<PAGE>
As filed with the Securities and Exchange Commission on December 29, 1995
Registration Nos. 33-20506; 811-5496
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form N1-A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 11
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
NORTHSTAR ADVANTAGE HIGH YIELD FUND
--------------------------------------------------
(Exact name of Registrant as specified in charter)
Two Pickwick Plaza, Greenwich, CT 06830
----------------------------------------
(Address of Principal Executive Offices)
(203) 863-6200
-------------------------------
(Registrant's telephone number)
Mark L. Lipson
c/o Northstar Investment Management Corporation
Two Pickwick Plaza, Greenwich, Connecticut 06830
------------------------------------------------
(Name and address of agent for service)
Copies of all correspondence to:
Lisa Hurley, Esq.
Northstar Investment Management Corp.
Two Pickwick Plaza
Greenwich, CT 06830
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
immediately upon filing pursuant to paragraph (b)
---
on [date] pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(1)
---
X on February 29, 1996 pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
on [date] pursuant to paragraph (a)(2) of Rule 485.
---
If appropriate, check the following box:
this post-effective amendment designates a new effective
--- date for a previously filed post-effective amendment.
__________________________________________________________________________
* Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company
Act of 1940. The Registrant has filed the Notice required by Rule 24f-2 for
its most recent fiscal year on or about February 25, 1995.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 404(a)
Under the Securities Act of 1933
PART A
FORM N-1A PROSPECTUS CAPTION
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Investment Objectives
and Policies of the Funds; Other
Investment Techniques; Risk
Factors; General Information
5. Management of the Fund Management of the Funds
6. Capital Stock and Other How Net Asset Value is
Securities Determined; How to Purchase Shares;
Alternative Sales Arrangements;
Investor Services and Account
Policies; Dividends, Distribution
and Taxes; General Information
7. Purchases of Securities Being How to Purchase Shares; Alternative
Offered Sales Arrangments; Investor
Services and Account Policies;
Distribution Plans; How Net Asset
Value is Determined.
8. Redemption or Repurchase How to Sell Shares; How Net Asset
Value is Determined;
9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
PART B
FORM N-1A CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information & History Cover Page; Other Information
13. Investment Objectives & Policies Cover Page; Investment
Restrictions; Other Investment
Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal N/A
Holders of Securities
16. Investment Advisory and Services of the Adviser and
Other Services Administrator; Other Information
17. Brokerage Allocation and Portfolio Transactions and
Other Practices Brokerage Allocation
18. Capital Stock and Other Purchases and Redemptions
Securities
19. Purchases, Redemptions and Net Asset Value; Purchases and
Pricing Redemptions of Shares.
20. Tax Status Dividends, Distributions and Taxes
21. Underwriter Underwriter and Distribution
Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
PART C
The information required to be included in Part C is set forth under the
eappropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
[LOGO]
TWO PICKWICK PLAZA (203) 863-6200
GREENWICH, CONNECTICUT, 06830 (800) 595-7827
COMBINED PROSPECTUS FEBRUARY 29, 1996
The Northstar Advantage Funds (the "Funds") are a group of open-end
diversified management investment companies. Each has its own investment
objective and specific investment goals. Shares of the Funds are offered by this
joint Prospectus. Northstar Investment Management Corporation (the "Adviser") is
the investment adviser for each Fund, and its professional staff selects and
supervises the investments in each Fund's portfolio. Northstar Distributors,
Inc. ("Underwriter") is the underwriter of the Funds' shares, and Northstar
Administrators Corporation ("Northstar" or "Administrators") serves as
administrator to each Fund. Distributors and Administrators are each affiliates
of the Adviser. See "Management of the Funds."
This Prospectus sets forth concisely the information about the Funds
that prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
February 29, 1996, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The Statement of Additional Information
is available without charge upon request to Northstar at the address or
telephone number given above.
* NORTHSTAR ADVANTAGE SPECIAL FUND ("Special Fund") seeks to achieve
capital appreciation through investment in a diversified portfolio of equity
securities selected for their potential for growth, primarily in small- and
mid-capitalization companies that may be subject to greater price volatility
than more mature companies.
* NORTHSTAR ADVANTAGE GROWTH FUND ("Growth Fund") seeks to achieve
long-term growth of capital by investing principally in common stocks.
* NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND, ("Income and Growth
Fund") seeks current income balanced with the objective of achieving capital
appreciation through investments in common and preferred stocks, corporate debt
and convertible securities, and government securities, selected for their
prospects of producing income and/or capital appreciation.
