysive, Inc. - 17,269 17,269
2,400 - 2,400 Devon Energy Corp. 93,300 - 93,300
0 500 500 DeVry, Inc. - 10,531 10,531
6,025 - 6,025 DeVry, Inc. 126,902 - 126,902
400 - 400 Diamond Tech Partners, Inc. 25,850 - 25,850
0 200 200 DSP Group, Inc. - 9,550 9,550
1,725 - 1,725 Dycom Industries, Inc. 56,170 - 56,170
100 - 100 E.pihpany, Inc. $8,600 - $8,600
1,025 - 1,025 Electro Scientific
Industries, Inc. 55,350 - 55,350
0 100 100 Emulex Corp. - 15,594 15,594
0 400 400 Enhance Financial Services
Group, Inc. - 7,300 7,300
24
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
0 200 200 Entercom Communications Corp. - $ 9,962 $ 9,962
1,725 - 1,725 Entercom Communications Corp. 85,927 - 85,927
0 200 200 Etec Systems, Inc. - 7,637 7,637
1,550 - 1,550 E-Tek Dynamics, Inc. 103,269 - 103,269
675 - 675 Etoys, Inc. 40,331 - 40,331
1,500 - 1,500 Exar Corp. 54,188 - 54,188
1,900 - 1,900 Exchange Applications, Inc. 51,775 - 51,775
625 - 625 F5 Networks, Inc. 86,719 - 86,719
3,355 - 3,355 Fairchild Semiconductor Corp. 84,714 - 84,714
0 1,300 1,300 Fairfield Communities, Inc. - 15,925 15,925
3,450 - 3,450 Financial Federal Corp. 74,175 - 74,175
3,225 - 3,225 Finish Line, Inc. 22,273 - 22,273
325 - 325 Foundry Networks, Inc. 61,587 - 61,587
2,750 - 2,750 Fremont General Corp. 23,719 - 23,719
1,500 - 1,500 Furniture Brands International 29,063 - 29,063
2,300 - 2,300 Gabelli Asset Management, Inc. 34,356 - 34,356
0 5,600 5,600 Galileo Technology, Ltd. - 13,725 13,725
3,225 - 3,225 Galileo Technology, Ltd. 73,771 - 73,771
4,600 - 4,600 GaSonics International Corp. 77,050 - 77,050
4,500 - 4,500 General Chemical Group, Inc. 11,250 - 11,250
5,525 - 5,525 Gentek, Inc. 48,689 - 48,689
2,925 - 2,925 Geon Co. 76,781 - 76,781
6,100 - 6,100 Georgia Gulf Corp. 131,530 - 131,530
0 600 600 Getty Images, Inc. - 18,487 18,487
0 200 200 Gilat Satellite Networks, Ltd. - 10,425 10,425
350 - 350 Gilead Sciences, Inc. 22,116 - 22,116
0 100 100 Go2Net - 7,038 7,038
350 - 350 Go2Net, Inc. 24,631 - 24,631
500 - 500 Hamilton Bancorp, Inc. 7,938 - 7,938
0 800 800 Hanger Orthopedic Group, Inc. - 9,850 9,850
2,425 - 2,425 Heller Financial, Inc. 57,594 - 57,594
500 - 500 HI/FN, Inc. 18,156 - 18,156
1,950 - 1,950 Hibbett Sporting Goods, Inc. 31,078 - 31,078
0 86 86 Hispanic Broadcasting Corp. - 6,966 6,966
3,000 - 3,000 Human Genome Sciences, Inc. 262,125 - 262,125
0 500 500 Hyperion Solutions Corp. - 12,188 12,188
450 - 450 IDEC Pharmaceuticals Corp. 52,284 - 52,284
3,300 - 3,300 IDEXX Laboratories, Inc. 49,913 - 49,913
475 - 475 Illuinet Holdings, Inc. 21,850 - 21,850
2,400 - 2,400 In Focus Systems, Inc. 47,551 - 47,551
1,330 - 1,330 Independent Bank Corp. 20,116 - 20,116
1,950 - 1,950 Indymac Mortgage Holdings, Inc. 27,178 - 27,178
0 300 300 InfoSpace.com, Inc. - 16,688 16,688
2,300 - 2,300 Insight Communications Co. 54,338 - 54,338
0 700 700 INSpire Insurance Solutions, Inc. - 4,463 4,463
4,100 - 4,100 Integrated Device
Technology, Inc. 84,306 - 84,306
565 - 565 Internet Capital Group, Inc. 65,752 - 65,752
25
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
0 300 300 Interspeed, Inc. - $ 3,319 $ 3,319
1,275 - 1,275 Intertan, Inc. 28,687 - 28,687
150 - 150 Interwoven, Inc. 11,756 - 11,756
2,000 - 2,000 Intevac, Inc. 8,000 - 8,000
0 450 450 Iron Mountain, Inc. - 13,612 13,612
0 400 400 Jack-in-the-Box, Inc. - 9,625 9,625
300 - 300 JNI Corp. 16,031 - 16,031
575 - 575 Jones Intercable, Inc. 31,408 - 31,408
1,950 - 1,950 Keebler Foods Co. 62,277 - 62,277
1,600 - 1,600 Kennametal, Inc. 46,000 - 46,000
100 - 100 Keynote Systems, Inc. 4,538 - 4,538
2,500 - 2,500 L-3 Communications Holdings 105,469 - 105,469
2,350 - 2,350 LAM Research Corp. 198,428 - 198,428
0 300 300 Legato Systems, Inc. - 16,125 16,125
2,775 - 2,775 Liberate Technologies, Inc. 189,047 - 189,047
6,200 - 6,200 Ligand Pharmaceuticals, Inc. 50,763 - 50,763
0 200 200 Linens 'n Things, Inc. - 7,950 7,950
1,500 - 1,500 Linens 'N Things, Inc. 59,625 - 59,625
3,200 - 3,200 LTX Corp. 50,600 - 50,600
1,700 - 1,700 Mapics, Inc. 14,450 - 14,450
1,325 - 1,325 Media Metrix, Inc. 62,109 - 62,109
3,400 - 3,400 Medquist, Inc. 108,800 - 108,800
0 200 200 Mercury Interactive Corp. - 16,225 16,225
0 400 400 Metamor Worldwide, Inc. - 7,550 7,550
800 - 800 MGM Grand, Inc. 40,800 - 40,800
950 - 950 Microchip Technology, Inc. 63,294 - 63,294
2,600 - 2,600 Microstrategy, Inc. 251,225 - 251,225
0 1,400 1,400 Mid Atlantic Medical Services - 7,613 7,613
0 700 700 Midway Games, Inc. - 13,956 13,956
1,850 - 1,850 Milacron, Inc. 30,409 - 30,409
1,600 - 1,600 Millennium Pharmaceuticals, Inc. 112,200 - 112,200
0 200 200 Minimed, Inc. - 15,162 15,162
1,725 - 1,725 MIPS Technologies, Inc., Class A 49,809 - 49,809
800 - 800 Mission Critical Software, Inc. 47,100 - 47,100
4,950 - 4,950 MKS Instruments, Inc. 103,950 - 103,950
2,425 - 2,425 Mondavi, Robert Corp., Class A 87,603 - 87,603
3,100 - 3,100 MSC Industrial Direct Co. 29,644 - 29,644
1,500 - 1,500 Mueller Industries, Inc. 47,906 - 47,906
0 400 400 Multex Systems, Inc. - 6,425 6,425
2,300 - 2,300 Multex.com, Inc. 36,944 - 36,944
3,700 - 3,700 National Commerce Bancorp 92,500 - 92,500
1,150 - 1,150 National Computer Systems, Inc. 43,483 - 43,483
2,625 - 2,625 National Information Consortiuium 85,968 - 85,968
0 450 450 National Instruments Corp. - $13,528 13,528
3,000 - 3,000 National-Oilwell, Inc. 40,688 - 40,688
3,000 - 3,000 Net Perceptions, Inc. 48,000 - 48,000
575 - 575 Net2phone, Inc. 31,194 - 31,194
26
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
0 600 600 Network Event Theater, Inc. - $ 13,800 $ 13,800
650 - 650 Netzero, Inc. 13,366 - 13,366
5,275 - 5,275 New Holland N.V. 80,114 - 80,114
1,500 - 1,500 NEXTLINK Communications 89,720 - 89,720
1,975 - 1,975 NFront, Inc. 27,403 - 27,403
0 200 200 Novellus Systems, Inc. - 15,500 15,500
575 - 575 Ocular Sciences, Inc. 10,565 - 10,565
3,900 - 3,900 Olin Corp. 53,869 - 53,869
0 200 200 Omnipoint Corp. - 16,525 16,525
1,650 - 1,650 Osteotech, Inc. 21,553 - 21,553
0 900 900 Oxford Health Plans, Inc. - 10,631 10,631
575 - 575 Pacific Century Financial Corp. 13,117 - 13,117
2,150 - 2,150 Pacific Gateway Exchange, Inc. 48,913 - 48,913
0 1,200 1,200 Pairgain Technologies, Inc. - 14,700 14,700
3,800 - 3,800 Papa Johns International, Inc. 142,025 - 142,025
1,000 - 1,000 PC-Tel, Inc. 30,000 - 30,000
0 100 100 Pegasus Communicaions Corp. - 4,425 4,425
0 500 500 Peregrine Systems, Inc. - 21,938 21,938
0 800 800 Petroleum Geo Services, Inc. - 11,700 11,700
0 500 500 Photronics, Inc. - 10,469 10,469
1,600 - 1,600 Photronics, Inc. 33,500 - 33,500
1,450 - 1,450 Pinnacle Systems, Inc. 40,238 - 40,238
1,850 - 1,850 Pixar, Inc. 70,415 - 70,415
400 - 400 Plexus Corp. 10,600 - 10,600
1,600 - 1,600 PLX Technology, Inc. 25,600 - 25,600
3,025 - 3,025 Polycom, Inc. 151,250 - 151,250
0 300 300 Powertel, Inc. - 17,662 17,662
0 400 400 Powerwave Technologies, Inc. - 26,025 26,025
425 - 425 Predictive Systems, Inc. 18,488 - 18,488
4,925 - 4,925 Premier Parks, Inc. 142,516 - 142,516
3,200 - 3,200 Private Business, Inc. 6,800 - 6,800
0 400 400 Proxim, Inc. - 18,725 18,725
0 300 300 QRS Corp. - 16,688 16,688
100 - 100 Quest Software, Inc. 7,375 - 7,375
0 900 900 Radiant Systems, Inc. - 14,175 14,175
4,400 - 4,400 Radiant Systems, Inc. 69,300 - 69,300
500 - 500 Radio Unica Corp. 14,312 - 14,312
0 500 500 Remedy Corp. - 21,500 21,500
1,500 - 1,500 Renaissancere Holdings, Ltd. 54,656 - 54,656
0 400 400 Renal Care Group, Inc. - 7,450 7,450
0 300 300 Research In Motion, Ltd. - 9,225 9,225
1,025 - 1,025 Respironics, Inc. 8,648 - 8,648
0 300 300 RSA Sec, Inc. - 10,650 10,650
800 - 800 Safeguard Scientifics, Inc. 67,300 - 67,300
2,825 - 2,825 Saleslogix Corp. 88,987 - 88,987
0 100 100 Sandisk Corp. - 6,063 6,063
4,300 - 4,300 SangStat Medical Corp. 92,987 - 92,987
27
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
1,275 - 1,275 Scholastic Corp. $ 59,288 - $ 59,288
1,350 - 1,350 Silicon Image, Inc. 59,653 - 59,653
0 400 400 Smith International, Inc. - 13,825 13,825
1,175 - 1,175 Smith International, Inc. 40,611 - 40,611
1,400 - 1,400 Spanish Broadcasting System 37,275 - 37,275
0 500 500 Spectrian Corp. - 16,750 16,750
1,425 - 1,425 Spinnaker Exploration Co. 21,019 - 21,019
5,725 - 5,725 Splitrock Services, Inc. 125,234 - 125,234
0 700 700 Stanford Communications, Inc. - 19,600 19,600
700 - 700 Steiner Leisure, Ltd. 13,257 - 13,257
3,100 - 3,100 Sterling Bancshares, Inc. 38,750 - 38,750
5,175 - 5,175 Steven Madden, Ltd. 63,394 - 63,394
0 300 300 Stone Energy Corp. - 14,588 14,588
0 400 400 Strayer Education, Inc. - 7,025 7,025
1,850 - 1,850 Summit Technology, Inc. 28,790 - 28,790
900 - 900 Sun Bancorp, Inc. 9,281 - 9,281
900 - 900 Sun International Hotels, Ltd. 18,225 - 18,225
0 800 800 Sunterra Corp. - 8,000 8,000
0 450 450 Swift Transportation, Inc. - 7,847 7,847
1,250 - 1,250 Sycamore Networks Inc. 268,749 - 268,749
1,750 - 1,750 Talbots, Inc. 82,359 - 82,359
2,075 - 2,075 Talk.com, Inc. 33,070 - 33,070
0 800 800 Telcom Semiconductor, Inc. - 7,400 7,400
0 300 300 THQ, Inc. - 12,338 12,338
1,600 - 1,600 Triangle Pharmaceuticals, Inc. 26,000 - 26,000
0 300 300 Triquint Semiconductor, Inc. - 24,000 24,000
0 1,300 1,300 Tristar Aerospace Co. - 8,612 8,612
3,200 - 3,200 Universal Forest Products, Inc. 46,400 - 46,400
1,900 - 1,900 Univision Communications, Inc. 161,619 - 161,619
3,800 - 3,800 US Bioscience, Inc. 61,275 - 61,275
1,800 - 1,800 Vail Resorts, Inc. 40,050 - 40,050
700 - 700 Valero Energy Corp. 12,863 - 12,863
0 200 200 Value America, Inc. - 2,487 2,487
0 400 400 Valuevision International, Inc. - 13,075 13,075
1,950 - 1,950 Vans, Inc. 21,938 - 21,938
3,500 - 3,500 Verio, Inc. 130,594 - 130,594
1,025 - 1,025 Versatel Telecom International
NV - ADR 12,941 - 12,941
1,950 - 1,950 Vertex Pharmaceuticals, Inc. 55,819 - 55,819
0 200 200 VerticalNet, Inc. - 11,200 11,200
450 - 450 Verticalnet, Inc. 25,200 - 25,200
0 400 400 Viatel, Inc. - 13,350 13,350
1,700 - 1,700 Vical, Inc. 24,225 - 24,225
1,275 - 1,275 Webstakes.com, Inc. 8,367 - 8,367
500 - 500 Webster Financial Corp. 14,313 - 14,313
800 - 800 Webtrend Corp. 49,400 - 49,400
7,600 - 7,600 Wellman, Inc. 114,475 - 114,475
515 - 515 West Coast Bancorp 7,113 - 7,113
28
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- -------------------------------------
North North
AGSPC2 American AGSPC2 American
Small Cap Small Cap Small Cap Small Cap
Growth Fund Growth Fund Combined Growth Fund Growth Fund Combined
----------- ----------- -------- ----------- ----------- --------
COMMON STOCK (continued)
0 200 200 Western Wireless Corp. - $ 10,575 $ 10,575
0 300 300 Westwood One, Inc. - 13,838 13,838
975 - 975 Williams Communications Group 31,078 - 31,078
400 - 400 WinStar Communications, Inc. 15,525 - 15,525
1,600 - 1,600 Wit Capital Group, Inc. 28,100 - 28,100
0 165 165 Xoom.com, Inc. - 10,312 10,312
0 400 400 Zapme Corp. - 3,000 3,000
- ----- -----
TOTAL COMMON STOCK $11,451,113 $1,182,026 $12,633,139
----------- ---------- -----------
(Cost $9,322,546, $933,422 and $10,255,968 respectively)
Shares Shares Shares PREFERRED STOCK
OIL/GAS PRODUCERS -
1,300 - 1,300 Tesoro Petroleum Corp. $16,413 - $16,413
-------- - -------
(Cost $20,242, $0 and $20,242 respectively)
Principal SHORT TERM INVESTMENTS Value
- ---------------------------------------- --------------------------------------
- $48,756 $48,756 SSGA Money Market Fund - $48,756 $48,756
-
State Street Bank Repurchase
Agreement 5.15% dated 10/31/99,
to be repurchased at $1,793,770
on 11/01/99, collateralized by
U.S. Treasury Note, 5.38%,
07/31/00 with a par value of
$1,793,000 - 1,793,000 $1,810,000 (Cost $1,793,000) 1,793,000 - 1,793,000
---------- - ----------
TOTAL SHORT TERM INVESTMENTS $1,793,000 $48,756 $1,841,756
---------- -------- ----------
(Cost $1,793,000, $48,756 and $1,841,756 respectively)
TOTAL INVESTMENTS $13,260,526 $1,230,782 $14,491,308
=========== ========== ===========
(Cost $11,135,788, $982,178 and $12,117,966 respectively)
29
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Small Cap Growth Fund and
American General Series Portfolio Company 2 Small Cap Growth Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Small Cap Growth Fund ("NAF") (formerly the North American
Emerging Growth Fund) is a series of North American Funds, a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended,
as a non-diversified, open-end management investment company. The pro-forma
combined financial statements reflect the pro-forma combined financial position
of the proposed acquisition of American General Series Portfolio Company 2 Small
Cap Growth Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
30
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Small Cap Mid Cap Pro-forma Pro-forma
ASSETS: Value Fund Value Fund Adjustments Combined
---------- ---------- ----------- --------
Investments in securities, at value ....................... $6,140,038 $9,286,127 $15,426,165
Receivables:
Investments sold ....................................... 58,025 71,882 129,907
Fund shares sold ....................................... 6,610 61,567 68,177
Dividends .............................................. 4,831 14,706 19,537
Other assets .............................................. 22,966 25,401 48,367
----------- ----------- ----------- -----------
Total assets ........................................ 6,232,470 9,459,683 -- 15,692,153
LIABILITIES:
Payables:
Investments purchased .................................. 20,006 110,201 130,207
Fund shares redeemed ................................... -- 3,200 3,200
Investment adviser ..................................... 43,277 55,124 98,401
Distribution fee ....................................... 2,012 3,327 5,339
Other accrued expenses ................................. 38,567 40,978 79,545
----------- ----------- ----------- -----------
Total liabilities ................................... 103,862 212,830 -- 316,692
NET ASSETS ................................................ $6,128,608 $9,246,853 $0 $15,375,461
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ............. $1,070 -- $1,070
Accumulated undistributed net realized gain (loss) on
investments ......................................... (154,832) $1,203,291 1,048,459
Unrealized appreciation (depreciation) on:
investments ......................................... (268,682) (338,721) (607,403)
Capital shares at par value of $.01 .................... 6,614 7,767 (1,473)(1) 12,908
Additional paid-in capital ............................. 6,544,438 8,374,516 1,473 (1) 14,920,427
----------- ----------- ----------- -----------
Net assets ......................................... $6,128,608 $9,246,853 $0 $15,375,461
=========== =========== =========== ===========
(1) Reflects change in shares due to merger exchange
See Notes to Pro-Forma Financial Statements
31
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Small Cap Mid Cap Pro-forma Pro-forma
Value Fund Value Fund Adjustments Combined
---------- ---------- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value ........................................... $ 1,371,038 $ 1,728,035 $ 3,099,073
Shares outstanding ............................................ 147,829 144,260 (33,385)(1) 258,704
Net asset value (NAV) and redemption price per share ............ $ 9.27 $ 11.98 $ 11.98
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced .... $ 9.84 $ 12.71 $ 12.71
Class B Shares
Net assets at value ........................................... $ 2,295,576 $ 4,555,111 $ 6,850,687
Shares outstanding ............................................ 247,985 384,406 (54,266)(1) 578,125
Net asset value, offering price and redemption price per share .. $ 9.26 $ 11.85 $ 11.85
Class I Shares
Net assets at value ........................................... $ 1,234,155 $ 1,507,193 $ 2,741,348
Shares outstanding ............................................ 133,133 126,083 (29,856)(1) 229,360
Net asset value, offering price and redemption price per share .. $ 9.27 $ 11.95 $ 11.95
Class II Shares
Net assets at value ........................................... $ 1,227,839 $ 1,456,514 $ 2,684,353
Shares outstanding ............................................ 132,434 121,911 (29,686)(1) 224,659
Net asset value, offering price and redemption price per share .. $ 9.27 $ 11.95 -- $ 11.95
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
32
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Small Cap Mid Cap Pro-forma Pro-forma
Value Fund Value Fund Adjustments Combined
---------- ---------- ----------- --------
INVESTMENT INCOME:
Interest ............................................... $33,625 $17,138 $50,763
Dividends .............................................. 94,607 105,799 200,406
----------- ----------- ----------- -----------
Total income ......................................... 128,232 122,937 -- 251,169
EXPENSES:
Distribution for Class A ............................... 3,172 3,825 2,800(1) 9,797
Distribution for Class B ............................... 15,450 22,257 37,707
Investment adviser fee ................................. 40,252 51,545 18,359(2) 110,156
Custodian fee .......................................... 7,408 9,328 16,736
Transfer agent fee ..................................... 14,755 18,640 33,395
Accounting/administration .............................. 4,639 5,645 (2,500)(3) 7,784
Audit and legal fees ................................... 3,244 4,071 (2,500)(3) 4,815
Registration and filing fees ........................... 54,359 54,368 (47,800)(3) 60,927
Miscellaneous .......................................... 3,542 4,564 (3,500)(3) 4,606
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser .... 146,821 174,243 (35,141) 285,923
Reimbursement of expenses by investment adviser ........ (74,625) (75,133) 93,489(3) (56,269)
----------- ----------- ----------- -----------
Net expenses ................................... 72,196 99,110 58,348 229,654
----------- ----------- ----------- -----------
Net investment income/(loss) ................... 56,036 23,827 (58,348) 21,515
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ............................. (159,770) 1,208,461 1,048,691
Futures contracts ................................... 4,938 4,938
Change in unrealized appreciation (depreciation) on:
Investments ......................................... (268,682) (338,721) (607,403)
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ...... (423,514) 869,740 -- 446,226
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ...... ($367,478) $893,567 ($58,348) $467,741
----------- ----------- ----------- -----------
(1) Reflects the surviving fund's 12b-1 service fee rate.
(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
33
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK
- 600 600 7-eleven, Inc. - $1,199 $1,199
8,700 - 8,700 A.H. Belo Corp. $177,263 - 177,263
- 200 200 AAR Corp. - 3,337 3,337
- 200 200 ABC-Naco, Inc. - 2,149 2,149
- 100 100 Acceptance Insurance Co., Inc. - 1,443 1,443
7,400 - 7,400 Ace, Ltd. 143,839 - 143,839
- 100 100 Actel Corp. - 1,888 1,888
- 100 100 Acuson Corp. - 1,037 1,037
- 100 100 ACX Technologies, Inc. - 780 780
- 100 100 Advanta Corp. - 1,780 1,780
- 300 300 Advantica Restaurant Corp. - 788 788
- 100 100 Advest Group, Inc. - 1,930 1,930
- 100 100 Aftermarket Technology Corp. - 945 945
- 500 500 AGCO Corp. - 5,374 5,374
- 400 400 AGL Resources, Inc. - 6,975 6,975
- 300 300 Agribiotech, Inc. - 955 955
- 100 100 Agribrands International, Inc. - 4,424 4,424
- 200 200 Air Express International Corp. - 5,324 5,324
- 400 400 Airborne Freight Corp. - 8,599 8,599
- 400 400 Airgas, Inc. - 3,799 3,799
- 100 100 Airtran Holdings, Inc. - 455 455
6,600 - 6,600 AK Steel Holding Corp. 114,263 - 114,263
- 191 191 AK Steel Holding Corp. - 3,308 3,308
- 100 100 Alabama National Bancorp - 2,374 2,374
- 200 200 Alaska Air Group, Inc. - 7,949 7,949
- 102 102 Albany International Corp., Class A - 1,548 1,548
- 200 200 Albemarle Corp. - 3,549 3,549
- 300 300 Alexander & Baldwin, Inc. - 7,199 7,199
- 100 100 Alexandria Real Estate Equities, Inc. - 2,875 2,875
- 300 300 Alfa Corp. - 5,362 5,362
- 200 200 Allen Telecom, Inc. - 1,812 1,812
- 100 100 Alliance Bancorp, Inc. - 2,050 2,050
- 200 200 Alliance Semiconductor Corp. - 2,325 2,325
- 400 400 Allied Capital Corp. - 8,025 8,025
- 135 135 Allstate Corp - 3,880 3,880
- 100 100 Alltrista Corp. - 2,293 2,293
- 100 100 Alterra Healthcare Corp. - 587 587
2,300 - 2,300 Ambac Financial Group, Inc. 137,425 - 137,425
- 100 100 AMCOL International Corp. - 1,225 1,225
- 200 200 AMCORE Financial, Inc. - 4,724 4,724
- 100 100 AMERCO, Inc. - 2,944 2,944
- 100 100 American Annuity Group, Inc. - 1,793 1,793
- 100 100 American Business Products, Inc. - 1,306 1,306
- 100 100 American Freightways Corp. - 2,063 2,063
- 200 200 American Health Properties Co. - 4,038 4,038
- 100 100 American Industrial Properties REIT - 1,150 1,150
7,700 - 7,700 American National Can Group 96,250 - 96,250
- 100 100 American States Water Co. - 3,431 3,431
4,600 - 4,600 American Tower Corp., Class A 87,688 - 87,688
- 200 200 American West Holdings Corp., Class B - 4,138 4,138
- 100 100 AmeriPath, Inc. - 740 740
34
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 AmerUs Life Holdings, Inc. - $ 2,413 $ 2,413
- 1,500 1,500 Ames Department Stores, Inc. - 47,530 47,530
- 600 600 AMF Bowling, Inc. - 2,662 2,662
- 100 100 AMKOR Technologies, Inc. - 2,018 2,018
- 100 100 Amli Residential Properties Trust - 2,075 2,075
- 200 200 Ampex Corp., Class A - 487 487
- 300 300 Amresco, Inc. - 880 880
- 100 100 Analogic Corp. - 2,624 2,624
- 200 200 Anchor BanCorp Wisconsin, Inc. - 3,199 3,199
- 100 100 Andover Bancorp, Inc. - 2,925 2,925
- 500 500 Andrew Corp. - 6,438 6,438
- 100 100 Anicom, Inc. - 413 413
- 200 200 Anixter International, Inc. - 4,174 4,174
- 450 450 ANTEC Corp. - 21,824 21,824
2,200 - 2,200 Aon Corp. 78,100 - 78,100
3,100 - 3,100 Apache Corp. 120,900 - 120,900
- 1,550 1,550 Applebees International, Inc. - 44,659 44,659
- 100 100 Applied Graphics Technology, Inc. - 712 712
- 200 200 Applied Industrial Tech., Inc. - 3,150 3,150
- 400 400 Apria Healthcare Group, Inc. - 6,325 6,325
- 200 200 AptarGroup, Inc. - 5,374 5,374
- 300 300 Arcadia Financial, Ltd. - 1,199 1,199
- 100 100 Arch Chemicals, Inc. - 1,475 1,475
- 100 100 Arch Coal, Inc. - 1,119 1,119
- 200 200 Arctic Cat, Inc. - 1,899 1,899
- 100 100 Area Bancshares Corp. - 2,600 2,600
- 100 100 Argonaut Group, Inc. - 2,406 2,406
- 200 200 Arnold Industries, Inc. - 2,006 2,006
- 100 100 Arrow International, Inc. - 2,712 2,712
- 200 200 Arvin Industries, Inc. - 5,699 5,699
- 300 300 ASARCO, Inc. - 8,849 8,849
- 200 200 Ascent Entertainment Group, Inc. - 3,474 3,474
- 100 100 Ashton Technology Group, Inc. - 640 640
- 100 100 Aspect Telecommunications Co. - 2,519 2,519
- 100 100 Aspen Technology, Inc. - 1,275 1,275
- 100 100 Assisted Living Concepts, Inc. - 113 113
- 100 100 Associated Estates Realty Corp. - 863 863
3,300 - 3,300 AT&T Corp. 130,969 - 130,969
- 500 500 ATMI, Inc. - 13,469 13,469
- 200 200 Atmos Energy Corp. - 4,537 4,537
- 100 100 Aurora Foods, Inc. - 1,287 1,287
- 100 100 Auspex Systems, Inc. - 556 556
- 100 100 Avado Brands, Inc. - 563 563
- 100 100 Avant! Corp. - 1,288 1,288
- 100 100 Aviall, Inc. - 893 893
- 100 100 Avid Technology, Inc. - 1,106 1,106
- 200 200 Avis Rent A Car, Inc. - 3,574 3,574
- 300 300 Avista Corp. - 5,400 5,400
- 34 34 Avnet, Inc. - 1,838 1,838
- 300 300 Aztar Corp. - 2,905 2,905
- 200 200 Baldor Electric Co. - 3,888 3,888
- 100 100 Baldwin & Lyons, Inc., Class B - 2,062 2,062
35
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 1,150 1,150 Bally Total Fitness Holding Corp. - $27,671 $ 27,671
- 2 2 BancFirst Corp. - 65 65
- 500 500 BancorpSouth, Inc. - 8,688 8,688
- 200 200 BancWest Corp. - 8,363 8,363
- 100 100 Bandag, Inc. - 2,499 2,499
- 45 45 Bank Atlantic Bancorp, Class A - 228 228
- 300 300 Bank Atlantic Bancorp, Class B - 1,875 1,875
- 200 200 Bank United Corp. - 7,800 7,800
- 190 190 Banknorth Group, Inc. - 6,418 6,418
- 200 200 Banta Corp. - 4,525 4,525
- 100 100 Barnes Group, Inc. - 2,031 2,031
- 100 100 Barnesandnoble.com, inc. - 1,838 1,838
- 100 100 Bassett Furniture Industries, Inc. - 1,799 1,799
- 100 100 Bay View Capital Corp. - 1,388 1,388
5,400 - 5,400 Becton, Dickinson and Co. 137,025 - 137,025
- 200 200 Bedford Prpty Investors, Inc. - 3,500 3,500
- 100 100 Belco Oil and Gas Corp. - 624 624
- 200 200 Belden, Inc. - 3,675 3,675
- 1,000 1,000 Bethlehem Steel Corp. - 6,937 6,937
- 700 700 Beverly Enterprises, Inc. - 2,755 2,755
- 100 100 Bindley Western Industries, Inc. - 1,255 1,255
- 100 100 Bio-Rad Laboratories, Inc., Class A - 2,399 2,399
- 5,350 5,350 Bio-Technology General Corp. - 52,163 52,163
- 800 800 BJ Services Co. - 27,449 27,449
- 100 100 Black Hills Corp. - 2,250 2,250
- 100 100 Block Drug Co., Inc., Class A - 3,488 3,488
- 103 103 Blount International, Inc. - 1,513 1,513
- 200 200 BMC Industries, Inc. - 1,163 1,163
- 300 300 Bob Evans Farms, Inc. - 4,125 4,125
- 100 100 Boise Cascade Office Products Corp. - 1,024 1,024
- 103 103 BOK Financial Corp. - 2,176 2,176
- 200 200 Bombay Co., Inc. - 825 825
- 300 300 Borders Group, Inc. - 3,899 3,899
- 600 600 Borg-Warner Automotive, Inc. - 23,699 23,699
3,100 - 3,100 Bowater, Inc. 162,750 - 162,750
- 300 300 Bowne & Co., Inc. - 3,338 3,338
- 300 300 Boyd Gaming Corp. - 1,950 1,950
- 200 200 Boyds Collection, Ltd. - 1,588 1,588
- 100 100 Boykin Lodging Co. - 1,294 1,294
- 200 200 Bradley Real Estate, Inc. - 3,350 3,350
- 2,350 2,350 Brandywine Realty Trust - 39,509 39,509
- 400 400 BRE Properties, Inc., Class A - 9,075 9,075
- 200 200 Brightpoint, Inc. - 1,569 1,569
- 105 105 Brooke Group, Ltd. - 1,608 1,608
- 100 100 Brookline Bancorp, Inc. - 1,050 1,050
- 100 100 Brooks Automation, Inc. - 1,900 1,900
- 100 100 Brown Shoe Comany, Inc. - 1,780 1,780
- 100 100 Brown, Tom, Inc. - 1,374 1,374
- 100 100 Brush Wellman, Inc. - 1,324 1,324
- 100 100 BSB Bancorp, Inc. - 2,206 2,206
- 100 100 BT Financial Corp. - 2,213 2,213
- 100 100 Buckeye Technologies, Inc. - 1,512 1,512
36
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 200 200 Budget Group, Inc. - $ 1,399 $ 1,399
- 400 400 Buffets, Inc. - 3,725 3,725
- 41 41 Building One Services Corp. - 456 456
- 100 100 Burlington Coat Factory Warehouse Corp. - 1,713 1,713
- 400 400 Burlington Industries, Inc. - 1,475 1,475
- 200 200 Burnham Pacific Properties, Inc. - 2,000 2,000
- 100 100 Bush Boake Allen, Inc. - 2,338 2,338
- 100 100 Bush Industries, Inc. - 1,455 1,455
- 200 200 Cable Design Technologies Corp. - 3,875 3,875
- 300 300 Cabot Industrial Trust - 6,000 6,000
- 200 200 Cabot Oil & Gas Corp., Class A - 3,224 3,224
11,000 - 11,000 Cadence Design Systems, Inc. 167,063 - 167,063
- 300 300 Calgon Carbon Corp. - 2,099 2,099
- 100 100 California Water Service Group Holding - 2,900 2,900
- 400 400 Callaway Golf Co. - 5,375 5,375
- 200 200 Cambrex Corp. - 6,050 6,050
- 300 300 Camden Poperty Trust - 8,119 8,119
- 100 100 Canandaigua Brands, Inc., Class A - 6,049 6,049
- 100 100 Capital Automotive REIT - 1,275 1,275
- 200 200 Capital Re Corp. - 2,824 2,824
- 600 600 Capitol Federal Financial - 6,000 6,000
- 400 400 Capstead Mortgage Corp. - 1,575 1,575
- 200 200 Caraustar Industries, Inc. - 4,825 4,825
- 100 100 Carmike Cinemas, Inc., Class A - 1,206 1,206
- 200 200 Carolina First Corp. - 4,138 4,138
- 100 100 Carpenter Technology Corp. - 2,438 2,438
- 100 100 Carter-Wallace, Inc. - 1,805 1,805
- 100 100 Cascade Natural Gas Corp. - 1,812 1,812
- 100 100 Caseys General Stores, Inc. - 1,288 1,288
- 200 200 Cash America International, Inc. - 1,888 1,888
- 100 100 Castle & Cooke, Inc. - 1,388 1,388
- 100 100 Castle A. M. & Co. - 1,237 1,237
- 100 100 Cathay Bancorp, Inc. - 3,838 3,838
- 100 100 Cato Corp., Class A - 1,149 1,149
- 100 100 CB Richard Ellis Services, Inc. - 1,231 1,231
- 1,500 1,500 CBL & Associates Properties, Inc. - 33,375 33,375
- 400 400 CBRL Group, Inc. - 5,350 5,350
- 100 100 CDI Corp. - 2,649 2,649
- 200 200 Center Trust, Inc. - 2,050 2,050
- 200 200 CenterPoint Properties Corp. - 6,525 6,525
- 100 100 Central Garden & Pet Co. - 725 725
- 100 100 Central Hudson Gas & Electric Corp. - 3,743 3,743
- 100 100 Century South Banks, Inc. - 2,438 2,438
9,600 - 9,600 Ceridian Corp. 210,600 - 210,600
- 200 200 CFS Bancorp, Inc. - 2,088 2,088
- 100 100 Champion Enterprises, Inc. - 912 912
- 800 800 Charming Shoppes, Inc. - 3,975 3,975
- 200 200 Charter Municipal Mortgage Acceptance Co. - 2,474 2,474
- 297 297 Charter One Financial, Inc. - 7,295 7,295
- 100 100 Chateau Communities, Inc. - 2,550 2,550
- 200 200 Checkpoint Systems, Inc. - 1,500 1,500
- 100 100 Chelsea GCA Realty, Inc. - 3,100 3,100
37
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Chemed Corp. - $ 2,994 $ 2,994
- 100 100 ChemFirst, Inc. - 2,688 2,688
- 125 125 Chemical Financial Corp. - 4,078 4,078
- 200 200 Chesapeake Corp. - 5,999 5,999
- 400 400 Chesapeake Energy Corp. - 1,450 1,450
- 100 100 Chicago Title Corp. - 4,405 4,405
- 300 300 Chiquita Brands International, Inc. - 1,425 1,425
- 1,107 1,107 Chittenden Corp. - 34,180 34,180
- 300 300 CHS Electronics, Inc. - 262 262
- 2,600 2,600 Church & Dwight Co., Inc. - 67,762 67,762
2,200 - 2,200 Cincinnati Financial Corp. 78,788 - 78,788
2,300 - 2,300 Cinergy Corp. 64,975 - 64,975
- 100 100 Circle International Group, Inc. - 2,200 2,200
- 50 50 CIRCOR International, Inc. - 475 475
- 500 500 Cirrus Logic, Inc. - 4,969 4,969
- 100 100 Citation Corp. - 1,644 1,644
- 200 200 Citizens Banking Corp. - 5,550 5,550
- 100 100 City Holding Co. - 1,588 1,588
- 369 369 CK Witco Corp. - 3,459 3,459
- 100 100 CKE Restaurants, Inc. - 675 675
- 200 200 CLARCOR, Inc. - 3,413 3,413
- 200 200 Cleco Corp. - 6,625 6,625
- 100 100 Cleveland-Cliffs, Inc. - 2,988 2,988
- 300 300 CMP Group, Inc. - 7,988 7,988
- 100 100 CNA Surety Corp. - 1,150 1,150
- 100 100 Coachmen Industries, Inc. - 1,468 1,468
3,800 - 3,800 Coastal Corp. 160,075 - 160,075
- 200 200 Coherent, Inc. - 4,113 4,113
- 200 200 Cohu, Inc. - 3,775 3,775
- 500 500 Collins & Aikman Corp. - 2,968 2,968
- 200 200 Colonial Properties Trust - 5,100 5,100
- 100 100 Columbus McKinnon Corp. - 1,205 1,205
10,900 - 10,900 Comdisco, Inc. 220,045 - 220,045
- 100 100 Comfort Systems USA, Inc. - 724 724
- 100 100 Commerce Bancorp, Inc. - 4,481 4,481
- 200 200 Commerce Group, Inc. - 5,075 5,075
- 100 100 Commercial Intertech Corp. - 1,269 1,269
- 100 100 Commercial Metals Co. - 3,263 3,263
- 200 200 Commercial Net Lease Realty - 2,300 2,300
- 100 100 Commonwealth Bancorp, Inc. - 1,688 1,688
- 100 100 Commscope, Inc. - 3,988 3,988
- 1,600 1,600 Community First Bankshares, Inc. - 30,450 30,450
- 100 100 Community Trust Bancorp, Inc. - 2,150 2,150
- 400 400 Compucom Systems, Inc. - 1,288 1,288
- 600 600 CompUSA, Inc. - 3,413 3,413
1,300 - 1,300 Computer Associates International 73,450 - 73,450
- 100 100 Connecticut Energy Corp. - 3,775 3,775
- 100 100 Connecticut Natural Gas Corp. - 3,713 3,713
- 100 100 Consol Energy, Inc. - 1,164 1,164
- 200 200 Consolidated Freightways Corp. - 1,575 1,575
9,200 - 9,200 Consolidated Stores Corp. 168,475 - 168,475
- 100 100 Contifinancial Corp. - 41 41
38
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
3,100 - 3,100 Continental Airlines, Inc., Class B $125,550 - $125,550
- 300 300 Corn Products International, Inc. - 9,769 9,769
- 300 300 Cornerstone Realty Income Trust, Inc. - 3,113 3,113
- 100 100 CORT Business Services Corp. - 2,030 2,030
- 100 100 Corus Bankshares, Inc. - 2,744 2,744
5,800 - 5,800 Countrywide Credit Industries, Inc. 196,838 - 196,838
- 400 400 Coventry Health Care, Inc. - 2,299 2,299
- 100 100 CPB, Inc. - 2,475 2,475
- 200 200 Credit Acceptance Corp. - 1,125 1,125
- 100 100 Crestline Capital Corp. - 2,225 2,225
- 100 100 Cross Timbers Oil Co. - 1,112 1,112
- 200 200 Crown American Realty Trust - 1,225 1,225
- 1,550 1,550 CSG Systems International, Inc. - 53,184 53,184
- 100 100 CSS Industries, Inc. - 2,231 2,231
- 100 100 CT Communication, Inc. - 4,813 4,813
- 2,300 2,300 Cullen/Frost Bankers, Inc. - 66,413 66,413
- 100 100 Cuno, Inc. - 1,999 1,999
- 400 400 Cypress Semiconductor Corp. - 10,225 10,225
- 0 0 Cyprus Amax Minerals Co. - 0 0
- 2,200 2,200 Cytec Industries, Inc. - 56,788 56,788
- 300 300 D R Horton, Inc. - 3,543 3,543
- 100 100 Dain Rauscher Corp. - 5,369 5,369
- 100 100 Daisytek International Corp. - 1,663 1,663
- 100 100 Dal-Tile International, Inc. - 930 930
- 100 100 Dan River, Inc., Class A - 531 531
- 100 100 Datascope Corp. - 3,600 3,600
- 100 100 Del Monte Foods Co. - 1,394 1,394
- 100 100 Del Webb Corp. - 2,205 2,205
1 - 1 Delhaize America, Inc., Class B 14 - 14
- 100 100 Delphi Financial Group, Inc., Class A - 3,200 3,200
- 100 100 Deltic Timber Corp. - 2,243 2,243
- 100 100 Department 56, Inc. - 1,900 1,900
- 100 100 Detroit Diesel Corp. - 1,818 1,818
- 500 500 Developers Diversified Realty Corp. - 7,125 7,125
- 34 34 Devon Energy Corp. - 1,321 1,321
- 100 100 Dexter Corp. - 3,506 3,506
- 100 100 Diagnostic Products Corp. - 2,325 2,325
- 100 100 Dime Community Bancshares - 2,019 2,019
- 300 300 DIMON, Inc. - 1,050 1,050
- 100 100 Discount Auto Parts, Inc. - 1,425 1,425
- 200 200 Dollar Thrifty Automotive Group, Inc. - 3,375 3,375
- 200 200 Donaldson Co., Inc. - 4,650 4,650
- 100 100 Donna Karan International, Inc. - 838 838
- 100 100 Doral Financial Corp. - 1,281 1,281
- 100 100 Downey Financial Corp. - 2,213 2,213
- 100 100 Dress Barn, Inc. - 1,778 1,778
- 38 38 Duke-Weeks Realty Corp. - 746 746
6,700 - 6,700 Dunn & Bradstreet Corp. 196,813 - 196,813
- 100 100 Dura Automotive System, Inc. - 1,875 1,875
- 4,500 4,500 Dura Pharmaceuticals, Inc. - 57,516 57,516
- 100 100 DVI, Inc. - 1,350 1,350
4,900 - 4,900 Dynegy, Inc. 112,088 - 112,088
39
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- - - Eagle Geophysical, Inc. - - -
- 2,200 2,200 Earthgrains Co. - $50,188 $ 50,188
- 100 100 Earthshell Corp. - 344 344
- 100 100 East West Bancorp, Inc. - 1,238 1,238
- 200 200 Eastern Enterprises - 10,225 10,225
- 200 200 Eastern Utilities Associates - 6,050 6,050
- 100 100 EastGroup Properties, Inc. - 1,831 1,831
1,000 - 1,000 Eaton Corp. 75,250 - 75,250
- 300 300 EEX Corp. - 1,106 1,106
- 500 500 El Paso Electric Co. - 4,563 4,563
- 100 100 Electro Rent Corp. - 1,200 1,200
- 100 100 Electroglas, Inc. - 2,759 2,759
- 125 125 EMC Corp. - 9,125 9,125
- 100 100 EMCOR Group, Inc. - 1,875 1,875
- 100 100 Empire District Electric Co. - 2,463 2,463
- 200 200 Energen Corp. - 3,700 3,700
5,400 - 5,400 Engelhard Corp. 95,175 - 95,175
- 200 200 Enhance Financial Services Group, Inc. - 3,650 3,650
- 100 100 Entertainment Properties Trust - 1,406 1,406
- 300 300 Equitable Resources, Inc. - 10,950 10,950
- 300 300 Equity Inns, Inc. - 2,250 2,250
- 200 200 ESS Technology, Inc. - 2,638 2,638
- 100 100 Essex Property Trust, Inc. - 3,256 3,256
- 100 100 Esterline Technologies Corp. - 1,375 1,375
- 500 500 Ethyl Corp. - 2,063 2,063
- 100 100 E'Town Corp. - 4,606 4,606
- 100 100 Exar Corp. - 3,613 3,613
- 200 200 Exide Corp. - 1,775 1,775
- 300 300 Extended Stay America, Inc. - 2,493 2,493
- 105 105 F&M Bank Corp. - 2,638 2,638
- 103 103 F&M National Corp. - 3,090 3,090
- 200 200 Fairchild Corp., Class A - 1,624 1,624
- 100 100 Family Golf Centers, Inc. - 163 163
- 100 100 FBL Financial Group, Inc., Class A - 1,831 1,831
- 100 100 FCNB Corp. - 1,800 1,800
- 200 200 Fedders USA, Inc. - 1,238 1,238
- 200 200 Federal Reality Investment Trust - 3,638 3,638
- 100 100 Ferro Corp. - 2,038 2,038
- 200 200 Fidelity National Financial, Inc. - 3,138 3,138
- 100 100 Finish Line, Inc. - 691 691
4,600 - 4,600 Finova Group, Inc. 202,688 - 202,688
- 400 400 First American Financial Corp., Class A - 5,925 5,925
- 100 100 First Busey Corp. - 2,350 2,350
- 100 100 First Charter Corp. - 1,900 1,900
- 200 200 First Commonwealth Financial Corp. - 5,675 5,675
- 100 100 First Federal Capital Corp. - 1,575 1,575
- 110 110 First Financial Bankshares - 3,740 3,740
- 100 100 First Financial Corp. - 3,519 3,519
- 1,300 1,300 First Financial Holdings, Inc. - 24,294 24,294
- 100 100 First Health Group Corp. - 2,325 2,325
- 100 100 First Indiana Corp. - 2,450 2,450
- 300 300 First Industrial Realty Trust, Inc. - 7,406 7,406
40
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 First Liberty Financial Corp. - $ 3,113 $ 3,113
- 100 100 First Merchants Corp. - 2,324 2,324
- 200 200 First Midwest Bancorp, Inc. - 8,175 8,175
- 100 100 First Republic Bank - 2,500 2,500
- 300 300 First Sentinel Bancorp, Inc. - 2,456 2,456
- 200 200 First United Bancshares, Inc. - 3,213 3,213
- 100 100 First Washington Bancorp, Inc. - 1,700 1,700
- 100 100 First Washington Realty Trust, Inc. - 2,044 2,044
- 200 200 FirstFed Financial Corp. - 3,200 3,200
- 100 100 Fisher Scientific International, Inc. - 2,481 2,481
3,100 - 3,100 Fleet Financial Group, Inc. 135,238 - 135,238
- 200 200 Fleetwood Enterprises, Inc. - 4,363 4,363
- 300 300 Fleming Companies, Inc. - 3,580 3,580
- 200 200 Florida East Coast Industries, Inc. - 7,450 7,450