* NORTHSTAR ADVANTAGE INCOME FUND ("Income Fund") seeks to realize
income and, secondarily, capital appreciation through investments in a balance
of debt securities, common and preferred stocks, and debt securities and
preferred stocks convertible into common stock.
* NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND ("Government
Securities Fund") seeks to achieve a high level of current income and to
conserve principal by investing in debt obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities.
* NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND ("Strategic Income Fund")
seeks to achieve high current income by allocating its investments among the
following three sectors of the fixed income securities markets: debt obligations
of the U.S. Government, its agencies and instrumentalities; high yield, high
risk, lower-rated and nonrated U.S. and foreign fixed income securities; and
foreign currency denominated investment grade debt obligations of foreign
governments, their agencies and instrumentalities. At least 20% shall, and up to
60% of the Fund's assets may, be invested in each sector.
* NORTHSTAR ADVANTAGE HIGH YIELD FUND ("High Yield Fund") seeks to
achieve high current income primarily through investments in long-term and
intermediate-term fixed income securities, with emphasis on high yield, high
risk, lower-rated and nonrated corporate debt instruments.
* NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND ("High Total Return
Fund") seeks to achieve high income by investing predominantly in high yield,
high risk, lower-rated and non-rated U.S. dollar-denominated debt securities. It
is the Fund's policy also to seek a high rate of total return, consistent with
the Fund's objective, by taking advantage of market developments, yield
disparities, and variations in the creditworthiness of issuers.
UNDER NORMAL MARKET CONDITIONS THE HIGH YIELD FUND AND HIGH TOTAL
RETURN FUND WILL INVEST AT LEAST 65% OF THEIR ASSETS, AND THE STRATEGIC INCOME
FUND MAY INVEST UP TO 60% (AND NO LESS THAN 20% OF ITS ASSETS) IN LOWER RATED
AND NONRATED BONDS, COMMONLY KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER RISKS,
INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES, AND ARE
CONSIDERED SPECULATIVE WITH REGARD TO PAYMENT OF INTEREST AND RETURN OF
PRINCIPAL. INVESTMENT IN THESE FUNDS MAY NOT BE APPROPRIATE FOR ALL INVESTORS.
INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. SEE "RISK
FACTORS -- HIGH YIELD SECURITIES."
WHILE MUTUAL FUNDS OFFER SIGNIFICANT INVESTMENT OPPORTUNITIES AND ARE
PROFESSIONALLY MANAGED, THEY ALSO CARRY RISKS THAT COULD POSSIBLY RESULT IN LOSS
OF PRINCIPAL. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
The tables and examples below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Funds. Shareholder Transaction Expenses are fees charged
directly to your individual account when you buy, sell or exchange shares.
Annual Operating Expenses are paid out of each Fund's assets and include fees
for portfolio management, maintenance of shareholder accounts, shareholder
servicing, accounting, legal and other services. Class A, Class B, and Class C
shares were first offered to investors in the Government Securities Fund, High
Yield Fund, Income Fund, Growth Fund, Special Fund and Strategic Income Fund on
June 5, 1995. Class T shares are no longer offered to new investors in these
Funds. The rules of the Securities and Exchange Commission require that maximum
sales charges be reflected in the table; however, certain investors may qualify
for reduced or no sales charges. See "How to Purchase Shares."
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE SPECIAL FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as % of Offering Price)............. 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds).................. None(1) 5.00%(2) 1.00% 4.00%(2)
Exchange Fee....................................