- 300 300 Florida Panthers Holdings, Inc. - 2,906 2,906
- 300 300 Flowserve Corp. - 5,063 5,063
- 110 110 FNB Corp. - 2,819 2,819
- 100 100 Footstar, Inc. - 3,500 3,500
- 100 100 Foremost Corp. of America - 2,825 2,825
4,800 - 4,800 Fort James Corp. 126,300 - 126,300
- 300 300 Foster Wheeler Corp. - 3,375 3,375
- 100 100 Franchise Mortgage Acceptance Co. - 763 763
- 100 100 Franklin Covey Co. - 806 806
- 100 100 Freedom Securities Corp. - 1,488 1,488
- 200 200 Fritz Companies, Inc. - 2,238 2,238
- 100 100 Frontier Airlines, Inc. - 994 994
- 200 200 Frontier Insurance Group, Inc. - 1,775 1,775
- 100 100 FSI International, Inc. - 800 800
- 100 100 Furniture Brands International, Inc. - 1,938 1,938
- 200 200 Gables Residential Trust - 4,838 4,838
4,900 - 4,900 Galileo International, Inc. 147,306 - 147,306
- 1,050 1,050 Gallagher, Arthur J & Co. - 54,338 54,338
- 100 100 Gardner Denver, Inc. - 1,206 1,206
- 200 200 Gaylord Container Corp., Class A - 1,124 1,124
- 100 100 Gaylord Entertainment Co. - 3,256 3,256
- 85 85 GBC Bancorp - 1,737 1,737
- 300 300 Gencorp, Inc. - 3,413 3,413
- 100 100 General Cable Corp. - 738 738
- 100 100 General Cigar Holdings, Inc. - 575 575
- 300 300 General Communication, Inc. - 1,463 1,463
4,100 - 4,100 General Dynamics Corp. 227,294 - 227,294
3,200 - 3,200 General Motors Corp., Class H 233,000 - 233,000
- 100 100 Genlyte Group, Inc. - 2,231 2,231
- 100 100 Gentek, Inc. - 881 881
3,500 - 3,500 Genzyme-Molecular Oncology 133,875 - 133,875
- 100 100 Geon Co. - 2,625 2,625
- 100 100 Georgia Gulf Corp. - 2,156 2,156
- 100 100 Gerber Scientific, Inc. - 1,888 1,888
- 100 100 Giant Cement Holding, Inc. - 1,913 1,913
- 2,600 2,600 Gibraltar Steel Corp. - 63,538 63,538
- 200 200 Glatfelter, P.H. Co. - 2,925 2,925
- 500 500 Glenayre Technologies, Inc. - 1,484 1,484
41
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 200 200 Glenborough Realty Trust, Inc - $ 2,613 $ 2,613
- 200 200 Glimcher Realty Trust - 2,963 2,963
3,400 - 3,400 Global Crossing, Ltd. 117,725 - 117,725
- 200 200 Global Industrial Technologies, Inc. - 2,449 2,449
- 100 100 Global Industries, Inc. - 800 800
- 100 100 Golf Trust of America, Inc. - 1,794 1,794
- 100 100 Goodys Family Clothing, Inc. - 1,013 1,013
11,100 - 11,100 Grace, W.R. & Co. 165,806 - 165,806
- 200 200 Grace, W.R. & Co. - 2,988 2,988
- 110 110 Grand Premier Financial, Inc. - 1,760 1,760
- 100 100 Grand Union Co. - 1,250 1,250
- 1,800 1,800 Granite Construction, Inc. - 37,238 37,238
- 100 100 Gray Communications Systems, Inc. - 1,800 1,800
- 1,400 1,400 Great Atlantic & Pacific Tea Co. - 39,987 39,987
- 100 100 Great Lakes REIT, Inc. - 1,444 1,444
- 1,800 1,800 Greater Bay Bancorp - 66,150 66,150
- 100 100 Greif Brothers Corp., Class A - 2,850 2,850
- 1,100 1,100 Grey Wolf, Inc. - 2,888 2,888
- 300 300 Griffon Corp. - 2,213 2,213
- 100 100 Group Maintenance America Corp. - 963 963
- 100 100 GT Interactive Software Corp. - 275 275
- 200 200 GTECH Holdings Corp. - 4,025 4,025
- 100 100 Guarantee Life Co., Inc. - 3,105 3,105
- 100 100 Guilford Mills, Inc. - 881 881
- 200 200 Guilford Pharmaceuticals, Inc. - 3,150 3,150
- 200 200 Gymboree Corp. - 1,288 1,288
- 100 100 H.B. Fuller Co. - 5,475 5,475
- 100 100 Hadco Corp. - 3,675 3,675
- 100 100 Haemonetics Corp. - 1,868 1,868
- 100 100 Halter Marine Group, Inc. - 544 544
- 100 100 Hancock Holding Co. - 3,950 3,950
- 200 200 Handleman Co. - 3,225 3,225
- 400 400 Hanna, M.A. Co. - 4,275 4,275
- 100 100 Harbor Florida Bancshares, Inc. - 1,256 1,256
3,000 - 3,000 Harcourt General, Inc. 115,500 - 115,500
- 1,000 1,000 Harken Energy Corp. - 1,000 1,000
- 200 200 Harland, John H. Co. - 3,800 3,800
- 100 100 Harleysville Group, Inc. - 1,706 1,706
- 105 105 Harleysville National Corp. - 3,504 3,504
- 100 100 Harman International Industries, Inc. - 4,088 4,088
- 300 300 Harnischfeger Industries, Inc. - 338 338
- 100 100 Harris Financial, Inc. - 1,063 1,063
- 300 300 Harsco Corp. - 8,831 8,831
- 100 100 Haverty Furniture Companies, Inc. - 1,375 1,375
- 200 200 Hawaiian Electric Industries, Inc. - 6,763 6,763
- 300 300 HCC Insurance Holdings, Inc. - 3,375 3,375
- 100 100 Health Care Property Investors, Inc. - 2,625 2,625
- 200 200 Health Care REIT, Inc. - 3,575 3,575
- 300 300 Healthcare Realty Trust, Inc. - 5,775 5,775
- 100 100 Heartland Express, Inc. - 1,356 1,356
- 400 400 Heilig-Meyers Co. - 1,750 1,750
- 400 400 Helmerich & Payne, Inc. - 9,525 9,525
42
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Herbalife International, Inc., Class A - $ 1,475 $ 1,475
- 100 100 Hexcel Corp. - 538 538
- 200 200 Hollywood Park, Inc. - 3,463 3,463
- 1,250 1,250 Home Properties of New York, Inc. - 33,359 33,359
- 300 300 Homebase, Inc. - 1,144 1,144
- 2,600 2,600 Horace Mann Educators Corp. - 73,288 73,288
- 400 400 Hospitality Properties Trust - 8,450 8,450
- 100 100 Houston Exploration Co. - 1,956 1,956
- 100 100 HS Resources, Inc. - 1,563 1,563
- 100 100 Hub Group, Inc., Class A - 1,900 1,900
- 100 100 Hudson River Bankcorp. - 1,106 1,106
- 200 200 Hughes Supply, Inc. - 4,338 4,338
- 400 400 Hussmann International, Inc. - 6,400 6,400
- 100 100 Hutchinson Technology, Inc. - 2,549 2,549
- 100 100 Hypercom Corp. - 799 799
- 300 300 Idacorp, Inc. - 9,056 9,056
- 200 200 IDEX Corp. - 4,925 4,925
- 300 300 Imation Corp. - 9,206 9,206
- 100 100 IMCO Recycling, Inc. - 1,462 1,462
- 3,250 3,250 Imperial Bancorp - 80,641 80,641
- 200 200 Imperial Credit Commercial Mortgage
Inv. Corp. - 2,175 2,175
- 200 200 Imperial Credit Industries, Inc. - 1,075 1,075
- 200 200 Imperial Sugar Co. - 1,063 1,063
- 200 200 In Focus Systems, Inc. - 3,963 3,963
- 300 300 Inacom Corp. - 1,444 1,444
- 600 600 Independence Community Bank - 7,163 7,163
- 100 100 Independent Bank Corp. - 1,338 1,338
- 200 200 Indiana Energy, Inc. - 4,038 4,038
11,000 - 11,000 Indymac Mortgage Holdings, Inc. 153,313 - 153,313
- 500 500 Indymac Mortgage Holdings, Inc. - 6,969 6,969
- 200 200 Information Resources, Inc. - 2,125 2,125
- 100 100 Ingles Markets, Inc., Class A - 1,294 1,294
- 300 300 Innkeepers USA Trust - 2,588 2,588
- 400 400 Input/Output, Inc. - 2,100 2,100
- 100 100 Insignia Financial Group, Inc. - 794 794
- 600 600 Integrated Device Technology, Inc. - 12,338 12,338
- 100 100 Integrated Electrical Services, Inc. - 1,088 1,088
- 400 400 Integrated Health Services, Inc. - 113 113
- 300 300 Interface, Inc., Class A - 1,219 1,219
- 400 400 Intergraph Corp. - 1,550 1,550
- 290 290 Interim Services, Inc. - 4,766 4,766
- 200 200 Intermet Corp. - 2,025 2,025
- 100 100 International Bancshares Corp. - 4,538 4,538
- 100 100 International Home Foods, Inc. - 1,913 1,913
- 100 100 International Multifoods Corp. - 2,113 2,113
- 200 200 International Rectifier Corp. - 3,888 3,888
- 100 100 International Specialty Products, Inc. - 756 756
- 100 100 Interpool, Inc. - 763 763
- 100 100 Intertan, Inc. - 2,250 2,250
- 100 100 InterWest Bancorp, Inc. - 1,850 1,850
- 200 200 Invacare Corp. - 4,175 4,175
- 1,600 1,600 Investors Financial Services Corp. - 59,200 59,200
43
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Ionics, Inc. - $ 2,950 $ 2,950
- 100 100 IRI International Corp. - 400 400
- 300 300 IRT Property Co. - 2,531 2,531
- 200 200 IT Group, Inc. - 1,975 1,975
- 100 100 ITI Technologies, Inc. - 2,713 2,713
- 200 200 Ivex Packaging Corp. - 1,888 1,888
- 100 100 J & J Snack Foods Corp. - 1,925 1,925
- 200 200 J.B. Hunt Transport Services - 2,575 2,575
- 100 100 Jacobs Engineering Group, Inc. - 3,550 3,550
- 100 100 JDA Software Group, Inc. - 900 900
- 300 300 JDN Reality Corp. - 5,719 5,719
- 100 100 JeffBanks, Inc. - 2,969 2,969
- 200 200 Jefferies Group, Inc. - 4,263 4,263
- 100 100 JLG Industries, Inc. - 1,281 1,281
- 100 100 Jo-ann Stores, Inc. - 1,394 1,394
- 100 100 Jostens, Inc. - 2,113 2,113
- 100 100 Journal Register Co. - 1,419 1,419
- 100 100 JP Realty, Inc. - 1,713 1,713
- 100 100 JSB Financial, Inc. - 6,013 6,013
- 5 5 Juno Lighting, Inc. - 53 53
- 100 100 Just For Feet, Inc. - 137 137
- 100 100 Justin Industries, Inc. - 1,399 1,399
- 200 200 Kaiser Aluminum Corp. - 1,288 1,288
- 200 200 Kaman Corp., Class A - 2,200 2,200
- 100 100 Kansas City Life Insurance Co. - 3,888 3,888
3,300 - 3,300 Kansas City Southern Industries 156,544 - 156,544
- 300 300 Kaufman & Broad Home Corp. - 6,019 6,019
- 100 100 Kaydon Corp. - 2,481 2,481
- 200 200 Kellwood Co. - 3,538 3,538
- 100 100 Kelly Services, Inc., Class A - 2,930 2,930
- 300 300 Kemet Corp. - 9,591 9,591
- 200 200 Kennametal, Inc. - 5,750 5,750
- 200 200 Kent Electronics Corp. - 3,888 3,888
- 600 600 Key Energy Services, Inc. - 2,699 2,699
- 200 200 Kilroy Realty Corp. - 3,838 3,838
- 300 300 Kimball International, Inc., Class B - 4,800 4,800
- 1,250 1,250 King Pharmaceuticals, Inc. - 37,812 37,812
3,200 - 3,200 KN Energy, Inc. 64,400 - 64,400
- 200 200 Koger Equity, Inc. - 3,100 3,100
- 500 500 Komag, Inc. - 827 827
- 200 200 Konover Property Trust, Inc. - 1,275 1,275
- 1,100 1,100 Korn/Ferry International, Inc. - 24,475 24,475
- 200 200 Kulicke & Soffa Industries, Inc. - 5,888 5,888
- 1,500 1,500 L-3 Communications Holdings, Inc. - 63,281 63,281
- 500 500 Laboratory Corp. of America Holdings - 1,500 1,500
- 100 100 Laclede Gas Co. - 2,131 2,131
- 100 100 LAM Research Corp. - 8,444 8,444
- 100 100 Lance, Inc. - 1,206 1,206
- 100 100 LandAmerica Financial Group, Inc. - 1,856 1,856
- 200 200 Landry Seafood Restaurants, Inc. - 1,500 1,500
- 100 100 LaSalle Hotel Properties - 1,256 1,256
- 300 300 La-Z-Boy Chair Co. - 5,475 5,475
44
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
6,100 - 6,100 Lear Corp. $205,875 - $205,875
- 100 100 Learn2.com, Inc. - 303 303
- 950 950 Legg Mason, Inc. - 34,556 34,556
- 400 400 Lennar Corp. - 6,575 6,575
- 300 300 Leucadia National Corp. - 7,031 7,031
- 100 100 Lexington Corp. Propertries, Inc. - 1,088 1,088
500 - 500 Lexmark International Group 39,031 - 39,031
- 100 100 Libbey, Inc. - 2,650 2,650
- 100 100 Liberty Corp. - 4,806 4,806
- 100 100 Liberty Financial Companies - 2,406 2,406
- 100 100 Lifepoint Hospitals, Inc. - 1,181 1,181
- 200 200 Lilly Industries, Inc., Class A - 2,688 2,688
- 200 200 Lincoln Electric Holdings, Inc. - 4,475 4,475
- 200 200 LNR Property Corp. - 3,875 3,875
- 200 200 Local Financial Corp. - 1,850 1,850
- 200 200 Lodgian, Inc. - 963 963
- 100 100 Loews Cineplex Entertainment Corp. - 681 681
- 300 300 Lone Star Steakhouse Saloon, Inc. - 2,400 2,400
- 100 100 Lone Star Technologies, Inc. - 2,094 2,094
- 400 400 Longview Fibre Co. - 4,550 4,550
- 200 200 Louis Dreyfus Natural Gas Corp. - 4,000 4,000
- 200 200 LTC Properties, Inc. - 2,125 2,125
- 700 700 LTV Corp. - 2,538 2,538
- 200 200 Luby's, Inc. - 2,375 2,375
- 100 100 Lydall, Inc. - 738 738
6,600 - 6,600 Lyondell Chemical Co. 80,025 - 80,025
- 200 200 M.D.C. Holdings, Inc. - 3,125 3,125
- 100 100 M.S. Carriers, Inc. - 2,825 2,825
- 200 200 Macerich Co. - 4,000 4,000
- 100 100 Madison Gas & Electric Co. - 2,088 2,088
- 200 200 MAF Bancorp, Inc. - 4,313 4,313
- 300 300 Magellan Health Services, Inc. - 1,819 1,819
- 200 200 MagnaTek, Inc. - 1,375 1,375
- 100 100 Manufactured Home Communities, Inc. - 2,331 2,331
- 100 100 Manugistics Group, Inc. - 1,150 1,150
- 200 200 Marcus Corp. - 2,813 2,813
- 3,300 3,300 Marine Drilling Companies, Inc. - 53,419 53,419
- 400 400 Mark IV Industries, Inc. - 7,700 7,700
- 100 100 Marshall Industries - 3,900 3,900
- 200 200 Mascotech, Inc. - 2,913 2,913
- 300 300 Matria Healthcare, Inc. - 1,209 1,209
- 100 100 Maverick Tube Corp. - 1,850 1,850
- 100 100 Maxxim Med, Inc. - 2,400 2,400
2,800 - 2,800 Maytag Corp. 112,174 - 112,174
- 1,550 1,550 McClatchy Co., Class A - 60,838 60,838
6,200 - 6,200 McDermott International, Inc. 112,375 - 112,375
- 100 100 McMoRan Exploration Co. - 2,238 2,238
- 2,750 2,750 MDU Resources Group, Inc. - 64,280 64,280
- 800 800 Media General, Inc., Class A - 43,700 43,700
- 210 210 Medical Assurance, Inc. - 4,909 4,909
- 300 300 MEMC Electronic Materials, Inc. - 4,275 4,275
- 300 300 Mentor Graphics Corp. - 2,419 2,419
45
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 700 700 Merisel, Inc. - $ 941 $ 941
- 400 400 Meristar Hospitality Corp. - 6,425 6,425
- 100 100 Merrill Corp. - 2,063 2,063
- 200 200 Mesa Airlines, Inc. - 1,125 1,125
- 200 200 Metals USA, Inc. - 1,488 1,488
- 100 100 Methode Electronics, Inc., Class A - 1,600 1,600
- 117 117 Metromedia Fiber Network, Inc. - 3,868 3,868
- 400 400 Metromedia International Group, Inc. - 1,475 1,475
- 100 100 MGI Properties, Inc. - 969 969
- 100 100 Michael Foods, Inc. - 2,550 2,550
- 2,050 2,050 Michaels Stores, Inc. - 68,803 68,803
- 200 200 Micro Warehouse, Inc. - 2,425 2,425
- 200 200 Mid Atlantic Med Services, Inc. - 1,088 1,088
- 100 100 Mid State Bancshares - 3,400 3,400
- 100 100 Mid-America Apt. Communities, Inc. - 2,213 2,213
- 100 100 Mid-America Bancorp - 2,988 2,988
- 100 100 Midwest Express Holdings, Inc. - 2,931 2,931
- 100 100 Mikasa, Inc. - 1,144 1,144
- 300 300 Milacron, Inc. - 4,930 4,930
- 200 200 Miller Industries, Inc. - 488 488
- 100 100 Minerals Technologies, Inc. - 4,313 4,313
6,200 - 6,200 Mirage Resorts, Inc. 90,288 - 90,288
- 200 200 Mississippi Chemical Corp. - 1,112 1,112
- 200 200 Mitchell Energy & Development Corp.,
Class A - 4,775 4,775
- 100 100 MMI Companies, Inc. - 819 819
- 100 100 Modine Manufacturing Co. - 2,488 2,488
- 100 100 Mondavi, Robert Corp., Class A - 3,612 3,612
- 400 400 Mony Group, Inc. - 12,600 12,600
- 100 100 Morgan Keegan, Inc. - 1,788 1,788
- 300 300 Morrison Knudsen Corp. - 2,738 2,738
- 100 100 Motivepower Industries, Inc. - 1,194 1,194
- 200 200 MRV Communications, Inc. - 4,338 4,338
- 200 200 MTS Systems Corp. - 2,025 2,025
- 200 200 Mueller Industries, Inc. - 6,388 6,388
- 110 110 Myers Industries, Inc. - 1,547 1,547
- 100 100 NACCO Industries, Inc., Class A - 4,637 4,637
- 100 100 National Bancorp of Alaska, Inc. - 2,600 2,600
- 100 100 National City Bancshares, Inc. - 2,800 2,800
- 900 900 National Computer Systems, Inc. - 34,031 34,031
- 100 100 National Equipment Services, Inc. - 1,056 1,056
- 200 200 National Health Investors, Inc. - 3,025 3,025
- 100 100 National Penn Bancshares, Inc. - 2,631 2,631
- 100 100 National Presto Industries, Inc. - 3,700 3,700
- 100 100 National Processing, Inc. - 869 869
1,500 - 1,500 National Semiconductor Corp. 44,906 - 44,906
- 100 100 National Steel Corp., Class B - 600 600
- 400 400 National-Oilwell, Inc. - 5,425 5,425
- 200 200 Nationsrent, Inc. - 1,275 1,275
- 300 300 Nationwide Health Properties, Inc. - 4,969 4,969
- 200 200 Nautica Enterprises, Inc. - 3,013 3,013
2,000 - 2,000 Navistar International Corp. 83,375 - 83,375
- 105 105 NBT Bancorp, Inc. - 1,962 1,962
46
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 400 400 NBTY, Inc. - $ 3,225 $ 3,225
- 100 100 NCI Building Systems, Inc. - 1,581 1,581
- 100 100 NCS HealthCare, Inc., Class A - 297 297
904 - 904 Neiman Marcus Group, Inc., Class B 19,377 - 19,377
- 200 200 Network Equipment Technologies, Inc. - 2,037 2,037
- 100 100 Neurogen Corp. - 1,600 1,600
- 100 100 New Century Financial Corp. - 1,369 1,369
- 100 100 New Jersey Resources Corp. - 4,069 4,069
- 100 100 Newfield Exploration Co. - 2,944 2,944
4,900 - 4,900 News Corp., Ltd. - ADR 135,056 - 135,056
- 100 100 Niagara Bancorp, Inc. - 1,056 1,056
7,400 - 7,400 Niagara Mohawk Holdings, Inc. 117,475 - 117,475
- 100 100 Nichols Research Corp. - 2,856 2,856
- 100 100 NL Industries, Inc. - 1,156 1,156
2,300 - 2,300 Noble Drilling Corp. 51,031 - 51,031
- 100 100 Nordson Corp. - 4,431 4,431
- 1,250 1,250 Nortek, Inc. - 38,281 38,281
- 100 100 Northwest Bancorp, Inc. - 819 819
- 200 200 Northwest Natural Gas Co. - 5,175 5,175
- 1,750 1,750 Northwestern Corp. - 39,922 39,922
- 67 67 Nstar - 2,550 2,550
- 1,850 1,850 Nuevo Energy Co. - 26,247 26,247
- 100 100 NUI Corp. - 2,481 2,481
- 300 300 Oakwood Homes Corp. - 881 881
- 100 100 Oceaneering International, Inc. - 1,356 1,356
- 100 100 OceanFirst Financial Corp. - 1,788 1,788
- 100 100 Octel Corp. - 1,225 1,225
- 200 200 Ocwen Financial Corp. - 1,338 1,338
- 100 100 OEA, Inc. - 688 688
- 700 700 OfficeMax, Inc. - 3,544 3,544
- 200 200 Offshore Logistics, Inc. - 1,850 1,850
- 300 300 Ogden Corp. - 2,718 2,718
- 500 500 Ohio Casualty Corp. - 8,344 8,344
- 300 300 Olin Corp. - 4,144 4,144
- 500 500 Olsten Corp. - 5,031 5,031
- 200 200 OM Group, Inc. - 7,500 7,500
- 100 100 Omega Financial Corp. - 3,225 3,225
- 100 100 Omega Healthcare Investors, Inc. - 1,981 1,981
- 300 300 OMNOVA Solutions - 2,100 2,100
- 100 100 On Command Corp. - 1,718 1,718
- 300 300 One Valley Bancorp, Inc. - 10,950 10,950
- 200 200 ONEOK, Inc. - 5,838 5,838
- 100 100 Orbital Sciences Corp. - 1,475 1,475
- 200 200 Oregon Steel Mills, Inc. - 1,688 1,688
- 400 400 Orion Capital Corp. - 19,550 19,550
- 100 100 O'Sullivan Industries Holdings, Inc. - 1,550 1,550
- 100 100 Otter Tail Power Co. - 4,200 4,200
- 200 200 Overseas Shipholding Group, Inc. - 2,575 2,575
- 3,800 3,800 Owens & Minor, Inc. - 35,625 35,625
- 100 100 Oxford Industries, Inc. - 2,150 2,150
- 100 100 Pacific Gulf Properties, Inc. - 2,025 2,025
- 100 100 Paging Network, Inc. - 94 94
47
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Pan Pacific Retail Properties, Inc. - $ 1,825 $ 1,825
10,100 - 10,100 Parametric Technology Corp. 192,531 - 192,531
- 100 100 Park Electrochemical Corp. - 3,488 3,488
- 500 500 Parker Drilling Co. - 1,875 1,875
- 100 100 Parkway Properties, Inc. - 3,063 3,063
- 300 300 Patterson Energy, Inc. - 3,844 3,844
- 300 300 Paxar Corp. - 2,794 2,794
- 100 100 P-Com, Inc. - 463 463
- 200 200 PE Corp. Celera Genomics - 7,825 7,825
- 200 200 Pegasystems, Inc. - 1,563 1,563
- 100 100 Pennsylvania Real Estate Investments Trust - 1,863 1,863
- 600 600 Pennzoil-Quaker State Co. - 7,088 7,088
- 100 100 Peoples Holding Company - 3,225 3,225
- 400 400 Pep Boys-Manny, Moe & Jack - 5,000 5,000
- 1,700 1,700 Performance Food Group Co. - 46,113 46,113
- 200 200 Perkinelmer, Inc. - 8,163 8,163
- 500 500 Perrigo Co. - 3,781 3,781
- 200 200 Personnel Group of America, Inc. - 1,338 1,338
- 200 200 Petco Animal Supplies, Inc. - 2,313 2,313
- 100 100 PFF Bancorp, Inc. - 2,038 2,038
- 72 72 Phelps Dodge Corp. - 4,063 4,063
- 100 100 Philadelphia Consolidated Holding Co. - 1,450 1,450
- 300 300 Philadelphia Suburban Corp. - 6,900 6,900
- 200 200 Phillips-Van Heusen Corp. - 1,600 1,600
- 400 400 Phoenix Investment Partners, Ltd. - 3,375 3,375
- 100 100 Phoenix Technologies, Ltd. - 1,150 1,150
- 500 500 PhyCor, Inc. - 1,250 1,250
- 100 100 PICO Holdings, Inc. - 1,644 1,644
- 300 300 Picturetel Corp. - 1,049 1,049
- 200 200 Piedmont Natural Gas Co., Inc. - 6,400 6,400
- 100 100 Pier 1 Imports, Inc. - 593 593
- 100 100 Pillowtex Corp. - 338 338
- 200 200 Pinnacle Holdings, Inc. - 4,800 4,800
- 700 700 Pioneer Natural Resources Corp. - 6,563 6,563
- 200 200 Pioneer-Standard Electronics, Inc. - 2,613 2,613
- 100 100 Pittston Bax Group - 738 738
- 300 300 Pittston Brink's Group - 5,756 5,756
- 100 100 Pittway Corp., Class A - 3,300 3,300
- 200 200 Players International, Inc. - 1,475 1,475
- 100 100 Playtex Products, Inc. - 1,200 1,200
- 100 100 Pma Capital Corp. - 2,000 2,000
- 300 300 Polaroid Corp. - 6,693 6,693
- 200 200 Polymer Group, Inc. - 3,913 3,913
- 200 200 Pool Energy Services Co. - 4,363 4,363
- 1,650 1,650 Potlatch Corp. - 69,609 69,609
3,500 - 3,500 Praxair, Inc. 163,625 - 163,625
- 200 200 Precision Castparts Corp. - 5,900 5,900
- 100 100 Premier National Bancorp, Inc. - 1,838 1,838
- 100 100 Premier Technologies, Inc. - 550 550
- 100 100 Premisys Communications, Inc. - 969 969
- 300 300 Prentiss Properties Trust - 6,431 6,431
- 200 200 Presidential Life Corp. - 3,675 3,675
48
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 400 400 Pride International, Inc. - $ 5,500 $ 5,500
- 200 200 Primark Corp. - 5,075 5,075
- 100 100 Prime Group Realty Trust - 1,438 1,438
- 400 400 Prime Hospitality Corp. - 3,125 3,125
- 300 300 Prime Retail, Inc. - 2,381 2,381
- 100 100 Primex Technologies, Inc. - 2,300 2,300
- 100 100 Professionals Group, Inc. - 2,406 2,406
- 100 100 Protein Design Labs, Inc. - 4,006 4,006
- 2,560 2,560 Provident Bankshares Corp. - 55,120 55,120
- 200 200 PS Business Parks, Inc. - 4,525 4,525
- 100 100 PSS World Medical, Inc. - 775 775
- 300 300 Public Service Co. of New Mexico - 5,363 5,363
- 200 200 Public Service Co. of North Carolina - 6,288 6,288
- 100 100 Pulitzer, Inc. - 4,288 4,288
- 200 200 Pulte Corp. - 4,025 4,025
- 100 100 PXRE Corp. - 1,225 1,225
- 100 100 Quanex Corp. - 2,169 2,169
- 380 380 Quebecor Printing, Inc. - 8,764 8,764
- 100 100 Queens County Bancorp, Inc. - 3,144 3,144
- 200 200 Quest Diagnostics, Inc. - 5,600 5,600
- 500 500 Quorum Health Group, Inc. - 4,000 4,000
- 300 300 Radian Group, Inc. - 15,844 15,844
- 714 714 Radisys Corp. - 37,842 37,842
- 270 270 Ralcorp Holdings, Inc. - 5,265 5,265
- 100 100 Rare Medium Group, Inc. - 1,475 1,475
- 100 100 Raymond James Financial, Inc. - 2,025 2,025
- 200 200 Rayonier, Inc. - 8,200 8,200
- 300 300 Read-Rite Corp. - 1,181 1,181
- 200 200 Realty Income Corp. - 4,500 4,500
- 300 300 Reckson Associated Realty Corp. - 5,550 5,550
- 100 100 Redwood Trust, Inc. - 1,300 1,300
- 300 300 Reebok International, Ltd. - 2,944 2,944
- 200 200 Regal-Beloit Corp. - 4,350 4,350
- 300 300 Regency Realty Corp. - 5,944 5,944
- 100 100 Regeneron Pharmaceuticals, Inc. - 800 800
- 100 100 Reliance Bancorp, Inc. - 4,034 4,034
- 400 400 Reliance Group Holdings, Inc. - 1,425 1,425
- 150 150 Reliance Steel & Aluminium Co. - 3,150 3,150
- 200 200 Remec, Inc. - 2,088 2,088
- 300 300 Republic Bancorp, Inc. - 3,938 3,938
- 400 400 Republic Security Financial Co. - 3,375 3,375
- 200 200 Resource America, Inc. - 1,450 1,450
- 200 200 Resource Bancshares Mortgage Group - 1,125 1,125
1,700 - 1,700 Reynolds Metals Co. 102,744 - 102,744
- 200 200 RFS Hotel Investors, Inc. - 2,400 2,400
- 200 200 RGS Energy Group, Inc. - 4,988 4,988
- 3,150 3,150 Richmond Count Financial Corp. - 57,881 57,881
- 200 200 Riggs National Corp. - 3,025 3,025
- 100 100 Risk Capital Holdings, Inc. - 1,306 1,306
- 100 100 RLI Corp. - 3,331 3,331
- 100 100 Roadway Express, Inc. - 2,088 2,088
- 100 100 Robbins & Myers, Inc. - 1,619 1,619
49
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Roberts Pharmaceutical Corp. - $ 3,225 $ 3,225
- 100 100 Rock-Tenn Co., Class A - 1,525 1,525
- 100 100 Rogers Corp. - 3,625 3,625
- 400 400 Rollins Truck Leasing Corp. - 3,850 3,850
- 100 100 Rouge Industries, Inc., Class A - 563 563
- 100 100 RPC, Inc. - 694 694
- 100 100 RTI International Metals, Inc. - 725 725
- 200 200 Ruddick Corp. - 3,413 3,413
- 100 100 Russ Berrie and Co., Inc. - 1,925 1,925
- 200 200 Russell Corp. - 3,038 3,038
- 300 300 Ryan's Family Steak Houses, Inc. - 3,141 3,141
- 61 61 Ryerson Tull, Inc. - 1,251 1,251
- 100 100 Ryland Group, Inc. - 2,063 2,063
- 300 300 S3, Inc. - 3,000 3,000
- 100 100 Sanderson Farms, Inc. - 994 994
- 2,900 2,900 Santa Fe Snyder Corp. - 25,013 25,013
- 100 100 Sauer, Inc. - 1,294 1,294
- 100 100 Saul Centers, Inc. - 1,419 1,419
- 100 100 Scholastic Corp. - 4,650 4,650
- 300 300 Schulman, A., Inc. - 4,669 4,669
- 100 100 Schweitzer-Mauduit, Inc. - 1,194 1,194
- 100 100 Scientific Games Holdings Corp. - 1,738 1,738
- 100 100 SCPIE Holdings, Inc. - 3,513 3,513
2,000 - 2,000 Scripps Co. 92,375 - 92,375
- 200 200 Seacoast Financial Services Co. - 2,200 2,200
- 100 100 SEACOR SMIT, Inc. - 4,575 4,575
- 100 100 Second Bancorp, Inc. - 2,550 2,550
- 300 300 Security Capital Group, Inc. - 4,125 4,125
- 200 200 Seitel, Inc. - 1,588 1,588
- 100 100 Select Comfort Corp. - 563 563
- 200 200 Selective Insurance Group, Inc. - 3,738 3,738
- 100 100 SEMCO Energy, Inc. - 1,406 1,406
- 400 400 Sensormatic Electronics Corp. - 6,050 6,050
- 100 100 Sequa Corp., Class A - 4,925 4,925
- 200 200 Serologicals Corp. - 775 775
4,600 - 4,600 Sherwin-Williams Co. 102,925 - 102,925
- 200 200 ShopKo Stores, Inc. - 5,013 5,013
- 100 100 Shorewood Packaging Corp. - 1,269 1,269
- 200 200 Shurgard Storage Centers, Inc., Class A - 4,725 4,725
- 500 500 Sicor, Inc. - 2,375 2,375
- 200 200 Sierra Health Services, Inc. - 1,463 1,463
- 588 588 Sierra Pacific Resources Corp. - 13,230 13,230
- 200 200 SIG Corp, Inc. - 5,200 5,200
- 100 100 Silgan Holdings, Inc. - 1,538 1,538
- 100 100 Silicon Valley Bancshares - 3,263 3,263
- 200 200 Silicon Valley Group, Inc. - 2,500 2,500
- 100 100 Simmons First National Corp. - 2,975 2,975
- 100 100 Simpson Industries, Inc. - 1,047 1,047
- 200 200 Sinclair Broadcast Group, Inc. - 1,999 1,999
- 100 100 Sitel Corp. - 450 450
- 100 100 Skyline Corp. - 2,488 2,488
- 200 200 SL Green Realty Corp. - 3,638 3,638
50
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
3,700 - 3,700 SLM Holding Corp. $181,069 - $181,069
- 100 100 Smart & Final, Inc. - 913 913
- 200 200 Smith, A.O. Corp. - 4,850 4,850
- 100 100 Smithfield Foods, Inc. - 2,275 2,275
- 200 200 Smucker, J.M. Co., Class A - 3,975 3,975
- 200 200 Sola International, Inc. - 2,800 2,800
2,700 - 2,700 Sonera Corp. - ADR 83,700 - 83,700
- 100 100 South Jersey Industries, Inc. - 2,600 2,600
- 200 200 Southern Peru Copper Corp. - 3,250 3,250
- 100 100 Southern Union Co. - 2,025 2,025
- 200 200 Southwest Gas Corp. - 4,650 4,650
- 200 200 Southwestern Energy Co. - 1,600 1,600
- 100 100 Sovran Self Storage, Inc. - 2,125 2,125
- 71 71 Speedfam-IPEC, Inc. - 785 785
- 100 100 Spiegel, Inc., Class A - 1,450 1,450
- 100 100 Springs Industries, Inc., Class A - 3,981 3,981
- 100 100 SPS Technologies, Inc. - 3,100 3,100
2,100 - 2,100 SPX Corp. 177,975 - 177,975
- 100 100 St Francis Capital Corp. - 2,250 2,250
- 100 100 St. Mary Land & Exploration Co. - 2,550 2,550
- 200 200 Staffmark, Inc. - 1,438 1,438
- 100 100 StanCorp Financial Group, Inc. - 2,538 2,538
- 100 100 Standard Motor Products, Inc. - 1,613 1,613
- 100 100 Standard Pacific Corp. - 1,075 1,075
- 100 100 Standard Products Co., Class A - 3,650 3,650
- 100 100 Standard Register Co. - 2,188 2,188
- 100 100 Starrett, L.S. Co. - 2,399 2,399
- 100 100 State Auto Financial Corp. - 1,150 1,150
- 300 300 Staten Island Bancorp, Inc. - 5,813 5,813
- 100 100 Stein Mart, Inc. - 663 663
- 200 200 Stewart & Stevenson Services - 2,650 2,650
- 100 100 Stewart Information Services Corp. - 1,488 1,488
- 100 100 Stone & Webster, Inc. - 1,550 1,550
- 100 100 Stoneridge, Inc. - 1,550 1,550
- 200 200 Storage USA, Inc. - 5,825 5,825
- 100 100 Stride Rite Corp. - 656 656
- 200 200 Sturm, Ruger & Co., Inc. - 1,775 1,775
- 300 300 Suiza Foods Corp. - 10,819 10,819
- 200 200 Summit Properties, Inc. - 3,825 3,825
- 100 100 Sun Communities, Inc. - 3,188 3,188
- 400 400 Sun Healthcare Group, Inc. - 40 40
- 700 700 Sunbeam Corp. - 3,325 3,325
- 200 200 Sunrise Medical, Inc. - 1,125 1,125
- 300 300 Sunstone Hotel Investors, Inc. - 2,869 2,869
- 4,400 4,400 Sunterra Corp. - 44,000 44,000
- 200 200 Superior Industries International, Inc. - 5,338 5,338
- 100 100 Superior National Insurance Group, Inc. - 1,200 1,200
- 2 2 Supervalu, Inc. - 42 42
- 300 300 Susquehanna Bancshares, Inc. - 4,988 4,988
- 100 100 Swift Energy Co. - 1,038 1,038
- 600 600 Sybase, Inc. - 8,100 8,100
- 800 800 Symantec Corp. - 38,200 38,200
51
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 100 100 Synthetic Industries, Inc. - $ 2,825 $ 2,825
- 300 300 Systemax, Inc. - 2,456 2,456
- 100 100 T.J. International, Inc. - 3,100 3,100
- 100 100 Talbots, Inc. - 4,706 4,706
- 300 300 Taubman Centers, Inc. - 3,394 3,394
- 300 300 Tektronix, Inc. - 10,125 10,125
- 1,600 1,600 Terex Corp. - 42,300 42,300
- 300 300 Terra Industries, Inc. - 355 355
- 300 300 Tesoro Petroleum Corp. - 3,638 3,638
- 1,800 1,800 Texas Industries, Inc. - 64,463 64,463
- 100 100 Texas Regional Bancshares, Inc., Class A - 2,794 2,794
- 100 100 Thermedics, Inc. - 531 531
- 100 100 ThermoQuest Corp. - 1,050 1,050
- 100 100 Thomas Industries, Inc. - 1,788 1,788
- 200 200 Thornburg Mortgage Asset Corp. - 1,800 1,800
- 400 400 Timken Co. - 7,175 7,175
- 100 100 Titan International, Inc. - 719 719
- 100 100 Titanium Metals Corp. - 600 600
- 100 100 TNP Enterprises, Inc. - 3,988 3,988
- 200 200 Toll Brothers, Inc. - 3,500 3,500
- 100 100 Toro Co. - 3,587 3,587
4,100 - 4,100 Tosco Corp. 103,781 - 103,781
- 300 300 Tower Automotive, Inc. - 4,894 4,894
- 100 100 Trans World Entertainment Corp. - 1,038 1,038
- 100 100 TransMontaigne, Inc. - 1,163 1,163
3,900 - 3,900 Transocean Offshore, Inc. 106,031 - 106,031
- 500 500 Transport World Airlines, Inc. - 1,656 1,656
- 600 600 TranSwitch Corp. - 28,238 28,238
- 100 100 Trenwick Group, Inc. - 2,031 2,031
- 100 100 Triad Guaranty, Inc. - 2,056 2,056
- 100 100 Triad Hospitals, Inc. - 975 975
- 200 200 TriNet Corporate Realty Trust - 4,613 4,613
- 300 300 Trinity Industries, Inc. - 8,944 8,944
- 100 100 Triumph Group, Inc. - 2,406 2,406
- 100 100 True North Communications, Inc. - 4,031 4,031
- 200 200 Tuboscope, Inc. - 2,225 2,225
- 200 200 Tupperware Corp. - 3,963 3,963
- 200 200 Twinlab Corp. - 1,625 1,625
- 100 100 U S Liquids, Inc. - 669 669
- 100 100 U S Xpress Enterprises, Inc., Class A - 850 850
- 100 100 U.S. Bancorp, Inc. - 1,325 1,325
- 100 100 U.S. Home Corp. - 2,800 2,800
- 100 100 U.S. Restaurant Properties, Inc. - 1,600 1,600
- 300 300 U.S. Trust Corp. - 24,338 24,338
7,600 - 7,600 UCAR International, Inc. 148,675 - 148,675
- 300 300 UCAR International, Inc. - 5,869 5,869
- 300 300 UGI Corp. - 7,200 7,200
- 300 300 UICI - 7,950 7,950
- 100 100 Ultratech Stepper, Inc. - 1,587 1,587
- 100 100 UMB Financial Corp. - 4,063 4,063
- 200 200 UniCapital Corp. - 325 325
2,900 - 2,900 Unicom Corp. 111,106 - 111,106
52
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 400 400 Unifi, Inc. - $ 4,800 $ 4,800
- 100 100 UniFirst Corp. - 1,225 1,225
- 100 100 Unilab Finance Corp. - 569 569
- 300 300 UniSource Energy Corp. - 3,450 3,450
- 200 200 United Asset Management Corp. - 4,150 4,150
- 200 200 United Auto Group, Inc. - 2,338 2,338
- 200 200 United Community Financial Co. - 1,975 1,975
- 800 800 United Dominion Realty Trust, Inc. - 8,750 8,750
- 100 100 United Fire & Casualty Co. - 2,231 2,231
- 100 100 United Illuminating Co. - 5,175 5,175
- 106 106 United National Bancorp - 2,425 2,425
- 100 100 United Retail Group, Inc. - 1,000 1,000
- 200 200 United Stationers, Inc. - 5,100 5,100
- 200 200 United Water Resources, Inc. - 6,750 6,750
- 200 200 Universal Corp. - 4,700 4,700
- 300 300 Universal Foods Corp. - 5,738 5,738
- 100 100 Universal Forest Products, Inc. - 1,450 1,450
- 300 300 Unova, Inc. - 3,994 3,994
- 100 100 Urban Shopping Centers, Inc. - 2,581 2,581
- 100 100 URS Corp. - 1,800 1,800
- 300 300 US Office Products Co. - 825 825
- 200 200 US Oncology, Inc. - 894 894
- 700 700 USEC, Inc. - 6,344 6,344
- 200 200 USFreightways Corp. - 9,063 9,063
- 300 300 UST Corp. - 9,300 9,300
5,500 - 5,500 USX-Marathon Group 160,188 - 160,188
- 100 100 UTI Energy Corp. - 1,919 1,919
- 100 100 Vail Resorts, Inc. - 2,225 2,225
- 400 400 Valero Energy Corp. - 7,350 7,350
3,125 - 3,125 Valley National Bancorp 83,398 - 83,398
- 100 100 Valmont Industries, Inc. - 1,738 1,738
- 100 100 Value City Department Stores, Inc. - 1,538 1,538
- 500 500 Varco International, Inc. - 5,281 5,281
- 200 200 Varian Medical Systems, Inc. - 4,213 4,213
- 100 100 Varian Semiconductor Equipment Assoc., Inc. - 2,263 2,263
- 100 100 Varian, Inc. - 1,888 1,888
- 400 400 Ventas, Inc. - 1,950 1,950
- 200 200 Veritas DGC, Inc. - 2,813 2,813
- 200 200 Vertex Pharmaceuticals, Inc. - 5,725 5,725
- 100 100 Veterinary Centers of America, Inc. - 1,175 1,175
- 1,912 1,912 Vishay Intertechnology, Inc. - 46,725 46,725
- 200 200 Vlasic Foods International, Inc. - 1,538 1,538
- 100 100 Volt Information Sciences, Inc. - 1,975 1,975
- 100 100 W. R. Berkley Corp. - 2,294 2,294
2,000 - 2,000 W. W. Grainger, Inc. 84,750 - 84,750
- 2,300 2,300 Wabash National Corp. - 36,513 36,513
- 200 200 Walden Residential Properties, Inc. - 4,288 4,288
- 300 300 Wallace Computer Services, Inc. - 6,638 6,638
- 300 300 Walter Industries, Inc. - 3,525 3,525
- 400 400 Washington Federal, Inc. - 9,125 9,125
- 300 300 Washington Gas Light Co. - 8,156 8,156
- 100 100 Watts Industries, Inc., Class A - 1,369 1,369
53
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
COMMON STOCK (continued)
- 200 200 Wausau-Mosinee Paper Corp. - $ 2,525 $ 2,525
- 100 100 Wave Systems Corp. - 950 950
- 300 300 Webster Financial Corp. - 8,588 8,588
- 200 200 Weingarten Realty Investors - 7,650 7,650
- 200 200 Wellman, Inc. - 3,013 3,013
2,700 - 2,700 Wellpoint Health Networks, Inc. 156,600 - 156,600
- 200 200 Wellsford Real Properties, Inc. - 1,650 1,650
- 1,700 1,700 Werner Enterprises, Inc. - 27,094 27,094
- 100 100 WesBanco, Inc. - 2,625 2,625
- 100 100 WESCO International, Inc. - 788 788
- 110 110 West Coast Bancorp - 1,519 1,519
- 100 100 West Marine, Inc. - 900 900
- 100 100 West Pharmaceutical Services, Inc. - 3,456 3,456
- 100 100 Westcorp, Inc. - 1,563 1,563
- 400 400 Western Digitial Corp. - 1,275 1,275
- 100 100 Western Gas Resources, Inc. - 1,644 1,644
- 100 100 Western Properties Trust - 1,050 1,050
- 200 200 Westfield America, Inc. - 2,750 2,750
- 1,950 1,950 Westinghouse Air Brake Co. - 35,831 35,831
- 200 200 Whitney Holding Corp. - 7,400 7,400
- 300 300 WICOR, Inc. - 8,925 8,925
4,200 - 4,200 Williams Companies, Inc. 157,500 - 157,500
- 1 1 Wilshire Financial Services Group - 2 2
- 100 100 Windmere Corp. - 1,300 1,300
2,100 - 2,100 WinStar Communications, Inc. 81,506 - 81,506
- 300 300 Wisconsin Central Transportation Corp. - 4,163 4,163
- 100 100 Wolverine Tube, Inc. - 1,375 1,375
- 300 300 Wolverine World Wide, Inc. - 3,075 3,075
- 100 100 Woodward Governor Co. - 2,650 2,650
- 100 100 Worthington Foods, Inc. - 2,369 2,369
- 600 600 Worthington Industries, Inc. - 9,975 9,975
- 200 200 WPS Resources Corp. - 5,775 5,775
- 100 100 Wyman-Gordon Co. - 1,969 1,969
- 1,000 1,000 Wyndham International, Inc. - 2,875 2,875
- 100 100 Xtra Corp. - 4,156 4,156
- 100 100 Yankee Energy Systems, Inc. - 4,250 4,250
- 200 200 Yellow Corp. - 3,400 3,400
- 100 100 Zapata Corp. - 513 513
- 100 100 Zenith National Insurance Corp. - 2,231 2,231
- 200 200 Ziff-Davis, Inc. - 2,988 2,988
----- -----
TOTAL COMMON STOCK $8,692,127 $5,418,938 $14,111,065
---------- ---------- -----------
(Cost $9,030,848, $5,683,644 and $14,714,492 respectively)
54
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ----------------------------------------- ---------------------------------
AGSPC2 AGSPC2 AGSPC2 AGSPC2
Mid Cap Small Cap Mid Cap Small Cap
Value Fund Value Fund Combined Value Fund Value Fund Combined
---------- ---------- -------- ---------- ---------- --------
Principal Value
- ----------------------------------------- ---------------------------------
SHORT TERM INVESTMENTS
REPURCHASE AGREEMENTS
State Street Bank Repurchase Agreement,
5.15% dated 10/31/99, to be
repurchased at $594,255 on 11/01/99,
collateralized by U.S. Treasury Note,
5.38%, 07/31/00, with a par value of
$594,000 $600,000 (Cost $594,000) $594,000 $594,000
State Street Bank Repurchase Agreement,
5.15% dated 10/31/99, to be
repurchased at $725,311 on 11/01/99 ,
collateralized by U.S. Treasury Note,
5.38%,07/31/00 , with a par value of
725,000 $735,000 (Cost $725,000) - 725,000 725,000
-------- -------
TOTAL SHORT TERM INVESTMENTS $594,000 $725,000 $1,319,000
---------------------------- -------- -------- ----------
(Cost $594,000, $725,000 and $1,319,000 respectively)
TOTAL INVESTMENTS $9,286,127 $6,143,938 $15,430,065
----------------- ========== ========== ===========
(Cost $9,624,848, $6,408,644 and $16,033,492 respectively)
55
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Mid Cap Value Fund,
American General Series Portfolio Company 2 Mid Cap Value Fund,
American General Series Portfolio Company 2 Small Cap Value Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Mid Cap Value Fund ("Shell Fund") is a series of North American
Funds, 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 Shell Fund after giving
effect to its proposed acquisition of American General Series Portfolio Company
2 Small Cap Value Fund ("Small Cap Value") and American General Series
Portfolio Company 2 Mid Cap Value Fund ("Mid Cap Value") 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 Small Cap Value and Mid Cap Value in exchange for shares
of Shell Fund 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 Shell Fund 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 of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of Small Cap Value
and Mid Cap Value 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 or the American
General Series Portfolio Company 2 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 Small Cap
Value shares and Mid Cap Value shares into Shell Fund shares based upon the net
asset value of the Mid Cap Value 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for Shell Fund at the time of the Reorganization at the combined
level of average net assets for the twelve month period ended October 31, 1999.