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE
NET ASSETS)
Management Fee.................................. .75% .75% .75% .75%
12b-1 Fee....................................... .30% 1.00%(3) 1.00%(3) .95%(3)
Other Expenses.................................. % % % %
Total Fund Operating Expenses................... % % % %
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE GROWTH FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as % of Offering Price)............. 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds).................. None(1) 5.00%(2) 1.00% 4.00%(2)
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE
NET ASSETS)
Management Fee.................................. .75% .75% .75% .75%
12b-1 Fee....................................... .30% 1.00%(3) 1.00%(3) .95%(3)
Other Expenses.................................. % % % %
Total Fund Operating Expenses................... % % % %
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as % of Offering Price)............. 4.75% None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds).................. None(1) 5.00%(2) 1.00%
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE
NET ASSETS)
Management Fee.................................. .75% .75% .75%
12b-1 Fee....................................... .30% 1.00%(3) 1.00%(3)
Other Expenses.................................. .46% .48% .47%
Total Fund Operating Expenses................... 1.51% 2.23% 2.22%
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase of Shares
(as % of Offering Price)................................. 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale of Shares
(as a % of the lesser of original price or redemption
proceeds)................................................ None(1) 5.00%(2) 1.00% 4.00%(2)
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET
ASSETS)
Management Fee............................................ .65% .65% .65% .65%
12b-1 Fee................................................. .30% 1.00%(3) 1.00%(3) .75%(3,4)
Other Expenses............................................ % % % %
Total Fund Operating Expenses............................. % % % %
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase of Shares
(as a % of Offering Price)................................................... 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale of Shares (as a % of the lesser
of original price or redemption proceeds).................................... None(1) 5.00%(2) 1.00% 4.00%(2)
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
Management Fee (after expense reimbursement)(5)............................... .45% .45% .45% .45%
12b-1 Fee..................................................................... .30% 1.00%(3) 1.00%(3) .65%(3,4)
Other Expenses................................................................ % % % %
Total Fund Operating Expenses................................................... % % % %
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase of Shares
(as % of Offering Price)................................. 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale of Shares
(as a % of the lesser of original price or redemption
proceeds)................................................ None(1) 5.00%(2) 1.00% 4.00%(2)
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET
ASSETS)
Management Fee............................................ .65% .65% .65% .65%
12b-1 Fee................................................. .30% 1.00%(3) 1.00%(3) .95%(3,4)
Other Expenses (after expense reimbursement)(6)........... % % % %
Total Fund Operating Expenses............................. % % % %
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE HIGH YIELD FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase of Shares (as % of Offering
Price)....................................................................... 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale of Shares (as a % of the lesser
of original price or redemption proceeds).................................... None(1) 5.00%(2) 1.00% 4.00%(2)
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................ .45% .45% .45% .45%
12b-1 Fee..................................................................... .30% 1.00%(3) 1.00%(3) .65%(3,4)
Other Expenses................................................................ % % % %
Total Fund Operating Expenses................................................. % % % %
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as % of Offering Price)............. 4.75% None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds).................. None(1) 5.00%(2) 1.00%
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE
NET ASSETS)
Management Fee.................................. .75% .75% .75%
12b-1 Fees...................................... .30% 1.00%(3) 1.00%(3)
Other Expenses.................................. .50% .50% .52%
Total Fund Operating Expenses................... 1.55% 2.25% 2.27%
<FN>
- ------------------------
(1) Purchases of $1 million or more are not subject to an initial sales charge;
however, a CDSC of up to 1% will be imposed on such purchases in the event
of certain redemption transactions within 18 months following the date of
purchase.
(2) The Class B CDSC on redemptions decreases 1% annually after year one to 2%
in years four and five and to 0% after year five. The Class T CDSC on
redemptions decreases 1% annually after year one to 0% after year four.
(3) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD") rules regarding investment companies.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(4) Although the Trustees have set 12b-1 fees at the levels indicated, under
the shareholder-approved 12b-1 plans for Class T shares and applicable
rules of the NASD, the Trustees of each Fund, except for Strategic Income
Fund, may increase these fees to an aggregate of up to 0.95% annually
without further shareholder approval. The Trustees of Strategic Income
Fund, may increase these 12b-1 fees for Class T Shares to an aggregate of
up to 1.00% annually without further shareholder approval.
(5) After waiver of 0.20% effective January 1, 1989. Without such a fee waiver,
the Management Fees would be 0.65% of average daily net assets.
(6) Absent the expense reimbursement by the Adviser, Other Expenses and Total
Fund Operating Expenses would have been % and %, respectively.
</TABLE>
EXAMPLES: An investor in each of the Funds would pay the following expenses on
a $1,000 investment assuming a 5% annual return throughout the period, and,
unless otherwise noted, redemption at the end of each period.