56
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Mid Cap Stock Pro-forma Pro-forma
ASSETS: Index Fund Index Fund Adjustments Combined
---------- ---------- ----------- --------
Investments in securities, at value ............................. $7,649,273 $20,593,904 $28,243,177
Receivables:
Investments sold ............................................. 8,504 -- 8,504
Fund shares sold ............................................. 3,987 409,718 413,705
Dividends .................................................... 5,202 15,654 20,856
Other assets .................................................... 49,042 86,212 135,254
----------- ----------- ----------- -----------
Total assets .............................................. 7,716,008 21,105,488 -- 28,821,496
LIABILITIES:
Payables:
Investments purchased ........................................ 15,863 10,856 26,719
Fund shares redeemed ......................................... -- 321,342 321,342
Investment adviser ........................................... 17,492 29,869 47,361
Distribution fee ............................................. 4,058 10,569 14,627
Other accrued expenses ....................................... 36,073 58,599 94,672
----------- ----------- ----------- -----------
Total liabilities ......................................... 73,486 431,235 -- 504,721
NET ASSETS ...................................................... $7,642,522 $20,674,253 $0 $28,316,775
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ................... $1,132 $2,017 $3,149
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ........................................ 710,646 $54,301 764,947
Unrealized appreciation (depreciation) on:
Investments ............................................... 153,204 1,370,824 1,524,028
Futures ................................................... 62,725 102,217 164,942
Foreign currency and forward foreign currency contracts ... -- --
Capital shares at par value of $.01 .......................... 6,482 16,868 (3,492)(1) 19,858
Additional paid-in capital ................................... 6,708,333 19,128,026 3,492(1) 25,839,851
----------- ----------- ----------- -----------
Net assets ................................................ $7,642,522 $20,674,253 $0 $28,316,775
=========== =========== =========== ===========
(1) Reflects change in shares due to merger exchange
See Notes to Pro-Forma Financial Statements
57
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Mid Cap Stock Pro-forma Pro-forma
Index Fund Index Fund Adjustments Combined
---------- ---------- ----------- --------
NET ASSET VALUES
Class A Shares
Net assets at value ........................................... $ 1,371,038 $ 5,633,775 $ 7,004,813
Shares outstanding ............................................ 147,829 457,472 (36,543)(1) 568,758
Net asset value (NAV) and redemption price per share ............ $ 9.27 $ 12.32 $ 12.32
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced .... $ 9.84 $ 13.07 $ 13.07
Class B Shares
Net assets at value ........................................... $ 2,295,576 $ 15,040,478 $ 17,336,054
Shares outstanding ............................................ 247,985 1,229,316 (60,285)(1) 1,417,016
Net asset value, offering price and redemption price per share .. $ 9.26 $ 12.23 $ 12.23
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
58
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2
Mid Cap Stock Pro-forma Pro-forma
Index Fund Index Fund Adjustments Combined
---------- ---------- ----------- --------
INVESTMENT INCOME:
Interest ................................................... $44,405 $90,543 $134,948
Dividends .................................................. 65,072 122,282 187,354
----------- ----------- ----------- -----------
Total income ............................................ 109,477 212,825 0 322,302
EXPENSES:
Distribution for Class A ................................... 7,078 9,224 6,521(1) 22,823
Distribution for Class B ................................... 32,282 65,092 97,374
Investment adviser fee ..................................... 17,492 29,869 (625)(2) 46,736
Custodian fee .............................................. 8,623 13,876 22,499
Transfer agent fee ......................................... 17,009 28,946 45,955
Accounting/administration .................................. 1,878 3,323 (1,500)(3) 3,701
Audit and legal fees ....................................... 3,747 6,298 (2,500)(3) 7,545
Registration and filing fees ............................... 33,785 36,028 (30,000)(3) 39,813
Miscellaneous .............................................. 3,595 8,640 (3,500) 8,735
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ........ 125,489 201,296 (31,604) 295,181
Reimbursement of expenses by investment adviser ............ (48,160) (57,204) 29,103.91(4) (76,260)
----------- ----------- ----------- -----------
Net expenses ...................................... 77,329 144,092 (2,500) 218,921
----------- ----------- ----------- -----------
Net investment income/(loss) ...................... 32,148 68,733 2,500 103,381
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ................................. 703,327 29,243 732,570
Futures contracts ....................................... 7,319 25,058 32,377
Change in unrealized appreciation (depreciation) on:
Investments ............................................. 153,204 1,370,824 1,524,028
Futures contracts ....................................... 62,725 102,217 164,942
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts .......... 926,575 1,527,342 -- 2,453,917
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations .......... $958,723 $1,596,075 $2,500 $2,557,298
----------- ----------- ----------- -----------
(1) Reflects the surviving fund's 12b-1 service fee rate.
(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
59
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock
600 600 * 3Com Corp. 17,400 17,400
300 300 A. Schulman, Inc. 4,669 4,669
700 700 A.G. Edwards, Inc. 21,043 21,043
800 800 A.H. Belo Corp. 16,300 16,300
2,400 2,400 Abbott Laboratories 96,899 96,899
700 700 * Abercrombie and Fitch Co. 19,075 19,075
400 400 * ACNielson Corp. 8,800 8,800
100 100 * Acuson Corp. 1,038 1,038
600 600 * Acxiom Corp. 9,900 9,900
150 150 * Adaptec, Inc. 6,749 6,749
200 200 * ADC Communications, Inc. 9,538 9,538
200 200 Adobe Systems, Inc. 13,987 13,987
300 300 * Adtran, Inc. 11,138 11,138
200 200 * Advanced Micro Devices, Inc. 3,963 3,963
300 300 * AES Corp. 16,931 16,931
200 200 Aetna, Inc. 10,049 10,049
400 400 * Affiliated Computer Services, Inc.,
Class A 15,199 15,199
400 400 AFLAC, Inc. 20,449 20,449
400 400 AGCO Corp. 4,300 4,300
500 500 AGL Resources, Inc. 8,719 8,719
300 300 Air Products and Chemicals, Inc. 8,249 8,249
400 400 Airborne Freight Corp. 8,600 8,600
400 400 * Airgas, Inc. 3,800 3,800
500 500 AK Steel Holding Corp. 8,656 8,656
200 200 * Alaska Air Group, Inc. 7,950 7,950
202 202 * Albany International Corp., Class A 3,068 3,068
300 300 Albemarle Corp. 5,325 5,325
100 100 Alberto-Culver Co., Class B 2,355 2,355
689 689 Albertsons, Inc. 25,018 25,018
300 300 Alcan Aluminium, Ltd. 9,880 9,880
600 600 Alcoa, Inc. 36,450 36,450
300 300 Alexander & Baldwin, Inc. 7,200 7,200
400 400 Allamerica Financial Corp. 22,874 22,874
900 900 Allegheny Energy, Inc. 28,630 28,630
300 300 Allegheny Teldyne, Inc. 4,555 4,555
100 100 Allergan, Inc. 10,737 10,737
500 500 Alliant Energy Corp. 13,594 13,594
900 900 Allied Signal, Inc. 51,243 51,243
300 300 * Allied Waste Industries, Inc. 3,150 3,150
1,300 1,300 Allstate Corp. 37,375 37,375
500 500 ALLTEL Corp. 41,625 41,625
1,300 1,300 * Altera Corp. 63,212 63,212
200 200 * ALZA Corp. 8,563 8,563
400 400 Ambac Financial Group, Inc. 23,900 23,900
100 100 Amerada Hess Corp. 5,738 5,738
200 200 Ameren Corp. 7,563 7,563
1,700 1,700 * America Online, Inc. 220,468 220,468
100 100 * American Eagle Outfitters, Inc. 4,281 4,281
300 300 American Electric Power, Inc. 10,350 10,350
700 700 American Express Co. 107,799 107,799
400 400 American Financial Group, Inc. 11,850 11,850
100 100 American Greetings Corp., Class A 2,587 2,587
60
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
2,000 2,000 American Home Products Corp. $104,500 $104,500
2,456 2,456 American International Group, Inc. 252,815 252,815
1,400 1,400 * American Power Conversion Corp. 31,412 31,412
400 400 * American Standard Companies 15,274 15,274
600 600 American Water Works Co., Inc. 17,513 17,513
- - Ameritech Corp. - -
200 200 AMETEK, Inc. 3,950 3,950
800 800 * Amgen, Inc. 63,800 63,800
200 200 * AMR Corp. 12,699 12,699
600 600 AmSouth Bancorporation 15,449 15,449
200 200 Anadarko Petroleum Corp. 6,163 6,163
300 300 * Analog Devices, Inc. 15,938 15,938
200 200 * Andrew Corp. 2,575 2,575
700 700 Anheuser-Busch Companies, Inc. 50,268 50,268
450 450 Aon Corp. 15,975 15,975
200 200 Apache Corp. 7,800 7,800
600 600 * Apollo Group, Inc., Class A 15,788 15,788
200 200 * Apple Computer, Inc. 16,025 16,025
600 600 * Applied Materials, Inc. 53,888 53,888
300 300 * Apria Healthcare Group, Inc. 4,744 4,744
930 930 Archer Daniels Midland Co. 11,450 11,450
100 100 Armstrong World Industries, Inc. 3,737 3,737
100 100 Arnold Industries, Inc. 1,003 1,003
700 700 * Arrow Electronics, Inc. 15,269 15,269
200 200 Arvin Industries, Inc. 5,700 5,700
100 100 Ashland Oil, Inc. 3,300 3,300
500 500 Associated Banc-Corp. 19,234 19,234
1,100 1,100 Associates First Capital Corp. 40,149 40,149
500 500 Astoria Financial Corp. 18,000 18,000
4,948 4,948 AT&T Corp. 231,319 231,319
500 500 Atlantic Richfield Co. 46,594 46,594
700 700 * Atmel Corp. 28,000 28,000
100 100 Autodesk, Inc. 1,875 1,875
1,000 1,000 Automatic Data Processing, Inc. 48,188 48,188
200 200 * AutoZone, Inc. 5,312 5,312
200 200 Avery Dennison Corp. 12,500 12,500
300 300 Avnet, Inc. 16,294 16,294
400 400 Avon Products, Inc. 12,900 12,900
500 500 Baker Hughes, Inc. 13,969 13,969
200 200 Bandag, Inc. 5,000 5,000
2,700 2,700 Bank of America Corp. 173,812 173,812
1,200 1,200 Bank of New York Co., Inc. 50,249 50,249
1,800 1,800 BankOne Corp. 67,613 67,613
200 200 Banta Corp. 4,525 4,525
400 400 * Barnes & Noble, Inc. 8,325 8,325
600 600 Barrick Gold Corp. 10,987 10,987
100 100 Bausch & Lomb, Inc. 5,400 5,400
500 500 Baxter International, Inc. 32,438 32,438
500 500 BB&T Corp. 18,187 18,187
205 205 Bear Stearns Co., Inc. 8,738 8,738
200 200 Beckman Coulter, Inc. 9,200 9,200
400 400 Becton, Dickinson and Co. 10,150 10,150
61
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
250 250 * Bed Bath & Beyond, Inc. $ 8,327 $ 8,327
2,400 2,400 Bell Atlantic Corp. 155,850 155,850
3,000 3,000 BellSouth Corp. 135,000 135,000
100 100 Bemis Co., Inc. 3,493 3,493
1,000 1,000 Bergen Brunswig Corp., Class A 7,125 7,125
300 300 * Best Buy Co., Inc. 16,669 16,669
400 400 BestFoods 23,500 23,500
200 200 * Bethlehem Steel Corp. 1,388 1,388
600 600 * Beverly Enterprises, Inc. 2,363 2,363
1,000 1,000 * Biogen, Inc. 74,124 74,124
200 200 Biomet, Inc. 6,025 6,025
600 600 * BJ Services Co. 20,588 20,588
500 500 * BJ's Wholesale Club, Inc. 15,405 15,405
100 100 Black & Decker Corp. 4,299 4,299
100 100 Black Hills Corp. 2,250 2,250
400 400 * Blyth Industries, Inc. 10,025 10,025
400 400 * BMC Software, Inc. 25,674 25,674
400 400 Bob Evans Farms, Inc. 5,500 5,500
1,500 1,500 Boeing Co. 69,093 69,093
100 100 Boise Cascade Corp. 3,563 3,563
600 600 * Borders Group, Inc. 7,800 7,800
100 100 Borg-Warner Automotive, Inc. 3,950 3,950
600 600 * Boston Scientific Corp. 12,075 12,075
400 400 Bowater, Inc. 21,000 21,000
400 400 * Brinker International, Inc. 9,325 9,325
3,100 3,100 Bristol Myers Squibb Co. 238,119 238,119
100 100 Brown-Forman Corp., Class B 6,750 6,750
100 100 Brunswick Corp. 2,262 2,262
200 200 * Buffets, Inc. 1,863 1,863
300 300 * Burlington Industries, Inc. 1,106 1,106
700 700 Burlington Northern Santa Fe 22,313 22,313
300 300 Burlington Resources, Inc. 10,463 10,463
100 100 C. R. Bard, Inc. 5,394 5,394
300 300 * Cabletron Systems, Inc. 4,968 4,968
400 400 Cabot Corp. 7,450 7,450
1,600 1,600 * Cadence Design Systems, Inc. 24,300 24,300
500 500 Callaway Golf Co. 6,719 6,719
400 400 * Calpine Corp. 23,050 23,050
500 500 * Cambridge Technology Partners, Inc. 5,531 5,531
700 700 Campbell Soup Co. 31,500 31,500
300 300 Capital One Financial Corp. 15,899 15,899
400 400 Cardinal Health, Inc. 17,249 17,249
200 200 Carlisle Companies, Inc. 6,650 6,650
300 300 Carlisle Companies, Inc. 6,975 6,975
1,000 1,000 Carnival Corp., Class A 44,499 44,499
200 200 Carolina Power & Light Co. 6,900 6,900
100 100 Carpenter Technology Corp. 2,438 2,438
200 200 Carter-Wallace, Inc. 3,613 3,613
100 100 Case Corp. 5,299 5,299
600 600 Caterpillar, Inc. 33,149 33,149
500 500 CBRL Group, Inc. 6,688 6,688
1,100 1,100 * CBS Corp. 53,693 53,693
62
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
300 300 CCB Financial Corp. $13,800 $ 13,800
1,119 1,119 * Cendant Corp. 18,463 18,463
100 100 Centex Corp. 2,680 2,680
300 300 Central & South West Corp. 6,656 6,656
300 300 CenturyTel, Inc. 12,131 12,131
200 200 * Ceridian Corp. 4,388 4,388
100 100 Champion International Corp. 5,781 5,781
1,300 1,300 Charles Schwab Corp. 50,619 50,619
1,460 1,460 Charter One Financial, Inc. 35,860 35,860
1,300 1,300 Chase Manhattan Corp. 113,588 113,588
200 200 Chesapeake Corp. 6,000 6,000
1,000 1,000 Chevron Corp. 91,313 91,313
1,200 1,200 * Chiron Corp. 34,275 34,275
206 206 * Chris-Craft Industries, Inc. 14,369 14,369
300 300 Chubb Corp. 16,462 16,462
200 200 Church & Dwight Co., Inc. 5,213 5,213
300 300 CIGNA Corp. 22,425 22,425
900 900 Cincinnati Bell, Inc. 18,731 18,731
300 300 Cincinnati Financial Corp. 10,744 10,744
300 300 Cinergy Corp. 8,475 8,475
700 700 Cintas Corp. 42,175 42,175
300 300 Circuit City Stores, Inc. 12,806 12,806
500 500 * Cirrus Logic, Inc. 4,969 4,969
5,100 5,100 * Cisco Systems, Inc. 377,399 377,399
5,250 5,250 Citigroup, Inc. 284,156 284,156
600 600 * Citrix Systems, Inc. 38,474 38,474
300 300 City National Corp. 11,625 11,625
777 777 CK Witco Corp. 7,284 7,284
400 400 Claire's Stores, Inc. 7,050 7,050
850 850 Clayton Homes, Inc. 8,606 8,606
500 500 * Clear Channel Communications 40,188 40,188
100 100 Cleco Corp. 3,313 3,313
100 100 Cleveland-Cliffs, Inc. 2,988 2,988
400 400 Clorox Co. 16,375 16,375
300 300 CMP Group, Inc. 7,988 7,988
200 200 CMS Energy Corp. 7,375 7,375
400 400 CNF Transportation, Inc. 13,225 13,225
300 300 Coastal Corp. 12,638 12,638
700 700 Coca Cola Enterprises, Inc. 17,894 17,894
3,900 3,900 Coca-Cola Co. 230,099 230,099
900 900 Colgate-Palmolive Co. 54,450 54,450
100 100 Columbia Energy Group 6,500 6,500
900 900 Columbia/HCA Healthcare Corp. 21,712 21,712
800 800 Comair Holdings, Inc. 18,463 18,463
1,200 1,200 Comcast Corp., Class A 50,550 50,550
1,000 1,000 Comdisco, Inc. 20,188 20,188
200 200 Comerica, Inc. 11,888 11,888
2,700 2,700 Compaq Computer Corp. 51,300 51,300
900 900 Compass Bancshares, Inc. 24,019 24,019
800 800 * CompUSA, Inc. 4,550 4,550
800 800 Computer Associates International 45,200 45,200
200 200 * Computer Sciences Corp. 13,738 13,738
63
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
600 600 * Compuware Corp. $ 16,688 $ 16,688
181 181 COMSAT Corp. 3,382 3,382
100 100 * Comverse Technology, Inc. 11,349 11,349
800 800 ConAgra, Inc. 20,850 20,850
1,350 1,350 * Concord EFS, Inc. 36,533 36,533
750 750 Conectiv, Inc. 14,625 14,625
957 957 Conoco, Inc., Class B 25,959 25,959
600 600 Conseco, Inc. 14,588 14,588
400 400 Consolidated Edison, Inc. 15,275 15,275
200 200 Consolidated Natural Gas Co. 12,800 12,800
600 600 Consolidated Papers, Inc. 18,788 18,788
200 200 * Consolidated Stores Corp. 3,663 3,663
200 200 Constellation Energy Group, Inc. 6,138 6,138
1,100 1,100 * Convergys Corp. 21,519 21,519
100 100 Cooper Industries, Inc. 4,305 4,305
100 100 Cooper Tire & Rubber Co. 1,681 1,681
300 300 Cordant Technologies, Inc. 9,356 9,356
400 400 Corning, Inc. 31,449 31,449
300 300 * Costco Wholesale 24,094 24,094
200 200 Countrywide Credit Industries, Inc. 6,788 6,788
500 500 * Covance, Inc. 4,844 4,844
1 1 Cox Communications, Inc., Class A 36 36
100 100 Crane Co. 2,044 2,044
200 200 Crown Cork & Seal Co., Inc. 4,788 4,788
300 300 CSX Corp. 12,300 12,300
100 100 Cummins Engine Co., Inc. 5,068 5,068
600 600 CVS Corp. 26,062 26,062
800 800 * Cypress Semiconductor Corp. 20,450 20,450
- - Cyprus Amax Minerals Co. - -
300 300 * Cytec Industries, Inc. 7,744 7,744
300 300 Dana Corp. 8,869 8,869
200 200 Danaher Corp. 9,663 9,663
200 200 Darden Restaurants, Inc. 3,813 3,813
700 700 Dayton Hudson Corp. 45,237 45,237
300 300 Dean Foods Co. 13,874 13,874
400 400 Deere & Co. 14,500 14,500
4,000 4,000 * Dell Computer Corp. 160,500 160,500
889 889 Delphi Automotive Systems Corp. 14,612 14,612
200 200 Delta Air Lines, Inc. 10,888 10,888
100 100 Deluxe Corp. 2,825 2,825
400 400 DENTSPLY International, Inc. 9,275 9,275
400 400 Devon Energy Corp. 15,550 15,550
500 500 * DeVry, Inc. 10,531 10,531
200 200 Dexter Corp. 7,013 7,013
800 800 Dial Corp. 18,700 18,700
500 500 Diebold, Inc. 13,125 13,125
200 200 Dillards, Inc., Class A 3,775 3,775
700 700 Dime Bancorp, Inc. 12,513 12,513
400 400 Dole Food Co., Inc. 7,175 7,175
325 325 Dollar General Corp. 8,572 8,572
500 500 * Dollar Tree Stores, Inc. 21,781 21,781
300 300 Dominion Resources, Inc. 14,438 14,438
64
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
300 300 Dover Corp. $ 12,769 $ 12,769
300 300 Dow Chemical Co. 35,474 35,474
100 100 Dow Jones & Co., Inc. 6,150 6,150
1,200 1,200 DPL, Inc. 24,300 24,300
500 500 DQE, Inc. 19,969 19,969
100 100 Dreyer's Grand Ice Cream, Inc. 1,706 1,706
400 400 * DST Systems, Inc. 25,475 25,475
200 200 DTE Energy Co. 6,638 6,638
1,511 1,511 Du Pont (E.I.) de Nemours and Co. 97,365 97,365
600 600 Duke Energy Corp. 33,900 33,900
300 300 Dunn & Bradstreet Corp. 8,813 8,813
1,600 1,600 * E*Trade Group, Inc. 38,100 38,100
100 100 Eastman Chemical Co. 3,856 3,856
500 500 Eastman Kodak Co. 34,469 34,469
100 100 Eaton Corp. 7,525 7,525
200 200 Ecolab, Inc. 6,763 6,763
500 500 Edison International, Inc. 14,813 14,813
400 400 El Paso Energy Corp. 16,400 16,400
500 500 * Electronic Arts, Inc. 40,405 40,405
800 800 Electronic Data Systems Corp. 46,800 46,800
1,700 1,700 Eli Lilly and Co. 117,088 117,088
1,600 1,600 * EMC Corp. 116,800 116,800
700 700 Emerson Electric Co. 42,044 42,044
800 800 Energy East Corp. 20,100 20,100
200 200 Engelhard Corp. 3,524 3,524
1,100 1,100 Enron Corp. 43,931 43,931
1,000 1,000 ENSCO International, Inc. 19,375 19,375
400 400 Entergy Corp. 11,975 11,975
200 200 Equifax, Inc. 5,400 5,400
400 400 Ethyl Corp. 1,650 1,650
300 300 Everest Reinsurance Holdings, Inc. 7,725 7,725
3,800 3,800 Exxon Corp. 281,438 281,438
1,200 1,200 Family Dollar Stores, Inc. 24,750 24,750
300 300 Fastenal Co. 10,875 10,875
500 500 * FDX Corp. 21,530 21,530
1,100 1,100 Federal Home Loan Mortgage Corp. 59,468 59,468
1,600 1,600 Federal National Mortgage Association 113,200 113,200
400 400 Federal Signal Corp. 7,525 7,525
500 500 Federal-Mogul Corp. 12,563 12,563
300 300 * Federated Department Stores, Inc. 12,806 12,806
200 200 Ferro Corp. 4,075 4,075
400 400 Fifth Third Bancorp 29,525 29,525
400 400 Finova Group, Inc. 17,624 17,624
700 700 First Data Corp. 31,981 31,981
400 400 * First Health Group Corp. 9,300 9,300
1,300 1,300 First Security Corp. 33,313 33,313
900 900 First Tennessee National Corp. 30,600 30,600
1,500 1,500 First Union Corp. 64,031 64,031
300 300 First Virginia Banks, Inc. 14,363 14,363
1,418 1,418 Firstar Corp. 41,654 41,654
400 400 FirstEnergy Corp. 10,425 10,425
600 600 FirstMerit Corp. 15,863 15,863
65
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
750 750 * Fiserv, Inc. $ 24,000 $ 24,000
1,492 1,492 Fleet Financial Group, Inc. 65,089 65,089
100 100 Florida Progress Corp. 4,581 4,581
800 800 Flowers Industries, Inc. 13,500 13,500
200 200 Flowserve Corp. 3,375 3,375
200 200 Fluor Corp. 7,975 7,975
1,900 1,900 Ford Motor Co. 104,263 104,263
600 600 * Forest Laboratories, Inc. 27,525 27,525
300 300 Fort James Corp. 7,894 7,894
300 300 Fortune Brands, Inc. 10,631 10,631
800 800 * Foundation Health Systems, Class A 5,300 5,300
300 300 FPL Group, Inc. 15,094 15,094
400 400 Franklin Resources, Inc. 14,000 14,000
200 200 * Freeport-McMoRan Copper & Gold, Class B 3,338 3,338
400 400 * Furniture Brands International, Inc. 7,750 7,750
400 400 Gannett Co., Inc. 30,850 30,850
1,300 1,300 Gap, Inc. 48,263 48,263
700 700 * Gartner Group, Inc., Class B 6,563 6,563
400 400 * Gateway, Inc. 26,425 26,425
400 400 GATX Corp. 13,275 13,275
300 300 General Dynamics Corp. 16,631 16,631
5,100 5,100 General Electric Co. 691,369 691,369
300 300 * General Insturment Corp. 16,144 16,144
200 200 General Mills, Inc. 17,438 17,438
1,000 1,000 General Motors Corp. 70,250 70,250
300 300 Genuine Parts Co. 7,819 7,819
600 600 Genzyme Corp. 22,950 22,950
- - * Genzyme Molecular Oncology - -
89 89 * Genzyme Surgical Products 478 478
200 200 Georgia Gulf Corp. 4,313 4,313
300 300 Georgia-Pacific Corp. 11,906 11,906
600 600 Georgia-Pacific Corp. (Timber Group) 14,324 14,324
200 200 * Gilead Sciences, Inc. 12,638 12,638
1,700 1,700 Gillette Co. 61,519 61,519
1,215 1,215 * Global Crossing, Ltd. 42,069 42,069
1,200 1,200 * Global Marine, Inc. 18,224 18,224
100 100 Golden West Financial Corp. 11,175 11,175
200 200 Goodrich (B.F) Co. 4,738 4,738
200 200 Goodyear Tire & Rubber Co. 8,263 8,263
200 200 GPU, Inc. 6,788 6,788
200 200 Granite Construction, Inc. 4,138 4,138
100 100 Great Atlantic & Pacific Tea Co. 2,856 2,856
100 100 Great Lakes Chemical Corp. 3,550 3,550
700 700 GreenPoint Financial Corp. 19,950 19,950
1,500 1,500 GTE Corp. 112,500 112,500
200 200 * GTECH Holdings Corp. 4,025 4,025
500 500 Guidant Corp. 24,687 24,687
200 200 H & R Block, Inc. 8,513 8,513
600 600 H J Heinz Co. 28,650 28,650
100 100 H.B. Fuller Co. 5,475 5,475
700 700 Halliburton Co. 26,381 26,381
300 300 Hannaford Bros. Co. 21,019 21,019
66
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
200 200 * Hanover Compressor Co. $ 7,400 $ 7,400
100 100 Harcourt General, Inc. 3,850 3,850
1,100 1,100 Harley-Davidson, Inc. 65,244 65,244
200 200 * Harrah's Entertainment, Inc. 5,788 5,788
100 100 Harris Corp. 2,244 2,244
300 300 Harsco Corp. 8,831 8,831
500 500 Harte-Hanks, Inc. $ 9,906 9,906
400 400 Hartford Financial Services Group 20,725 20,725
350 350 Hasbro, Inc. 7,219 7,219
200 200 Hawaiian Electric Industries, Inc. 6,763 6,763
200 200 * HCR Manor Care, Inc. 3,150 3,150
1,900 1,900 * Health Management Association 16,862 16,862
600 600 * HealthSouth Corp. 3,450 3,450
300 300 Heilig-Meyers Co. 1,313 1,313
100 100 Helmerich & Payne, Inc. 2,381 2,381
200 200 Hercules, Inc. 4,813 4,813
600 600 Herman Miller, Inc. 13,013 13,013
200 200 Hershey Foods Corp. 10,100 10,100
1,600 1,600 Hewlett Packard Co. 118,500 118,500
1,300 1,300 Hibernia Corp., Class A 18,444 18,444
400 400 Hillenbrand Industries, Inc. 13,250 13,250
400 400 Hilton Hotels Corp. 3,699 3,699
300 300 * Hispanic Broadcasting Corp., Class A 24,300 24,300
2,300 2,300 Home Depot, Inc. 173,650 173,650
400 400 Homestake Mining Co. 3,350 3,350
400 400 Hon Inustries, Inc. 7,850 7,850
200 200 Honeywell, Inc. 21,088 21,088
200 200 Horace Mann Educators Corp. 5,638 5,638
500 500 Hormel Foods Corp. 21,562 21,562
200 200 Houghton Mifflin Co. 8,474 8,474
800 800 Household International, Inc. 35,700 35,700
200 200 HSB Group, Inc. 7,650 7,650
400 400 Hubbell, Inc., Class B 11,075 11,075
200 200 * Humana, Inc. 1,375 1,375
320 320 Huntington Bancshares, Inc. 9,480 9,480
700 700 IBP, Inc. 16,756 16,756
500 500 ICN Pharmaceuticals, Inc. 11,500 11,500
300 300 Idacorp, Inc. 9,056 9,056
200 200 Ikon Office Solutions, Inc. 1,375 1,375
400 400 Illinois Tool Works, Inc. 29,300 29,300
600 600 Illinova Corp. 19,088 19,088
300 300 * Imation Corp. 9,206 9,206
900 900 IMC Global, Inc. 11,475 11,475
500 500 IMS Health, Inc. 14,500 14,500
300 300 Inco, Ltd. 6,075 6,075
100 100 Indiana Energy, Inc. 2,019 2,019
1,300 1,300 * Informix Corp. 9,913 9,913
300 300 Ingersoll-Rand Co. 15,675 15,675
700 700 * Integrated Device Technology, Inc. 14,394 14,394
5,200 5,200 Intel Corp. 402,675 402,675
2,800 2,800 International Business Machine 275,450 275,450
200 200 International Flavors & Fragrances, Inc. 7,650 7,650
67
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
700 700 International Game Technology $ 13,038 $ 13,038
100 100 International Multifoods Corp. 2,113 2,113
648 648 International Paper Co. 34,101 34,101
400 400 Interpublic Group Companies, Inc. 16,249 16,249
600 600 Interstate Bakeries Corp. 12,150 12,150
1,200 1,200 * Intuit, Inc. 34,949 34,949
200 200 Investment Technology Group, Inc. 5,275 5,275
600 600 IPALCO Enterprises, Inc. 12,263 12,263
100 100 ITT Industries, Inc. 3,419 3,419
700 700 * IVAX Corp. 12,294 12,294
300 300 J. P. Morgan & Co., Inc. 39,263 39,263
200 200 J.B. Hunt Transport Services, Inc. 2,575 2,575
400 400 J.C. Penney Co., Inc. 10,149 10,149
200 200 J.M. Smucker Co., Class A 3,975 3,975
500 500 * Jabil Circut, Inc. 26,124 26,124
200 200 * Jacobs Engineering Group, Inc. 7,100 7,100
200 200 Jefferson-Pilot Corp. 15,013 15,013
2,100 2,100 Johnson & Johnson 219,975 219,975
100 100 Johnson Controls, Inc. 6,075 6,075
800 800 * Jones Apparel Group, Inc. 25,300 25,300
850 850 K N Energy, Inc. 17,106 17,106
400 400 Kansas City Power & Light Co. 9,800 9,800
200 200 Kansas City Southern Industries, Inc. 9,488 9,488
100 100 Kaufman & Broad Home Corp. 2,006 2,006
200 200 Kaydon Corp. 4,963 4,963
600 600 * Keane, Inc. 14,100 14,100
600 600 Kellogg Co. 23,888 23,888
200 200 Kelly Services, Inc., Class A 5,863 5,863
300 300 Kennametal, Inc. 8,625 8,625
100 100 Kerr-McGee Corp. 5,375 5,375
700 700 KeyCorp 19,556 19,556
1,100 1,100 KeySpan Corp. 30,938 30,938
300 300 Keystone Financial, Inc. 7,519 7,519
800 800 Kimberly-Clark Corp. 50,500 50,500
100 100 * King World Productions, Inc. 3,875 3,875
100 100 * KLA-Tencor Corp. 7,919 7,919
800 800 * KMart Corp. 8,050 8,050
200 200 Knight-Ridder, Inc. 12,700 12,700
300 300 * Kohl's Corp. 22,444 22,444
1,300 1,300 * Kroger Co. 27,056 27,056
500 500 Laidlaw Inc. 3,063 3,063
300 300 Lancaster Colony Corp. 10,481 10,481
100 100 Lance, Inc. 1,206 1,206
200 200 * Land's End, Inc. 15,388 15,388
500 500 * Lear Corp. 16,875 16,875
200 200 Lee Enterprises, Inc. 5,900 5,900
600 600 * Legato Systems, Inc. 32,250 32,250
400 400 Legg Mason, Inc. 14,550 14,550
300 300 Leggett & Platt, Inc. 6,655 6,655
200 200 Lehman Brothers Holdings, Inc. 14,738 14,738
200 200 * Lexmark International Group 15,613 15,613
1,000 1,000 LG&E Energy Corp. 22,000 22,000
68
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
292 292 Limited, Inc. $ 12,009 $ 12,009
500 500 * Lincare Holdings, Inc. 14,063 14,063
300 300 Lincoln National Corp. 13,838 13,838
1,100 1,100 Linear Technology Corp. 76,930 76,930
300 300 * Litton Industries, Inc. 14,081 14,081
100 100 Liz Claiborne, Inc. 4,000 4,000
600 600 Lockheed Martin Corp. 12,000 12,000
200 200 Loews Corp. 14,175 14,175
300 300 * Lone Star Steakhouse & Saloon, Inc. 2,400 2,400
100 100 Longs Drug Stores Corp. 2,725 2,725
300 300 Longview Fibre Co. 3,413 3,413
200 200 Louisiana Pacific Corp. 2,538 2,538
600 600 Lowe's Companies, Inc. 33,000 33,000
200 200 * LSI Logic Corp. 10,638 10,638
400 400 Lubrizol Corp. 10,250 10,250
4,730 4,730 Lucent Technologies, Inc. 303,903 303,903
800 800 Lyondell Chemical Co. 9,700 9,700
400 400 M. A. Hanna Co. 4,275 4,275
200 200 * MagnaTek, Inc. 1,375 1,375
100 100 Mallinckrodt, Inc. 3,394 3,394
600 600 * Mandalay Resort Group 11,175 11,175
600 600 Manpower, Inc. 21,074 21,074
300 300 Mark IV Industries, Inc. 5,775 5,775
400 400 Marriott International, Inc. 13,475 13,475
400 400 Marsh & McLennan Companies, Inc. 31,625 31,625
700 700 Marshall & Ilsley Corp. 46,988 46,988
400 400 Martin Marietta Materials, Inc. 15,575 15,575
700 700 Masco Corp. 21,350 21,350
600 600 Mattel, Inc. 8,025 8,025
900 900 * Maxim Integrated Products, Inc. 71,044 71,044
500 500 May Department Stores Co. 17,347 17,347
100 100 Maytag Corp. 4,006 4,006
200 200 MBIA, Inc. 11,412 11,412
1,300 1,300 MBNA Corp. 35,913 35,913
500 500 McCormick & Co., Inc. 15,688 15,688
100 100 McDermott International, Inc. 1,813 1,813
2,100 2,100 McDonald's Corp. 86,625 86,625
300 300 McGraw-Hill, Inc. 17,888 17,888
2,900 2,900 * MCI Worldcom, Inc. 248,856 248,856
411 411 McKesson HBOC, Inc. 8,246 8,246
600 600 MCN Energy Group, Inc. 14,663 14,663
200 200 Mead Corp. 7,200 7,200
200 200 Media General, Inc., Class A 10,925 10,925
900 900 * Media One Group, Inc. 63,956 63,956
400 400 * Medimmune, Inc. 44,799 44,799
1,800 1,800 Medtronic, Inc. 62,325 62,325
800 800 Mellon Financial Corp. 29,550 29,550
600 600 * Mentor Graphics Corp. 4,838 4,838
500 500 Mercantile Bankshares Corp. 18,000 18,000
3,700 3,700 Merck & Co., Inc. 294,381 294,381
100 100 Meredith Corp. 3,569 3,569
400 400 Meritor Automotive, Inc. 6,775 6,775
69
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
600 600 Merrill Lynch & Co., Inc. $ 47,100 $ 47,100
200 200 MGIC Investment Corp. 11,950 11,950
200 200 * Micro Warehouse, Inc. 2,425 2,425
400 400 * Microchip Technology, Inc. 26,650 26,650
400 400 * Micron Technology, Inc. 28,525 28,525
8,000 8,000 * Microsoft Corp. 740,500 740,500
400 400 * Midamerican Energy Holdings Co. 13,450 13,450
300 300 * Millennium Pharmaceuticals, Inc. 21,038 21,038
100 100 Millipore Corp. 3,188 3,188
100 100 Minerals Technologies, Inc. 4,313 4,313
200 200 * MiniMed, Inc. 15,163 15,163
600 600 Minnesota Mining & Manufacturing Co. 57,038 57,038
400 400 Minnesota Power, Inc. 7,400 7,400
400 400 * Mirage Resorts, Inc. 5,825 5,825
1,200 1,200 Mobil Corp. 115,800 115,800
200 200 Modine Manufacturing Co. 4,975 4,975
700 700 * Modis Professional Services, Inc. 7,831 7,831
400 400 * Mohawk Industries, Inc. 9,175 9,175
1,000 1,000 Molex, Inc. 36,500 36,500
4 4 * Momentum Business Applications 31 31
1,000 1,000 Monsanto Co. 38,500 38,500
800 800 Montana Power Co. 22,750 22,750
900 900 Morgan Stanley Dean Witter Discover 99,281 99,281
900 900 Motorola, Inc. 87,694 87,694
300 300 Murphy Oil Corp. 16,819 16,819
900 900 Mylan Laboratories, Inc. 16,144 16,144
500 500 Nabisco Group Holdings Corp. 6,406 6,406
700 700 * Nabors Industries, Inc. 15,881 15,881
1,000 1,000 National City Corp. 29,500 29,500
700 700 National Commerce Bancorp 17,500 17,500
200 200 National Fuel Gas Co. 9,775 9,775
300 300 * National Semiconductor Corp. 8,981 8,981
100 100 National Service Industries, 3,225 3,225
300 300 * Navigant Consulting Co. 8,569 8,569
100 100 * Navistar International Corp. 4,169 4,169
200 200 * NCO Group, Inc. 8,475 8,475
700 700 * NCR Corp. 23,188 23,188
100 100 * Network Appliance, Inc. 7,400 7,400
1,000 1,000 * Networks Associates, Inc. 18,313 18,313
200 200 New Century Energies, Inc. 6,513 6,513
400 400 New England Electric System 20,825 20,825
300 300 New York Times Co., Class A 12,075 12,075
478 478 Newell Rubbermaid, Inc. 16,551 16,551
300 300 Newmont Mining Corp. 6,580 6,580
300 300 Newport News Shipbuilding, Inc. 9,113 9,113
600 600 * Nextel Communications, Inc., Class A 51,713 51,713
300 300 * Niagara Mohawk Holdings, Inc. 4,763 4,763
100 100 NICOR, Inc. 3,875 3,875
400 400 NIKE, Inc., Class B 22,574 22,574
1,000 1,000 Nisource, Inc. 20,500 20,500
500 500 Noble Affiliates, Inc. 12,655 12,655
900 900 * Noble Drilling Corp. 19,969 19,969
70
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
100 100 Nordson Corp. $ 4,431 $ 4,431
200 200 Nordstrom, Inc. 4,988 4,988
600 600 Norfolk Southern Corp. 14,663 14,663
2,100 2,100 Nortel Networks Corp. 130,069 130,069
1,000 1,000 North Fork Bancorporation, Inc. 20,688 20,688
800 800 * Northeast Utilities 16,650 16,650
200 200 Northern States Power Co. 4,300 4,300
200 200 Northern Trust Corp. 19,313 19,313
100 100 Northrop Grumman Corp. 5,488 5,488
600 600 * NOVA Corp. 15,600 15,600
500 500 * Novell, Inc . 10,031 10,031
250 250 * Novellus Systems, Inc. 19,374 19,374
100 100 Nucor Corp. 5,188 5,188
500 500 Occidental Petroleum Corp. 11,406 11,406
1,100 1,100 * Ocean Energy, Inc. 10,106 10,106
600 600 * Office Depot, Inc. 7,463 7,463
700 700 * OfficeMax, Inc. 3,544 3,544
400 400 Ogden Corp. 3,625 3,625
500 500 OGE Energy Corp. 11,344 11,344
500 500 Ohio Casualty Corp. 8,344 8,344
735 735 Old Kent Financial Corp. 29,951 29,951
1,000 1,000 Old Republic International Corp. 13,688 13,688
300 300 Olin Corp. 4,144 4,144
600 600 Olsten Corp. 6,038 6,038
700 700 Omnicare, Inc. 6,475 6,475
300 300 Omnicom Group, Inc. 26,400 26,400
2,250 2,250 * Oracle Corp. 107,016 107,016
100 100 Oregon Steel Mills, Inc. 844 844
450 450 * Outback Steakhouse, Inc. 10,350 10,350
200 200 Overseas Shipholding Group, Inc. 2,575 2,575
100 100 Owens Corning 2,050 2,050
200 200 * Owens-Illinois, Inc. 4,788 4,788
500 500 * Oxford Health Plans, Inc. 5,906 5,906
200 200 P.H. Glatfelter Co. 2,925 2,925
100 100 PACCAR, Inc. 4,713 4,713
500 500 Pacific Century Financial Corp. 11,406 11,406
300 300 * PacifiCare Health Systems, Inc., Class A 11,831 11,831
500 500 PacifiCorp 10,313 10,313
200 200 Paine Webber Group Inc. 8,150 8,150
200 200 Pall Corp. 4,388 4,388
300 300 * Papa Johns International, Inc. 11,213 11,213
400 400 * Parametric Technology Corp. 7,625 7,625
1,800 1,800 * Park Place Entertainment Corp. 23,624 23,624
200 200 Parker Hannifin Corp. 9,163 9,163
400 400 Paychex, Inc. 15,750 15,750
200 200 * Payless ShoeSource, Inc. 9,163 9,163
200 200 PE Corp PE Biosystems Group 12,975 12,975
300 300 Peco Energy Co. 11,456 11,456
610 610 Pennzoil-Quaker State Co. 7,206 7,206
300 300 Pentair, Inc. 11,288 11,288
100 100 Peoples Energy Corp. 3,800 3,800
400 400 * Peoplesoft, Inc. 6,000 6,000
71
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
100 100 Pep Boys-Manny, Moe & Jack (The) $ 1,250 $ 1,250
2,300 2,300 PepsiCo, Inc. 79,781 79,781
100 100 Perkinelmer, Inc. 4,081 4,081
500 500 * Perrigo Co. 3,781 3,781
6,100 6,100 Pfizer, Inc. 240,950 240,950
600 600 PG&E Corp. 13,763 13,763
800 800 Pharmacia & Upjohn, Inc. 43,150 43,150
112 112 Phelps Dodge Corp. 6,315 6,315
3,600 3,600 Philip Morris Companies, Inc. 90,675 90,675
400 400 Phillips Petroleum Co. 18,600 18,600
100 100 Pinnacle West Capital Corp. 3,688 3,688
700 700 * Pioneer Natural Resources Corp. 6,563 6,563
400 400 Pitney Bowes, Inc. 18,225 18,225
300 300 Pittston Brink's Group 5,756 5,756
500 500 Placer Dome, Inc. 6,063 6,063
300 300 PMI Group, Inc. 15,562 15,562
500 500 PNC Bank Corp. 29,813 29,813
100 100 Polaroid Corp. 2,231 2,231
300 300 * Policy Management Systems Corp. 5,756 5,756
900 900 Potomac Electric Power Co. 24,694 24,694
300 300 PP&L Resources, Inc. 8,119 8,119
300 300 PPG Industries, Inc. 18,188 18,188
200 200 Praxair, Inc. 9,350 9,350
200 200 Precision Castparts Corp. 5,900 5,900
500 500 Premark International, Inc. 27,374 27,374
600 600 * Premier Parks, Inc. 17,362 17,362
2,100 2,100 Procter & Gamble Co. 220,238 220,238
100 100 Progressive Corp. 9,256 9,256
600 600 * Promus Hotel Corp. 20,550 20,550
400 400 Protective Life Corp. 14,475 14,475
300 300 Provident Financial Group, Inc. 12,881 12,881
250 250 Providian Financial Corp. 27,250 27,250
600 600 * PSS World Medical, Inc. 4,650 4,650
300 300 Public Service Co. of New Mexico 5,363 5,363
300 300 Public Service Enterprise Group, Inc. 11,869 11,869
500 500 Puget Sound Energy, Inc. 11,063 11,063
100 100 Pulte Corp. 2,013 2,013
200 200 * QLogic Corp. 20,825 20,825
200 200 Quaker Oats Co. 14,000 14,000
200 200 * QUALCOMM, Inc. 44,550 44,550
1,200 1,200 Quantum Corp. - DLT & Storage Systems 18,525 18,525
600 600 * Quantum Corp. - Hard Disk Drive 3,675 3,675
500 500 Questar Corp. 9,000 9,000
800 800 * Quintiles Transnational Corp. 14,850 14,850
500 500 * Quorum Health Group, Inc. 4,000 4,000
200 200 R. R. Donnelley and Sons Co. 4,850 4,850
700 700 R.J. Reynolds Tobacco Holdings, Inc. 15,181 15,181
500 500 Ralston Purina Co. 15,719 15,719
600 600 * Rationale Software Corp. 25,649 25,649
200 200 Rayonier, Inc. 8,200 8,200
500 500 Raytheon Co., Class B 14,563 14,563
800 800 Reader's Digest Association, Inc.,
Class A 25,800 25,800
72
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
100 100 * Reebok International, Ltd. $ 981 $ 981
300 300 Regions Financial Corp. 9,019 9,019
500 500 Reliant Energy, Inc. 13,625 13,625
700 700 Reliastar Financial Corp. 30,055 30,055
200 200 Republic of New York Corp. 12,638 12,638
500 500 Reynolds and Reynolds Co., Class A 9,094 9,094
100 100 Reynolds Metals Co. 6,044 6,044
400 400 Rite Aid Corp. 3,500 3,500
133 133 RJ Reynolds Tobacco Holdings 2,884 2,884
600 600 * Robert Half International, Inc. 16,237 16,237
300 300 Rockwell International Corp. 14,531 14,531
373 373 Rohm and Haas Co. 14,268 14,268
100 100 Rollins, Inc. 1,569 1,569
800 800 Ross Stores, Inc. 16,500 16,500
100 100 * Rowan Companies, Inc. 1,556 1,556
3,400 3,400 Royal Dutch Petroleum Company New York 203,788 203,788
700 700 RPM, Inc. 8,356 8,356
300 300 Ruddick Corp. 5,119 5,119
100 100 Ryder System, Inc. 2,138 2,138
100 100 Ryerson Tull, Inc. 2,050 2,050
200 200 SAFECO Corp. 5,500 5,500
800 800 * Safeway, Inc. 28,250 28,250
1,000 1,000 * Saks, Inc. 17,187 17,187
400 400 * Sanmina Corp. 36,024 36,024
1,300 1,300 * Santa Fe Snyder Corp. 11,213 11,213
1,400 1,400 Sara Lee Corp. 37,888 37,888
5,337 5,337 SBC Communications, Inc. 271,853 271,853
800 800 Scana Corp. 19,900 19,900
2,300 2,300 Schering-Plough Corp. 113,850 113,850
900 900 Schlumberger, Ltd. 54,506 54,506
100 100 * Scholastic Corp. 4,650 4,650
500 500 * SCI Systems, Inc. 24,688 24,688
100 100 Scientific-Atlanta, Inc. 5,725 5,725
300 300 * Seagate Technology, Inc. 8,831 8,831
700 700 Seagram Co., Ltd. 34,563 34,563
200 200 * Sealed Air Corp. 11,075 11,075
600 600 Sears Roebuck and Co. 16,913 16,913
400 400 Sempra Energy 8,175 8,175
500 500 * Sensormatic Electronics Corp. 7,563 7,563
300 300 * Sepracor, Inc. 24,956 24,956
400 400 Service Corp. International 3,825 3,825
900 900 Shaw Industries, Inc. 13,893 13,893
300 300 Sherwin-Williams Co. 6,713 6,713
600 600 * Siebel Systems, Inc. 65,887 65,887
200 200 Sigma Aldrich Corp. 5,700 5,700
300 300 * Silicon Graphics, Inc. 2,325 2,325
300 300 SLM Holding Corp. 14,681 14,681
400 400 * Smith International, Inc. 13,825 13,825
100 100 Snap-on, Inc. 3,038 3,038
400 400 * Solectron Corp. 30,100 30,100
800 800 Solutia, Inc. 13,750 13,750
700 700 Sonoco Products Co. 16,800 16,800
73
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
400 400 Sotheby's Holdings, Inc., Class A $ 11,500 $ 11,500
300 300 Southdown, Inc. 14,494 14,494
1,100 1,100 Southern Co. 29,219 29,219
300 300 SouthTrust Corp. 12,000 12,000
750 750 Southwest Airlines Co. 12,609 12,609
1,100 1,100 Sovereign Bancorp, Inc. 9,694 9,694
1,300 1,300 Sprint Corp., FON Group 96,606 96,606
700 700 * Sprint Corp., PCS Group 58,056 58,056
200 200 * SPX Corp. 16,950 16,950
100 100 * St. Jude Medical, Inc. 2,738 2,738
400 400 St. Paul Companies, Inc. 12,800 12,800
200 200 Standard Register Co. 4,375 4,375
100 100 Stanley Works 2,775 2,775
700 700 * Staples, Inc. 15,531 15,531
1,200 1,200 * Starbucks Corp. 32,625 32,625
200 200 State Street Corp. 15,225 15,225
500 500 * Steris Corp. 6,656 6,656
700 700 * Sterling Commerce, Inc. 16,406 16,406
500 500 * Sterling Software, Inc. 10,969 10,969
300 300 Stewart & Stevenson Services, Inc. 3,975 3,975
900 900 Stewart Enterprises, Inc. 4,275 4,275
700 700 * Storage Technology Corp. 11,025 11,025
200 200 * Structural Dynamic Research 1,975 1,975
700 700 Stryker Corp. 43,224 43,224
300 300 * Suiza Foods Corp. 10,819 10,819
300 300 Summit Bancorporation 10,388 10,388
1,200 1,200 * Sun Microsystems, Inc. 126,975 126,975
900 900 * SunGard Data Systems, Inc. 21,994 21,994
100 100 Sunoco, Inc. 2,413 2,413
500 500 SunTrust Banks, Inc. 36,594 36,594
100 100 Superior Industries International, Inc. 2,669 2,669
200 200 Supervalu, Inc. 4,200 4,200
500 500 * Swift Transportation Co., Inc. 8,719 8,719
600 600 * Sybron International Corp. 14,288 14,288
300 300 * Sykes Enterprises, Inc. 9,263 9,263
400 400 * Sylvan Learning Systems, Inc. 5,175 5,175
400 400 * Symantec Corp. 19,100 19,100
700 700 Symbol Technologies, Inc. 27,825 27,825
500 500 * Synopsys, Inc. 31,155 31,155
400 400 Synovus Financial Corp. 8,575 8,575
500 500 SYSCO Corp. 19,219 19,219
200 200 T. Rowe Price Associates 7,100 7,100
300 300 Tandy Corp. 18,881 18,881
500 500 TCF Financial Corp. 14,750 14,750
400 400 * Tech Data Corp. 7,525 7,525
1,100 1,100 TECO Energy, Inc. 24,269 24,269
200 200 Tecumseh Products Co., Class A 9,588 9,588
100 100 Tektronix, Inc. 3,374 3,374
200 200 Teleflex, Inc. 6,813 6,813
400 400 Telephone and Data Systems, Inc. 46,100 46,100
600 600 * Tellabs, Inc. 37,950 37,950
100 100 Temple-Inland, Inc. 5,813 5,813
74
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
500 500 * Tenet Healthcare Corp. $ 9,719 $ 9,719
300 300 Tenneco, Inc. 4,800 4,800
1,200 1,200 * Teradyne, Inc. 46,200 46,200
800 800 Texaco, Inc. 49,100 49,100
1,200 1,200 Texas Instruments, Inc. 107,700 107,700
400 400 Texas Utilities Co. 15,500 15,500
200 200 Textron, Inc. 15,438 15,438
300 300 * Thermo Electron Corp. 4,050 4,050
100 100 Thomas & Betts Corp. 4,488 4,488
400 400 Tidewater, Inc. 12,000 12,000
400 400 Tiffany & Co. 23,800 23,800
2,100 2,100 Time Warner, Inc. 146,344 146,344
100 100 Times Mirror Co. 7,213 7,213
100 100 Timken Co. 1,794 1,794
500 500 TJX Companies, Inc. 13,563 13,563
200 200 Torchmark Corp. 6,238 6,238
500 500 Tosco Corp. 12,656 12,656
500 500 * Total Renal Care Holdings, Inc. 3,656 3,656
400 400 * Toys "R" Us, Inc. 5,650 5,650
300 300 * Transaction Systems Architects, Inc.,
Class A 9,225 9,225
700 700 Transocean Offshore, Inc. 19,031 19,031
400 400 Tribune Co. 24,000 24,000
200 200 * Tricon Global Restaurants Inc. 8,038 8,038
300 300 * Trigon Healthcare, Inc. 8,513 8,513
400 400 Trinity Industries, Inc. 11,925 11,925
200 200 TRW, Inc. 8,575 8,575
100 100 Tupperware Corp. 1,981 1,981
2,506 2,506 Tyco International, Ltd. 100,083 100,083
1,600 1,600 Tyson Foods, Inc., Class A 24,400 24,400
800 800 U. S. WEST, Inc. 48,850 48,850
100 100 * U.S. Airways Group, Inc. 2,800 2,800
1,100 1,100 U.S. Bancorp, Inc. 40,769 40,769
800 800 * U.S. Foodservice 15,350 15,350
300 300 * UCAR International, Inc. 5,869 5,869
700 700 Ultramar Diamond Shamrock Corp. 17,150 17,150
400 400 Unicom Corp. 15,325 15,325
400 400 * Unifi, Inc. 4,800 4,800
935 935 Unilever NV - ADR 62,353 62,353
200 200 Union Carbide Corp. 12,200 12,200
400 400 Union Pacific Corp. 22,300 22,300
400 400 Union Pacific Resources Group, Inc. 5,800 5,800
200 200 Union Planters Corp. 8,900 8,900
400 400 * Unisys Corp. 9,700 9,700
300 300 United HealthCare Corp. 15,506 15,506
800 800 United Technologies Corp. 48,400 48,400
600 600 Unitrin, Inc. 22,463 22,463
300 300 Universal Corp. 7,050 7,050
300 300 Universal Foods Corp. 5,738 5,738
600 600 * Univision Communications, Inc. 51,038 51,038
400 400 Unocal Corp. 13,800 13,800
373 373 UnumProvident Corp. 12,286 12,286
350 350 USG Corp. 17,347 17,347
75
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
300 300 UST, Inc. $ 8,306 $ 8,306
500 500 USX-Marathon Group 14,563 14,563
100 100 USX-US Steel Group, Inc. 2,556 2,556
600 600 UtiliCorp United, Inc. 12,975 12,975
200 200 V. F. Corp. 6,013 6,013
500 500 Valero Energy Corp. 9,188 9,188
400 400 * Varco International, Inc. 4,225 4,225
200 200 * Ventiv Health, Inc. 1,425 1,425
1,200 1,200 * Veritas Software Corp. 129,449 129,449
1,100 1,100 * Viacom, Inc., Class B 49,225 49,225
600 600 Viad Corp. 14,738 14,738
625 625 * Vishay Intertechnology, Inc. 15,273 15,273
400 400 * VISX, Inc. 25,024 25,024
1,000 1,000 * Vitesse Semiconductor Corp. 45,875 45,875
300 300 * Vlasic Foods International, Inc. 2,306 2,306
100 100 Vulcan Materials Co. 4,131 4,131
100 100 * W. R. Grace & Co. 1,494 1,494
100 100 W. W. Grainger, Inc. 4,238 4,238
300 300 Wachovia Corp. 25,875 25,875
1,600 1,600 Walgreen Co. 40,300 40,300
300 300 Wallace Computer Services, Inc. 6,638 6,638
7,000 7,000 Wal-Mart Stores, Inc. 399,875 399,875
3,200 3,200 * Walt Disney Co. 84,400 84,400
500 500 Warnaco Group, Inc., Class A 7,125 7,125
1,300 1,300 Warner-Lambert Co. 103,756 103,756
300 300 Washington Gas Light Co. 8,156 8,156
900 900 Washington Mutual, Inc. 32,344 32,344
900 900 Waste Management, Inc. 16,538 16,538
500 500 * Waters Corp. 26,563 26,563
200 200 * Watson Pharmaceuticals, Inc. 6,350 6,350
300 300 Wausau-Mosinee Paper Corp. 3,788 3,788
700 700 Weatherford International, Inc. 23,713 23,713
250 250 Webster Financial Corp. 7,156 7,156
300 300 Wellman, Inc. 4,519 4,519
100 100 * Wellpoint Health Networks, Inc. 5,800 5,800
2,600 2,600 Wells Fargo Co. 124,475 124,475
200 200 Wendy's International, Inc. 4,775 4,775
300 300 Westamerica Bankcorporation 10,331 10,331
400 400 WestPoint Stevens, Inc., Class A 7,575 7,575
100 100 Westvaco Corp. 2,969 2,969
300 300 * Westwood One, Inc. 13,838 13,838
300 300 Weyerhaeuser Co. 17,906 17,906
100 100 Whirlpool Corp. 6,969 6,969
800 800 Whitman Corp. 10,400 10,400
200 200 Willamette Industries, Inc. 8,313 8,313
700 700 Williams Companies, Inc. 26,250 26,250
400 400 * Williams-Sonoma, Inc. 21,500 21,500
200 200 Wilmington Trust Corp. 10,850 10,850
200 200 Winn-Dixie Stores, Inc. 5,413 5,413
300 300 * Wisconsin Central Transportation Corp. 4,163 4,163
700 700 Wisconsin Energy Corp. 15,663 15,663
200 200 Wm. Wrigley Jr. Co. 15,988 15,988
76
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- --------------------------------------
AGSPC 2 AGSPC 2 AGSPC 2 AGSPC 2
Stock Index Mid Cap Index Combined Stock Index Mid Cap Index Combined
----------- ------------- -------- ----------- ------------- --------
Common Stock - continued
100 100 Worthington Industries, Inc. 1,663 1,663
1,000 1,000 Xerox Corp. 28,000 28,000
1,100 1,100 * Xilinx, Inc. 86,487 86,487
300 300 York International Corp. 7,069 7,069
600 600 Zions Bancorporation 35,363 35,363
-------------------------------------
Total Common Stocks $17,559,568 $5,879,760 23,439,328
(Cost $16,188,744, $5,726,556 & -------------------------------------
$21,915,300 respectively)
COST AND PAR VALUE
- ---------------------------------------
REPURCHASE AGREEMENT -
$2,860,000 $1,660,000 $4,520,000 State Street Bank Repurchase
Agreement, 5.15%, dated 10/31/99
collateralized by U.S. Treasury
Notes $2,860,000 $1,660,000 $4,520,000
-------------------------------------
U. S. GOVERNMENT - SHORT TERM
United States Treasury Bills:
$75,000 $50,000 $125,000 4.51% due 12/09/99 $74,642 $49,762 $124,404
50,000 50,000 4.50% due 12/09/99 49,762 49,762
50,000 50,000 4.48% due 11/12/99 49,932 49,932
10,000 10,000 4.45% due 11/12/99 9,986 9,986
50,000 50,000 4.44% due 12/09/99 49,765 49,765
TOTAL U.S. GOVERNMENT - SHORT TERM $174,336 $109,513 $283,849
(Cost $174,336, $109,513 &
$283,849 respectively)
TOTAL INVESTMENTS 20,593,904 7,649,273 28,243,177
(Cost $19,223,080, $7,496,069 &
$26,719,149 respectively)
* Non-income producing
77
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Stock Index Fund,
American General Series Portfolio Company 2 Stock Index Fund
American General Series Portfolio Company 2 Mid Cap Index Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Stock Index Fund ("Shell Fund") is a series of North American
Funds, 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 Shell Fund after giving effect to its proposed
acquisition of American General Series Portfolio Company 2 Mid Cap Index Fund
("Mid Cap Index") and American General Series Portfolio Company 2 Stock Index
Fund ("Stock Index") 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 Shell Fund in exchange for shares of Stock Index and Mid
Cap Index 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 Stock Index and Mid Cap Index
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 of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements of Mid Cap Index and Stock Index 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 or the American
General Series Portfolio Company 2 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 Mid Cap Index
shares and Stock Index shares based upon the net asset value of the Stock Index
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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for Shell Fund at the time of the Reorganization at the combined level
of average net assets for the twelve month period ended October 31, 1999.
78
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American
General
Series
Portfolio 2 North American
Balanced Balanced Pro-forma Pro-forma
ASSETS: Fund Fund Adjustments Combined
---- ---- ----------- --------
Investments in securities, at value ............................... $11,247,337 $71,769,480 $83,016,817
Cash .............................................................. -- 660 660
Foreign currency .................................................. 7,820
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for securities on
loan, at value ................................................. -- 5,183,450 5,183,450
Receivables:
Investments sold ............................................ 132,078 1,770,989 1,903,067
Fund shares sold ............................................ 80,866 9,923 90,789
Dividends ................................................... 61,627 52,772 114,399
Interest .................................................... -- 760,414 760,414
Foreign tax withholding reclaims ............................ 6,899 6,899
Other assets ...................................................... 24,553 1,476 26,029
------------ ------------ ------------ ------------
Total assets .......................................... 11,546,461 79,563,883 -- 91,110,344
LIABILITIES:
Collateral on securities loaned, at value ......................... -- 5,183,450 5,183,450
Payables:
Investments purchased ....................................... 55,750 572,265 628,015
Fund shares redeemed ........................................ 100,050 36,583 136,633
Dividend and interest withholding tax ....................... -- 1,156 1,156
Investment adviser .......................................... 59,766 49,057 108,823
Custodian and transfer agent fees ........................... -- 11,591 11,591
Distribution fee ............................................ 4,366 14,139 18,505
Other accrued expenses ...................................... 27,968 32,706 60,674
------------ ------------ ------------ ------------
Total liabilities ..................................... 247,900 5,900,947 -- 6,148,847
NET ASSETS ........................................................ $11,298,561 $73,662,936 $0 $84,961,497
============ ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) .................. $2,505 $1,271,183 $1,273,688
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ....................................... 228,864 8,646,672 8,875,536
Unrealized appreciation (depreciation) on:
Investments .............................................. 412,696 (1,896,585) (1,483,889)
Futures .................................................. -- --
Foreign currency and forward foreign currency contracts .. (133) (133)
Capital shares at par value of $.001 ........................ 9,950 6,940 (8,879)(1) 8,011
Additional paid-in capital .................................. 10,644,546 65,534,859 8,879(1) 76,188,284
------------ ------------ ------------ ------------
Net assets ............................................ $11,298,561 $73,562,936 $0 $84,861,497
============ ============ ============ ============
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
79
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American
General
Series
Portfolio 2 North American
Balanced Balanced Pro-forma Pro-forma
Fund Fund Adjustments Combined
---- ---- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value ............................................ $ 1,808,620 $ 5,936,108 $ 7,744,728
Shares outstanding ............................................. 159,216 561,872 12,055(1) 733,143
Net asset value (NAV) and redemption price per share ............. $ 11.36 $ 10.56 $ 10.56
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced ..... $ 12.05 $ 11.20 $ 11.20
Class B Shares
Net assets at value ............................................ $ 6,260,659 $13,957,744 $20,218,403
Shares outstanding ............................................. 551,562 1,330,817 45,260(1) 1,927,639
Net asset value, offering price and redemption price per share ... $ 11.35 $ 10.49 $ 10.49
Class C Shares
Net assets at value ............................................ $ -- $53,669,084 $53,669,084
Shares outstanding ............................................. -- 5,046,875 -- 5,046,875
Net asset value, offering price and redemption price per share ... $ -- $ 10.63 $ 10.63
Class I Shares
Net assets at value ............................................ $ 1,777,070 0 $ 1,777,070
Shares outstanding ............................................. 156,355 0 10,820(1) 167,175
Net asset value, offering price and redemption price per share ... $ 11.37 $ -- $ 10.63
Class II Shares
Net assets at value ............................................ $ 1,452,302 $ -- $ 1,452,302
Shares outstanding ............................................. 127,884 8,739(1) 136,623
Net asset value, offering price and redemption price per share ... $ 11.36 $ -- -- $ 10.63
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
80
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American
General
Series
Portfolio 2 North American
Balanced Balanced Pro-forma Pro-forma
Fund Fund Adjustments Combined
---- ---- ----------- --------
INVESTMENT INCOME:
Interest ......................................................... $178,717 $2,451,719 $2,630,436
Dividends ........................................................ 51,583 845,697 897,280
----------- ----------- ----------- -----------
Total income .................................................. 230,300 3,297,416 -- 3,527,716
EXPENSES:
Distribution for Class A ......................................... 3,924 41,514 1,570(1) 47,008
Distribution for Class B ......................................... 29,389 170,727 200,116
Distribution for Class C ......................................... -- 616,807 616,807
Investment adviser fee ........................................... 59,766 681,955 (3,735)(2) 737,986
Custodian fee .................................................... 9,757 58,065 67,822
Transfer agent fee ............................................... 19,973 129,193 149,166
Accounting/administration ........................................ 5,839 140,051 (5,000)(3) 140,890
Audit and legal fees ............................................. 4,392 46,612 (3,500)(3) 47,504
Miscellaneous .................................................... 60,306 76,717 (50,000)(4) 87,023
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser .............. 193,346 1,961,641 (60,666) 2,094,321
Reimbursement of expenses by investment adviser .................. (96,903) (190,199) 75,666(5) (211,436)
----------- ----------- ----------- -----------
Net expenses ............................................ 96,443 1,771,442 15,000 1,882,885
----------- ----------- ----------- -----------
Net investment income/(loss) ............................ 133,857 1,525,974 (15,000) 1,644,831
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ....................................... 229,026 9,063,680 9,292,706
Futures contracts ............................................. -- --
Foreign currency and forward foreign currency contracts ....... -- (43,308) (43,308)
Change in unrealized appreciation (depreciation) on:
Investments ................................................... 412,696 (9,389,607) (8,976,911)
Futures contracts ............................................. -- --
Translation of foreign currency and forward foreign currency
contracts .................................................. -- (920) (920)
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ............... 641,722 (370,155) -- 271,567
Net increase in net assets resulting from operations ................ $775,579 $1,155,819 -- $1,916,398
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds
are combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
81
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Balanced Balanced Combined Balanced Balanced Combined
-------- -------- -------- -------- -------- --------
COMMON STOCK
56,800 56,800 Abbott Laboratories $2,293,300 $2,293,300
900 900 Adelphia Communications Corp., Class A * $ 49,163 49,163
1,700 1,700 AES Corp. * 95,944 95,944
31,447 31,447 Albertson's, Inc. 1,141,919 1,141,919
400 400 Alcoa, Inc. 24,300 24,300
600 600 Allstate Corp. 17,250 17,250
1,600 1,600 American Electric Power, Inc. 55,200 55,200
1,600 1,600 American Greetings Corp., Class A 41,400 41,400
800 800 Applied Materials, Inc. * 71,850 71,850
57,600 57,600 Archer Daniels Midland Company 709,200 709,200
2,456 2,456 Astrazeneca, Plc. - ADR 112,362 112,362
1,850 1,850 AT&T Corp. 86,488 86,488
3,800 3,800 AT&T Corp. - Libery Media Group * 150,812 150,812
1,900 1,900 Autodesk, Inc. 35,625 35,625
6,200 6,200 Autonation, Inc. * 62,388 62,388
39,800 39,800 B.F. Goodrich Company 942,762 942,762
1,900 1,900 Baker Hughes, Inc. 53,081 53,081
2,800 2,800 Bank of America Corp. 180,250 180,250
12,200 12,200 Baxter International, Inc. 791,475 791,475
1,800 30,500 32,300 Beckton Dickinson & Co. 45,675 773,937 819,612
12 12 Berkshire Hathaway, Inc. * 25,080 25,080
1 1 Berkshire Hathaway, Inc., Class A * 63,900 63,900
700 700 Black & Decker Corp. 30,100 30,100
1,000 1,000 Blockbuster, Inc. 12,125 12,125
2,000 2,000 Boeing Co. 92,125 92,125
1,700 1,700 Bowater, Inc. 89,250 89,250
1,000 1,000 Burlington Resources, Inc. 34,874 34,874
1,500 1,500 Cablevision Systems Corp., Class A * 101,344 101,344
3,800 3,800 Cadence Design Systems, Inc. * 57,713 57,713
2,700 2,700 Campbell Soup Co. 121,500 121,500
2,000 2,000 Carnival Corp., Class A 89,000 89,000
2,500 2,500 Cincinnati Financial Corp. 89,531 89,531
600 600 Circuit City Stores, Inc. 25,613 25,613
2,550 2,550 Citigroup, Inc. 138,019 138,019
2,700 32,200 34,900 Clorox Company 110,531 1,318,188 1,428,719
38,800 38,800 Coastal Corp. 1,634,450 1,634,450
1,100 1,100 Coca-Cola Co. 64,900 64,900
36,900 36,900 Columbia Energy Group 2,398,500 2,398,500
2,500 2,500 Conagra, Inc. 65,156 65,156
127,300 127,300 Conoco, Inc. 3,492,794 3,492,794
800 800 Continental Airlines, Inc., Class B * 32,400 32,400
300 300 Delphi Automotive Systems Corp. 4,931 4,931
21,975 21,975 Dial Corp. 513,666 513,666
1,900 1,900 Dover Corp. 80,869 80,869
2,500 2,500 Ecolab, Inc. 84,531 84,531
600 600 Emerson Electric Co. 36,038 36,038
1,300 1,300 Exxon Corp. 96,281 96,281
2,900 2,900 Federal-Mogul Corp. 72,863 72,863
1,800 1,800 Forest Laboratories, Inc. * 82,575 82,575
82
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Balanced Balanced Combined Balanced Balanced Combined
-------- -------- -------- -------- -------- --------
COMMON STOCK - continued
2,700 2,700 Fort James Corp. 71,043 71,043
5,100 5,100 Fox Entertainment Group, Inc. * 110,287 110,287
55,600 55,600 Franco Nevada Mining Ltd. 1,031,239 1,031,239
1,500 1,500 Galileo International, Inc. 45,094 45,094
600 600 Gateway, Inc. * 39,638 39,638
500 500 General Electric Co. 67,780 67,780
19,150 19,150 Glaxo Wellcome Plc 1,146,606 1,146,606
82,700 82,700 Granada Group 656,361 656,361
2,900 2,900 Guidant Corp. 143,188 143,188
3,500 3,500 Hasbro, Inc. 72,188 72,188
1,100 1,100 Hewlett Packard Co. 81,468 81,468
2,400 2,400 Household International, Inc. 107,100 107,100
1,100 1,100 Illinois Tool Works, Inc. 80,575 80,575
2,000 4,100 6,100 IMC Global, Inc. 25,500 $52,275 77,775
2,500 2,500 Indymac Mortgage Holdings, Inc. 34,844 34,844
800 800 Intel Corp. 61,950 61,950
800 800 International Business Machines 78,700 78,700
1,200 1,200 Jefferson-Pilot Corp. 90,074 90,074
3,500 3,500 Kellogg Co. 139,343 139,343
300 300 Kimberly-Clark Corp. 18,938 18,938
700 700 KLA-Tencor Corp. * 55,430 55,430
1,600 1,600 KN Energy, Inc. 32,200 32,200
27,600 27,600 Lafarge Corporation 819,375 819,375
400 400 Lincoln National Corp. 18,450 18,450
1,600 1,600 Lowe's Companies, Inc. 88,000 88,000
3,100 3,100 Mallinckrodt, Inc. 105,206 105,206
1,000 1,000 Maxim Integrated Products, Inc. * 78,937 78,937
1,000 1,000 MCI Worldcom, Inc. * 85,813 85,813
1,600 1,600 Medtronic, Inc. 55,400 55,400
16,400 16,400 Merck & Company, Inc. 1,304,825 1,304,825
31,725 31,725 Merck KGAA 1,094,534 1,094,534
1,500 36,300 37,800 Mirage Resorts, Inc. * 21,844 528,619 550,463
300 300 Mobil Corp. 28,950 28,950
900 900 New York Times Co., Class A 36,225 36,225
900 900 Niagara Mohawk Holdings, Inc. * 14,288 14,288
800 800 Nokia Corp. - ADR, Class A 92,450 92,450
4,300 4,300 Northeast Utilities * 89,494 89,494
700 700 PacifiCare Health Systems, Inc., Class A* 27,606 27,606
1,000 1,000 PE Corp - PE Biosystems Group 64,875 64,875
3,500 3,500 Peoplesoft, Inc. * 52,500 52,500
2,300 2,300 PepsiCo, Inc. 79,781 79,781
2,100 2,100 Pfizer, Inc. 82,950 82,950
13,900 13,900 Pharmacia & Upjohn, Inc. 749,731 749,731
2,200 2,200 Philip Morris Companies, Inc. 55,413 55,413
7,800 7,800 Phillips Petroleum Co. 362,700 362,700
111,900 111,900 Placer Dome, Inc. 1,356,787 1,356,787
1,350 1,350 PMI Group, Inc. 70,031 70,031
2,200 2,200 Policy Management Systems Corp. * 42,213 42,213
13,550 13,550 Potash Corporation of Saskatchewan, Inc. 598,741 598,741
83
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Balanced Balanced Combined Balanced Balanced Combined
-------- -------- -------- -------- -------- --------
COMMON STOCK - continued
10,700 10,700 Precision Castparts, Inc. 315,650 315,650
5,900 5,900 Quintiles Transnational Corp. * 109,518 109,518
6,400 6,400 Scana Corporation 159,200 159,200
1,300 1,300 Sealed Air Corp. * 71,988 71,988
2,700 2,700 Shell Transport & Trading - ADR 123,863 123,863
2,400 2,400 SLM Holding Corp. 117,449 117,449
600 600 Sony Corp. 95,850 95,850
2,300 2,300 Sprint Corp. FON Group 170,919 170,919
1,000 1,000 Starbucks Corp. * 27,188 27,188
1,300 1,300 Storage Technology Corp. * 20,475 20,475
1,900 1,900 Teradyne, Inc. * 73,150 73,150
14,900 14,900 Texaco, Inc. 914,488 914,488
400 400 Textron, Inc. 30,875 30,875
500 500 Time Warner, Inc. 34,844 34,844
2,500 2,500 Tommy Hilfiger Corp. * 70,625 70,625
2,000 2,000 Tyco International, Ltd. 79,875 79,875
21,300 21,300 U.S. West, Inc. 1,300,631 1,300,631
1,000 1,000 United HealthCare Corp. 51,688 51,688
1,900 1,900 United Technologies Corp. 114,950 114,950
1,600 1,600 USX-Marathon Group 46,600 46,600
900 900 V. F. Corp. 27,056 27,056
2,800 2,800 Viacom, Inc., Class B * 125,300 125,300
1,000 1,000 Vodafone Airtouch, Plc. - ADR 47,938 47,938
1,000 1,000 Wal-Mart Stores, Inc. 57,125 57,125
12,700 12,700 Warner Lambert 1,013,619 1,013,619
2,500 2,500 Washington Mutual, Inc. 89,844 89,844
2,500 2,500 Wells Fargo Co. 119,688 119,688
200 200 Williams Communications Group, Inc. * 6,375 6,375
1,700 1,700 Williams Companies, Inc. 63,750 63,750
2,200 2,200 Xerox Corp. 61,600 61,600
1,500 60,210 61,710 XL Capital, Ltd. 80,531 3,232,524 3,313,055
1,500 1,500 Young & Rubicam, Inc. 68,625 68,625
TOTAL COMMON STOCK $7,146,130 $32,818,458 $39,964,588
(Cost - $6,652,006, $34,335,615 & $40,987,621,
resepectively)
PAR VALUE MARKET VALUE
- --------------------------------------- ------------------------------------
BONDS
Charter Communications Holding,
$ 100,000 $ 100,000 8.25% due 04/01/07 $ 95,000 $ 95,000
Continential Airlines,
99,987 99,987 7.08% due 11/01/04 $96,405 96,405
Discover Card Master Trust I,
100,000 100,000 5.60% due 05/15/06 96,050 96,050
Federal Home Loan Bank,
100,000 100,000 5.13% due 09/15/03 95,766 95,766
Federal Home Loan Mortgage Corporation
$1,600,000 1,600,000 6.45% due 04/29/09 $1,519,248 1,519,248
84
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
PAR VALUE MARKET VALUE
- --------------------------------------- ------------------------------------
North North
AGSPC2 American AGSPC2 American
Balanced Balanced Combined Balanced Balanced Combined
-------- -------- -------- -------- -------- --------
BONDS - continued
Federal National Mortgage Association,
400,000 400,000 6.00% due 05/15/08 381,248 381,248
Fox/Liberty Networks, LLC,
100,000 100,000 zero coupon due 08/15/07 78,500 78,500
Government Lease Trust 1999-GSA1, Series A2,
100,000(1) 100,000 6.18% due 05/18/05 96,820 96,820
Government National Mortgage Association:
248,544 248,544 6.50% due 06/15/29 237,513 237,513
203,815 203,815 7.00% due 12/15/22 201,300 201,300
497,385 497,385 7.00% due 11/25/28 487,900 487,900
Green Tree Financial Corp., Series A,
100,000 100,000 7.14% due 01/15/29 99,937 99,937
Household Finance Corp.,
100,000 100,000 6.40% due 06/17/08 94,468 94,468
McKesson Corp.,
100,000 100,000 6.30% due 03/01/05 91,278 91,278
Morgan Stanley Capital,
93,893 93,893 6.01% due 11/15/30 90,168 90,168
Nabisco, Inc.,
100,000 100,000 7.55% due 06/15/15 95,877 95,877
Ontario Province
1,330,000 1,330,000 6.125% due 09/12/07 893,239 893,239
1,405,000 1,405,000 6.500% due 03/08/29 943,065 943,065
Reliastar Financial Corp.,
100,000 100,000 8.00% due 10/30/06 100,026 100,026
Spectrasite Holdings, Inc.,
100,000 100,000 zero coupon due 07/15/08 56,250 56,250
United States Treasury Notes:
1,000,000 1,000,000 5.375% due 06/30/03 981,560 981,560
3,400,000 3,400,000 5.50% due 02/15/08 3,261,348 3,261,348
3,820,000 3,820,000 5.625% due 05/15/08 3,685,689 3,685,689
985,000 985,000 5.75% due 11/30/02 980,843 980,843
4,115,000 4,115,000 5.875% due 02/15/04 4,103,437 4,103,437
3,950,000 3,950,000 6.25% due 06/30/02 3,984,563 3,984,563
100,000 100,000 6.38% due 08/15/02 101,234 101,234
1,000,000 1,000,000 6.625% due 03/31/02 1,016,560 1,016,560
3,130,000 3,130,000 6.625% due 04/30/02 3,184,274 3,184,274
4,800,000 4,800,000 6.875% due 05/15/06 4,981,488 4,981,488
700,000 700,000 6.88% due 05/15/06 726,467 726,467
4,300,000 4,300,000 7.25% due 05/15/04 4,506,916 4,506,916
1,300,000 1,300,000 7.25% due 08/15/04 1,364,792 1,364,792
TOTAL BONDS $3,322,207 $35,407,022 $38,729,229
(Cost - $3,403,635, $35,786,450 & $39,190,085,
respectively)
85
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
PAR VALUE MARKET VALUE
- --------------------------------------- ------------------------------------
North North
AGSPC2 American AGSPC2 American
Balanced Balanced Combined Balanced Balanced Combined
-------- -------- -------- -------- -------- --------
SHORT TERM INVESTMENTS
$ 1,000 $ 1,000 SSGA Money Market Fund $ 1,000 $ 1,000
(Cost - $1000)
REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust Company dated 10/29/99 at 4.25%, to be
repurchased at $3,544,255 on 11/01/99,
collateralized by $3,605,000 U.S. Treasury
Notes, 4.00% due 10/31/00 (valued at
$3,543,000 $3,543,000 $5,489,730, including interest) $ 3,543,000 3,543,000
State Street Bank Repurchase Agreement,
5.15%, dated 10/31/99, to be
repurchased at $779,334 on 11/01/99,
collateralized by U.S. Treasury Note,
5.38%, 07/31/00, with a par value of
$790,000 (Cost $779,000) $ 779,000 $ 779,000
Total Repurchase Agreement $ 779,000 $ 3,543,000 $ 4,322,000
(Cost - $3,543,000, $779,000 & $4,322,000,
respectively)
TOTAL SHORT TERM INVESTMENTS $ 779,000 $ 3,544,000 $ 4,323,000
TOTAL INVESTMENTS $11,247,337 $71,769,480 $83,016,817
(Cost - $10,834,641, $73,666,065 &
$84,500,706, respectively)
*Non-income producing
86
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Balanced Fund and
American General Series Portfolio Company 2 Balanced Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Balanced Fund ("NAF") is a series of North American Funds, 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 American General Series Portfolio
Company 2 Balanced Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
87
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2 North American
International International International Pro-forma Pro-forma
ASSETS: Growth Fund Value Fund Equity Fund** Adjustments Combined
----------- ---------- ------------- ----------- --------
Investments in securities, at value .................... $7,607,141 $9,636,258 $25,628,249 $42,871,648
Receivable for forward foreign currency contracts
to sell ............................................. -- -- 3,979,413 3,979,413
Forward foreign currency contracts to buy, at value .... 4,109,593 4,109,593
Cash ................................................... -- -- 385 385
Foreign currency ....................................... -- -- 138,372 138,372
Investment in State Street Bank & Trust Company
Navigator Securities Lending Trust held as collateral
for securities on loan, at value .................... -- -- 3,922,082 3,922,082
Variation margin receivable for open futures contracts . -- -- 151,098 151,098
Receivables:
Investments sold ................................. 43,903 115,160 -- 159,063
Fund shares sold ................................. 5,931 17,786 13,508 37,225
Dividends ........................................ 3,975 7,322 35,880 47,177
Interest ......................................... -- -- 259 259
Foreign tax withholding reclaims ................. -- -- 16,475 16,475
Other assets ........................................... 33,657 19,758 41,522 94,937
----------- ----------- ----------- ----------- -----------
Total assets ............................... 7,694,607 9,796,284 38,036,836 -- 55,527,727
LIABILITIES:
Forward foreign currency contracts to sell, at value ... 3,993,804 3,993,804
Collateral on securities loaned, at value .............. -- -- 3,922,082 3,922,082
Payables:
Forward foreign currency contracts to buy ........ 4,105,676 4,105,676
Investments purchased ............................ 164,866 122,295 1,012,385 1,299,546
Fund shares redeemed ............................. -- 11,951 22,188 34,139
Dividend and interest withholding tax ............ -- -- 4,607 4,607
Investment adviser ............................... 55,526 70,660 13,631 139,817
Custodian and transfer agent fees ................ -- -- 3,687 3,687
Distribution fee ................................. 2,262 2,770 11,254 16,286
Other accrued expenses ........................... 35,475 50,860 1,543 87,878
----------- ----------- ----------- ----------- -----------
Total liabilities .......................... 258,129 258,536 13,090,857 -- 13,607,522
NET ASSETS ............................................. $7,436,478 $9,537,748 $24,945,979 $0 $41,920,205
=========== =========== =========== =========== ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ....... $26,950 $5,369 $53,768 $86,087
Accumulated undistributed net realized gain (loss)
on investments, foreign currency and forward
foreign currency contracts .................... 156,954 281,880 1,830,855 2,269,689
Unrealized appreciation (depreciation) on:
Investments ................................... 674,057 2,162,620 2,146,348 4,983,025
Futures ....................................... -- -- (27,820) (27,820)
Foreign currency and forward foreign
currency contracts ......................... (6,841) (12,515) (19,356)
Capital shares at par value of $.001 ............. 6,485 6,639 2,121 (11,979)(1) 3,266
Additional paid-in capital ....................... 6,572,032 7,088,081 20,953,222 11,979(1) 34,625,314
----------- ----------- ----------- ----------- -----------
Net assets ................................. $7,436,478 $9,537,748 $24,945,979 $0 $41,920,205
=========== =========== =========== =========== ===========
** Formerly the International Growth and Income Fund
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
88
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2 North American
International International International Pro-forma Pro-forma
NET ASSET VALUES: Growth Fund Value Fund Equity Fund** Adjustments Combined
----------- ---------- ------------- ----------- --------
Class A Shares
Net assets at value .......................................... $ 1,649,699 $ 1,936,053 $ 5,970,129 $ 9,555,881
Shares outstanding ........................................... 143,491 134,284 322,314 50,124(1) 515,929
Net asset value (NAV) and redemption price per share ........... $ 11.50 $ 14.42 $ 18.52 $ 18.52
Public offering price per share (100/94.25 of NAV)
On sales of $100,000 or more the offering price is reduced ... $ 12.20 $ 15.30 $ 19.65 $ 19.65
Class B Shares
Net assets at value .......................................... $ 2,826,092 $ 3,730,989 $17,184,297 $23,741,378
Shares outstanding ........................................... 247,958 261,392 955,434 1,072,045(1) 1,320,003
Net asset value, offering price and redemption price per share . $ 11.40 $ 14.27 $ 17.99 $ 17.99
Class C Shares
Net assets at value .......................................... $ -- $ -- $18,938,549 $18,938,549
Shares outstanding ........................................... -- -- 1,051,128 -- 1,051,128
Net asset value, offering price and redemption price per share . $ -- $ -- $ 18.02 $ 18.02
Class I Shares
Net assets at value .......................................... $ 1,487,026 $ 2,132,125 0 $ 3,619,151
Shares outstanding ........................................... 129,227 147,864 0 71,614(1) 200,841
Net asset value, offering price and redemption price per share . $ 11.51 $ 14.42 $ -- $ 18.02
Class II Shares
Net assets at value .......................................... $ 1,473,661 $ 1,738,581 $ -- $ 3,212,242
Shares outstanding ........................................... 127,792 120,325 50,468(1) 178,260
Net asset value, offering price and redemption price per share . $ 11.53 $ 14.45 $ -- -- $ 18.02