<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE SPECIAL FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................................. $ 62 $ 72 $ $ 32 $ $ 62 $
3 Years................................. 93 99 69 88
5 Years................................. 125 138 118 116
10 Years................................ 218 253 253 233
<CAPTION>
NORTHSTAR ADVANTAGE GROWTH FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................................. $ 62 $ 72 $ $ 32 $ $ 60 $
3 Years................................. 93 99 69 83
5 Years................................. 125 138 118 108
10 Years................................ 218 253 253 220
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
--------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2)
------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
1 year............................................ $ 62 $ 73 $ 23 $ 33 $ 23
3 years........................................... 93 100 70 69 69
5 years........................................... 126 139 119 119 119
10 years.......................................... 219 256 256 255 255
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE INCOME FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................................. $ 61 $ 71 $ $ 31 $ $ 57 $
3 Years................................. 90 96 66 73
5 Years................................. 120 133 113 92
10 Years................................ 207 243 243 192
<CAPTION>
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................................. $ 59 $ 69 $ $ 29 $ $ 53 $
3 Years................................. 84 90 60 61
5 Years................................. 110 123 103 71
10 Years................................ 186 222 222 153
<CAPTION>
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year.................................. $ 61 $ 71 $ $ 31 $ $ 59 $
3 Years................................. 90 96 66 80
5 Years................................. N/A N/A N/A N/A
10 Years................................ N/A N/A N/A N/A
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE HIGH YIELD FUND
----------------------------------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)
------- ---------- ---------- ------- ---------- ---------- ----------
1 Year.................................. $ 59 $ 69 $ $ 29 $ $ 54 $
<S> <C> <C> <C> <C> <C> <C> <C>
3 Years................................. 84 90 60 62
5 Years................................. 110 123 103 73
10 Years................................ 186 222 222 157
<CAPTION>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
--------------------------------------------------------
CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2)
------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year............................................ $ 63 $ 73 $ 23 $ 33 $ 23
3 years........................................... 94 100 70 71 71
5 years........................................... 128 140 120 121 121
10 years.......................................... 223 258 258 261 261
</TABLE>
- ------------------------
(1) Class B and Class T shares convert to Class A shares eight years after
purchase in the case of B Shares and on the later of eight years after
purchase or May 31, 1998 in the case of T Shares; therefore, Class A
expenses are used after year eight.
(2) Assumes no redemption.
The examples above assume the reinvestment of all dividends and distributions
and that the percentage amounts listed under "Annual Operating Expenses" remain
the same each year. The examples should not be considered to be indicative of
actual or expected performance or expenses, both of which will vary.
6
<PAGE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The financial highlights set forth below present certain information and
ratios as well as performance information for a share of each Class outstanding
throughout each year or portion thereof. Except where indicated, percentages for
periods of less than one year have been annualized. The financial highlights for
fiscal years ended in 1995 (and for all prior periods in the case of the Income
and Growth and High Total Return Funds) have been examined by ,
independent accountants, whose unqualified report thereon is incorporated by
reference in the Statement of Additional Information and should be read in
conjunction with the related audited financial statements and notes thereto
which are contained in the Annual Report for each Fund. Further information
about performance of each Fund is also contained in the Annual Report, a copy of
which may be obtained without charge from Northstar. The financial highlights
for the Growth, Special, Income, Strategic Income, High Yield and Government
Securities Funds for the periods prior to 1995 were examined by other
independent accountants.
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE SPECIAL FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995
---------------------------------------------
CLASS A CLASS B CLASS C CLASS T
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period.....................
Income from investment
operations:
Net investment income
(loss)...................
Net realized and
unrealized gain (loss)...
--------- --------- --------- ---------
Total from investment
operations...............
--------- --------- --------- ---------
Less distributions:
Dividends from net
realized gain............
--------- --------- --------- ---------
Total distributions.......
--------- --------- --------- ---------
Net Asset Value end of
period.....................
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (excluding
sales charges)(1)..........
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratios/supplemental data:
Net assets end of period
(thousands)..............
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets.......
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets before
waiver or
reimbursement(3).........
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of net investment
income to average net
assets...................
--------- --------- --------- ---------
--------- --------- --------- ---------
Portfolio Turnover Rate...
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
CLASS T SHARES
------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 20.79 $ 17.40 $ 15.74 $ 10.64 $ 11.67 $ 9.55 $ 7.90 $ 8.92 $ 10.00
Income from investment
operations:
Net investment income
(loss)................... (0.25) (0.32) (0.33) (0.21) (0.20) (0.06) (0.13) (0.14) (0.06)
Net realized and
unrealized gain (loss)... (0.76) 3.83 2.61 6.24 (0.83) 2.18 1.78 (0.88) (1.02)
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total from investment
operations............... (1.01) 3.51 2.28 6.03 (1.03) 2.12 1.65 (1.02) (1.08)
-------- -------- -------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
realized gain............ (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total distributions....... (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- -------
Net Asset Value end of
period..................... $ 19.64 $ 20.79 $ 17.40 $ 15.74 $ 10.64 $ 11.67 $ 9.55 $ 7.90 $ 8.92
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total Return (excluding
sales charges)(1).......... (4.86)% 20.16% 14.54% 57.27% (8.83)% 22.20% 20.89% (11.43)% (10.80)%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 38,848 $ 28,838 $ 11,336 $ 5,480 $ 3,024 $ 3,958 $ 3,330 $ 3,078 $ 3,823
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Ratio of expenses to
average net assets....... 2.16% 2.34% 2.84% 2.95% 2.95% 2.95% 2.96% 2.94% 2.90%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Ratio of expenses to
average net assets before
waiver or
reimbursement(3)......... -- -- -- 3.69% 4.98% 4.89% 6.01% 4.52% 4.82%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................... (1.25)% (1.66)% (2.12)% (1.57)% (0.97)% (0.44)% (1.06)% (1.22)% (0.76)%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Portfolio Turnover Rate... 39.43% 34.57% 39.62% 85.43% 71.79% 85.36% 39.88% 57.08% 27.86%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995
-----------------------------------------
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ $ $ $
Income from investment
operations:
Net investment income
(loss)...................