** Formerly the International Growth and Income Fund.
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
89
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American American
General General
Series Series
Portfolio 2 Portfolio 2 North American
International International International Pro-forma Pro-forma
Growth Fund Value Fund Equity Fund** Adjustments Combined
----------- ---------- ------------- ----------- --------
INVESTMENT INCOME:
Interest .............................................. $24,816 $21,400 $41,854 $88,070
Dividends ............................................. 117,526 90,041 453,691 661,258
---------- ---------- ---------- ---------- ----------
Total income ....................................... 142,342 111,441 495,545 0 749,328
EXPENSES:
Distribution for Class A .............................. 3,401 3,709 13,640 2,844(1) 23,594
Distribution for Class B .............................. 16,888 18,850 145,027 180,765
Distribution for Class C .............................. -- -- 72,373 72,373
Investment adviser fee ................................ 52,251 66,958 230,737 (6,696)(2) 343,250
Custodian fee ......................................... 7,844 8,884 36,313 53,041
Transfer agent fee .................................... 15,736 17,843 61,348 94,927
Accounting/administration ............................. 5,021 5,715 39,260 (5,000)(3) 44,996
Audit and legal fees .................................. 3,488 3,978 13,198 (3,500)(3) 17,164
Miscellaneous ......................................... 58,096 58,569 35,271 (60,000)(4) 91,936
---------- ---------- ---------- ---------- ----------
Expenses before reimbursement by investment adviser ... 162,725 184,506 647,167 (72,352) 922,046
Reimbursement of expenses by investment adviser ....... (74,126) (89,115) (58,359) 110,352(5) (111,248)
---------- ---------- ---------- ---------- ----------
Net expenses ................................. 88,599 95,391 588,808 38,000 810,798
---------- ---------- ---------- ---------- ----------
Net investment income/(loss) ................. 53,743 16,050 (93,263) (38,000) (61,470)
---------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ............................ 156,954 281,880 2,202,524 2,641,358
Foreign currency and forward foreign currency
contracts ........................................ (24,661) (9,092) (147,079) (180,832)
Change in unrealized appreciation (depreciation) on:
Investments ........................................ 674,057 2,162,620 2,776,922 5,613,599
Foreign currency and forward foreign currency
contracts ........................................ -- (6,841) 127,819
---------- ---------- ---------- ---------- ----------
Net gain/(loss) on investments, foreign
currency and forward foreign currency
contracts .................................. 806,350 2,435,408 4,832,367 -- 8,074,125
Net increase in net assets resulting from operations ..... $860,093 $2,451,458 $4,739,104 ($38,000) $8,012,655
** Formerly the International Growth and Income Fund.
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds
are combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements.
90
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK
- 5,300 - 5,300 3I Group - $66,379 - $66,379
- - 1,000 1,000 77 Bank Ltd. - - $11,873 11,873
- - 700 700 ABB AG - - 70,491 70,491
- - 2,518 2,518 Abbey National Plc. - - 49,154 49,154
- 2,000 - 2,000 ABN Amro Holdings NV - 48,497 - 48,497
- - 4,283 4,283 Abn Amro Holdings NV - - 103,572 103,572
- - 21 21 Accor SA - - 20,484 20,484
- 90 - 90 Accor, S.A. - 20,314 - 20,314
5,600 - - 5,600 Aceralia Corp Siderurgica 69,697 - - 69,697
- - 381 381 Acerinox SA - - 11,582 11,582
9,000 - - 9,000 A-COM AB 104,005 - - 104,005
1,000 - - 1,000 Acom Co. 109,429 - - 109,429
- - 500 500 Acom Co. Ltd. - - 54,666 54,666
- - 310 310 Acs Actividades de Construc. - - 7,434 7,434
- - 60 60 Adecco SA - - 36,371 36,371
- - 200 200 Adidas Salomon AG - - 14,473 14,473
- 1,100 - 1,100 Advantest Corp. - 165,775 - 165,775
- - 600 600 Advantest Corporation - - 90,342 90,342
- - 1,642 1,642 Aegon NV - - 151,556 151,556
- 1,759 - 1,759 AEGON, N.V. - 162,834 - 162,834
- - 800 800 Agiv AG - - 13,911 13,911
- 132 - 132 Aiful Corp. - 20,527 - 20,527
- - 3,000 3,000 Ajinomoto Co., Inc. - - 33,634 33,634
2,613 - - 2,613 Akzo Nobel 112,833 - - 112,833
- - 971 971 Akzo Nobel NV - - 41,814 41,814
- - 466 466 Alcatel - - 72,789 72,789
- - 3,315 3,315 Alitalia Linee Aeree Italiane - - 9,153 9,153
- - 900 900 Allianz AG - - 274,059 274,059
- - 2,465 2,465 Allied Zurich Plc - - 29,974 29,974
- - 1,000 1,000 Alps Electric Co. Ltd. - - 19,373 19,373
- - 20 20 Alusuisse Lonza Group AG - - 12,202 12,202
- - 1,574 1,574 Amcor Ltd. - - 6,879 6,879
- - 1,218 1,218 AMEC Plc - - 4,293 4,293
- - 949 949 AMP Diversified Prop. Tr. - - 1,422 1,422
- - 2,297 2,297 AMP Limited - - 23,358 23,358
91
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
19,000 - - 19,000 Amvescap, Plc. $169,527 - - $169,527
- - 1,207 1,207 Anglian Water Plc - - 13,447 13,447
- - 2,332 2,332 Argent., Caja Post. Y Banco - - 51,756 51,756
- - 1,920 1,920 Arjo Wiggins Appleton Plc - - 6,657 6,657
- - 10,000 10,000 Asahi Bank Ltd. - - 88,808 88,808
- 2,000 - 2,000 Asahi Breweries - 28,471 - 28,471
- - 2,000 2,000 Asahi Breweries Ltd. - - 28,445 28,445
- - 5,000 5,000 Asahi Chemical Industry - - 30,210 30,210
- - 5,000 5,000 Asahi Glass Company Ltd. - - 39,753 39,753
- 2,400 - 2,400 ASM Lithography Hlgs, N.V. - 169,857 - 169,857
- - 2,426 2,426 Assicurazione Gen. SpA - - 77,830 77,830
- 2,100 - 2,100 Assicurazioni Generali - 67,557 - 67,557
- - 3,146 3,146 Associated British Ports - - 15,612 15,612
- - 2,848 2,848 Astrazeneca Plc - - 128,789 128,789
- 2,500 - 2,500 Astrazeneca, Plc. - 112,785 - 112,785
- 2,320 - 2,320 Astrazeneca, Plc. - (SEK) - 104,842 - 104,842
- 200 - 200 Astrazeneca, Plc. - ADR - 9,150 - 9,150
- 7,046 - 7,046 Asustek Computer, Inc. - 99,349 - 99,349
- - 600 600 Atlas Copco AB Ser A - - 15,832 15,832
- - 300 300 Atlas Copco AB Ser B - - 7,806 7,806
- 8,088 - 8,088 Aust & NZ Banking Group - 53,400 - 53,400
- - 912 912 Australian Gas Light Co. - - 5,031 5,031
- - 169 169 Austria Tabak AG - - 7,599 7,599
- - 166 166 Austrian Airlines - - 3,527 3,527
- - 1,338 1,338 Autopistas Concesionaria - - 14,426 14,426
- - 812 812 Axa - - 114,535 114,535
- - 165 165 Azucarera Ebro Agricolas - - 2,947 2,947
- - 2,161 2,161 BAA Plc - - 15,802 15,802
- - 747 747 Banca Commerciale Italiana - - 4,495 4,495
- - 10,944 10,944 Banca Intesa SpA - - 46,736 46,736
- - 870 870 Banca Popolare di Milano - - 5,848 5,848
- - 10,534 10,534 Banco Bilbao Vizcaya SA - - 141,605 141,605
- - 1,336 1,336 Banco Comercial Portugues - - 37,633 37,633
- - 690 690 Banco Espirito Santo - - 17,941 17,941
825 - - 825 Banco Pastor, S.A. $35,616 - - 35,616
92
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 18,056 18,056 Banco Sant. Cent. Hispano - - $187,453 $187,453
2,000 - - 2,000 Bank Austria AG 99,716 - - 99,716
- - 861 861 Bank Austria AG - - 42,810 42,810
- - 3,600 3,600 Bank of East Asia Ltd. - - 7,878 7,878
- - 1,000 1,000 Bank of Fukuoka Ltd. - - 7,701 7,701
- 2,800 - 2,800 Bank of Nova Scotia - 63,745 - 63,745
- - 16,000 16,000 Bank of Tokyo-Mitsubishi - - 265,158 265,158
- - 805 805 Banque Nationale de Paris - - 70,703 70,703
- 310 - 310 Banque Nationale De Paris - 27,302 - 27,302
- - 1,903 1,903 Barclays Plc - - 58,381 58,381
- 1,300 - 1,300 Barclays, Plc. - 39,919 - 39,919
- - 868 868 Barratt Development Plc - - 3,380 3,380
230 - - 230 Barry Callebaut AG 39,241 - - 39,241
- - 2,550 2,550 BASF AG - - 114,665 114,665
- - 1,456 1,456 Bass Plc - - 15,958 15,958
- - 36 36 Bau Holdings AG - - 1,242 1,242
- - 2,800 2,800 Bayer AG - - 114,567 114,567
- - 1,550 1,550 Bayerische Vereinsbank - - 101,735 101,735
- - 1,573 1,573 Beazer Group lc - - 3,386 3,386
- - 400 400 Beiersdorf AG - - 26,927 26,927
- - 200 200 Benesse Corporation Ltd. - - 42,774 42,774
- - 4,146 4,146 Benetton Group SpA - - $9,158 $9,158
- - 1,239 1,239 Berisford Plc - - 5,782 5,782
- - 422 422 Berkeley Group Plc - - 3,807 3,807
- - 7,128 7,128 BG Plc - - 39,589 39,589
- - 1,343 1,343 BICC Plc - - 2,405 2,405
- - 250 250 Bilfingeo & Berger Bauak. - - 5,128 5,128
- - 3,595 3,595 Blue Circle Industries Plc - - 16,688 16,688
- - 1,580 1,580 BOC Group Plc - - 34,011 34,011
- 2,500 - 2,500 BOC Group, Plc. - 53,658 - 53,658
- - 85 85 Boehler-Uddeholm - - 3,558 3,558
2,100 - - 2,100 Boehler-Udeholm AG 88,156 - - 88,156
- 4,100 - 4,100 Bombardier, Inc. - 72,165 - 72,165
- - 1,880 1,880 Boots Company Plc - - 19,292 19,292
- - 2,733 2,733 Boral Ltd. - - 4,113 4,113
93
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 85 85 Bouygues - - $ 29,594 $ 29,594
- - 32,032 32,032 BP Amoco Plc - - 311,073 311,073
- - 3,263 3,263 BPB Plc - - 19,302 19,302
- - 4,425 4,425 BPI-SGPS SA - - 17,687 17,687
- - 529 529 Brambles Industries Ltd. - - 14,877 14,877
- - 3,000 3,000 Bridgestone Corporation - - 82,574 82,574
- - 431 431 Brisa Auto-Estradas - - 16,978 16,978
- - 3,650 3,650 British Aerospace Plc - - 21,592 21,592
- - 2,159 2,159 British Airways Plc - - 11,033 11,033
- - 11,659 11,659 British Land Company Plc - - 83,912 83,912
- - 2,871 2,871 British Sky Broadcasting - - 30,948 30,948
9,200 - 10,244 19,444 British Telecom. Plc 167,125 - 185,835 352,960
- 6,683 3,856 10,539 Broken Hill Proprietary Co. - 69,103 39,853 108,956
- 1,000 - 1,000 Broken Hill Prop. Co.- ADR - 21,125 - 21,125
- - 267 267 Buhrmann NV - - 4,603 4,603
- - 1,457 1,457 Burmah Castrol Plc - - 25,115 25,115
- - 13 13 BWT (Benckiser) AG - - 2,349 2,349
- - 32,000 32,000 Cable & Wireless HKT Ltd. - - 73,115 73,115
- - 5,103 5,103 Cable & Wireless Plc - - 59,534 59,534
- 8,900 3,456 12,356 Cadbury Schweppes Plc - 58,112 22,488 80,600
- 760 309 1,069 Canal Plus SA - 52,906 21,451 74,357
- - 5,000 5,000 Canon, Inc. - - 141,460 141,460
- - 201 201 Cap Gemini SA - - 30,445 30,445
- - 2,710 2,710 Capital Shopping Centres Plc - - 17,946 17,946
- - 4,230 4,230 Caradon Plc - - 9,860 9,860
- - 738 738 Carrefour - - 136,623 136,623
- - 210 210 Cartiere Burgo SpA - - 1,546 1,546
- - 213 213 Casino Guichard Perrachon - - 24,197 24,197
- - 1,590 1,590 Castellum AB - - 13,727 13,727
- - 9,000 9,000 Cathay Pacific Airways Ltd. - - 18,247 18,247
- 105 - 105 Celanese AG - 1,645 - 1,645
3,800 - - 3,800 Celesius AB, Class B 59,639 - - 59,639
- 2,617 - 2,617 Cemex SA -ADR - 58,878 - 58,878
- - 9 9 Central Japan Railway Co. - - 60,852 60,852
- - 8,276 8,276 Centrica Plc - - 24,036 24,036
94
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 1,932 1,932 CGU Plc - - $28,159 $28,159
15,000 - - 15,000 Cheung Kong 136,109 - - 136,109
- - 6,000 6,000 Cheung Kong Holdings Ltd. - - 54,644 54,644
- - 600 600 Chiba Bank Ltd. - - 3,280 3,280
36,000 - - 36,000 China Telecom (Hong Kong) 123,250 - - 123,250
561 - - 561 Christian Dior 100,710 - - 100,710
- 1,000 - 1,000 CIA Cervejaria Brahma - 12,500 - 12,500
- - 233 233 Cie de Saint Gobain - - 40,438 40,438
- - 65 65 Cie De Seguros Tranquil. - - 1,811 1,811
- 33 - 33 CIE Financ Richemont - 63,179 - 63,179
- - 260 260 Cie Fonciere Klepierre - - 26,883 26,883
- - 374 374 Cie Generale des Establis. - - 16,286 16,286
- 2,200 - 2,200 Cifra SA - ADR - 33,275 - 33,275
- - 964 964 Cimpor Cimentos de Portugal SA - - 15,991 15,991
- - 34 34 Cin Corporacao Industrial Norte - - 855 855
- 140 - 140 CIT Group, Inc. - 3,343 - 3,343
- - 6,000 6,000 City Developments Ltd. - - 31,023 31,023
- 2,000 - 2,000 Clarica Life Insurance Co. - 32,484 - 32,484
- - 4,500 4,500 CLP Holdings Ltd. - - 20,680 20,680
- - 730 730 Cobham Plc - - 8,829 8,829
- 6,422 1,520 7,942 Coca-Cola Amatil Ltd. - 19,832 4,691 24,523
- 9,100 2,643 11,743 Coles Myer Ltd. - 45,285 13,146 58,431
- - 1,929 1,929 Colonial Ltd. - - 7,098 7,098
- 5,100 - 5,100 Colt TelecomGroup - 152,828 - 152,828
- - 4,000 4,000 Comfort Group Ltd. - - 2,008 2,008
2,900 - - 2,900 Commerzbank AG 110,635 - - 110,635
- 330 - 330 Comp. De Saint -Gobain - 57,431 - 57,431
- 300 - 300 Comp. Financiere de Paribas - 31,326 - 31,326
3,000 - - 3,000 Comp. de Brasileira - ADR 65,625 - - 65,625
- - 1,002 1,002 Compass Group Plc - - 10,702 10,702
- - 500 500 Continental AG - - 10,860 10,860
- - 444 444 Corp. Financiera Alba SA - - 12,890 12,890
- - 372 372 Corp. Mapfre Cia International - - 6,339 6,339
- - 158 158 Corticeira Amorim Socdad - - 1,579 1,579
- - 3,788 3,788 Corus Group Plc - - 7,220 7,220
- - 700 700 Creative Technology Ltd. - - 8,164 8,164
- - 780 780 Credit Suisse Holding - - 149,931 149,931
- 3,300 - 3,300 CRH, Plc. - 62,478 - 62,478
- - 100 100 CSK Corporation - - 4,603 4,603
95
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 257 257 CSL Ltd. - - $3,114 $3,114
- - 2,472 2,472 CSR Ltd. - - 5,549 5,549
- - 1,000 1,000 Cycle & Carriage Ltd. - - 3,397 3,397
- - 3,000 3,000 Dai Nippon Printing Co. Ltd. - - 54,695 54,695
- 400 3,700 4,100 Daimlerchrysler AG - 31,221 287,997 319,218
62,100 - - 62,100 Dairy Farm International 48,749 - - 48,749
- - 7,000 7,000 Daiwa Bank Ltd. - - 33,500 33,500
- - 2,000 2,000 Daiwa House Industry Co. Ltd. - - 18,299 18,299
- - 5,000 5,000 Daiwa Securities Group, Inc. - - 53,371 53,371
10,500 - - 10,500 DAO Heng Bank Group, Ltd. 48,246 - - 48,246
- - 5,815 5,815 DBS Group Holdings Ltd. - - 65,726 65,726
- - 10,000 10,000 DBS Land Ltd. - - 18,517 18,517
16 - - 16 DDI Corp. 175,086 - - 175,086
- 1,500 - 1,500 De Beers Cons Mines - 41,081 - 41,081
- 1,400 - 1,400 Degussa AG - 53,602 - 53,602
- - 2,000 2,000 Denso Corporation - - 42,774 42,774
- 666 2,000 2,666 Deutsche Bank AG - 47,908 143,472 191,380
- - 1,350 1,350 Deutsche Lufthansa AG - - 28,400 28,400
- 1,900 9,938 11,838 Deutsche Telekom AG - 87,576 456,808 544,384
- - 5,942 5,942 Diageo Plc - - 60,438 60,438
3,500 - - 3,500 Dialog Semiconductor PLC 90,445 - - 90,445
- - 2,645 2,645 Diligentia AB - - 18,815 18,815
- 1,617 - 1,617 Dixons Group, Plc. - 28,696 - 28,696
- - 400 400 Douglas Holding AG - - 18,155 18,155
- - 1,900 1,900 Dresdner Bank AG - - 97,827 97,827
- - 1,730 1,730 Drott AB - - 16,618 16,618
- 1,815 - 1,815 DSM NV - 68,917 - 68,917
- - 17 17 East Japan Railway Co. - - 104,181 104,181
3,200 - - 3,200 ECI Telecommunications 93,200 - - 93,200
- - 1,656 1,656 Edison SpA - - 13,743 13,743
- 800 - 800 Eircom, Plc. - 3,341 - 3,341
- - 4,211 4,211 Electricidade de Portugal - - 65,466 65,466
- - 1,400 1,400 Electrolux AB - - 27,918 27,918
- - 1,752 1,752 Elsevier NV - - 16,641 16,641
- - 374 374 EMAP Plc - - 4,855 4,855
- 2,600 3,740 6,340 EMI Group, Plc. - 20,462 29,499 49,961
96
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 4,797 4,797 Endesa SA - - $96,020 $96,020
- - 96 96 Engil SGPS - - 976 976
25,400 11,000 - 36,400 Eni, SpA 148,956 64,509 - 213,465
- - 17,265 17,265 Ente Naz. Idrocarburi SpA - - 100,971 100,971
- 1,300 1,536 2,836 Enterprise Oil, Plc. - 9,237 10,929 20,166
3,800 1,100 - 4,900 Ericsson LMTEL Co. Series B 162,450 45,877 - 208,327
- - 88 88 Eridania Beghin-Say SA - - 9,997 9,997
5,400 - - 5,400 ESG RE, Ltd. 41,850 - - 41,850
- - 650 650 Fag Kugel. Georg Schaefer - - 5,504 5,504
- - 1,000 1,000 Fanuc Ltd. - - 77,683 77,683
- - 297 297 Faulding & Co. Ltd. - - 1,816 1,816
- - 861 861 Fiat SpA - - 27,260 27,260
- 3,240 - 3,240 Fiat SpA, Private - 49,928 - 49,928
- - 2,000 2,000 First Capital Corporation Ltd. - - 2,381 2,381
128,000 - - 128,000 First Pacific Co., Ltd. 74,136 - - 74,136
- - 1,490 1,490 Firstgroup Plc - - 5,962 5,962
- - 1,710 1,710 FKI Plc - - 4,496 4,496
- - 163 163 Flughafen Wein AG - - 5,627 5,627
- - 2,400 2,400 Foereningssparbanken AB - - 38,230 38,230
- - 472 472 Fomento de Construcciones Y Contra - - 11,841 11,841
14,400 - - 14,400 Fomento Economico Mexicano UBD 46,654 - - 46,654
- 2,250 - 2,250 Foreiningssparbanken AB - 35,854 - 35,854
10,200 - - 10,200 Forsoft, Ltd. 74,588 - - 74,588
- - 4,277 4,277 Fosters Brewing Group Ltd. - - 11,368 11,368
- - 2,389 2,389 France Telecom SA - - 230,806 230,806
- - 2,000 2,000 Fraser & Neave Ltd. - - 8,537 8,537
- - 11,000 11,000 Fuji Bank Ltd. - - 150,858 150,858
4,000 - 2,000 6,000 Fuji Photo Film Co. 128,627 - 64,256 192,883
- - 100 100 Fuji Software ABC, Inc. - - 9,159 9,159
- 1,000 10,000 11,000 Fujitsu, Ltd. - 30,141 301,141 331,282
- - 2,259 2,259 Gas Natural Sdg SA - - 49,899 49,899
- - 5,077 5,077 General Electric Plc - - 55,269 55,269
- - 3,281 3,281 General Property Trust Units - - 5,270 5,270
- - 54 54 Generali Holding, Vienna - - 8,788 8,788
3,000 - 221 3,221 Getronics NV 149,985 - 11,019 161,004
- - 540 540 Gio Australia Holdings Ltd. - - 1,026 1,026
97
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 2,453 2,453 GKN Plc - - $ 39,461 $ 39,461
- - 5,906 5,906 Glaxo Wellcome Plc 25p Ords - - 174,297 174,297
6,000 - - 6,000 Global TeleSystems Group, Inc. 143,625 - - 143,625
- - 2,953 2,953 Goodman Fielder Wattie Ltd. - - 2,731 2,731
- - 2,737 2,737 Granada Group Plc - - 21,723 21,723
- - 14,750 14,750 Grantchester Holdings Plc - - 32,720 32,720
- - 6,370 6,370 Great Portland Estates Plc - - 19,888 19,888
- - 1,704 1,704 Great Universal Stores Plc - - 12,908 12,908
- - 180 180 Groupe Danone - - 45,913 45,913
- 300 - 300 Groupe Danone Frf10 - 76,733 - 76,733
- - 888 888 Grupo Dragados SA - - 9,406 9,406
40,000 - - 40,000 Grupo Financiero Banamex- 99,896 - - 99,896
1,400 - - 1,400 Grupo Televisa, S.A. 59,500 - - 59,500
- - 243 243 Hagemeyer NV - - 4,982 4,982
- - 3,935 3,935 Halifax Group Plc - - 50,241 50,241
- - 4,560 4,560 Hammerson Plc - - 33,715 33,715
- - 6,000 6,000 Hang Lung Development Co. Ltd. - - 6,449 6,449
- - 5,500 5,500 Hang Seng Bank Ltd. - - 59,825 59,825
- - 200 200 Hankyu Corp. - - 689 689
- - 2,782 2,782 Hanson Plc - - 21,668 21,668
9000(1) - - - Hanvit Bank - GDR 66,778 - - 66,778
- - 76 76 Hartwall - - 974 974
- - 900 900 Hazama Corporation - - 578 578
- - 50 50 Heidelberger Zement AG - - 3,944 3,944
- 600 905 1,505 Heineken Holdings NV - 30,687 46,159 76,846
- 900 - 900 Heinekin Holding NV, Class A - 32,750 - 32,750
- - 3,800 3,800 Hennes & Mauritz AB - - 100,961 100,961
- - 2,840 2,840 Hilton Group Plc - - 8,680 8,680
- 700 - 700 Hirose Electric Co., Ltd. - 122,223 - 122,223
- - 100 100 Hirose Electric Company Ltd. - - 17,445 17,445
13,000 - 14,000 27,000 Hitachi, Ltd. 140,635 - 151,319 291,954
- - 20 20 Holderbank Financiere Glarus AG - - 24,628 24,628
- 40 - 40 Holdrbank Finan Glarus, Class B - 49,362 - 49,362
- 1,300 - 1,300 Hon Hai Precision- GDR - 21,294 - 21,294
- - 3,000 3,000 Honda Motor Company - - 126,594 126,594
- - 14,000 14,000 Hongkong & China Gas Company Ltd. - - 18,562 18,562
98
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 2,500 2,500 Hongkong & Shanghai Hotels Ltd. - - $1,834 $ 1,834
27,500 - - 27,500 HongKong Electric Holdings 84,062 - - 84,062
- - 4,000 4,000 Hopewell Holdings Ltd. - - 2,536 2,536
- - 3,000 3,000 Hotel Properties Ltd. - - 2,561 2,561
- - 488 488 Howard Smith Ltd. - - 3,499 3,499
- - - - Hoya Corp. - - - -
- - 13,514 13,514 HSBC Holdings Plc - - 166,213 166,213
- 5,000 10,000 15,000 Hutchison Whampoa Ltd. - 50,196 100,405 150,601
- - 1,485 1,485 Hyder Plc - - 13,372 13,372
- - 3,000 3,000 Hysan Development Co. Ltd. - - 3,572 3,572
- 2,000 - 2,000 Hyundai Motor Co., Ltd. - 17,591 - 17,591
- - 4,540 4,540 Iberdrola SA - - 66,187 66,187
- - 1,437 1,437 IMI Plc - - 5,643 5,643
- - 1,324 1,324 Imperial Chemical Industries Plc - - 13,173 13,173
- - 1,043 1,043 Impregilo SpA - - 737 737
- - 10,000 10,000 Industrial Bank of Japan - - 135,226 135,226
30,000 - - 30,000 Industrias CH S.A., Series B 65,420 - - 65,420
2,200 - 2,745 4,945 ING Groep NV 130,131 - 161,921 292,052
- 18,900 6,839 25,739 Invensys, Plc. - 93,099 33,601 126,700
- - 119 119 Investimentos Participacoes - - 1,036 1,036
7,900 - - 7,900 Investor AB Holding Co. 101,383 - - 101,383
5,300 - - 5,300 Ispat Intl-ADR NV 54,988 - - 54,988
- - 8,413 8,413 Istituto Naz. delle Assicuratrice - - 25,530 25,530
- - 553 553 Italcementi Fabbriche Riunite - - 2,577 2,577
- - 377 377 Italcementi Fabbriche Riunite NCNV - - 4,763 4,763
- - 1,122 1,122 Italgas Sta Italiana Per Il Gas - - 4,638 4,638
- - 1,000 1,000 Ito-Yokado Company Ltd. - - 79,985 79,985
- - 3,214 3,214 J. Sainsbury Plc - - 19,303 19,303
- - 13,000 13,000 Japan Airlines Company Ltd. - - 43,637 43,637
- - 1,140 1,140 Jarvis Plc - - 4,908 4,908
- - 565 565 Jeronimo Martins Sgps. SA - - 15,773 15,773
- 15,000 2,500 17,500 Johnson Electric Holdings, Ltd. - 81,086 13,516 94,602
- - 1,692 1,692 Johnson Matthey Plc - - 15,681 15,681
- - 2,400 2,400 Joyo Bank Ltd. - - 11,739 11,739
- - 2,000 2,000 Jusco Company Ltd. - - 46,610 46,610
- - 9,000 9,000 Kajima Corporation - - 31,677 31,677
99
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 5,200 5,200 Kansai Electric Power Co., Inc. - - $97,198 $97,198
- 1,000 2,000 3,000 KAO Corporation - 30,525 60,995 91,520
- - 100 100 Karstadt AG - - 4,523 4,523
- - 8,000 8,000 Kawasaki Steel Corporation - - 18,107 18,107
1,500 - - 1,500 KDD Corp. 188,620 - - 188,620
- - 1,111 1,111 Kelda Group {lc - - 6,773 6,773
- - 7,000 7,000 Keppel Corporation Ltd. - - 19,022 19,022
- - 547 547 Kesko Corporation - - 6,225 6,225
- 400 - 400 Keyence Corp. - 107,317 - 107,317
- - 2,640 2,640 Kingfisher Plc - - 28,891 28,891
- - 10,000 10,000 Kinki Nippon Railway Company Ltd. - - 46,322 46,322
- - 6,000 6,000 Kirin Brewery Company Ltd. - - 68,706 68,706
- - 190 190 KLM Royal Dutch Air - - 5,176 5,176
- - 4,000 4,000 Komatsu Ltd. - - 23,247 23,247
- - 77 77 Koninklijke Nedlloyd NV - - 2,150 2,150
1,104 - - 1,104 Koninklijke Philips Electronic 113,533 - - 113,533
- - 1,752 1,752 KoninklijkeAhold NV - - 53,811 53,811
1,900 - - 1,900 Korea Telecom Corp. - ADR 66,975 - - 66,975
3,726 - 1,357 5,083 KPN NV (Koninklijke) 191,745 - 69,640 261,385
- - 600 600 Kumagai Gumi Co. Ltd. - - 564 564
- - 1,100 1,100 Kyocera Corporation - - 105,495 105,495
- - 6,200 6,200 L M Ericsson Telefon AB - - 257,831 257,831
- - 263 263 Lafarge SA - - 25,312 25,312
2,457 - 388 2,845 Lagardere S.C.A. 99,774 - 15,713 115,487
- - 192 192 L'Air Liquide - - 29,586 29,586
- - 1,113 1,113 Laird Group Plc - - 4,682 4,682
- - 9,784 9,784 Land Securities Plc - - 121,864 121,864
- - 6,149 6,149 Lasmo Plc - - 13,640 13,640
- - 14,174 14,174 Legal & General Group Plc - - 39,361 39,361
- - 71 71 Legrand SA - - 16,990 16,990
- - 661 661 Leighton Holdings Ltd. - - 2,403 2,403
- 3,400 1,298 4,698 Lend Lease Corp., Ltd. - 39,139 14,935 54,074
- - 28 28 Lenzing AG - - 1,635 1,635
- - 829 829 Lex Services Plc - - 6,334 6,334
92,000 - - 92,000 LI & Fung 160,447 - - 160,447
- - 3,294 3,294 Limit Plc - - 8,011 8,011
100
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 350 350 Linde AG - - $18,334 $18,334
- 2,800 9,981 12,781 Lloyds TSB Group, Plc. - 38,729 138,094 176,823
- - 1,504 1,504 Lonmin Plc - - 15,125 15,125
- - 160 160 L'Oreal - - 106,784 106,784
- 700 - 700 Mabuchi Motor Co., Ltd. - 103,477 - 103,477
- - 500 500 Man AG - - 16,619 16,619
500 1,900 1,350 3,750 Mannesmann AG 78,843 299,602 212,290 590,735
- - 4,980 4,980 Marks & Spencer Plc - - 22,995 22,995
- - 1,000 1,000 Marui Company Ltd. - - 18,893 18,893
- - 11,000 11,000 Matsushita Electric Industrial - - 231,562 231,562
- - 877 877 Mayne Nickless Ltd. - - 2,377 2,377
- - 92 92 Mayr-Melnhof Karton AG - - 4,098 4,098
- - 2,891 2,891 Mediaset SpA - - 28,858 28,858
- - 1,377 1,377 Mediobanca SpA - - 14,165 14,165
- - 1,604 1,604 Meggitt Plc - - 4,006 4,006
- - 100 100 Meitec Corporation - - 3,750 3,750
- - 7,782 7,782 MEPC Plc - - 53,963 53,963
- - 3,075 3,075 Merita Plc - - 17,822 17,822
- 2,500 - 2,500 Metallgesellschaft AG - 52,078 - 52,078
- - 211 211 Metra AB - - 3,995 3,995
- - 950 950 Metro AG - - 51,062 51,062
- - 1,369 1,369 Metrovacesa SA - - 30,240 30,240
17,800 - - 17,800 Metsa Serla, Class B 161,649 - - 161,649
- - 488 488 Metso - - 5,518 5,518
7,000 - 2,860 9,860 Misys, Plc. 58,658 - 23,827 82,485
- - 11,000 11,000 Mitsubishi Chemical Corp. - - 49,899 49,899
- - 7,000 7,000 Mitsubishi Corporation - - 50,350 50,350
- - 13,000 13,000 Mitsubishi Electric Corp. - - 71,938 71,938
- - 4,000 4,000 Mitsubishi Estate Co. Ltd. - - 40,088 40,088
- - 13,000 13,000 Mitsubishi Heavy Ind. Ltd. - - 50,993 50,993
- - 4,000 4,000 Mitsubishi Trust & Bank. Corp. - - 53,822 53,822
- - 4,000 4,000 Mitsui & Company - - 29,577 29,577
- - 800 800 Mitsui Engineering & Shipbuilding Co. - - 714 714
- - 2,000 2,000 Mitsui Fudosan Company Ltd. - - 14,942 14,942
- 9,000 - 9,000 Mitsui Marine & Fire - 59,696 - 59,696
- - 225 225 Moet Hennessy Louis Vuitton - - 67,923 67,923
101
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 3,429 3,429 Montedison SpA - - $ 6,114 $ 6,114
- - 550 550 Muenchener Rueckversicherungs - - 126,117 126,117
- - - Murata Manufacturing Co. Ltd. - - -
- 1,000 1,000 2,000 Murata Manufacturing Co., Ltd. - 128,627 128,513 257,140
- 6,000 - 6,000 Mycal Corp. - 28,451 - 28,451
- - 3,197 3,197 National Australia Bank Ltd. - - 49,337 49,337
- - 2,129 2,129 National Grid Group Plc - - 15,848 15,848
- - 2,597 2,597 National Power Plc - - 17,624 17,624
- - 3,000 3,000 Natsteel Ltd. - - 5,014 5,014
- 8,000 9,000 17,000 NEC Corp. - 162,031 182,123 344,154
- - 2,000 2,000 Neptune Orient Lines Ltd. - - 2,898 2,898
- 25 120 145 Nestle, S.A. - 48,323 231,451 279,774
- - 400 400 Netcom AB - - 16,609 16,609
- 1,000 - 1,000 New Bridge Networks Corp. - 19,436 - 19,436
- - 6,000 6,000 New World Development Co. Ltd. - - 11,354 11,354
21,900 600 4,535 27,035 News Corp, Ltd. 148,343 4,341 32,795 185,479
- 850 - 850 News Corp., Ltd. - ADR - 25,181 - 25,181
- - 932 932 Next Plc - - 10,054 10,054
- - 2,446 2,446 NFC Plc - - 7,878 7,878
- 600 300 900 Nichiei Company Ltd. - 31,101 15,537 46,638
- - 200 200 Nidec Corporation - - 38,841 38,841
- 5,000 1,000 6,000 Nikon Corporation - 119,028 23,784 142,812
- 500 - 500 Nintendo Co., Ltd. - 79,432 - 79,432
- - 800 800 Nintendo Company Ltd. - - 126,978 126,978
- - 5,000 5,000 Nippon Express Company Ltd. - - 35,389 35,389
- - 9,000 9,000 Nippon Mitsubishi Oil Corp. - - 39,705 39,705
- - 47,000 47,000 Nippon Steel Corporation - - 119,450 119,450
- - 43 43 Nippon Telegraph & Telephone - - 659,824 659,824
- 9,000 8,000 17,000 Nissan Motors Company - 53,994 47,952 101,946
- - 3,452 3,452 Nokia AB - - 395,088 395,088
- 2,400 - 2,400 Nokia Oyj - 275,442 - 275,442
- - 6,000 6,000 Nomura Securities Co. Ltd. - - 99,031 99,031
- - 4,810 4,810 Normandy Mining Ltd. - - 3,650 3,650
- 850 - 850 Norsk Hydro ASA - 33,935 - 33,935
- - 1,641 1,641 North Ltd. - - 3,171 3,171
- 46 190 236 Novartis AG - 68,955 284,196 353,151
102
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- 4 - 4 NTT Corp. - $61,434 - $61,434
- 10 - 10 NTT Mobile Communications - 265,892 - 265,892
- - 269 269 OCE NV - - 4,456 4,456
- - 470 470 Odakyu Electric Railway Co. Ltd. - - 1,465 1,465
- - 70 70 Oesterreichische Brau-Beteilign - - 3,221 3,221
- - 235 235 Oesterreichische Elektrizitaets - - 34,013 34,013
- - 4,000 4,000 Oji Paper Co. Ltd. - - 28,196 28,196
- - 9,381 9,381 Olivetti & Co. SpA - - 18,255 18,255
- - 300 300 OM Gruppen AB - - 3,867 3,867
- - 205 205 OMV AG - - 19,797 19,797
- 2,500 - 2,500 Orange, Plc. - 62,252 - 62,252
- - 700 700 Orica Ltd. - - 3,701 3,701
- - 400 400 Oriental Land Company Plc - - 37,902 37,902
1,400 - 200 1,600 Orix Corporation 188,140 - 26,853 214,993
- - 9,000 9,000 Osaka Gas Company Ltd. - - 30,124 30,124
- - 588 588 Outakumpa - - 6,729 6,729
- - 8,400 8,400 Oversea-Chinese Banking Corp. Ltd. - - 63,128 63,128
- - 1,000 1,000 Overseas Union Enterprise Ltd. - - 2,754 2,754
- - 2,596 2,596 Pacific Dunlop Ltd. - - 3,659 3,659
- - 3,000 3,000 Parkway Holdings Ltd. - - 5,519 5,519
- - 4,303 4,303 Parmalat Finanziaria SpA - - 5,653 5,653
- - 1,248 1,248 Pearson Plc - - 28,095 28,095
- - 235 235 Pechiney SA - - 13,150 13,150
2,644 1,400 - 4,044 Pechiney, S.A., Class A 148,362 78,558 - 226,920
- - 1,204 1,204 Peninsular & Orient Steam Navigation - - 17,311 17,311
- - 679 679 Pennon Group Plc - - 10,209 10,209
- - 800 800 Penta-Ocean Construction Co. Ltd. - - 1,335 1,335
- - 227 227 Pernod Ricard - - 15,329 15,329
3,500 - - 3,500 Petroleo Brasileiro S.A. 55,563 - - 55,563
- 325 135 460 Peugeot, S.A. - 62,560 25,915 88,475
- - 966 966 Philips Electronics - - 99,068 99,068
- - 9,480 9,480 Pilkington Plc - - 14,214 14,214
- - 309 309 Pinault-Printemps Redoute - - 58,926 58,926
- - 2,234 2,234 Pioneer International Ltd. - - 4,886 4,886
- - 5,441 5,441 Pirelli SpA - - 12,476 12,476
- 1,600 - 1,600 Pohang Iron & Steel Co., Ltd. - ADR - 53,400 - 53,400
103
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
2,800 - - 2,800 Pohang Iron & Steel-Spon ADR $93,450 - - $93,450
1,900 - - 1,900 Pohjola Group Insurance Corp., Class B 102,205 - - 102,205
- - 660 660 Portucel Industrial SA - - 4,512 4,512
- - 1,260 1,260 Portugal Telecom SA - - 56,193 56,193
- 1,255 450 1,705 Preussag AG - 68,171 24,377 92,548
- - 1,260 1,260 Prima Inmobiloaroa SA - - 11,159 11,159
- - 500 500 Promise Company Ltd. - - 33,567 33,567
- - 3,499 3,499 Prudential Corporation Plc - - 54,851 54,851
- - 966 966 QBE Insurance Group Ltd. - - 4,035 4,035
25,000 - - 25,000 QXL Ltd. 85,730 - - 85,730
- - 803 803 Racal Electronics - - 5,925 5,925
- - 920 920 Railtrack Group Plc - - 18,836 18,836
- - 508 508 Raisio Group Plc - - 3,308 3,308
- - 3,326 3,326 Rank Group Plc - - 10,357 10,357
- - 2,207 2,207 Reed International Plc - - 12,947 12,947
2,927 - - 2,927 Renault, S.A. 151,893 - - 151,893
- - 295 295 Reno de Medici SpA - - 864 864
- - 4,998 4,998 Rentokil Initial Plc - - 16,733 16,733
- - 4,889 4,889 Repsol SA - - 100,999 100,999
- 7,400 2,210 9,610 Reuters Group, Plc. - 68,460 20,336 88,796
- - 905 905 Rexam Plc - - 3,718 3,718
- - 108 108 Rhi AG - - 3,033 3,033
2,680 - 965 3,645 Rhone-Poulance S.A. 150,382 - 54,000 204,382
- - 527 527 Rinascente Per L'Esercizio - - 3,659 3,659
- - 439 439 Rio Tinto Ltd. - - 7,057 7,057
- - 1,832 1,832 Rio Tinto Plc - - 31,277 31,277
- - 1,183 1,183 Riunione Adriatica de Sicurta - - 10,913 10,913
- - 761 761 RMC Group Plc - - 10,942 10,942
- - 21 21 Roche Holding Chf Gen. NPV - - 252,116 252,116
- 2 5 7 Roche Holdings AG - 24,063 87,253 111,316
- - 2,164 2,164 Rolls Royce Plc - - 7,681 7,681
- 6,972 2,475 9,447 Royal & Sun Alliance Insur. - 47,530 16,857 64,387
- - - - Royal Bank of Canada - - - -
- - 6,266 6,266 Royal Dutch Petrol. Co. NV - - 374,560 374,560
- - 2,861 2,861 Rugby Group Plc - - 5,547 5,547
- - 1,850 1,850 RWE AG - - 74,529 74,529
104
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 2,149 2,149 Safeway Plc - - $6,780 $6,780
- - 336 336 Sai Sta Assic. Industrial - - 3,517 3,517
- - 50 50 Sairgroup - - 10,513 10,513
- - 16,000 16,000 Sakura Bank Ltd. - - 137,489 137,489
- - 332 332 Sampo Insurance Co. Ltd. - - 11,524 11,524
- - 3,094 3,094 San Paolo IMI SpA - - 40,095 40,095
- - 400 400 Sandvik AB Ser A - - 10,360 10,360
- - 900 900 Sandvik AB Ser B - - 23,146 23,146
- 3,000 2,000 5,000 Sankyo Co. Ltd. - 85,526 56,967 142,493
- 1,500 1,679 3,179 Sanofi-Synthelabo SA - 66,370 74,086 140,456
- - 1,459 1,459 Santos Ltd. - - 3,750 3,750
- - 11,000 11,000 Sanyo Electric Company Ltd. - - 52,748 52,748
- - 200 200 SAP AG - - 74,303 74,303
- - 200 200 Schering AG - - 23,793 23,793
- - 414 414 Schneider SA - - 28,523 28,523
- - 311 311 Schroder Plc - - 6,224 6,224
- 30 - 30 Schweizerische Rueckversicherungs - 62,327 - 62,327
1,301 - - 1,301 Scor 65,181 - - 65,181
- - 1,800 1,800 Securitas AB - - 26,702 26,702
- - 152 152 Seita Soc. Nat'l. D'Exploitation - - 8,474 8,474
- - 4,000 4,000 Sekisui House Ltd. - - 43,311 43,311
- - 10,000 10,000 Sembcorp Industries Ltd. - - 12,626 12,626
- - 2,000 2,000 Shangri-La Asia Ltd. - - 2,175 2,175
- - 6,000 6,000 Sharp Corporation - - 95,521 95,521
- 6,600 - 6,600 Shell Transport & Trading Co. - 50,639 - 50,639
- - 2,000 2,000 Shin-Etsu Chemical Co. Ltd. - - 82,478 82,478
- - 1,000 1,000 Shiseido Co. Ltd. - - 15,249 15,249
- - 4,000 4,000 Shizuoka Bank Ltd. - - 45,267 45,267
- 100 - 100 Shohkoh Fund & Co., Ltd. - 61,242 - 61,242
- 1,060 2,250 3,310 Siemens AG - 95,424 201,995 297,419
- - 70 70 SILIC - - 11,560 11,560
- - 400 400 SIMCO - - 34,459 34,459
- - 7,000 7,000 Singapore Airlines Ltd. - - 74,070 74,070
- 3,000 3,000 6,000 Singapore Press Holdings, Ltd. - 51,477 51,404 102,881
- 52,000 23,000 75,000 Singapore Tech. Engineering - 75,453 33,325 108,778
- - 45,000 45,000 Singapore Telecom. Ltd. - - 85,492 85,492
105
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 10,000 10,000 Sino Land Company Ltd. - - $4,570 $4,570
- - 448 448 Sirti SpA - - 2,427 2,427
6,200 - - 6,200 SK Telecom Co., Ltd. ADR 80,988 - - 80,988
- - 2,400 2,400 Skandia Forsakring AB - - 53,405 53,405
- - 2,800 2,800 Skandinaviska Ensk. Banken - - 28,769 28,769
- - 600 600 Skanska/Frueher AB - - 21,960 21,960
- - 400 400 SKF AB - - 8,123 8,123
- - 8,823 8,823 Slough Estates - - 51,178 51,178
- - 300 300 SMC Corporation - - 50,609 50,609
- - 368 368 Smith Industries Plc - - 4,995 4,995
- - 8,850 8,850 Smithkline Beecham Plc - - 114,157 114,157
- - 2,119 2,119 SNIA SpA - - 2,292 2,292
- - 723 723 Soc. Gen. de Aguas - - 11,544 11,544
- 800 - 800 Societe BIC, S.A. - 39,237 39,237
- - 258 258 Societe Generale - - 56,175 56,175
- 28 - 28 Soc. Gen. de Sur. Holding - 30,559 - 30,559
457 - - 457 Societe Generale, Class A 99,778 - - 99,778
- - 79 79 Sodexho Alliance SA - - 12,963 12,963
- - 500 500 Softbank Corporation - - 207,634 207,634
- - 495 495 Sol Melia SA - - 5,649 5,649
- - 332 332 Sonae Investimentos SA - - 11,091 11,091
- - 1,218 1,218 Sonera Corporation - - 36,576 36,576
600 1,500 2,000 4,100 Sony Corporation 93,648 234,120 311,883 639,651
- 200 - 200 Sony Music Ent. (Japan), Inc. - 26,090 - 26,090
- 3,920 - 3,920 South African Breweries, Ltd. - 34,331 - 34,331
- 2,500 - 2,500 South African Breweries, Plc. - 22,142 - 22,142
- - 2,000 2,000 South China Morning Post - - 1,480 1,480
- - 1,529 1,529 Southcorp Ltd. - - 5,314 5,314
- - 600 600 SSAB Swedish Steel - - 7,478 7,478
- - 2,618 2,618 Stagecoach Holdings Plc - - 7,442 7,442
- 2,721 - 2,721 Standard Charter, Plc. - 38,107 - 38,107
- - 120 120 Ste Fonciere Lyonnaise SA - - 16,068 16,068
- - 187 187 Ste. BIC - - 9,146 9,146
- 1,640 - 1,640 STMicroelectronics, N.V. - 144,437 - 144,437
- - 794 794 Stockland Trust Group - - 1,710 1,710
- - 137 137 Stork NV - - 2,688 2,688
106
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 1,000 1,000 Straits Trading Company Ltd. - - $1,052 $1,052
- - 345 345 Suez Lyonnaise des Eaux - - 55,703 55,703
- - 10 10 Sulzer AG - - 7,020 7,020
- - 10,000 10,000 Sumitomo Bank - - 160,928 160,928
- - 9,000 9,000 Sumitomo Chemical Co. Ltd. - - 57,744 57,744
- - 7,000 7,000 Sumitomo Corporation - - 51,156 51,156
- - 5,000 5,000 Sumitomo Electric Industries - - 67,181 67,181
- - 16,000 16,000 Sumitomo Metal Industries Ltd. - - 15,652 15,652
- - 400 400 Sumitomo Osaka Cement Co. Ltd. - - 660 660
- 5,000 7,000 12,000 Sun Hung Kai Prop. Ltd. - 40,382 56,768 97,150
- - 766 766 Suncorp Metway Ltd. - - 4,034 4,034
- 4,000 - 4,000 Suzuki Motor Corp. - 60,819 - 60,819
- - 1,000 1,000 Svenska Cellulosa AB - - 26,994 26,994
- - 3,000 3,000 Svenska Handelsbanken - - 41,586 41,586
- - 1,400 1,400 Swedish Match AB - - 5,124 5,124
- - 4,500 4,500 Swire Pacific Ltd. - - 22,302 22,302
- - 45 45 Swiss Ruckversicher - - 93,289 93,289
- 262 200 462 Swisscom AG - 80,012 60,945 140,957
- - 1,043 1,043 T.I. Group Plc - - 7,027 7,027
- - 904 904 Tabacalera SA - - 14,881 14,881
- - 788 788 Tabcorp Holdings Ltd. - - 4,995 4,995
- - 2,000 2,000 Taisho Pharm. Co. Ltd. - - 83,245 83,245
- 3,621 - 3,621 Taiwan Semiconductor - ADR - 125,377 - 125,377
- 1,000 3,000 4,000 Takeda Chemical Industries Ltd. - 57,498 172,341 229,839
- - 500 500 Takefuji Corporation - - 64,736 64,736
- - 1,411 1,411 Taylor Woodrow Plc - - 3,316 3,316
- 1,000 - 1,000 TDK Corp. - 98,006 - 98,006
- - 3,606 3,606 Telecom Italia Mob. SpA Eur - - 12,516 12,516
- - 15,270 15,270 Telecom Italia Mob. SpA Eur - - 95,407 95,407
- - 8,015 8,015 Telecom Italia SpA Itl1000 Ords - - 69,215 69,215
- - 1,029 1,029 Telecom Italia SpA Itl1000 Risp - - 5,055 5,055
- 1,800 - 1,800 Telecom Italia, SpA - 15,587 - 15,587
- 17,000 - 17,000 Telecom Italia, SpA - Risp - 83,737 - 83,737
8,708 5,086 13,935 27,729 Telefonica, S.A. 143,650 83,900 229,244 456,794
- 1,700 - 1,700 Telefonos De Mexico - ADR - 145,350 - 145,350
- 2,300 - 2,300 Teleglobe - 53,925 - 53,925
107
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
12,400 - - 12,400 Telenorte Leste Partic - ADR $209,250 - - $209,250
- - 1,144 1,144 Telepizza SA - - 6,113 6,113
- - 1,000 1,000 Television Broadcasts Ltd. - - 5,342 5,342
- - 11,677 11,677 Telstra Corporation Ltd. - - 59,400 59,400
- - 1,000 1,000 Terumo Corporation - - 30,402 30,402
- 207 6,258 6,465 Tesco, Plc. - 615 18,587 19,202
- - 794 794 Thames Water Plc - - 11,481 11,481
- 8,000 - 8,000 The Sakura Bank, Ltd. - 68,806 - 68,806
- - 20 20 The Swatch Group AG - - 15,929 15,929
- 3,000 - 3,000 THK Co., Ltd. - 98,198 - 98,198
- - 417 417 Thomson CSF - - 14,167 14,167
- 3,600 - 3,600 Thomson Corp. - 105,077 - 105,077
- - 1,600 1,600 Thyssen Krupp AG - - 37,867 37,867
- 6,700 - 6,700 TI Group, Plc. - 45,400 - 45,400
- - 225 225 Tietoenator Corporation - - 7,810 7,810
- 5,000 - 5,000 TIM, Spa - 31,326 - 31,326
- - 1,432 1,432 TNT Post Groep NV - - 36,451 36,451
- - 2,300 2,300 Tohoku Electric Power Co., Inc. - - 35,911 35,911
- - 8,000 8,000 Tokai Bank Ltd - - 69,819 69,819
- - 5,000 5,000 Tokio Marine & Fire Insur, Co. - - 65,455 65,455
- - 1,000 1,000 Tokyo Broadcasting Sys., Inc. - - 26,422 26,422
- - 5,800 5,800 Tokyo Electric Power Co., Inc. - - 129,606 129,606
- 2,000 1,000 3,000 Tokyo Electron, Ltd. - 166,255 83,054 249,309
- - 3,000 3,000 Toppan Printing Co. Ltd. - - 36,799 36,799
- - 8,000 8,000 Toray Industries, Inc. - - 44,116 44,116
- - 910 910 Tornet Fastighets AB - - 11,840 11,840
- 8,000 18,000 26,000 Toshiba Corporation - 50,376 113,244 163,620
- 270 1,720 1,990 Total Fina, S.A. - 36,595 232,469 269,064
- - 800 800 Toyobo Company Ltd. - - 1,205 1,205
- - 13,000 13,000 Toyota Motor Corp. - - 450,082 450,082
- - 700 700 Trelleborg AB - - 6,384 6,384
- - 1,304 1,304 Trinity Mirror Plc - - 5,614 5,614
- 73 600 673 UBS AG - 21,286 174,572 195,858
- - 280 280 Unibail SA - - 40,938 40,938
- - 94 94 Unicer Uniao Cervejjeira SA - - 1,780 1,780
- - 10,457 10,457 Unicredito Italiano - - 48,946 48,946
108
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- --------------------------------------------- ------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 1,697 1,697 Unilever NV - - $112,454 $112,454
- 3,500 5,049 8,549 Unilever, Plc. - 32,495 46,875 79,370
- - 1,504 1,504 Union Electrica Fenosa - - 22,005 22,005
- - 140,836 140,836 Unione Immobiliare SpA - - 72,440 72,440
- - 11,000 11,000 United Industrial Corp. Ltd. - - 5,985 5,985
13,000 6,000 19,000 United Overseas Bank Ltd. 98,621 45,452 144,073
- 5,000 5,000 United Overseas Land Ltd. - - 4,329 4,329
- - 1,171 1,171 United Utilities Plc - - 11,603 11,603
- 2,800 - 2,800 UPM-Kymmene Oyj - 88,599 - 88,599
- - 844 844 UPM-Kymmene4 - - 26,633 26,633
8,100 - 685 8,785 Usinor SA 112,859 - 9,518 122,377
- - 115 115 VA Technolocies AG - - 7,690 7,690
- - 239 239 Valeo SA - - 17,170 17,170
- - 5,362 5,362 Vallehermoso SA - - 46,305 46,305
- - 20 20 Valora Holding AG - - 5,091 5,091
- - 2,000 2,000 Veba AG - - 108,130 108,130
- - 213 213 Vedior NV - - 3,585 3,585
- - 2,000 2,000 Venture Manufacturing, Singapore - - 17,796 17,796
- - 3,000 3,000 Viag AG - - 55,380 55,380
- - 1,337 1,337 Vivendi SA - - 101,326 101,326
- - 48,995 48,995 Vodafone Airtouch Plc - - 228,242 228,242
- - 1,250 1,250 Volkswagen AG - - 73,892 73,892
- - 700 700 Volvo AB - - 18,258 18,258
- - 1,400 1,400 Volvo AB - - 36,175 36,175
- - 528 528 Weinerberger Baustoffindustrie - - 12,146 12,146
- - 450 450 Wesfarmers Ltd. - - 3,332 3,332
- - 133 133 Westfield Trust - - 247 247
- - 3,102 3,102 Westfield Trust - - 5,954 5,954
- 9,258 4,391 13,649 Westpac Banking Corp. - 59,432 28,175 87,607
- - 6,000 6,000 Wharf Holdings Ltd. - - 17,339 17,339
69,000 - - 69,000 Wheelock & Company, Ltd. 78,151 - - 78,151
- - 4,360 4,360 WMC Ltd. - - 18,712 18,712
- - 200 200 Wm-Data Nordik AB - - 8,402 8,402
- - 852 852 Wolters Kluwer NV - - 28,472 28,472
- 1,900 - 1,900 Woodside Petroleum, Ltd. - 11,455 - 11,455
- - 2,745 2,745 Woolworths Ltd. - - 9,330 9,330
109
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ------------------------------------------ ------------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
COMMON STOCK (continued)
- - 1,000 1,000 Yamanouchi Pharm. Co. - - $45,363 $45,363
- - 248 248 Zardoya Otis SA - - 2,786 2,786
- - 140 140 Zurich Allied AG - - 79,263 79,263
- - ------ ------
TOTAL COMMON STOCK $7,047,141 $8,734,776 $24,773,782 $40,555,699
---------- ---------- ----------- -----------
(Cost $6,373,084, $6,571,667,
$22,651,558 and $35,596,309
respectively)
PREFERRED STOCK
- - 152 152 Fiat SpA - - $2,336 $2,336
- - 400 400 Volkswagen AG - - 14,179 14,179
- - 4,007 4,007 News Corporation - - 27,129 27,129
- - 150 150 SAP AG - - 66,109 66,109
- - 1,951 1,951 Unilever NV - - 10,302 10,302
- - ------ ------
TOTAL PREFERRED STOCK - - $120,055 $120,055
-------- --------
(Cost $0, $0, $107,548 and $107,548
respectively)
RIGHTS & WARRANTS
- - 338 338 Banque Nationale de Paris - - $1,998 $1,998
- - 20 20 Lonza Group AG - - 11,678 11,678
- - 350 350 Linde AG - - 736 736
- - --- ---
TOTAL RIGHTS AND WARRANTS - - $14,412 $14,412
------- -------
(Cost $0, $0, $2,795 and $2,795
respectively)
Par Value
- ------------------------------------------
SHORT TERM INVESTMENTS
1,000 1,000 SSGA Money Market Fund - - $1,000 $1,000
- - ------ ------
REPURCHASE AGREEMENTS
State Street Bank Repurchase
Agreement, 5.15%, dated 10/31/99,
to be repurchased at $560,240 on
11/01/99, collateralized by U.S.
Treasury Note, 5.38%, 07/31/00,
with a par value of $565,000
$565,000 (Cost $560,000) $560,000 - - $560,000
State Street Bank Repurchase
Agreement, 5.15%, dated 10/31/99,
to be
110
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
SHARES MARKET VALUE
- ------------------------------------------ ------------------------------------------------
North North
AGSPC2 AGSPC2 American AGSPC2 AGSPC2 American
Int'l Int'l Int'l Int'l Int'l Int'l
Growth Value Equity Growth Value Equity
Fund Fund Fund Combined Fund Fund Fund Combined
---- ---- ---- -------- ---- ---- ---- --------
repurchased at $902,387 on
11/01/99, collateralized by U.S.
Treasury Note, 5.38%,7/31/00 ,
with a par value of $910,000
$902,000 (Cost $902,000) - $902,000 - $902,000
State Street Bank Repurchase
Agreement, 4.25%, dated 10/29/99,
to be repurchased at $719,255 on
11/01/99, collateralized by U.S.
Treasury Notes, 4.875%, 03/31/01 ,
with a par value of $740,000
$719,000 (Cost $719,000) - - 719,000 719,000
- - ------- -------
TOTAL SHORT TERM INVESTMENTS $560,000 $902,000 $720,000 $2,182,000
-------- -------- -------- ----------
(Cost $560,000, $902,000. $720,000
and $2,182,000 respectively)
TOTAL INVESTMENTS $7,607,141 $9,636,776 $25,628,249 $42,872,166
========== ========== =========== ===========
(Cost $6,933,084, $7,473,667,
$23,481,901 and $37,888,652
respectively)
111
Notes to Pro Forma Combined Financial Statements of Merger Between
North American International Equity Fund,
American General Series Portfolio Company 2 International Growth Fund and
American General Series Portfolio Company 2 International Value Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American International Equity Fund ("NAF") is a series of North American
Funds, 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 American General
Series Portfolio Company 2 International Growth Fund ("AGSPC2 Growth"), and
American General Series Portfolio Company 2 International Value Fund ("AGSPC2
Value") by NAF 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 AGSPC2 Growth and AGSPC2 Value in exchange for shares of
NAF 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 NAF 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 of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 Growth,
AGSPC2 Value and NAF 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 or the American
General Series Portfolio Company 2 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 AGSPC2 Growth
and AGSPC2 Value shares into NAF shares based upon the net asset value of the
NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
112
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series Portfolio 2 North American
Core Bond Core Bond Pro-forma Pro-forma
ASSETS: Fund Fund** Adjustments Combined
---- ------ ----------- --------
Investments in securities, at value ............................ $339,263,186 $12,164,731 $351,427,917
Cash ........................................................... -- 643 643
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for securities on
loan, at value .............................................. -- 1,618,069 1,618,069
Receivables:
Investments sold ......................................... 14,441,680 -- 14,441,680
Fund shares sold ......................................... 16,387 177 16,564
Interest ................................................. 3,919,598 234,729 4,154,327
From adviser ............................................. 134
Other assets ................................................... 54,795 40,287 95,082
------------ ------------ ------------ ------------
Total assets ....................................... 357,695,646 14,058,770 -- 371,754,416
LIABILITIES:
Collateral on securities loaned, at value ...................... -- 1,618,069 1,618,069
Payables:
Investments purchased .................................... 24,616,960 -- 24,616,960
Fund shares redeemed ..................................... 3,000,000 8,200 3,008,200
Dividends ................................................ 30,610
Dividend and interest withholding tax .................... -- 21 21
Investment adviser ....................................... 1,551,232 -- 1,551,232
Custodian and transfer agent fees ........................ -- 1,527 1,527
Distribution fee ......................................... 191 4,299 4,490
Other accrued expenses ................................... 669,457 1,296 670,753
------------ ------------ ------------ ------------
Total liabilities .................................. 29,837,840 1,664,022 -- 31,501,862
NET ASSETS ..................................................... $327,857,806 $12,394,748 -- $340,252,554
============ ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ............... $594,517 ($20,882) $573,635
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts .................................... (7,483,499) (577,532) ($8,061,031)
Unrealized appreciation (depreciation) on:
Investments ........................................... (8,604,320) (558,562) (9,162,882)
Capital shares at par value of $.001 ..................... 346,950 1,259 (313,665)(1) 34,544
Additional paid-in capital ............................... 343,004,158 13,550,465 313,665(1) 356,868,288
------------ ------------ ------------ ------------
Net assets ......................................... $327,857,806 $12,394,748 $0 $340,252,554
============ ============ ============ ============
** Formerly the Investment Quality Bond Fund
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
113
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series Portfolio 2 North American
Core Bond Core Bond Pro-forma Pro-forma
Fund Fund** Adjustments Combined
---- ------ ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value ........................................... $ 130,264 $ 3,506,653 $ 3,636,917
Shares outstanding ............................................ 13,785 356,060 (560)(1) 369,285
Net asset value (NAV) and redemption price per share ............ $ 9.45 $ 9.85 $ 9.85
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering price is reduced .... $ 9.92 $ 10.34 $ 10.45
Class B Shares
Net assets at value ........................................... $ 294,198 $ 4,294,772 $ 4,588,970
Shares outstanding ............................................ 31,133 436,117 (1,265)(1) 465,985
Net asset value, offering price and redemption price per share .. $ 9.45 $ 9.85 $ 9.85
Class C Shares
Net assets at value ........................................... $ -- $ 4,593,323 $ 4,593,323
Shares outstanding ............................................ -- 466,440 -- 466,440
Net asset value, offering price and redemption price per share .. $ -- $ 9.85 $ 9.85
Class I Shares
Net assets at value ........................................... $ 49,176 0 $ 49,176
Shares outstanding ............................................ 5,204 0 (212)(1) 4,992
Net asset value, offering price and redemption price per share .. $ 9.45 $ -- $ 9.85
Class II Shares
Net assets at value ........................................... $ 327,384,168 $ -- $ 327,384,168
Shares outstanding ............................................ 34,644,912 (1,407,941)(1) 33,236,971
Net asset value, offering price and redemption price per share .. $ 9.45 $ -- -- $ 9.85
** Formerly the Investment Quality Bond Fund
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
114
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series Portfolio 2 North American
Core Bond Core Bond Pro-forma Pro-forma
Fund Fund** Adjustments Combined
INVESTMENT INCOME:
Interest ................................................... $19,789,892 $1,197,389 $20,987,281
Dividends .................................................. 0 4,063 4,063
------------ ------------ ------------ ------------
Total income ............................................ 19,789,892 1,201,452 0 20,991,344
EXPENSES:
Distribution for Class A ................................... 297 19,724 119(1) 20,140
Distribution for Class B ................................... 1,749 46,976 48,725
Distribution for Class C ................................... -- 54,899 54,899
Investment adviser fee ..................................... 1,551,018 94,898 279,292(2) 1,925,208
Custodian fee .............................................. 431,393 36,179 467,572
Transfer agent fee ......................................... 850,770 37,925 888,695
Accounting/administration .................................. 97,221 24,557 (35,000)(3) 86,778
Audit and legal fees ....................................... 192,589 8,172 (15,000)(3) 185,761
Miscellaneous .............................................. 275,160 14,782 (15,000)(4) 274,942
------------ ------------ ------------ ------------
Expenses before reimbursement by investment adviser ....... 3,400,197 338,112 214,411 3,952,720
Reimbursement of expenses by investment adviser ............ (1,214,465) (74,346) 510,589(5) (778,222)
------------ ------------ ------------ ------------
Net expenses ...................................... 2,185,732 263,766 725,000 3,174,498
------------ ------------ ------------ ------------
Net investment income/(loss) ..................... 17,604,160 937,686 (725,000) 17,816,846
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ................................. (6,856,127) (205,464) (7,061,591)
Change in unrealized appreciation (depreciation) on:
Investments ............................................. (8,604,320) (979,000) (9,583,320)
------------ ------------ ------------ ------------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ......... (15,460,447) (1,184,464) -- (16,644,911)
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations .......... $2,143,713 ($246,778) ($725,000) $1,171,935
------------ ------------ ------------ ------------
** Formerly the Investment Quality Bond Fund
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds
are combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
115
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds
AAG Holding, Inc.,
$100,000 $100,000 6.875% due 06/01/08 $89,878 $89,878
Abraxas Petroleum Corp.,
20,000 20,000 11.50% due 11/01/04 12,800 12,800
Acetex Corp.,
10,000 10,000 9.75% due 10/01/03 8,600 8,600
Accuride Corp.,
10,000 10,000 9.25% due 02/01/08 9,212 9,212
Acindar Industria, Argentina,
10,000 10,000 11.25% due 02/15/04 6,900 6,900
Advanced Micro Devices, Inc.,
10,000 10,000 11.00% due 08/01/03 9,250 9,250
AK Steel Corp.,
15,000 15,000 7.875% due 02/15/09 13,650 13,650
Alaris Medical, Inc.,
15,000 15,000 Step-up due 08/01/08* 6,375 6,375
Allbritton Communications Co.,
20,000 20,000 8.875% due 02/01/08 19,050 19,050
Allegiance Corp.,
325,000 325,000 7.00% due 10/15/26 319,046 319,046
American Media Operations, Inc.,
5,000 5,000 10.25% due 05/01/09 4,900 4,900
Amerus Capital I,
100,000 100,000 8.85% due 02/01/27 86,050 86,050
AMSC Acquisition, Inc.,
5,000 5,000 12.25% due 04/01/08 3,100 3,100
Amvescap Plc,
150,000 150,000 6.60% due 05/15/05 143,545 143,545
Arco Chemical Co.,
5,000 5,000 9.80% due 02/01/20 4,728 4,728
Arizona Public Service,
$4,000,000 4,000,000 5.88% due 02/15/04 $3,833,920 3,833,920
Associates Corp. of North America,
120,000 120,000 5.75% due 11/01/03 115,854 115,854
AMC Entertainment, Inc.,
10,000 10,000 9.50% due 03/15/09 8,850 8,850
AT&T Canada, Inc.,
2,130,000 2,130,000 7.65% due 09/15/06 2,131,554 2,131,554
AT&T Capital Corp.,
3,880,000 3,880,000 6.88% due 01/16/01 3,877,905 3,877,905
AT&T Corp.,
3,550,000 3,550,000 6.50% due 03/15/29 3,281,691 3,281,691
6,390,000 6,390,000 6.00% due 03/15/09 5,652,594 5,652,594
Aztar Corp.,
10,000 10,000 8.875% due 05/15/07 9,450 9,450
B & G Foods Corp.,
10,000 10,000 9.625% due 08/01/07 8,900 8,900
BankAmerica Corp.,
114,000 114,000 9.50% due 04/01/01 118,309 118,309
BanPonce Financial Corp.,
250,000 250,000 6.75% due 08/09/01 248,600 248,600
Bell Atlantic Pennsylvania, Inc.,
$7,755,000 $7,755,000 6.00% due 12/01/28 $6,378,410 $6,378,410
116
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Bell Sports, Inc.,
10,000 10,000 11.00% due 08/15/08 9,825 9,825
Benedek Communications Corp.,
5,000 5,000 Step-up due 05/15/06* 4,375 4,375
Beneficial Corp.,
75,000 75,000 8.40% due 05/15/08 80,092 80,092
Boise Cascade Corp.,
100,000 100,000 9.90% due 10/01/01 104,109 104,109
Boise Cascade Office Products Co.,
100,000 100,000 7.05% due 05/15/05 92,719 92,719
BTI Telecommunications Corp.,
5,000 5,000 10.50% due 09/15/07 4,250 4,250
Capital One Bank,
2,500,000 2,500,000 6.40% due 05/08/03 2,415,425 2,415,425
Century Communications,
35,000 35,000 Step-up, due 01/15/08 * 14,963 14,963
Charter Communications Holdings,
15,000 15,000 8.625% due 04/01/09 14,175 14,175
Chiquita Brands International, Inc.,
5,000 5,000 10.0%, due 06/15/09 3,750 3,750
Cincinnati Milacron, Inc.,
130,000 130,000 7.875% due 05/15/00 130,178 130,178
Cinergy Corp.,
2,940,000 2,940,000 6.13% due 04/15/04 2,789,880 2,789,880
Classic Cable, Inc.,
5,000 5,000 9.875% due 08/01/08 5,083 5,083
The Cleveland Electric Illuminating
125,000 125,000 Company, 7.19% due 07/01/00 125,026 125,026
Coca Cola Enterprises, Inc.,
3,550,000 3,550,000 7.13% due 09/30/09 3,527,032 3,527,032
Concentric Network Corp.,
10,000 10,000 12.75% due 12/15/07 10,400 10,400
Consolidated Natural Gas Co.,
2,485,000 2,485,000 7.25% due 10/01/04 2,501,277 2,501,277
Costilla Energy, Inc.,
20,000 20,000 10.25% due 10/01/06* 5,000 5,000
Countrywide Home,
4,715,000 4,715,000 6.25% due 04/15/09 4,336,055 4,336,055
Credit National,
150,000 150,000 7.00%, due 11/14/05 144,592 144,592
DecisionOne Corp.,
10,000 10,000 9.75% due 08/01/07* 150 150
Deere & Co.,
3,550,000 3,550,000 6.55% due 07/15/04 3,505,980 3,505,980
Del Monte Foods Co.,
16,000 16,000 Step-up, due 12/15/07 * 12,160 12,160
Dime Capital Trust I,
150,000 150,000 9.33% due 05/06/27 148,030 148,030
Disco SA,
10,000 10,000 9.875% due 05/15/08 8,750 8,750
Doman Industries, Ltd.,
$10,000 $10,000 12.0% due 07/01/04, 144A $10,200 $10,200
117
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Domtar, Inc.,
10,000 10,000 9.50% due 08/01/16 10,340 10,340
Doral Financial Corp.,
$2,490,000 2,490,000 8.50% due 07/08/04 $2,482,911 2,482,911
Duane Reade, Inc.,
20,000 20,000 9.25% due 02/15/08 19,600 19,600
Duke Capital Corp
3,550,000 3,550,000 7.50% due 8/15/09 3,505,625 3,505,625
Dunlop Aerospace Holdings Plc,
10,000 10,000 11.875% due 05/15/09, 144A 10,100 10,100
EchoStar DBS Corp.,
30,000 30,000 9.375% due 02/01/09 29,700 29,700
Edison International, Inc.,
7,100,000 7,100,000 6.88% due 09/15/04 7,038,655 7,038,655
E.I. du Pont de Nemours and Co.,
3,550,000 3,550,000 6.88% due 10/15/09 3,523,517 3,523,517
Emmis Communications Corp.,
5,000 5,000 8.125% due 03/15/09 4,762 4,762
Energy Corporation of America,
20,000 20,000 9.50% due 05/15/07 9,600 9,600
Engle Homes, Inc.,
10,000 10,000 9.25% due 02/01/08 8,700 8,700
Enron Corp.,
3,675,000 100,000 3,775,000 6.75% due 09/01/04 3,611,129 98,532 3,709,661
EOP Operating LP,
95,000 95,000 6.50% due 01/15/04 91,661 91,661
Equitable Companies, Inc.,
100,000 100,000 7.00% due 04/01/28 90,970 90,970
e.Spire Communications, Inc.,
15,000 15,000 Step-up, due 04/01/06 * 8,325 8,325
Exodus Communications, Inc.,
10,000 10,000 11.25% due 07/01/08 10,225 10,225
Fairchild Semiconductor Corp.,
15,000 15,000 10.125% due 03/15/07 14,700 14,700
Falcon Building Products, Inc.,
15,000 15,000 Step-up due 06/15/07* 11,025 11,025
First Financial Caribbean Corp.,
135,000 135,000 7.84% due 10/10/06 130,741 130,741
First Union National Bank,
4,890,000 4,890,000 5.80% due 12/01/08 4,405,303 4,405,303
Fisher Scientific Int'l., Inc.,
10,000 10,000 9.00% due 02/01/08 9,400 9,400
Florida Windstorm Underwriting,
180,000 180,000 7.125% due 02/25/19, 144A 167,195 167,195
Fred Meyer, Inc.,
1,630,000 1,630,000 7.45% due 03/01/08 1,612,689 1,612,689
Frontiervision Holding, L.P.,
5,000 5,000 Step-up, due 09/15/07 * 4,225 4,225
Gaylord Container Corp.,
5,000 5,000 9.375% due 06/15/07 4,650 4,650
GCI, Inc.,
$25,000 $25,000 9.75% due 08/01/07 $23,625 $23,625
118
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
CoreBond Core Bond CoreBond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Globalstar LP,
15,000 15,000 10.75% due 11/01/04 7,950 7,950
Granite Broadcasting Corp.,
15,000 15,000 8.875% due 05/15/08 14,437 14,437
Grove Worldwide LLC,
15,000 15,000 9.25% due 05/01/08 4,950 4,950
Grupo Int'l Durango SA,
15,000 15,000 12.625% due 08/01/03 14,494 14,494
GST Telecommunications, Inc.,
20,000 20,000 Step-up due 11/15/07 * 20,000 20,000
Guitar Center Management Co., Inc.,
17,000 17,000 11.00% due 07/01/06 16,660 16,660
Huntsman Corp.,
10,000 10,000 9.50% due 07/01/07, 144A 9,325 9,325
Hyperion Telecommunications, Inc.,
10,000 10,000 13.0 % due 04/15/03* 8,550 8,550
ICI North America, Inc.,
65,000 65,000 8.875% due 11/15/06 68,824 68,824
Innova S. de R.L.,
20,000 20,000 12.875% due 04/01/07 16,100 16,100
Intermedia Communications, Inc.,
25,000 25,000 8.875% due 11/01/07 22,500 22,500
Intermedia Communications, Inc.,
10,000 10,000 8.60% due 06/01/08 8,850 8,850
Iridium Operations LLC,
25,000 25,000 11.25% due 07/15/05* 1,375 1,375
Iron Mountain, Inc.,
10,000 10,000 8.75% due 09/30/09 9,400 9,400
Israel Electric Corp., Ltd.,
$3,550,000 3,550,000 8.25% due 10/15/00 $3,564,023 3,564,023
Jacor Communications Co.,
10,000 10,000 8.75% due 06/15/07 10,050 10,050
Jackson National Life Insurance Co.,
100,000 100,000 8.15% due 03/15/27, 144A 99,270 99,270
J.C. Penney, Inc.,
80,000 80,000 7.40% due 04/01/37 77,714 77,714
Johnstown American Industries, Inc.,
10,000 10,000 11.75% due 08/15/05 10,175 10,175
K & F Industries, Inc.,
10,000 10,000 9.25% due 10/15/07 9,575 9,575
Kelley Oil & Gas Corp.,
7,000 7,000 14.00% due 04/15/03 6,440 6,440
KMC Telecom. Holdings, Inc.,
50,000 50,000 Step-up due 02/15/08* 27,000 27,000
KN Energy, Inc.,
100,000 100,000 6.65% due 03/01/05 95,431 95,431
LDM Technologies, Inc.,
20,000 20,000 10.75% due 01/15/07 17,600 17,600
Level 3 Communications, Inc.,
5,000 5,000 8.00% due 08/01/08 4,575 4,575
LIN Holdings Corp.,
$30,000 $30,000 Step-up due 03/01/08 * $19,575 $19,575
119
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Loew's Cineplex Entertainment Corp.,
10,000 10,000 8.875% due 08/01/08 9,025 9,025
Lyondell Chemical Company,
20,000 20,000 9.875% due 05/01/07 19,950 19,950
Mattress Discounters Corp.,
5,000 5,000 12.625% due 07/15/07, 144A 4,700 4,700
Mediq/PRN Life Support Services,
10,000 10,000 11.0% due 06/01/08 3,200 3,200
Merrill Lynch & Co., Inc.:
$7,385,000 7,385,000 7.20% due 10/15/12, MTNB $6,745,607 6,745,607
1,000,000 1,000,000 6.00% due 02/17/09 1,006,950 1,006,950
MetroNet Communications Corp.,
3,910,000 3,910,000 zero coupon due 06/15/08 3,042,293 3,042,293
MGC Communications, Inc.,
5,000 5,000 13.0% due 10/01/04 4,463 4,463
Multicanal,
20,000 20,000 13.125% due 04/15/09, 144A 18,850 18,850
Nash Finch Company,
10,000 10,000 8.50% due 05/01/08 8,500 8,500
National Rual Utilities,
2,000,000 2,000,000 5.70% due 01/15/10 1,791,300 1,791,300
NBD Bancorp,
300,000 300,000 8.25% due 11/01/24 321,117 321,117
Neenah Corp.,
10,000 10,000 11.125% due 05/01/07 9,225 9,225
Newcourt Credit Group, Inc.,
5,755,000 5,755,000 7.13% due 12/17/03 5,788,200 5,788,200
News America Holdings, Inc.,
250,000 250,000 9.25% due 02/01/13 274,710 274,710
Nextel Communications, Inc.,
50,000 50,000 Step up to 9.75% due 10/31/07 * 36,000 36,000
Nextlink Communications, Inc.,
30,000 30,000 Step-up due 04/15/08 * 17,850 17,850
Northwestern Bell Telephone,
1,835,000 1,835,000 7.75% due 05/01/30 1,812,796 1,812,796
Ohio National Life Insurance Co.,
150,000 150,000 8.50% due 05/15/26, 144A 155,638 155,638
Olympic Financial, Ltd.,
10,000 10,000 11.5% due 03/15/07 6,200 6,200
Owens Corning,
5,870,000 5,870,000 7.70% due 05/01/08 5,616,416 5,616,416
Newfield Exploration Co.,
45,000 45,000 7.45% due 10/15/07 41,885 41,885
NTL, Inc.,
20,000 20,000 Step-up due 10/01/08* 13,400 13,400
Owens & Minor, Inc.,
15,000 15,000 10.875% due 06/01/06 15,319 15,319
PanEnergy Corp.,
3,260,000 3,260,000 7.38% due 09/15/03 3,325,624 3,325,624
Peco Energy Transition Trust,
$3,780,000 $3,780,000 6.135 due 03/01/09 $3,537,814 $3,537,814
Pennsylvania Electric Co.,
3,675,000 3,675,000 6.63% due 04/01/19 3,263,327 3,263,327
120
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Petroleos Mexicanos,
$25,000 25,000 8.85% due 09/15/07 $22,688 22,688
P&L Coal Holdings Corp.,
25,000 25,000 9.625% due 05/15/08 24,063 24,063
Pindo Deli Financial Mauritius, Ltd.,
10,000 10,000 10.75% due 10/01/07 6,350 6,350
Pioneer Americas Acquisiton Corp.,
5,000 5,000 9.25% due 06/15/07 3,900 3,900
Plains Resources, Inc.,
10,000 10,000 Series B, 10.25% due 03/15/06 10,050 10,050
Psinet, Inc.,
5,000 5,000 11.50% due 11/01/08 5,206 5,206
Psinet, Inc.,
10,000 10,000 10.00% due 02/15/05 9,825 9,825
RBF Finance,
10,000 10,000 11.375% due 03/15/09 10,525 10,525
RCN Corporation,
15,000 15,000 Step-up due 07/01/08* 9,450 9,450
Repap New Brunswick, Inc.,
15,000 15,000 10.625% due 04/15/05 13,312 13,312
Republic New York Corp.,
155,000 155,000 9.75% due 12/01/00 159,912 159,912
Rite Aid Corp.:
1,590,000 1,590,000 7.13% due 01/15/07 1,113,000 1,113,000
4,000,000 4,000,000 6.00% due 12/15/05 2,800,000 2,800,000
Royal Bank of Scotland Group Plc,
150,000 150,000 6.40% due 04/01/09 137,834 137,834
Royster Clark, Inc.,
10,000 10,000 10.25% due 04/01/09, 144A 8,800 8,800
RSL Communications Plc,
10,000 10,000 9.125% due 03/01/08 8,700 8,700
Safeway, Inc.,
3,550,000 3,550,000 7.50% due 09/15/09 3,546,557 3,546,557
Satelites Mexicanos SA,
10,000 10,000 10.125% due 11/01/04 7,312 7,312
SCL Aereo Santiago,
100,000 100,000 6.95% due 07/01/12, 144A 93,042 93,042
Joseph E. Seagram & Sons, Inc.,
65,000 65,000 7.50% due 12/15/18 62,466 62,466
Security Benefit Life Co.,
150,000 150,000 8.75% due 05/15/16, 144A 155,101 155,101
Silgan Holdings, Inc.,
5,000 5,000 9.00% due 06/01/09 4,738 4,738
Standard Pacific Corp.,
5,000 5,000 8.50% due 06/15/07 4,550 4,550
Stater Bros. Holdings. Inc.,
10,000 10,000 10.75% due 08/15/06 10,175 10,175
Station Casinos, Inc.,
$15,000 $15,000 8.875% due 12/01/08, 144A $14,475 $14,475
Sullivan Graphics, Inc.,
20,000 20,000 12.75% due 08/01/05 20,450 20,450
Sovereign Specialty Chemicals,
15,000 15,000 9.50% due 08/01/07 14,775 14,775
121
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Southern Railway Company,
30,000 30,000 8.75% due 10/15/03 31,602 31,602
Sun Canada Financial Co.,
200,000 200,000 7.25% due 12/15/15, 144A 195,390 195,390
Telecommunications Techniques Co., LLC,
15,000 15,000 9.75% due 05/15/08 14,250 14,250
Tele-Communications, Inc.,
200,000 200,000 9.25% due 04/15/02 211,284 211,284
Tembec Finance Corp.,
5,000 5,000 9.875% due 10/31/05 5,162 5,162
Temple-Inland, Inc.,
$3,550,000 3,550,000 6.75% due 03/01/09 $3,333,273 3,333,273
Tenet Healthcare Corp.,
110,000 110,000 7.875% due 01/15/03 105,050 105,050
Texas Petrochemicals Corp.,
10,000 10,000 11.125% due 07/01/06 8,100 8,100
Time Warner Telecommunications, LLC,
5,000 5,000 9.75% due 07/15/08 5,100 5,100
Transamerica Finance Corp.,
6,520,000 6,520,000 7.25% due 08/15/02 6,551,948 6,551,948
Triad Hospitals Holdings, Inc.,
5,000 5,000 11.0% due 05/15/09, 144A 4,912 4,912
True Temper Sports, Inc.,
15,000 15,000 10.875% due 012/01/08 14,400 14,400
Tyco International Group SA,
5,215,000 5,215,000 6.88% due 09/05/02 5,181,937 5,181,937
Universal Hospital Services, Inc.,
15,000 15,000 10.25% due 03/01/08 10,200 10,200
U.S. Bancorp,
300,000 300,000 7.50% due 06/01/26 304,494 304,494
U.S. West Capital Funding, Inc.,
80,000 80,000 6.25% due 07/15/05 76,510 76,510
1,630,000 1,630,000 6.88% due 08/15/01 1,623,024 1,623,024
Valero Energy Corp.,
5,145,000 5,145,000 7.38% due 03/15/06 4,924,331 4,924,331
Verio, Inc.,
15,000 15,000 10.375% due 04/01/05 15,000 15,000
Verio, Inc.,
10,000 10,000 11.25% due 12/01/08 10,300 10,300
Viatel, Inc.,
15,000 15,000 11.25% due 04/15/08 14,175 14,175
Vlasic Foods, Inc.