Net realized and
unrealized gain (loss)...
-------- -------- -------- --------
Total from investment
operations...............
-------- -------- -------- --------
Less distributions:
Dividends from net
investment income........
Dividends from net
realized gain............
Dividends from capital....
-------- -------- -------- --------
Total distributions.......
-------- -------- -------- --------
Net Asset Value end of
period.....................
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (excluding
sales charges)(1)..........
-------- -------- -------- --------
-------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands)..............
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of expenses to
average net assets.......
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of net investment
income to average net
assets...................
-------- -------- -------- --------
-------- -------- -------- --------
Portfolio Turnover Rate...
-------- -------- -------- --------
-------- -------- -------- --------
<CAPTION>
CLASS T SHARES
------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 17.33 $ 16.36 $ 16.37 $ 12.49 $ 13.85 $ 11.96 $ 10.47 $ 10.54 $ 10.00
Income from investment
operations:
Net investment income
(loss)................... 0.08 0.02 0.02 0.09 0.10 0.20 0.16 0.09 0.03
Net realized and
unrealized gain (loss)... (1.41) 1.67 1.30 4.62 (0.83) 2.66 1.58 (0.07) 0.87
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............... (1.33) 1.69 1.32 4.71 (0.73) 2.86 1.74 0.02 0.90
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.08) (0.04) (0.02) (0.08) (0.10) (0.20) (0.17) (0.08) (0.03)
Dividends from net
realized gain............ (0.15) (0.67) (1.31) (0.75) (0.51) (0.76) (0.08) -- (0.33)
Dividends from capital.... (0.02) (0.01)(2) -- -- (0.02) (0.01) -- (0.01) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions....... (0.25) (0.72) (1.33) (0.83) (0.63) (0.97) (0.25) (0.09) (0.36)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value end of
period..................... $ 15.75 $ 17.33 $ 16.36 $ 16.37 $ 12.49 $ 13.85 $ 11.96 $ 10.47 $ 10.54
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... (7.66)% 10.36% 8.05% 38.10% (5.24)% 24.25% 16.70% 0.11% 8.91%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 76,391 $ 80,759 $ 56,759 $ 40,884 $ 24,927 $ 29,842 $ 25,359 $ 27,493 $ 17,013
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to
average net assets....... 2.00% 2.04% 2.15% 2.25% 2.33% 2.33% 2.46% 2.29% 2.77%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 0.49% 0.13% 0.09% 0.66% 0.80% 1.39% 1.40% 0.83% 0.37%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Portfolio Turnover Rate... 53.76% 42.27% 46.77% 63.56% 54.22% 74.56% 58.73% 54.72% 32.66%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1994
---------------------------------------
1995 CLASS A CLASS B CLASS C
--------------------------------------- FROM FROM FROM
CLASS A CLASS B CLASS C 11/8/93 2/9/94 3/21/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period........... $ 10.00 $ 9.99 $ 9.99 $ 10.00 $ 10.64 $ 10.37
Income from
investment
operations:
Net investment
income......... .35 .27 .27 0.30 0.20 0.20
Net realized and
unrealized gain
(loss)......... .84 .85 .85 (0.05) (0.65) (0.38)
----------- ----------- ----------- ----------- ----------- -----------
Total from
investment
operations..... 1.19 1.12 1.12 0.25 (0.45) (0.18)
----------- ----------- ----------- ----------- ----------- -----------
Less
distributions:
Dividends (from
net investment
income)........ (0.33) (0.27) (0.28) (0.25) (0.20) (0.20)
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value
end of period.... $ 10.86 $ 10.84 $ 10.83 $ 10.00 $ 9.99 $ 9.99
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Total Return
(excluding sales
charge).......... 13.19% 12.31% 12.33% 2.48% (4.20)% (1.75)%
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Ratios/Supplemental
Data:
Net assets end
of period (in
thousands)..... 76,031 60,347 53,661 72,223 37,767 4,823
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Ratio of
expenses to
average net
assets......... 1.51% 2.23% 2.22% 1.50% 2.20% 2.20%
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Ratio of expense
reimbursement
to average net
assets......... 0% 0% 0% 0.06% 0.16% 0.47%
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Ratio of net
investment
income to
average net
assets......... 3.39% 2.66% 2.67% 3.73% 3.00% 2.87%
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Portfolio
Turnover
Rate........... 91% 91% 91% 26% 26% 26%
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995
-----------------------------------------
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ $ $ $
Income from investment
operations:
Net investment income
(loss)...................
Net realized and
unrealized gain (loss)...
-------- -------- -------- --------
Total from investment
operations...............
-------- -------- -------- --------
Less distributions:
Dividends from net
investment income........
Dividends from net
realized gain............
Dividends from capital....
-------- -------- -------- --------
Total distributions.......
-------- -------- -------- --------
Net Asset Value end of
period..................... $ $ $ $
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (excluding
sales charges)(1)..........
-------- -------- -------- --------
-------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ $ $ $
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of expenses to
average net assets.......
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of net investment
income to average net
assets...................
-------- -------- -------- --------
-------- -------- -------- --------
Portfolio Turnover Rate...
-------- -------- -------- --------
-------- -------- -------- --------
<CAPTION>
CLASS T SHARES
------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 12.94 $ 12.05 $ 11.66 $ 10.13 $ 10.71 $ 9.71 $ 9.11 $ 10.39 $ 10.00
Income from investment
operations:
Net investment income
(loss)................... 0.57 0.49 0.55 0.57 0.61 0.68 0.62 0.56 0.40
Net realized and
unrealized gain (loss)... (1.25) 1.20 0.36 1.53 (0.54) 1.00 0.58 (1.04) 0.67
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............... (0.68) 1.69 0.91 2.10 0.07 1.68 1.20 (0.48) 1.07
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.54) (0.49) (0.52) (0.57) (0.63) (0.68) (0.60) (0.57) (0.40)
Dividends from net
realized gain............ (0.16) (0.31) -- -- -- -- -- (0.22) (0.28)
Dividends from capital.... (0.02)(2) -- -- -- (0.02) -- -- (0.01) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions....... (0.72) (0.80) (0.52) (0.57) (0.65) (0.68) (0.60) (0.80) (0.68)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value end of
period..................... $ 11.54 $ 12.94 $ 12.05 $ 11.66 $ 10.13 $ 10.71 $ 9.71 $ 9.11 $ 10.39
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... (5.33)% 14.08% 8.06% 21.17% 0.78% 17.70% 13.39% (5.35)% 10.74%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 73,764 $ 80,841 $ 56,823 $ 49,367 $ 44,750 $ 58,006 $ 57,425 $ 58,722 $ 49,332
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to
average net assets....... 1.69% 1.77% 2.02% 2.06% 2.10% 2.04% 2.10% 1.98% 2.15%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 4.36% 3.99% 4.73% 5.21% 5.73% 6.38% 6.30% 5.70% 5.72%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Portfolio Turnover Rate... 59.26% 38.26% 58.96% 76.87% 57.39% 56.15% 24.57% 45.91% 78.71%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995
---------------------------------------------
CLASS A CLASS B CLASS C CLASS T
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ $ $ $
Income from investment
operations:
Net investment income
(loss)...................
Net realized and
unrealized gain (loss)...
--------- --------- --------- ---------
Total from investment
operations...............
--------- --------- --------- ---------
Less distributions:
Dividends from net
investment income........
Dividends from net
realized gain............
Dividends from capital....
--------- --------- --------- ---------
Total distributions.......
--------- --------- --------- ---------
Net Asset Value end of
period..................... $ $ $ $
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (excluding
sales charges)(1)..........
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ $ $ $
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets.......
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets before
waiver or
reimbursement(3).........
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of net investment
income to average net
assets...................
--------- --------- --------- ---------
--------- --------- --------- ---------
Portfolio Turnover Rate...