15,000 15,000 10.25% due 07/01/09 14,100 14,100
Wachovia Corp.,
3,260,000 3,260,000 5.63% due 12/15/08 2,917,570 2,917,570
Wesco Distribution, Inc.,
15,000 15,000 9.125% due 06/01/08 13,425 13,425
Western Financial Savings,
25,000 25,000 8.875% due 08/01/07 22,125 22,125
Williams Companies, Inc.,
$3,260,000 3,260,000 7.63% due 07/15/19 $3,170,741 3,170,741
WorldCom, Inc.,
200,000 200,000 7.55% due 04/01/04 203,332 203,332
122
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Corporate Bonds - cont'd
Werner Holding, Inc.,
$5,000 $5,000 10.00% due 11/15/07 $4,850 $4,850
YPF SA,
70,000 70,000 8.00% due 02/15/04 68,928 68,928
ZSC Specialty Corp.,
10,000 10,000 11.0% due 07/01/09, 144A 10,050 10,050
Total Corporate Bonds
(Cost - $149,666,830, $7,000,829, $145,068,283 $ 6,674,240 $151,742,523
& $156,667,659, respectively)
Foreign Bonds
Cable & Wire Optus, Ltd.,
$3,260,000 $3,260,000 8.13% due 06/15/09 $3,272,421 $3,272,421
Fairfax Financial Holdings, Ltd.:
2,935,000 2,935,000 8.25% due 10/01/15 2,676,749 2,676,749
3,780,000 3,780,000 7.38% due 03/15/06 3,439,134 3,439,134
Newcourt Credit Group, Inc.,
2,610,000 2,610,000 6.88% due 02/16/05 2,578,497 2,578,497
Quebec-Prov,
1,775,000 7.50% due 09/15/29 1,783,520 1,783,520
United News & Media, Plc.,
3,260,000 3,260,000 7.75% due 07/01/09 3,134,588 3,134,588
Total Foreign Bonds
(Cost - $15,761,123, $0, &
$15,761,123, respectively) $16,884,909 $ - $16,884,909
U.S. Government Bonds
U.S. Treasury Bonds
$11,210,000 $11,210,000 5.25% due 02/15/29 $9,689,588 $9,689,588
$560,000 560,000 7.50% due 11/15/16 $617,927 617,927
125,000 125,000 9.25% due 02/15/16 159,160 159,160
1,030,000 1,030,000 12.00% due 08/15/13 1,412,068 1,412,068
U. S. Treasury Notes:
2,130,000 2,130,000 3.88% due 01/15/09 2,090,062 2,090,062
2,075,000 2,075,000 5.63% due 02/15/06 2,024,744 2,024,744
15,975,000 15,975,000 6.00% due 08/15/04 16,012,343 16,012,343
1,950,000 1,950,000 7.50% due 02/15/05 2,072,187 2,072,187
Federal Farm Credit Bank,
5,540,000 5,540,000 6.75% due 07/07/09 5,502,771 5,502,771
Federal Home Loan Bank:
3,780,000 3,780,000 5.81% due 03/23/09 3,511,847 3,511,847
4,000,000 4,000,000 5.32% due 12/23/08 3,591,240 3,591,240
Federal Home Loan Mortgage Corp.
$3,460,793 $751,185 $4,211,978 6.00% due 11/01/13 - 09/25/22 $3,331,014 $706,274 $4,037,288
4,095,147 4,095,147 6.00% due 06/01/29 3,821,265 3,821,265
6,000,000 6,000,000 6.22% due 03/18/08 5,636,220 5,636,220
3,260,000 3,260,000 6.25% due 07/15/04 3,230,953 3,230,953
100,000 100,000 6.50% due 06/15/23 96,031 96,031
200,000 200,000 7.00% due 09/15/21 196,936 196,936
131,411 131,411 7.00% due 03/01/12 131,411 131,411
41,386 41,386 7.00% due 07/01/12 41,372 41,372
829,064 829,064 7.00% due 09/01/12 828,799 828,799
1,818,449 1,818,449 7.00% due 04/01/14 1,817,867 1,817,867
12,000,000 12,000,000 7.00% due 07/15/28 11,790,000 11,790,000
123
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
U.S. Government Bonds - cont'd
Federal Home Loan Mortgage Corp., cont'd
3,474,662 3,474,662 7.00% due 08/01/29 3,413,856 3,413,856
8,745 8,745 8.00% due 01/01/22 8,964 8,964
515,428 515,428 8.00% due 08/01/24 526,381 526,381
64,478 64,478 8.00% due 10/01/25 65,829 65,829
520,281 520,281 8.00% due 09/01/26 531,092 531,092
302,362 302,362 8.00% due 10/01/26 308,645 308,645
411,259 411,259 8.00% due 03/01/27 419,871 419,871
15,741 15,741 8.00% due 07/01/27 16,068 16,068
98,756 98,756 8.00% due 08/01/27 100,792 100,792
802,042 802,042 8.00% due 09/01/27 818,581 818,581
347,146 347,146 8.00% due 10/01/27 354,304 354,304
529,590 529,590 8.00% due 03/01/28 540,595 540,595
458,823 458,823 8.00% due 11/01/28 468,431 468,431
34,913 34,913 8.50% due 08/01/10 35,928 35,928
13,289 13,289 8.50% due 07/01/14 13,767 13,767
23,210 23,210 8.50% due 06/01/18 23,946 23,946
21,117 21,117 8.50% due 06/01/20 21,952 21,952
245,734 245,734 8.50% due 11/01/20 255,460 255,460
72,789 72,789 8.50% due 01/02/22 75,678 75,678
15,349 15,349 8.50% due 09/01/22 15,953 15,953
26,088 26,088 8.50% due 07/01/24 27,066 27,066
530,185 530,185 8.50% due 11/01/26 549,234 549,234
72,110 72,110 8.50% due 01/01/27 74,700 74,700
Federal National Mortgage Association
1,747,591 1,747,591 5.50% due 06/01/04 1,644,361 1,644,361
7,864,952 7,864,952 5.50% due 02/01/14 7,400,369 7,400,369
348,645 348,645 5.50% due 08/01/28 316,176 316,176
198,381 198,381 6.00% due 12/01/28 184,927 184,927
967,758 967,758 6.00% due 12/01/28 903,344 903,344
15,066,893 15,066,893 6.00% due 01/01/29 14,045,056 14,045,056
568,699 568,699 6.00% due 02/01/29 530,130 530,130
391,782 391,782 6.00% due 03/01/29 365,212 365,212
563,254 563,254 6.00% due 04/01/29 525,054 525,054
19,734 19,734 6.18% due 07/01/08 18,650 18,650
54,134 54,134 6.27% due 11/01/07 51,609 51,609
3,780,000 3,780,000 6.28% due 02/12/08 3,622,297 3,622,297
19,728 19,728 6.295% due 06/01/08 18,784 18,784
19,642 19,642 6.30% due 01/01/08 18,744 18,744
196,490 196,490 6.305% due 02/01/08 192,202 192,202
19,462 19,462 6.34% due 01/01/0/ 18,638 18,638
$4,050,000 $4,050,000 6.37% due 01/30/08 $3,901,284 $3,901,284
$19,227 19,227 6.39% due 01/01/06 $18,690 18,690
19,640 19,640 6.43% due 01/01/08 18,887 18,887
3,550,000 3,550,000 6.50% due 08/15/04 3,556,106 3,556,106
4,000,000 4,000,000 6.65% due 11/07/07 3,900,640 3,900,640
18,828 18,828 6.981% due 06/01/07 18,824 18,824
12,552 12,552 7.00% due 09/01/10 12,538 12,538
9,380 9,380 7.00% due 07/01/11 9,365 9,365
14,450 14,450 7.00% due 11/01/11 14,427 14,427
19,593 19,593 7.00% due 02/01/12 19,562 19,562
34,430 34,430 7.00% due 05/01/12 34,377 34,377
21,224 21,224 7.00% due 06/01/12 21,190 21,190
124
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
U.S. Government Bonds - cont'd
Federal National Mortgage Association,
cont'd.
16,851 16,851 7.00% due 09/01/12 16,825 16,825
17,645 17,645 7.00% due 10/01/12 17,617 17,617
23,934 23,934 7.00% due 07/01/13 23,896 23,896
484,647 484,647 7.00% due 04/01/28 475,861 475,861
111,377 111,377 7.00% due 08/01/28 109,358 109,358
102,552 102,552 7.00% due 10/01/28 100,693 100,693
107,237 107,237 7.00% due 11/01/28 105,293 105,293
108,248 108,248 7.00% due 12/01/28 106,286 106,286
114,967 114,967 7.00% due 02/01/29 112,883 112,883
308,574 308,574 7.00% due 05/01/29 302,979 302,979
3,116,593 3,116,593 7.00% due 07/01/29 3,060,090 3,060,090
19,539 19,539 7.04% due 03/01/07 19,514 19,514
19,491 19,491 7.28% due 10/01/06 19,740 19,740
14,941 14,941 7.50% due 04/01/09 15,111 15,111
35,739 35,739 7.50% due 10/01/09 36,198 36,198
11,981 11,981 7.50% due 02/01/17 12,094 12,094
37,091 37,091 7.50% due 12/01/22 37,323 37,323
23,966 23,966 7.50% due 06/01/25 24,086 24,086
18,470 18,470 7.50% due 07/01/25 18,539 18,539
477,772 477,772 7.50% due 10/01/25 479,564 479,564
333,684 333,684 7.50% due 12/01/25 334,622 334,622
20,091 20,091 7.50% due 05/01/26 20,147 20,147
476,814 476,814 7.50% due 07/01/26 478,154 478,154
435,811 435,811 7.50% due 01/01/27 436,761 436,761
12,912 12,912 7.50% due 06/01/27 12,940 12,940
81,506 81,506 7.50% due 07/01/27 81,684 81,684
738,076 738,076 7.50% due 08/01/27 739,685 739,685
554,797 554,797 7.50% due 09/01/27 556,006 556,006
57,331 57,331 7.50% due 10/01/27 57,495 57,495
635,503 635,503 7.50% due 11/01/27 636,889 636,889
11,249 11,249 7.50% due 12/01/27 11,273 11,273
34,046 34,046 7.50% due 01/01/28 34,120 34,120
14,842 14,842 7.50% due 01/02/28 14,874 14,874
23,008 23,008 7.50% due 04/01/28 23,058 23,058
32,409 32,409 7.50% due 05/01/28 32,491 32,491
19,146 19,146 7.50% due 06/01/28 19,188 19,188
424,447 424,447 7.50% due 07/01/28 425,372 425,372
2,000,000 2,000,000 7.50% due 02/25/29 2,004,380 2,004,380
168,812 168,812 8.50% due 08/01/14 175,860 175,860
$398,890 $398,890 8.50% due 09/01/14 $414,674 $414,674
40,390 40,390 8.50% due 10/01/14 41,988 41,988
161,905 161,905 8.50% due 11/01/14 168,311 168,311
224,242 224,242 8.50% due 01/01/15 232,532 232,532
75,440 75,440 8.50% due 06/01/15 78,387 78,387
73,358 73,358 8.50% due 11/01/17 75,919 75,919
52,780 52,780 8.50% due 07/01/24 54,676 54,676
39,703 39,703 8.50% due 11/01/24 41,129 41,129
82,301 82,301 8.50% due 01/01/25 85,258 85,258
73,622 73,622 8.50% due 10/01/26 76,267 76,267
57,967 57,967 8.50% due 12/01/26 60,049 60,049
116,129 116,129 8.50% due 01/01/27 120,301 120,301
234,442 234,442 8.50% due 02/01/27 242,866 242,866
125
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
U.S. Government Bonds - cont'd
Federal National Mortgage Association,
cont'd.
463,195 463,195 8.50% due 03/01/27 479,838 479,838
956,573 956,573 8.50% due 05/01/27 990,941 990,941
141,798 141,798 8.50% due 06/01/27 146,894 146,894
362,401 362,401 8.50% due 07/01/27 375,421 375,421
457,589 457,589 8.50% due 08/01/27 474,030 474,030
303,206 303,206 8.50% due 10/01/27 314,099 314,099
329,309 329,309 8.50% due 11/01/27 341,141 341,141
469,194 469,194 8.50% due 12/01/27 486,052 486,052
95,630 95,630 8.50% due 04/01/28 99,383 99,383
42,776 42,776 8.50% due 05/01/28 44,313 44,313
436,248 436,248 8.50% due 07/01/28 451,923 451,923
404,172 404,172 8.50% due 08/01/28 418,694 418,694
Government National Mortgage Association
25,545 25,545 6.50% due 10/15/24 24,651 24,651
70,888 70,888 6.50% due 03/15/26 68,120 68,120
43,258 43,258 6.50% due 07/15/26 41,568 41,568
432,488 432,488 6.50% due 04/15/28 413,295 413,295
504,820 504,820 6.50% due 09/15/28 482,417 482,417
54,386 54,386 6.50% due 11/15/28 51,972 51,972
4,501,494 4,501,494 6.50% due 12/15/28 4,301,718 4,301,718
1,754,920 1,754,920 6.50% due 01/15/29 1,677,036 1,677,036
$503,176 503,176 7.00% due 06/15/23 - 10/15/23 $496,886 496,886
Total US Government Bonds
(Cost - $152,369,152, $2,271,538, $149,006,573 $4,415,740 $153,422,313
& $154,640,690, respectively)
Commercial Paper
CVS Corporation,
$6,639,000 $6,639,000 5.33% due 11/03/99 $6,637,030 $6,637,030
6,600,000 6,600,000 Eaton Corp., 5.38%, due 11/02/99 6,599,012 6,599,012
Jefferson-Pilot Corp.,
8,046,000 8,046,000 5.38% due 11/01/99 8,046,000 8,046,000
Raytheon Co.,
3,523,000 3,523,000 5.50% due 11/04/99 3,521,379 3,521,379
OGE Energy Corp.,
3,500,000 3,500,000 5.37% due 11/01/99 3,500,000 3,500,000
Total Commercial Paper
(Cost $28,303,421, $0, & $28,303,421 $28,303,421 $0 $28,303,421
respectively)
Municipal Securities
Philadelphia, PA, Retirement System
$170,000 $170,000 Authority, 5.59% due 04/15/05 $159,195 $159,195
Phoenix, AZ, Civic Improvement
125,000 125,000 Corp., 6.30% due 07/01/08 117,284 117,284
Southern California Public Power
50,000 50,000 Authority, 6.93% due 05/15/17 48,859 48,859
Total Municipal Securities
(Cost $350,856) $0 $325,338 $325,338
126
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
AGSPC 2 North American AGSPC 2 North American
Core Bond Core Bond Core Bond Core Bond
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Other Asset Backed Securities
Aesop Funding II LLC,
$100,000 $100,000 6.40% due 10/20/03, 144A $98,999 $98,999
First Union Lehman Bros., Series 1997,
200,000 200,000 Class A2, 6.60% due 05/18/07 193,806 193,806
Continental Airlines,
97,919 97,919 6.90% due 01/02/18 91,724 91,724
Continental Airlines pass-through,
68,494 68,494 6.648% due 09/15/17 63,246 63,246
Total Other Asset Backed Securities
(Cost $0, $468,769, & $468,769, respectively) $0 $447,775 $447,775
Shares Market Value
- ----------------------------------------- ---------------------------------------
Common Stocks
557 557 Arch Communications Group $2,785 $2,785
Total Common Stocks
(Cost $0, $49,664, and $49,664, respectively) $ - $ 2,785 $ 2,785
Preferred Stocks
5 5 Concentric Network, PIK 13.5% $4,762 $4,762
25 25 Fairfield Mfg. Co., Inc., PIK 11.25% 24,813 24,813
145 145 Primedia, Inc., 8.625% 12,724 12,724
2 2 SF Holdings Group, Inc.*, 13.75% 6,050 6,050
74 74 SF Holdings Group, Inc. * 144A 10 10
Total Preferred Stocks
(Cost $0, $61,614, and $61,614, respectively) $ - $ 48,359 $ 48,359
Warrants
American Mobile Satellite,
5 5 Exp. 04/01/08, 144A $91 $91
Concentric Network Corp.*,
5 5 Exp. 12/15/07 1,250 1,250
KMC Telecom. Holdings, Inc.*,
50 50 Exp. 04/15/08, 144A 153 153
Total Warrants
(Cost - $0, $0, & $0, respectively) $ - $ 1,494 $ 1,494
FACE AMOUNT MARKET VALUE
- ----------------------------------------- ---------------------------------------
Short Term
$249,000 $249,000 Repurchase Agreement with Paine Webber,
dated 10/29/99 at 5.22% to be repurchased
at $249,108 on 11/01/99, collateralized by
$260,000 U.S. Treasury Notes, 5.625%
due 05/15/08 (valued at $257,616 including
interest) $249,000 $249,000
Total Short Term
(Cost - $0, $249,000, & $249,000, $ - $ 249,000 $ 249,000
repsectively)
TOTAL INVESTMENTS
(Cost $347,867,506, $12,723,293, & $339,263,186 $ 12,164,731 $351,427,917
$360,590,799, respectively)
*non-income producing
127
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Core Bond Fund and
American General Series Portfolio Company 2 Core Bond Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Core Bond Fund ("NAF") (formerly the North American Investment
Quality Bond Fund) is a series of North American Funds, 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 American General Series Portfolio Company 2 Core Bond
Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
128
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Strategic Strategic Pro-forma Pro-forma
ASSETS: Bond Fund Income Fund Adjustments Combined
--------- ----------- ----------- --------
Investments in securities, at value ............................. $5,975,736 $52,135,699 $58,111,435
Receivable for forward foreign currency contracts to sell ....... 1,924,403
Forward foreign currency contracts to buy, at value ............. 1,365,629
Cash ............................................................ -- 69,642 69,642
Investment in State Street Bank & Trust Company Navigator
Securities Lending Trust held as collateral for securities on
loan, at value ............................................... -- 6,274,430 6,274,430
Receivables:
Investments sold .......................................... 86,780 210,824 297,604
Fund shares sold .......................................... 15,000 27,200 42,200
Dividends ................................................. -- 2,836 2,836
Interest .................................................. 103,081 1,049,042 1,152,123
Other assets .................................................... 34,982 59,785 94,767
------------ ------------ ------------ ------------
Total assets ........................................ 6,215,579 63,119,490 -- 69,335,069
LIABILITIES:
Forward foreign currency contracts to sell, at value ............ 1,918,812
Collateral on securities loaned, at value ....................... -- 6,274,430 6,274,430
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 8) ........................................ 1,370,978
Investments purchased ..................................... 578,337 2,042,958 2,621,295
Fund shares redeemed ...................................... -- 187,607 187,607
Dividends ................................................. 132,167
Dividend and interest withholding tax ..................... -- 4,660 4,660
Investment adviser ........................................ 34,365 38,604 72,969
Custodian and transfer agent fees ......................... -- 11,330 11,330
Distribution fee .......................................... 1,602 22,535 24,137
Other accrued expenses .................................... 35,600 29,371 64,971
------------ ------------ ------------ ------------
Total liabilities ................................... 649,904 12,033,452 -- 12,683,356
NET ASSETS ...................................................... $5,565,675 $51,086,038 $0 $56,651,713
============ ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ................ $2,125 ($94,527) ($92,402)
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and forward foreign
currency contracts ..................................... (128,913) (4,012,655) ($4,141,568)
Unrealized appreciation (depreciation) on:
Investments ............................................ (119,005) (4,208,516) (4,327,521)
Futures ................................................ -- --
Foreign currency and forward foreign currency contracts (4,371) (4,371)
Capital shares at par value of $.001 ...................... 5,830 6,079 (5,169)(1) 6,740
Additional paid-in capital ................................ 5,805,638 59,400,028 5,169(1) 65,210,835
------------ ------------ ------------ ------------
Net assets .......................................... $5,565,675 $51,086,038 $0 $56,651,713
============ ============ ============ ============
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
129
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Strategic Strategic Pro-forma Pro-forma
Bond Fund Income Fund Adjustments Combined
--------- ----------- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value .................................................. $ 1,298,184 $ 8,996,901 $10,295,085
Shares outstanding ................................................... 135,983 1,071,397 18,563(1) 1,225,943
Net asset value (NAV) and redemption price per share ................... $ 9.55 $ 8.40 $ 8.40
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering price is reduced ........... $ 10.03 $ 8.82 $ 8.91
Class B Shares
Net assets at value .................................................. $ 1,704,237 $21,340,388 $23,044,625
Shares outstanding ................................................... 178,540 2,538,419 2,562,523(1) 2,741,063
Net asset value, offering price and redemption price per share ......... $ 9.55 $ 8.41 $ 8.41
Class C Shares
Net assets at value .................................................. $ -- $20,748,749 $20,748,749
Shares outstanding ................................................... -- 2,468,053 -- 2,468,053
Net asset value, offering price and redemption price per share ......... $ -- $ 8.41 $ 8.41
Class I Shares
Net assets at value .................................................. $ 1,280,550 0 $ 1,280,550
Shares outstanding ................................................... 134,137 0 18,128(1) 152,265
Net asset value, offering price and redemption price per share ......... $ 9.55 $ -- $ 8.41
Class II Shares
Net assets at value .................................................. $ 1,282,704 $ -- $ 1,282,704
Shares outstanding ................................................... 134,362 18,159(1) 152,521
Net asset value, offering price and redemption price per share ......... $ 9.55 $ -- -- $ 8.41
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
130
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series
Portfolio 2 North American
Strategic Strategic Pro-forma Pro-forma
Bond Fund Income Fund Adjustments Combined
--------- ----------- ----------- --------
INVESTMENT INCOME:
Interest ......................................................... $421,963 $6,483,191 $6,905,154
Total income .................................................. 421,963 6,483,191 0 6,905,154
EXPENSES:
Distribution for Class A ......................................... 3,142 42,157 1,257(1) 46,556
Distribution for Class B ......................................... 14,194 268,194 282,388
Distribution for Class C ......................................... -- 287,809 287,809
Investment adviser fee ........................................... 31,224 498,515 5,656(2) 535,395
Custodian fee .................................................... 7,323 91,391 98,714
Transfer agent fee ............................................... 14,255 103,440 117,695
Accounting/administration ........................................ 4,706 104,964 (4,000)(3) 105,670
Audit and legal fees ............................................. 3,171 34,703 (3,000)(3) 34,874
Miscellaneous .................................................... 57,296 58,419 (50,000)(4) 65,715
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ............. 135,311 1,489,592 (50,087) 1,574,816
Reimbursement of expenses by investment adviser .................. (70,610) (113,062) 62,087(5) (121,585)
----------- ----------- ----------- -----------
Net expenses ............................................ 64,701 1,376,530 12,000 1,453,231
----------- ----------- ----------- -----------
Net investment income/(loss) ............................ 357,262 5,106,661 (12,000) 5,451,923
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND FORWARD
FOREIGN CURRENCY CONTRACTS:
Net realized gain/(loss) on:
Investment transactions ....................................... (128,901) (3,377,733) (3,506,634)
Foreign currency and forward foreign currency contracts ....... 2,113 (246,365) (244,252)
Change in unrealized appreciation (depreciation) on:
Investments ................................................... (119,005) (281,966) (400,971)
Translation of foreign currency and forward foreign currency
contracts ................................................. -- 255,346 255,346
----------- ----------- ----------- -----------
Net gain/(loss) on investments, foreign currency
and forward foreign currency contracts ............... (245,793) (3,650,718) -- (3,896,511)
Net increase in net assets resulting from operations ................ $111,469 $1,455,943 ($12,000) $1,555,412
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds are
combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
131
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS
Aerospace
B.E. Aerospace, Inc.,
- $250,000 $250,000 8.00% due 03/01/08 - $218,125 $218,125
Lear Corporation,
- 375,000 375,000 8.11% due 05/15/09 - 358,579 358,579
-------- -------
- 576,704 576,704
Apparel & Products
Anvil Knitwear, Inc., Series B,
88,000 - 88,000 10.88% due 03/15/07 57,420 - 57,420
------- ------
Auto-Cars
100,000 - 100,000 Diamond Triumph,
9.25% due 04/01/08 85,000 - 85,000
------- ------
Banking
- 540,000 540,000 Commerzbank,
10.25% due 04/28/00 - 351,486 351,486
- 400,000 400,000 European Bank Recon. & Development,
10.50% due 01/25/01 - 90,295 90,295
- 140,000 140,000 Nordiska Investeringsbanken,
17.75% due 04/15/02 - 34,921 34,921
------- ------
- 476,702 476,702
Business Services
Comdisco, Inc.,
- 400,000 400,000 6.00% due 01/30/02 - 389,020 389,020
- CSC Holdings, Inc.,
- 500,000 500,000 10.50% due 05/15/16 - 545,000 545,000
- Iron Mountain, Inc.,
- 500,000 500,000 10.125% due 10/01/06 - 510,000 510,000
-------- -------
- - 1,444,020 1,444,020
- Chemical Products
- Revlon Worldwide Corp.,
- 600,000 600,000 Series B, zero coupon due 03/15/01 - 132,000 132,000
-------- -------
Containers-Metal/Glass
BWAY Corp.,
100,000 - 100,000 10.25% due 04/15/07 100,250 - 100,250
-------- -------
Crude Petroleum & Natural Gas
Bellwether Exploration Co.,
- 250,000 250,000 10.875% due 04/01/07 - 230,625 230,625
Benton Oil & Gas Co.,
- 200,000 200,000 11.625% due 05/01/03 - 144,500 144,500
132
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS (continued)
Crude Petrol. & Nat. Gas (cont'd)
Pennzoil Company,
- $500,000 $500,000 10.25% due 11/01/05 - $542,905 $542,905
United Refining Co.,
- 250,000 250,000 10.75% due 06/15/07 - 181,250 181,250
-------- -------
- 1,099,280 1,099,280
Drugs & Health Care
Express Scripts, Inc.,
$50,000 - 50,000 9.63% due 06/15/09 $50,000 - 50,000
Fresenius Medical Care Capital Trust,
- 250,000 250,000 9.00% due 12/01/06 236,250 236,250
ICN Pharmaceuticals, Inc.,
100,000 - 100,000 8.75% due 11/15/08 91,000 - 91,000
Unilab Finance Corp.,
100,000 - 100,000 11.00% due 04/01/06 109,000 - 109,000
Universal Hospital Service
35,000 - 35,000 10.25% due 03/01/08 23,800 - 23,800
------- ------
273,800 236,250 510,050
Electronics
Breed Technologies, Inc.,
- 500,000 500,000 9.25% due 04/15/08 - 15,000 15,000
Jordan Telecommunication Products,
- 250,000 250,000 Series B Step Up due 08/01/07 - 205,000 205,000
Protection One, Inc.,
- 250,000 250,000 8.125% due 01/15/09, 144A - 50,000 50,000
------- ------
- 270,000 270,000
Energy & Utilities
Costilla Energy, Inc.,
- 500,000 500,000 10.25% due 10/01/06 - 125,000 125,000
High Voltage Engineering Corp.,
- 250,000 250,000 10.5% due 08/15/04 - 230,000 230,000
-------- -------
- 355,000 355,000
Financial Serveces
ContiFinancial Corp.,
- 500,000 500,000 8.125% due 04/01/08 - 100,000 100,000
Ford Motor Credit Company,
- 300,000 300,000 7.375% due 10/28/09 - 302,418 302,418
KFW International Finance,
- 860,000 860,000 16.30% due 06/24/03 - 218,083 218,083
KFW International Finance,
- 34,000,000 34,000,000 2.05% due 09/21/09 - 331,065 331,065
Merrill Lynch & Co., Inc.,
- 190,000 190,000 6.00% due 11/15/04 - 182,866 182,866
Merrill Lynch & Co., Inc.,
- 370,000 370,000 5.97% due 09/11/00 - 252,155 252,155
133
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS (continued)
Financial Services (continued)
Navistar International Corp.,
$500,000 $500,000 8.00% due 02/01/08 - $478,750 $478,750
Ono Finance, Plc.,
$100,000 - 100,000 13.00% due 05/01/09 $105,500 - 105,500
Toyota Motor Credit Corp.,
160,000 160,000 6.25% due 08/04/03 - 255,813 255,813
-------- -------
105,500 2,121,150 2,226,650
Food & Beverages
Agrilink Foods, Inc.,
100,000 - 100,000 11.88% due 11/01/08 87,500 - 87,500
Ameriserve Food Distr, Inc.,
- 500,000 500,000 10.125% due 07/15/07 - 285,000 285,000
Disco S.A.,
100,000 - 100,000 9.88% due 05/15/08 87,500 - 87,500
------- ------
175,000 285,000 460,000
Homebuilders
Beazer Homes USA, Inc.:
75,000 - 75,000 9.00% due 03/01/04 69,938 - 69,938
25,000 - 25,000 8.88% due 04/01/08 22,500 - 22,500
------- ------
92,438 - 92,438
Hotels & Restaurants
100,000 - 100,000 Apple South, Inc.,
9.75% due 06/01/06 95,250 - 95,250
100,000 - 100,000 Dominos, Inc., Series B,
10.38% due 01/15/09 91,000 - 91,000
Prime Eospitality Corp.,
- 450,000 450,000 9.75% due 04/01/07 - 409,500 409,500
-------- -------
186,250 409,500 595,750
Industrials
Alvey Systems, Inc.,
- 375,000 375,000 11.375% due 01/31/03 - 386,250 386,250
Berry Plastics Corp.,
- 650,000 650,000 12.25% due 04/15/04 - 657,313 657,313
CFP Holdings, Inc.,
- 250,000 250,000 11.625% due 01/15/04 - 207,500 207,500
Foamex, L.P.,
- 375,000 375,000 9.875% due 05/15/07 - 322,500 322,500
ICG Holdings, Inc.,
- 500,000 500,000 Step up to 13.50% due 09/15/05 - 427,500 427,500
P&L Coal Holdings Corp.,
- 250,000 250,000 8.875% due 05/15/08 - 240,625 240,625
Polymer Group, Inc.,
- 150,000 150,000 8.75% due 03/01/08 - 141,000 141,000
- 190,000 190,000 9.00% due 07/01/07 - 182,400 182,400
Praxair, Inc.,
- 300,000 300,000 6.15% due 04/15/03 - 289,644 289,644
134
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS (continued)
Industrials (continued)
Raytheon Company,
- $175,000 $175,000 6.15% due 11/01/08 - $157,099 $157,099
Stellex Industries, Inc.,
- 250,000 250,000 9.50% due 11/01/07 - 185,000 185,000
Synthetic Industries, Inc.,
- 25,000 25,000 9.25% due 02/15/07 - 25,000 25,000
Williams Scotsman, Inc.,
- 500,000 500,000 9.875% due 06/01/07 - 478,750 478,750
-------- -------
- 3,700,581 3,700,581
Leisure Time
Harrah's, Inc.,
- 500,000 500,000 7.875% due 12/15/05 - 476,250 476,250
Harveys Casino Resorts,
100,000 - 10.63% due 06/01/06 102,000 - 102,000
Mohegan Tribal Gaming Authority,
- 225,000 225,000 8.75% due 01/01/09 - 218,813 218,813
Park Place Entertainment Corp.,
- 500,000 500,000 7.875% due 12/15/05 - 471,250 471,250
0 Speedway Motorsports, Inc., Series D,
100,000 - 8.50% due 08/15/07 96,000 - 96,000
------- ------
198,000 1,166,313 1,364,313
Other
American Standard, Inc.,
- 400,000 400,000 7.375% due 02/01/08 - 352,000 352,000
Countrywide Funding Corp.,
- 400,000 400,000 6.25% due 04/15/09 - 367,852 367,852
Hines Horticulture, Inc.,
- 325,000 325,000 Series B, 11.75% due 10/15/05 - 331,500 331,500
The Holt Group, Inc.,
- 500,000 500,000 9.75% due 01/15/06 - 326,250 326,250
Huntsman Corp.,
- 350,000 350,000 9.50% due 07/01/07, 144A - 325,500 325,500
La Petite Academy, Inc.,
- 375,000 375,000 10.0% due 05/15/08 - 296,250 296,250
LIN Holdings Corp.,
- 500,000 500,000 Zero Coupon due 03/01/08 - 326,250 326,250
Service Corporation International, Inc.,
- 400,000 400,000 6.00% due 12/15/05 - 300,504 300,504
United International Holdings, Inc.,
- 1,000,000 1,000,000 10.75% due 02/15/08 - 575,000 575,000
-------- -------
- 3,201,106 3,201,106
135
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS (continued)
Pollution Control
Allied Waste Industries, Inc.,
- $500,000 $500,000 7.875% due 01/01/09 - $425,625 $425,625
--------- --------- --------- --------
Publishing
Big Flowers Press Holdings, Inc.,
- 500,000 500,000 8.625% due 12/01/08 - 501,250 501,250
Hollinger International, Inc.,
- 250,000 250,000 9.25% due 03/15/07 - 245,000 245,000
-------- -------
- 746,250 746,250
Real Estate
HMH Properties, Inc.,
- 250,000 250,000 7.875% due 08/01/08 - 216,875 216,875
Radnor Holdings Corp.,
- 250,000 250,000 10.00% due 12/01/03 - 250,625 250,625
-------- -------
- 467,500 467,500
Retail Trade
Cole National Group, Inc.,
- 250,000 250,000 8.625% due 08/15/07 - 195,000 195,000
Musicland Group, Inc.,
- 250,000 250,000 9.875% due 03/15/08 - 210,000 210,000
Staples, Inc.,
- 350,000 350,000 7.125% due 08/15/07 - 331,940 331,940
True Temper Sports, Inc., Series B,
200,000 - 200,000 10.88% due 12/01/08 192,000 - 192,000
-------- -------
192,000 736,940 928,940
Steel
Murrin Murrin Holdings,
- 500,000 500,000 9.375% due 08/31/07 - 430,000 430,000
National Steel Corp., Series D,
50,000 - 50,000 9.88% due 03/01/09 49,250 - 49,250
Pohang Iron & Steel - ADR,
155,000 - 155,000 7.13% due 11/01/06 144,404 - 144,404
Renco Steel Holdings, Series B,
50,000 - 50,000 10.88% due 02/01/05 40,500 - 40,500
------- ------
234,154 430,000 664,154
Telecommunications & Broadcasting
Adelphia Communications Corp.,
- 46,998 46,998 9.50% due 02/15/04 - 47,233 47,233
- 175,000 175,000 9.875% due 03/01/07 - 178,500 178,500
Century Communications Corp.,
- 175,000 175,000 8.875% due 01/15/07 - 169,750 169,750
- 250,000 250,000 Step up to due 01/15/08 - 106,875 106,875
Cumulus Media, Inc.,
100,000 - 100,000 10.38% due 07/01/08 103,125 - 103,125
136
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
CORPORATE BONDS (continued)
Telecom. & Broadcasting (cont'd)
Echostar DBS Corp.,
$100,000 - $100,000 9.38% due 02/01/09 $99,000 - $99,000
Energis, Plc.,
25,000 - 25,000 9.75% due 06/15/09 25,375 - 25,375
GTE Corp.,
- 200,000 200,000 6.94% due 04/15/28 - 188,126 188,126
International Cabletel, Inc.,
- 1,000,000 1,000,000 11.50% due 02/01/06 - 872,500 872,500
National Communications Corp.,
Series B,
100,000 - 100,000 11.50% due 10/01/08 106,750 - 106,750
Nextel Communications,
- 250,000 250,000 9.95% due 02/15/08 - 177,500 177,500
- 400,000 400,000 9.75% due 08/15/04 - 407,500 407,500
NEXTLINK Communications, Inc.,
100,000 - 100,000 10.75% due 11/15/08 101,000 - 101,000
SFX Broadcasting, Inc.,
- 164,000 164,000 10.75% due 05/15/06 - 182,040 182,040
Susquehanna Media Co.,
100,000 - 100,000 8.50% due 05/15/09 97,500 - 97,500
TeleCorp PCS, Inc.,
200,000 - 200,000 zero coupon due 04/15/09 122,500 -
Telewest Communication Plc,
- 500,000 500,000 Step up to 11.00% due 10/01/07 - 452,500 452,500
-------- -------
655,250 2,782,524 3,437,774
Transportation
Stena AB,
- 250,000 250,000 10.5% due 12/15/05 - 247,500 247,500
TFM SA de CV,
- 500,000 500,000 Step up to 11.75% due 06/15/09 - 300,000 300,000
-------- -------
- 547,500 547,500
-------- -------
TOTAL CORPORATE BONDS $2,355,062 $21,609,945 $23,965,007
---------- ----------- -----------
(Cost $2,409,979, $25,303,488 and
$27,713,467 respectively)
U.S. GOVERNMENT OBLIGATIONS
Federal Home Loan Banks
- $450,000 $450,000 5.89% due 07/24/00 - $449,577 $449,577
Federal Home Loan Mortgage Corp.
700,000 700,000 6.50% due 12/01/99 - 671,125 671,125
$148,434 - 148,434 6.50% due 05/01/29 $142,311 - 142,311
199,543 - 199,543 7.00% due 06/01/29 196,051 - 196,051
- 299,599 299,599 8.50% due 05/01/08 - 307,131 307,131
- 281,577 281,577 10.00% due 05/15/20 - 299,085 299,085
- 163,351 163,351 11.565% due 06/15/21 - 42,265 42,265
- ------- ------
338,362 1,319,606 1,657,968
137
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
U.S. GOVERNMENT OBLIGATIONS (contd)
Government Nat'l Mortgage Assoc.
- $270,237 $270,237 7.50% due 07/15/27 - $270,913 270,913
- 344,354 344,354 7.50% due 10/15/27 - 345,215 345,215
- 75,054 75,054 7.50% due 10/15/27 - 75,241 75,241
------- ------
- 691,369 691,369
Federal Natl Mortgage Assoc.