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
CLASS T SHARES
-----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 10.32 $ 9.22 $ 8.99 $ 8.47 $ 8.47 $ 8.26 $ 8.80 $ 9.94 $ 10.00
Income from investment
operations:
Net investment income
(loss)................... 0.56 0.59 0.61 0.67 0.68 0.72 0.75 0.64 0.54
Net realized and
unrealized gain (loss)... (1.56) 1.09 0.23 0.52 -- 0.21 (0.48) (1.10) 0.27
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............... (1.00) 1.68 0.84 1.19 0.68 0.93 0.27 (0.46) 0.81
--------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.57) (0.58) (0.61) (0.67) (0.68) (0.72) (0.75) (0.64) (0.54)
Dividends from net
realized gain............ -- -- -- -- -- -- -- -- (0.33)
Dividends from capital.... (0.01) -- -- -- -- -- (0.06) (0.04) --
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions....... (0.58) (0.58) (0.61) (0.67) (0.68) (0.72) (0.81) (0.68) (0.87)
--------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value end of
period..................... $ 8.74 $ 10.32 $ 9.22 $ 8.99 $ 8.47 $ 8.47 $ 8.26 $ 8.80 $ 9.94
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... (9.82)% 18.48% 9.77% 14.73% 8.57% 11.73% 2.97% (4.72)% 8.50%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 152,608 $184,156 $144,144 $121,389 $108,420 $123,735 $169,421 $237,190 $223,598
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to
average net assets....... 1.29% 1.31% 1.39% 1.44% 1.43% 1.45% 1.88% 1.79% 1.89%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to
average net assets before
waiver or
reimbursement(3)......... 1.49% 1.51% 1.59% 1.64% 1.63% 1.65% -- -- --
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 6.00% 5.83% 6.81% 7.68% 8.23% 8.57% 8.47% 7.02% 6.38%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Portfolio Turnover Rate... 314.91% 81.41% 120.08% 87.00% 16.77% 73.94% 494.05% 412.29% 241.73%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1994
-------
1995 CLASS T
------------------------------------- FROM
CLASS A CLASS B CLASS C CLASS T 7/1/94
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value beginning of period.......... $12.00
Income from investment operations:
Net investment income (loss)............... 0.51
Net realized and unrealized gain (loss).... (0.25)
------- ------- ------- ------- -------
Total from investment operations........... 0.26
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income....... (0.49)
Dividends from net realized gain........... (0.05)
Dividends from capital..................... (0.01)(2)
------- ------- ------- ------- -------
Total distributions........................ (0.55)
------- ------- ------- ------- -------
Net Asset Value end of period................ $11.71
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total Return (excluding sales charges)(1).... 2.14%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/supplemental data:
Net assets end of period (thousands)....... $25,252
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of expenses to average net assets.... 1.90%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of expenses to average net assets
before waiver or reimbursement (3)........ 2.53%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of net investment income to average
net assets................................ 7.92%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Portfolio Turnover Rate.................... 156.34%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE HIGH YIELD FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------------
1995 CLASS T SHARES
----------------------------------------- ------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS T 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period........... $ $ $ $ $ 9.31 $ 9.09 $ 7.94 $ 6.27 $ 8.55 $ 10.00
Income from
investment
operations:
Net investment
income
(loss)......... 0.81 0.85 0.92 1.08 1.12 0.60
Net realized and
unrealized gain
(loss)......... (0.99) 0.80 1.19 1.67 (2.30) (1.45)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Total from
investment
operations..... (0.18) 1.65 2.11 2.75 (1.18) (0.85)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Less
distributions:
Dividends from
net investment
income......... (0.83) (0.83) (0.94) (1.08) (1.10) (0.60)
Dividends from
net realized
gain........... (0.01) (0.60) (0.02) -- -- --
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Total
distributions... (0.84) (1.43) (0.96) (1.08) (1.10) (0.60)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Net Asset Value
end of period.... $ $ $ $ $ 8.29 $ 9.31 $ 9.09 $ 7.94 $ 6.27 $ 8.55
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Total Return
(excluding sales
charges)(1)...... (2.18)% 18.89% 27.57% 46.49% (14.59)% (8.81)%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratios/supplemental
data:
Net assets end
of period
(thousands).... $ $ $ $ $ 136,426 $ 125,095 $ 64,063 $ 25,651 $ 11,342 $ 11,045
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratio of
expenses to
average net
assets......... 1.34% 1.40% 1.50% 1.50% 1.44% 1.35%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratio of
expenses to
average net
assets before
waiver or
reimbursement(3)... -- -- 1.55% 1.96% 2.25% 2.65%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratio of net
investment
income to
average net
assets......... 9.08% 8.84% 10.30% 14.84% 15.15% 11.44%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Portfolio
Turnover
Rate........... 86.20% 176.40% 121.51% 57.48% 156.23% 39.63%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
1994
----------------------------
1995 CLASS A CLASS B CLASS C
--------------------------- FROM FROM FROM
CLASS A CLASS B CLASS C 11/8/93 2/9/94 3/21/94