$49,291 - 49,291 5.50% due 01/01/29 44,700 - 44,700
446,843 - 446,843 5.50% due 06/01/29 405,228 - 405,228
- 1,000,000 1,000,000 7.50% due TBA - 1,002,180 1,002,180
500,000 - 500,000 8.00% due 05/25/27 509,455 - 509,455
- 46,659 46,659 13.00% due 11/15/15 - 53,067 53,067
- 6,164,069 6,164,069 Interest Only due 03/17/20, REMIC - 142,199 142,199
- 5,993,008 5,993,008 Interest Only due 02/25/35, REMIC - 423,523 423,523
- 12,644,890 12,644,890 Interest Only due 10/17/36, REMIC - 320,207 320,207
- 6,218,392 6,218,392 Interest Only due 06/25/38, REMIC - 351,996 351,996
- 367,987 367,987 8.80% due 01/25/19, REMIC - 383,395 383,395
- 63,962 63,962 10.40% due 04/25/19, REMIC - 68,360 68,360
- 384,772 384,772 7.387% due 08/17/03 - 386,072 386,072
- -------- -------
959,383 3,130,999 4,090,382
Student Loan Marketing Assoc.
- 450,000 450,000 7.20% due 11/09/00 - 454,216 454,216
-------- -------
U.S. Treasury Obligations
United States Treasury Notes,
315,000 - 315,000 4.75% due 11/15/08 285,075 0 285,075
-------- - -------
TOTAL U. S. GOVERNMENT OBLIGATIONS $1,582,820 $6,045,767 $7,628,587
---------- ---------- ----------
(Cost $1,632,779, $6,251,003 and
$7,883,782 respectively)
FIXED INCOME - OTHER
Collateralized Mortgage Obligations
Green Tree Financial Corp.,
- $2,077,083 $2,077,083 7.07% due 09/15/07 - $2,036,185 $2,036,185
Mid State Trust VI, Class A,
- 1,381,939 1,381,939 7.34% due 07/01/35 - 1,362,067 1,362,067
---------- ---------
- 3,398,252 3,398,252
Commercial Mortgage Backed Securities
Commercial Mortgage Asset Trust,
- 1,200,000 1,200,000 7.35% due 08/17/13 - 1,126,860 1,126,860
DLJ Commercial Mortgage Corp.,
- 9,661,651 9,661,651 Step Up due 05/10/23 - 410,721 410,721
DLJ Commercial Mortgage Corp.,
- 7,619,424 7,619,424 Step Up due 11/12/31 - 374,234 374,234
-------- -------
- 1,911,815 1,911,815
138
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
FIXED INCOME - OTHER (continued)
Residential Subordinate Securities
ContiMortgage Home Equity Loan,
- $500,000 $500,000 7/35% due 12/25/29, 144A - $439,250 $439,250
First Union Residential Securities,
- 244,746 244,746 7.00% due 08/25/28 - 215,710 215,710
GE Capital Management Services, Inc.
- 989,393 989,393 6.75% due 11/25/28 - 848,404 848,404
PNC Mortgage Securities Corp.,
- 417,616 417,616 6.734% due 07/25/28 - 360,084 360,084
- 345,187 345,187 6.75% due 05/25/28 - 317,085 317,085
- 496,799 496,799 6.772% due 03/25/29 - 451,280 451,280
- 468,241 468,241 6.838% due 05/25/28 - 408,306 408,306
- 446,138 446,138 6.905% due 04/25/29 - 388,636 388,636
-------- -------
- 3,428,755 3,428,755
TOTAL FIXED INCOME - OTHER - $8,738,822 $8,738,822
---------- ----------
(Cost $0, $9,250,530 and $9,250,530
respectively)
FOREIGN GOVERNMENT OBLIGATIONS
Algeria
- $1,796,706 $1,796,706 6.375% due 03/04/10 - $1,221,760 $1,221,760
Republic of Argentina
$176,000 176,000 6.81% due 03/31/05 $157,142 - 157,142
- 500,000 500,000 11.00% due 12/04/05 - 477,500 477,500
- 2,150,000 2,150,000 11.375% due 01/30/17 - 2,053,357 2,053,357
- ---------- ---------
157,142 2,530,857 2,687,999
Federal Republic of Brazil
- 1,168,324 1,168,324 5.00% due 04/15/14 - 777,784 777,784
- 200,000 200,000 7.00% due 04/15/12 - 130,260 130,260
303,303 - 303,303 8.00% due 04/15/14 202,272 202,272
- 150,000 150,000 9.375% due 04/07/08 - 121,395 121,395
- 1,222,192 1,222,192 14.5% due 10/15/09 - 1,277,190 1,277,190
- ---------- ---------
202,272 2,306,629 2,508,901
National Republic of Bulgaria
- 1,100,000 1,100,000 2.75% due 07/28/12 739,750 739,750
- 750,000 750,000 6.50% due 07/28/11 - 571,875 571,875
- -------- -------
- 1,311,625 1,311,625
Canada
150000 - 150,000 5.25% due 09/01/03 99,358 - 99,358
------- - ------
Republic of Ecuador
- 700,000 700,000 4.00% due 02/28/25 - 235,375 235,375
- -------- -------
Federal Republic of Germany
- 190,000 190,000 5.625% due 01/04/28 - 193,256 193,256
- -------- -------
139
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
FOREIGN GOVERNMENT OBLIGATIONS (contd)
Republic of Greece
- $80,000,000 $80,000,000 6.60% due 01/15/04 - $247,897 $247,897
$50,000,000 - 50,000,000 8.80% due 06/19/07 $174,470 - 174,470
- 70,000,000 70,000,000 8.90% due 04/01/03 - 231,408 231,408
- 90,400,000 90,400,000 11.00% due 02/25/00 - 291,501 291,501
- -------- -------
174,470 770,806 945,276
Republic of Italy
- 150,000 150,000 5.25% due 11/01/29 - 143,404 143,404
- -------- -------
Ivory Coast
4,100,000 4,100,000 2.00% due 03/31/18 - 1,230,000 1,230,000
- ---------- ---------
Republic of Lithuania
125,000 - 125,000 8.00% due 03/29/04 131,186 - 131,186
-------- -------
Government of Mexico
250,000 - 250,000 6.25% due 12/31/19 187,426 - 187,426
- 500,000 500,000 10.375% due 02/17/09 - 506,275 506,275
- -------- -------
187,426 506,275 693,701
Government of Morocco
- 384,524 384,524 5.906% due 01/01/09 - 332,613 332,613
-------- -------
Kingdom of Norway
- 1,000,000 1,000,000 5.80% due 11/17/99 - 127,422 127,422
-------- -------
Government of Peru
- 1,400,000 1,400,000 FRF to 3.75% due 03/07/17 - 770,000 770,000
- 600,000 600,000 Step up to 4.50% due 03/07/17 - 372,000 372,000
-------- -------
1,142,000 1,142,000
Russia
- 700,000 700,000 10.0% due 06/26/07 - 333,165 333,165
- 1,500,000 1,500,000 12.75% due 06/24/28 - 793,575 793,575
-------- -------
1,126,740 1,126,740
Kingdom of Sweden
- 1,000,000 1,000,000 6.50% due 05/05/08 - 127,541 127,541
- 1,600,000 1,600,000 10.25% due 05/05/03 - 224,864 224,864
-------- -------
352,405 352,405
Republic of Venezuela -
- 357,140 357,140 6.00% due 03/31/07 - 283,927 283,927
- 892,852 892,852 6.875% due 03/31/07 - 709,818 709,818
- 1,250,000 1,250,000 13.625% due 08/15/18 - 1,125,000 1,125,000
---------- ---------
2,118,745 2,118,745
TOTAL FOREIGN GOV'T OBLIGATIONS $951,854 $15,649,912 $16,601,766
-------- ----------- -----------
(Cost $965,983, $15,367,229 and
$16,333,212 respectively)
140
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------------- ------------------------------------------
North North
AGSPC2 American AGSPC2 American
Strategic Bond Strategic Income Strategic Bond Strategic Income
Fund Fund Combined Fund Fund Combined
---- ---- -------- ---- ---- --------
Shares Shares Shares PREFERRED STOCK Value Value Value
------ ------ ------ ------ ------ -----
- 570 570 TCR Holdings-Class B - $6 $6
- 314 314 TCR Holdings-Class C - 3 3
- 827 827 TCR Holdings-Class D - 8 8
- 1,711 1,711 TCR Holdings-Class E - 17 17
-- --
TOTAL PREFERRED STOCK - $34 $34
--- ---
(Cost $0, $204 and $204 respectively)
RIGHTS & WARRANTS Value Value Value
------ ------ -----
Crude Petroleum & Natural Gas
Terex Corporation,
- 2,000 2,000 Zero Coupon due 05/15/02 - $28,250 $28,250
Foreign Governments
- 935 935 United Mexican States exp. 02/17/09 - 62,762 62,762
Other
- 500 500 BCP Holdings Corp. exp. 04/15/04 - - -
Telephone
Wireless One, Inc. ,
- 750 750 Zero Coupon due 10/19/00 - 8 8
In-flight Phone Corp.,
- 1,000 1,000 Zero Coupon due 05/15/02 - - -
- -
TOTAL RIGHTS & WARRANTS - $91,020 $91,020
------- -------
(Cost $0, $32,378 and $32,378
respectively)
PURCHASED OPTIONS
Contracts Contracts Contracts Foreign Currency
--------- --------- ---------
Hong Kong Dollars, Strike Price
7.81, Put, Expiration Jan. 2000
- $103,000 $103,000 (premium $101,215.01) - - -
Hong Kong Dollars, Strike Price
7.8025, Put, Expiration Jan. 2000
- 52,500 52,500 (premium $38,167.50) - 199 199
- --- ---
TOTAL PURCHASED OPTIONS - $199 $199
(Cost $0, $139,383 and $139,383
respectively)
SHORT-TERM INVESTMENTS
$1,086,000 - $1,086,000 State Street Bank Repurchase
Agreement, 5.15%, dated 10/31/99,
to be repurchased at $1,086,466
on 11/01/99, collateralized by U.S.
Treasury Note, 5.38%, 07/31/00,
with a par value of $1,095,000 $1,086,000 - $1,086,000
---------- - ----------
(Cost $1,086,000, $0 and
$1,086,000 respectively)
TOTAL INVESTMENTS $5,975,736 $52,135,699 $58,111,435
========== =========== -==========
(Cost $6,094,741, $56,344,215 and
$62,438,956 respectively )
141
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Strategic Income Fund and
American General Series Portfolio Company 2 Strategic Bond Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Strategic Income Fund ("NAF") is a series of North American
Funds, 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 American General
Series Portfolio Company 2 Strategic Bond Fund ("AGSPC2") by NAF 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.
Under the terms of the Plan of Reorganization, the combination of NAF and AGSPC2
will be taxed as a tax-free business combination and accordingly will be
accounted for by a method of accounting for tax free mergers of investment
companies (sometimes referred to as the pooling without restatement method). The
acquisition would be accomplished by an acquisition of the net assets of AGSPC2
in exchange for shares of NAF 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 NAF 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 of Reorganization.
The pro forma financial statements should be read in conjunction with the
financial statements and schedules of investments of AGSPC2 and NAF which are
included in their respective annual reports dated October 31, 1999.
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
142
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Municipal Municipal Pro-forma Pro-forma
ASSETS: Bond Fund Bond Fund** Adjustments Combined
--------- ----------- ----------- --------
Investments in securities, at value ......................... $7,264,073 $12,315,669 $19,579,742
Cash ........................................................ -- 38,522 38,522
Receivables:
Investments sold ......................................... 217,065 -- 217,065
Fund shares sold ......................................... 5,016 -- 5,016
Interest ................................................. 77,420 195,856 273,276
Other assets ................................................ 98,665 47,684 146,349
------------ ------------ ------------ ------------
Total assets .......................................... 7,662,239 12,597,731 -- 20,259,970
LIABILITIES:
Payables:
Investments purchased .................................... 514,398 -- 514,398
Fund shares redeemed ..................................... 323 10 333
Dividends ................................................ 20,987
Investment adviser ....................................... 30,118 6,104 36,222
Custodian and transfer agent fees ........................ -- 4,139 4,139
Distribution fee ......................................... 3,982 3,970 7,952
Other accrued expenses ................................... 33,749 -- 33,749
------------ ------------ ------------ ------------
Total liabilities ..................................... 582,570 35,210 -- 617,780
NET ASSETS .................................................. $7,079,669 $12,562,521 -- $19,642,190
============ ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(loss) ............... -- ($263) ($263)
Accumulated undistributed net realized loss on investments ($20,931) (100,115) ($121,046)
Unrealized appreciation (depreciation) on:
Investments ........................................... (627,356) 12,048 (615,308)
Capital shares at par value of $.001 ..................... 7,810 1,324 (2,214)(1) 6,920
Additional paid-in capital ............................... 7,720,146 12,649,527 2,214(1) 20,371,887
------------ ------------ ------------ ------------
Net assets ............................................ $7,079,669 $12,562,521 $0 $19,642,190
============ ============ ============ ============
** Formerly the National Municipal Bond Fund
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
143
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Municipal Municipal Pro-forma Pro-forma
Bond Fund Bond Fund** Adjustments Combined
--------- ----------- ----------- --------
NET ASSET VALUES:
Class A Shares
Net assets at value .................................................. $ 3,005,345 $ 8,996,901 $12,002,246
Shares outstanding ................................................... 331,515 1,071,397 26,264(1) 1,429,176
Net asset value (NAV) and redemption price per share ................... $ 9.07 $ 8.40 $ 8.40
Public offering price per share (100/95.25 of NAV)
On sales of $100,000 or more the offering price is reduced ........... $ 9.52 $ 8.82 $ 8.82
Class B Shares
Net assets at value .................................................. $ 4,074,324 $21,340,388 $25,414,712
Shares outstanding ................................................... 449,516 2,538,419 34,946(1) 3,022,881
Net asset value, offering price and redemption price per share ......... $ 9.06 $ 8.41 $ 8.41
Class C Shares
Net assets at value .................................................. $ -- $20,748,749 $20,748,749
Shares outstanding ................................................... -- 2,468,053 -- 2,468,053
Net asset value, offering price and redemption price per share ......... $ -- $ 8.41 $ 8.41
** Formerly the National Municipal Bond Fund
(1) Reflects change in shares due to merger exchange.
See Notes to Pro-Forma Financial Statements
144
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series
Portfolio 2 North American
Municipal Municipal Pro-forma Pro-forma
Bond Fund Bond Fund** Adjustments Combined
--------- ----------- ----------- --------
INVESTMENT INCOME:
Interest ..................................................... $287,598 $826,875 $1,114,473
----------- ----------- ----------- -----------
EXPENSES:
Distribution for Class A ..................................... 6,741 8,045 (2,696)(1) 12,090
Distribution for Class B ..................................... 33,044 49,930 82,974
Distribution for Class C ..................................... -- 46,413 46,413
Investment adviser fee ....................................... 30,118 89,986 6,024(2) 126,128
Custodian fee ................................................ 8,280 36,186 44,466
Transfer agent fee ........................................... 16,399 18,297 34,696
Accounting/administration .................................... 1,811 23,167 (2,000)(3) 22,978
Audit and legal fees ......................................... 3,417 7,740 (2,500)(3) 8,657
Miscellaneous ................................................ 37,633 14,045 (32,000)(4) 19,678
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ......... 137,443 293,809 (33,173) 398,079
Reimbursement of expenses by investment adviser .............. (49,167) (61,828) 33,173(5) (77,822)
----------- ----------- ----------- -----------
Net expenses ........................................ 88,276 231,981 -- 320,257
----------- ----------- ----------- -----------
Net investment income/(loss) ........................ 199,322 594,894 -- 794,216
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on:
Investment transactions ................................... (20,931) (75,958) (96,889)
Change in unrealized appreciation (depreciation) on:
Investments ............................................... (627,356) (1,012,148) (1,639,504)
----------- ----------- ----------- -----------
Net gain/(loss) on investments ...................... (648,287) (1,088,106) -- (1,736,393)
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ............ ($448,965) (493,212) 0 (942,177)
----------- ----------- ----------- -----------
** Formerly the National Municipal Bond Fund
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds are
combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
145
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Combined Bond Fund Bond Fund Combined
--------- --------- -------- --------- --------- --------
LONG-TERM INVESTMENTS
Argyle Texas Independent School District,
$500,000 - $500,000 zero coupon due 08/15/14 $209,110 - $209,110
Alabama Housing Finance Authority
Single Family Mortgage Revenue
Collateralized Home Mortgage Program,
- $215,000 215,000 Series B-2, 6.40%, 04/01/25 - $219,569 219,569
California Housing Finance Agency
- 1,000,000 1,000,000 Revenue, Series H, 6.15%, 08/01/16 - 1,014,750 1,014,750
Camden Arkansas Pollution Control,
250,000 - 250,000 5.70% 09/01/12 244,860 - 244,860
Central Pudget Sound Washington
Regional, -
225,000 - 225,000 5.25% due 02/01/13 216,864 216,864
Chicago, Illinois, Water
- 500,000 500,000 Revenue, 6.50%, 11/01/15 - 538,895 538,895
Chicago, Illinois, Skyway Toll Bridging
- 500,000 500,000 Revenue, 5.375%, 01/01/16 - 467,895 467,895
Colorado Health Facilities Authority,
250,000 - 250,000 5.25% due 09/01/18 214,973 - 214,973
Delaware Valley, Pennsylvania,
Regional Finance Authority
- 500,000 500,000 Series A, 5.50%, 08/01/28 - 473,080 473,080
District of Columbia Refunding,
250,000 - 250,000 5.50% due 06/01/09 253,708 - 253,708
Elkhart County Hospital Authority,
250,000 - 250,000 5.25% due 08/15/28 208,225 - 208,225
Garland Texas,
250,000 - 250,000 4.50% due 02/15/19 202,535 - 202,535
Greenville Hospital Systems
Hospital Facilities Revenue,
- 500,000 500,000 Series B, 5.70%, 05/01/12 - 498,670 498,670
Green River-Sweetwater-County Wyoming,
Series B,
230,000 - 230,000 4.50% due 03/01/14 221,508 - 221,508
Harris County, Texas,
225,000 - 225,000 4.50% due 10/01/09 209,428 - 209,428
Honolulu Hawaii City & County,
225,000 - 225,000 5.25% due 07/01/15 209,504 - 209,504
Humphreys County, Tennessee, Industrial
Development Board Solid Waste Disposal
Revenue (E.I. Du Pont De Nemours &
- 450,000 450,000 Company Project), 6.70%, 05/01/24 - 471,438 471,438
Illinois Health Facilities Authority
Revenue (Hospital Association
- 200,000 200,000 Project), 7.00%, 02/15/22 - 214,538 214,538
Illinois State Toll Highway Authority Toll,
225,000 - 225,000 5.50% due 01/01/15 219,337 - 219,337
Iowa Finance Authority Hospital Facility
Revenue Refunding (Trinity Regional
- $150,000 $150,000 Hospital Project), 7.00%, 07/01/12 - $161,442 $161,442
146
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Combined Bond Fund Bond Fund Combined
--------- --------- -------- --------- --------- --------
LONG-TERM INVESTMENTS (continued)
Irvine Ranch California Water District,
$200,000 - 200,000 3.50% due 04/01/33 $200,000 - 200,000
Kansas State Development Finance
Authority Hospital Revenue,
200,000 - 200,000 5.20% due 12/15/18 174,120 - 174,120
Long Island Power Authority
New York Electric,
225,000 - 225,000 5.00% due 04/01/12 220,154 - 220,154
Long Island Power Authority, New
York Electric Systems Revenue,
- 250,000 250,000 5.125%, 04/01/12 - 239,460 239,460
Louisiana Public Facilities Authority
Hospital,
250,000 - 250,000 5.50% due 08/15/19 219,705 - 219,705
Louisiana Public Facilities Authority Hospital
Revenue Refunding (Touro Infirmary
- $500,000 500,000 Project), Series B, 6.125%, 08/15/23 - $479,430 479,430
Lower Colorado River Authority
Texas Revenue,
200,000 - 200,000 5.25% due 01/01/15 191,708 - 191,708
Lower Colorado River Authority
Texas Revenue,
250,000 - 250,000 6.00% due 05/15/10 262,548 - 262,548
Maine State Housing Authority
Mortgage Purchase, Series A-4,
- 25,000 25,000 6.375%, 11/15/12 - 25,376 25,376
Massachusetts State Health & Educational
Facilities Authority,
225,000 - 225,000 5.25% due 07/01/14 210,544 - 210,544
Massachusetts State Health & Educational
Facilities Partners Healthcare System,
Series B,
200,000 - 200,000 5.13% due 07/01/19 173,488 - 173,488
Michigan State Hospital Finance Authority
Revenue Bonds, Series A,
250,000 - 250,000 5.25% due 11/15/09 248,645 - 248,645
Missouri State Health & Educational
Facilities Authority Revenue,
- 500,000 500,000 6.25%, 02/15/11 - 524,377 524,377
Missouri State Housing Development
Community Mortgage,
500,000 - 500,000 zero coupon due 03/01/29 85,065 - 85,065
Nekoosa Wisconsin Pollution Control
Nekoosa Papers, Inc.,
$250,000 - $250,000 5.35% due 07/01/15 $222,540 - $222,540
Nevada Housing Division, Single-Family
- $260,000 260,000 Program, B-2, 6.95%, 10/01/26 - $268,658 268,658
Nevada Housing Division, Single-Family
- 320,000 320,000 Program, Issue C, 6.35%, 10/01/12 - 325,843 325,843
147
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ---------------------------------------- ----------------------------------
North North
AGSPC2 American AGSPC2 American
Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Combined Bond Fund Bond Fund Combined
--------- --------- -------- --------- --------- --------
LONG-TERM INVESTMENTS (continued)
New Jersey Economic Development
Authority Water Facilities Revenue
(New Jersey American Water
Company, Incorporated Project),
- 500,000 500,000 6.875%, 11/01/34 - 536,550 536,550
New York State Local Government
Assistance Corporation, Series A,
- 1,000,000 1,000,000 6.00%, 04/01/16 - 1,010,070 1,010,070
New York State Dormitory Authority
Revenue, State University Educational
- 500,000 500,000 Facilities, Series A, 6.25%, 05/15/08 - 537,240 537,240
New York State Environmental Facilities
Corporation Pollution Control Revenue
Refunding (IBM Corporation Project),
- 580,000 580,000 7.125%, 07/01/12 - 601,100 601,100
New York State Mortgage Agency,
225,000 - 225,000 4.70% due 10/01/11 206,647 - 206,647
New York State Mortgage Agency
Revenue, Series 40-A, 6.35%,
- 630,000 630,000 04/01/21 - 633,414 633,414
New York State Urban Development Corp.
Revenue,
225,000 - 225,000 5.00% due 04/01/09 220,525 - 220,525
Ohio Building Authority Correctional
Facilities,
$250,000 - $250,000 5.50% due 10/01/09 $255,940 - $255,940
Oklahoma Development Finance Authority
Oklahoma-Pollution Control Revenue,
250,000 - 250,000 4.88% due 06/01/14 246,770 - 246,770
Philadelphia Pennsylvania,
100,000 - 100,000 5.00% due 03/15/28 84,646 - 84,646
Philadelphia Pennsylvania Gas Works,
250,000 - 250,000 5.38% due 07/01/12 244,480 - 244,480
Philadelphia, Pennsylvania, Water
& Wastewater Revenue,
- 500,000 500,000 6.25%, 08/01/12 - 533,530 533,530
Pine Richland School District Pennsylvania,
500,000 - 500,000 zero coupon due 09/01/23 115,295 - 115,295
Port Arthur, Texas, Navy District,
- $1,000,000 $1,000,000 Zero Coupon, 03/01/10 - $566,090 $566,090
Port Portland Oregon Airport Revenue,
$225,000 - 225,000 5.25% due 07/01/11 $222,089 - 222,089
Public Highway Authority Colorado
Sr. Series A,
225,000 - 225,000 5.25% due 09/01/18 206,804 - 206,804
South Carolina State
Public Service Revenue,
250,000 - 250,000 5.63% due 01/01/13 249,403 - 249,403
Texas State Veterans Housing
- 65,000 65,000 Assistance, 6.80%, 12/01/23 - 67,649 67,649
148
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT MARKET VALUE
- ------------------------------------ ----------------------------------
North North
AGSPC2 American AGSPC2 American
Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Combined Bond Fund Bond Fund Combined
--------- --------- -------- --------- --------- --------
LONG-TERM INVESTMENTS (continued)
Triborough Bridge & Tunnel Authority,
- 100,000 100,000 Series Y, 5.5%, 01/01/17 - 97,074 97,074
Victor California Elementary School District,
200,000 - 200,000 zero coupon due 06/01/20 57,810 - 57,810
Virginia State Housing Development
Authority Commonwealth Mortgage,
- 300,000 300,000 Subseries I-1, 6.55%, 07/01/17 - 305,481 305,481
Washington County Ohio Hospital Revenue,
175,000 - 175,000 5.38% due 09/01/18 160,708 - 160,708
Washington State General Obligation,
- 300,000 300,000 Series C, 5.50%, 07/01/16 - 290,748 290,748
Wisconsin Housing & Economic
Development Authority Home Ownership
- 100,000 100,000 Revenue, Series D, 6.10%, 07/01/24 - 97,052 97,052
Wisconsin State Health & Educational
Facilities Authority Revenue, Mercy
Hospital of Janesville, Incorporated,
- 1,000,000 1,000,000 6.60%, 08/15/22 - 1,016,250 1,016,250
Wyandotte County Kansas University
Government University,
225,000 - 225,000 4.50% due 09/01/28 174,391 0 174,391
------- - -------
TOTAL LONG-TERM INVESTMENTS $7,064,077 $12,215,669 $19,279,746
---------- ----------- -----------
(Cost $7,691,429, $12,203,621 and $19,895,050
respectively)
SHORT-TERM INVESTMENTS
Missouri Higher Education Loan Authority,
$200,000 - $200,000 3.55% due 12/01/05 $200,000 - $200,000
Jasper County, Indiana, Pollution
Control Revenue, Northern Indiana
Public Service B, 3.50% due
- 100,000 100,000 06/01/13 - 100,000 100,000
- ------- -------
TOTAL SHORT-TERM INVESTMENTS $200,000 $100,000 $300,000
-------- -------- --------
(Cost $200,000, $100,000 and $300,000
respectively)
TOTAL INVESTMENTS $7,264,077 $12,315,669 $19,579,746
========== =========== ===========
(Cost $7,891,429, $12,303,621 and $20,195,050
respectively)
149
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Municipal Bond Fund and
American General Series Portfolio Company 2 Municipal Bond Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Municipal Bond Fund ("NAF") (formerly the North American National
Municipal Bond Fund) is a series of North American funds, 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 American General Series Portfolio Company 2 Municipal
Bond Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF shares at October 31,
1999.
4. 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
150
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1999
American General
Series Portfolio 2 North American
Money Market Money Market Pro-forma Pro-forma
ASSETS: Fund Fund Adjustments Combined
------------------ -------------- ----------- --------
Investments in securities, at value .................... $21,257,197 $20,023,054 $41,280,251
Cash ................................................... -- 807 807
Receivables:
Fund shares sold ............................... 560,605 345,198 905,803
Interest ....................................... 1,884 60,895 62,779
From adviser ................................... 5,717
Other assets ........................................... 43,000 67,310 110,310
------------ ------------ ------------ ------------
Total assets ............................ 21,862,686 20,502,981 -- 42,365,667
LIABILITIES:
Payables: --
Fund shares redeemed ........................... 576,126 1,257,870 1,833,996
Dividends ...................................... 13,104
Investment adviser ............................. 37,207 -- 37,207
Custodian and transfer agent fees .............. -- 855 855
Distribution fee ............................... 5,705 -- 5,705
Other accrued expenses ......................... 57,749 6,054 63,803
------------ ------------ ------------ ------------
Total liabilities ....................... 676,787 1,277,883 -- 1,954,670
NET ASSETS ............................................. $21,185,899 $19,225,098 $0 $40,410,997
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital shares at par value of $.001 ........... $211,859 $19,225 ($190,675)(1) $40,409
Additional paid-in capital ..................... 20,974,040 19,205,873 190,675(1) 40,370,588
------------ ------------ ------------ ------------
Net assets .............................. $21,185,899 $19,225,098 $0 $40,410,997
============ ============ ============ ============
*Investments in securities, at identified cost ......... $21,257,197 $20,023,054 $41,280,251
------------ ------------ ------------
(1) Reflects change in shares due to merger exchange and par value differences.
See Notes to Pro-Forma Financial Statements
151
COMBINED PRO-FORMA STATEMENT OF ASSETS AND LIABILITIES (cont'd) (Unaudited)
October 31, 1999
American General
Series
Portfolio 2 North American
Money Market Money Market Pro-forma Pro-forma
Fund Fund Adjustments Combined
-------------- -------------- ----------- --------
Class A Shares
Net assets at value ...................................................... $ 7,548,678 $ 6,029,946 $13,578,624
Shares outstanding ....................................................... 7,548,678 6,029,890 -- 13,578,568
Net asset value (NAV), offering price and redemption price per share ....... $ 1.00 $ 1.00 $ 1.00
Class B Shares
Net assets at value ...................................................... $ 6,058,166 $ 4,550,981 $10,609,147
Shares outstanding ....................................................... 6,058,166 4,550,563 10,608,729
Net asset value, offering price and redemption price per share ............. $ 1.00 $ 1.00 $ 1.00
Class C Shares
Net assets at value ...................................................... $ -- $ 8,644,171 $ 8,644,171
Shares outstanding ....................................................... -- 8,643,100 -- 8,643,100
Net asset value, offering price and redemption price per share ............. $ -- $ 1.00 $ 1.00
Class I Shares
Net assets at value ...................................................... $ 2,910,006 0 $ 2,910,006
Shares outstanding ....................................................... 2,910,006 0 -- 2,910,006
Net asset value, offering price and redemption price per share ............. $ 1.00 $ -- $ 1.00
Class II Shares
Net assets at value ...................................................... $ 4,669,049 $ -- $ 4,669,049
Shares outstanding ....................................................... 4,669,049 -- 4,669,049
Net asset value, offering price and redemption price per share ............. $ 1.00 $ -- -- $ 1.00
See Notes to Pro-Forma Financial Statements
152
COMBINED PRO-FORMA STATEMENT OF OPERATIONS (Unaudited)
for the Year Ended October 31, 1999
American General
Series
Portfolio 2 North American
Money Market Money Market Pro-forma Pro-forma
Fund Fund Adjustments Combined
--------------- -------------- ----------- --------
INVESTMENT INCOME:
Interest ..................................................... $701,084 $1,097,161 $1,798,245
----------- ----------- ----------- -----------
EXPENSES:
Distribution for Class A ..................................... 7,535 0 (7,535)(1) --
Distribution for Class B ..................................... 34,961 0 (34,961)(1) --
Investment adviser fee ....................................... 32,936 44,172 (6,587)(2) 70,521
Custodian fee ................................................ 16,342 36,192 52,534
Transfer agent fee ........................................... 34,592 70,210 104,802
Accounting/administration .................................... 8,229 34,090 (7,500)(3) 34,819
Audit and legal fees ......................................... 7,273 11,456 (6,000)(3) 12,729
Miscellaneous ................................................ 66,647 19,532 (50,000)(4) 36,179
----------- ----------- ----------- -----------
Expenses before reimbursement by investment adviser ......... 208,515 215,652 (112,583) 311,584
Reimbursement of expenses by investment adviser .............. (95,505) (105,222) 65,583(5) (135,144)
----------- ----------- ----------- -----------
Net expenses ........................................ 113,010 110,430 -47,000 176,440
----------- ----------- ----------- -----------
Net investment income/(loss) ........................ 588,074 986,731 47,000 1,621,805
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on:
Investment transactions ................................... -- 572 -- 572
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ............ $588,074 $987,303 $47,000 $1,622,377
----------- ----------- ----------- -----------
(1) Reflects the surviving fund's 12b-1 service fee rate.
(2) Reflects the surviving fund's Advisory fee rate.
(3) Reflects expected savings due to economies of scale.
(4) Reflects expected savings in registration and filing fees when the funds are
combined.
(5) Reflects adjustment to level of the acquiring fund's expense reimbursement.
See Notes to Pro-Forma Financial Statements
153
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT COST & MARKET VALUE
- ----------------------------------------------- --------------------------------------------
North North
AGSPC2 American AGSPC2 American
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
------------ ----------- -------- ------------ ------------ --------
COMMERCIAL PAPER
----------------
Abbott Laboratories,
$607,000 - $607,000 5.19% due 11/03/99 $606,825 - $606,825
Albertson's, Inc.,
700,000 - 700,000 5.39% due 07/14/00 699,296 - 699,296
Aon Corp.,
800,000 - 800,000 5.92% due 01/26/00 788,649 - 788,649
Assoc. Corp. of North America:
311,000 - 311,000 5.67% due 01/13/00 307,380 - 307,380
500,000 - 500,000 5.28% due 11/23/99 498,383 - 498,383
Baxter International, Inc.,
650,000 - 650,000 5.58% due 01/18/00 641,547 - 641,547
Bellsouth Telecom., Inc.,
711,000 - 711,000 5.62% due 01/19/00 702,128 - 702,128
Canada Government,
- $1,000,000 1,000,000 5.50% due 01/24/00 - $987,167 987,167
Canadian Wheat Board,
- 1,000,000 1,000,000 5.67% due 02/14/00 - 983,462 983,462
Caterpillar Financial Services,
231,000 - 231,000 5.80% due 02/28/00 226,563 - 226,563
Ciesco, L.P.,
504,000 - 504,000 5.35% due 11/12/99 500,627 - 500,627
CIT Group Holdings, Inc.,
100,000 - 100,000 5.30% due 12/09/99 99,440 - 99,440
Coca Cola Co.,
625,000 - 625,000 5.13% due 11/10/99 623,371 - 623,371
Colgate-Palmolive Co.,
748,000 - 748,000 5.28% due 11/04/99 747,670 - 747,670
Conectiv, Inc.,
250,000 - 250,000 6.30% due 01/28/00 246,123 - 246,123
Cooper Industries, Inc.,
193,000 - 193,000 5.34% due 11/01/99 193,000 - 193,000
Eastman Kodak Co.,
780,000 - 780,000 5.30% due 12/07/99 775,850 - 775,850
Emerson Electric,
- 1,000,000 1,000,000 5.22% due 11/03/99 - 999,710 999,710
E.I. du Pont de Nemours & Co.,
751,000 - 751,000 5.65% due 02/25/00 737,213 - 737,213
Export Development Corp.,
- 1,000,000 1,000,000 5.50% due 02/10/00 - 984,569 984,569
Ford Motor Credit Co.,
717,000 - 717,000 5.22% due 12/13/99 710,539 - 710,539
Fortune Brands,
800,000 - 800,000 5.90% due 02/18/00 785,683 - 785,683
General Electric Capital Corp.,
1,000,000 1,000,000 5.25% due 11/01/99 - 1,000,000 1,000,000
General Electric Capital Corp.,
504,000 - 504,000 5.71% due 02/10/00 495,848 - 495,848
General Electric Capital
Services, Inc.,
226,000 - 226,000 5.72% due 02/07/00 222,450 - 222,450
154
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT COST & MARKET VALUE
- ----------------------------------------------- --------------------------------------------
North North
AGSPC2 American AGSPC2 American
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
------------ ----------- -------- ------------ ------------ --------
COMMERCIAL PAPER (continued)
General Motors Acceptance Corp.,
$762,000 - $762,000 5.93% due 02/17/00 $757,414 - $757,414
Goldman Sachs Group LP,
- $1,000,000 1,000,000 5.30% due 11/22/99 - $996,908 996,908
GTE Corp.,
441,000 - 441,000 5.33% due 11/22/99 439,627 - 439,627
Hewlett Packard Co.,
811,000 - 811,000 5.27% due 11/09/99 810,047 - 810,047
H.J. Heinz Co.,
1,000,000 1,000,000 5.27% due 11/09/99 - 998,829 998,829
Household Finance Corp.,
660,000 - 660,000 5.10% due 11/02/99 659,905 659,905
Jefferson-Pilot Corp.,
657,000 - 657,000 5.70% due 02/02/00 647,198 - 647,198
Lucent Technology, Inc.,
- 1,000,000 1,000,000 5.29% due 11/29/99 - 995,886 995,886
Mattel, Inc.,
600,000 - 600,000 5.33% due 12/01/99 597,296 - 597,296
Merrill Lynch & Co.,
800,000 - 800,000 5.96% due 01/31/00 787,928 - 787,928
Morgan Stanley Dean Witter Discover,
788,000 - 788,000 5.75% due 01/27/00 776,990 - 776,990
Paccar Financial Corp.,
- 1,000,000 1,000,000 5.29% due 11/12/99 - 998,384 998,384
Pitney Bowes, Inc.,
564,000 - 564,000 5.28% due 12/16/99 560,267 - 560,267
PPG Industries, Inc.,
800,000 - 800,000 5.28% due 11/05/99 799,529 - 799,529
R. R. Donnelley and Sons Co.,
437,000 - 437,000 5.29% due 11/12/99 436,292 - 436,292
Sears Roebuck Acceptance Corp.,
702,000 - 702,000 5.14% due 11/01/99 700,764 - 700,764
Sara Lee Corp.,
- 1,000,000 1,000,000 5.28% due 11/08/99 - 998,973 998,973
Southern California Edison Co.,
789,000 - 789,000 5.15% due 11/08/99 782,991 - 782,991
United Parcel Service,
- 1,000,000 1,000,000 5.25% due 12/01/99 - 995,625 995,625
Wal-Mart Stores, Inc.,
711,000 - 711,000 5.30% due 11/16/99 708,195 - 708,195
Walt Disney Co.,
763,000 - 763,000 4.78% due 11/09/99 755,664 - 755,664
------- -------
TOTAL COMMERCIAL PAPER $20,828,692 $10,939,513 $31,768,205
----------- ----------- -----------
155
COMBINING PRO-FORMA PORTFOLIO OF INVESTMENTS (Unaudited)
October 31, 1999
FACE AMOUNT COST & MARKET VALUE
- ----------------------------------------------- --------------------------------------------
North North
AGSPC2 American AGSPC2 American
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
------------ ----------- -------- ------------ ------------ --------
U.S. GOVERNMENT BONDS
- $2,000,000 $2,000,000 5.545% disc note due 06/09/00 - $2,000,000 $2,000,000
- 1,500,000 1,500,000 5.595% disc note due 01/21/00 - 1,500,000 1,500,000
- 1,000,000 997,013 5.12% disc note due 11/22/99 - 997,013 997,013
- 1,000,000 - 5.425% due 11/18/99 - 1,000,000 1,000,000
- 1,000,000 - 4.685% due 02/10/00 - 986,856 986,856
- 2,000,000 - 4.790% due 03/09/00 - 1,965,672 1,965,672
--------- ---------
TOTAL US. S. GOVERNMENT BONDS - $8,449,541 $8,449,541
---------- ----------
REPURCHASEMENT AGREEMENT
Repurchase Agreement with
State Street Bank & Trust
Company dated 10/29/99 at
5.17%, to be repurchased
at $634,273 on 11/01/99,
collateralized by $620,000
U.S. Treasury Bonds, 8.25%
due 05/15/05 (valued at
- $634,000 $634,000 $659,356, including interest) - $634,000 $634,000
FOREIGN BONDS
$431,000 - $431,000 Province of British Columbia,
5.28% due 12/10/99 $428,505 - $428,505
-------- --------
TOTAL INVESTMENTS $21,257,197 $20,023,054 $41,280,251
=========== =========== ==========
156
Notes to Pro Forma Combined Financial Statements of Merger Between
North American Money Market Fund and
American General Series Portfolio Company 2 Money Market Fund
October 31, 1999 (unaudited)
1. Basis Of Combination
North American Money Market Fund ("NAF") is a series of North American Funds, 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 American General Series Portfolio
Company 2 Money Market Fund ("AGSPC2") by NAF 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 AGSPC2 in exchange for shares of NAF 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 NAF 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
of Reorganization.
The pro forma financial statements should be read in conjunction with the
historical financial statements and schedules of investments of AGSPC2 and NAF
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 or the American
General Series Portfolio Company 2 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 AGSPC2 shares
into NAF shares based upon the net asset value of the NAF 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 adviser fee and distribution fees have been
calculated for the combined fund based on the contractual rates expected to be
in effect for NAF at the time of the Reorganization at the combined level of
average net assets for the twelve month period ended October 31, 1999.
157
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
(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)
(h) Declaration of Trust Amendment--Establishment of 11 additional Series
of Shares and 2 additional Classes of Shares. (13)
(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. 33-27058) 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) Interim Investment Advisory Agreement between North American Funds and
American General Asset Management Corp., dated March 10, 2000. (13)
(b) Interim Subadvisory Agreement between American General Asset Management
Corp. and American General Investment Management, L.P., dated March 10,
2000. (13)
(c) Subadvisory Agreement between American General Asset Management Corp.
and Wellington Management Company, dated March 10, 2000. (13)
(d) Subadvisory Agreement between American General Asset Management Corp.
and Morgan Stanley Dean Witter Investment Management Inc., dated March
10, 2000. (13)
(e) Subadvisory Agreement between American General Asset Management Corp.
and INVESCO Funds Group, Inc., dated March 10, 2000. (13)
(f) Subadvisory Agreement between American General Asset Management Corp.
and Founders Asset Management LLC, dated March 10, 2000. (13)
(g) Subadvisory Agreement between American General Asset Management Corp.
and T. Rowe Price Associates, Inc., dated March 10, 2000. (13)
(h) Subadvisory Agreement between American General Asset Management Corp.
and Neuberger Berman Management Inc., dated March 10, 2000. (13)
(i) Subadvisory Agreement between American General Asset Management Corp.
and Credit Suisse Asset Management, LLC, dated March 10, 2000. (13)
(7)(a) Distribution Agreement between North American Funds and American
General Funds Distributors, Inc., dated March 10, 2000. (13)
(b) Most Recent Form of Dealer Agreement Among American General Funds
Distributors, Inc. and Selected Broker-Dealers. (13)
(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) Amended and Restated Rule 18f-3 plan dated February 27, 2000. (13)
(11) Form of opinion and consent of counsel as to legality of securities
being registered. (14)
(12) Opinion of counsel as to tax matters. (15)
(13) None.
(14)(a) Consent of PricewaterhouseCoopers LLP. (14)
(b) Consent of Ernst & Young LLP. (14)
(15) None.
(16)(a) Power of Attorney. (13)
(b) Power of Attorney. (13)
(17) Form of Proxy. (14)
- --------
(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) Previously filed as Exhibit to North American Funds' Post-Effective
Amendment No. 32 on Form N-1A (File No. 33-27958) dated March 17, 2000.
(14) Filed herewith.
(15) 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.
(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 Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and that 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.
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 27th 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.
Signature Title Date
--------- ----- ----
* Trustee March 27, 2000
_________________________________
William F. Achtmeyer
* Trustee March 27, 2000
_________________________________
Don B. Allen
* Trustee March 27, 2000
_________________________________
William F. Devin
* Trustee; Chairman; President March 27, 2000
_________________________________ and Principal Executive
Alice T. Kane Officer
* Trustee March 27, 2000
_________________________________
Kenneth J. Lavery
* Treasurer; Principal March 27, 2000
_________________________________ Financial and Accounting
Thomas J. Brown Officer
*By: /s/ John I. Fitzgerald
_________________________________
John I. Fitzgerald
Attorney-in-Fact
EXHIBIT INDEX
Exhibit No. Exhibit Name
----------- ------------
(11) Form of opinion of Ropes & Gray.
(14)(a) Consent of PricewaterhouseCoopers LLP.
(b) Consent of Ernst & Young LLP.
(17) Form of Proxy.