------- ------- ------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period..... $ 4.41 $ 4.41 $ 4.41 $ 5.00 $ 5.20 $ 5.06
Income from investment operations:
Net investment income (loss).......... .48 .45 .44 0.41 0.33 0.26
Net realized and unrealized gain
(loss)............................... .07 .06 .09 (0.60) (0.80) (0.65)
------- ------- ------- ------ ------ ------
Total from investment operations...... .55 .51 .53 (0.19) (0.47) (0.39)
------- ------- ------- ------ ------ ------
Less distributions:
Dividends (from net investment
income).............................. (0.48) (0.45) (0.45) (0.40) (0.32) (0.26)
------- ------- ------- ------ ------ ------
Net Asset Value end of period........... $ 4.48 $ 4.47 $ 4.49 $ 4.41 $ 4.41 $ 4.41
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Total Return (excluding sales charge)... 13.02% 11.97% 12.44% (4.11)% (9.30)% (7.21)%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratios/Supplemental Data:
Net assets end of period (in
thousands)........................... 88,552 96,362 11,011 50,797 25,880 2,330
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of expenses to average net
assets............................... 1.55% 2.25% 2.27% 1.50% 2.20% 2.20%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of expense reimbursement to
average net assets................... 0% 0% 0% 0.11% 0.20% 0.99%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of net investment income to
average net assets................... 10.90% 10.20% 10.18% 10.09% 9.72% 9.46%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Portfolio Turnover Rate............... 145% 145% 145% 163% 163% 163%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
<FN>
- ------------------------------
(1) Total returns for 1986 for the Government Securities, Growth, Income, and
Special Funds (1989 for the High Yield Fund and 1994 for Strategic Income
Fund) represent actual, not annualized, percentages. Unaudited prior to
1992.
(2) Represents distribution in excess of net investment income due to
differences in book and tax income.
(3) Reflects ratio that would have existed, in the case of the Government
Securities Fund, had the former Adviser not elected to waive 0.20% of its
investment advisory fee effective January 1, 1989, and, in the case of the
High Yield, Special and Strategic Income Funds, had the former Adviser or
its affiliates not reimbursed such Funds for a portion of their expenses.
</TABLE>
11
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
- ----------------------------------------------------------------------
Each Fund has its own investment objective and policies, and each utilizes
specific investment techniques to achieve its objective. Each of the Funds is
diversified, which is a means of reducing risk by investing the Fund's assets in
a broad range of securities designed to meet the Fund's objectives. The
objectives and policies of each Fund can be expected to affect the investment
return of such Fund and the degree of market and financial risk to which such
Fund is exposed. The percentage limitations included in these policies apply
only at the time of purchase. Policies and objectives that are noted as
"fundamental" cannot be changed without a shareholder vote. All other policies,
including the investment objective for each Fund other than the Income and
Growth Fund and High Total Return Fund are not fundamental and may be changed by
the Fund's Trustees without shareholder approval. Shareholders of those Funds
will be notified at least thirty days in advance of a change in the investment
objective of a Fund, and will be notified of any other material changes. If
there is a change to a Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial goals. Shareholders may incur a contingent deferred sales
charge if shares are redeemed in response to a change in objective. There can,
of course, be no guarantee that the investment objective of any of the Funds
will be achieved, due to the uncertainty inherent in all investments.
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND. The investment objective of
the Fund is to achieve a high level of current income and to conserve principal
by investing primarily in debt obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities ("U.S. Government Securities").
U.S. Government Securities include U.S. Treasury obligations and obligations
of agencies and instrumentalities of the U.S. Government. The Fund may at
various times have all or substantially all of its assets in U.S. Government
Securities issued by a single agency or instrumentality. Some U.S. Government
Securities, such as U.S. Treasury obligations, are supported by the full faith
and credit of the United States; others, such as securities of Federal Home Loan
Banks, are supported by the right of the issuer to borrow from the U.S.
Treasury; still others, such as bonds issued by the Federal National Mortgage
Association, a private corporation, are supported only by the credit of the
instrumentality. Securities of an instrumentality are not insured by the U.S.
Government and there can be no assurance that the U.S. Government will support
an instrumentality it sponsors. Because the U.S. Government is not obligated by
law to provide support to an instrumentality it sponsors, the Government
Securities Fund will invest in the securities issued by such an instrumentality
only when the Adviser determines that the credit risk with respect to the
instrumentality does not make the securities of the instrumentality unsuitable
investments. The Adviser does not intend to invest in excess of 35% of the
Fund's assets in securities not supported by the full faith and credit of the
United States, nor does it intend to invest more than 20% of the portfolio in
securities issued by any single instrumentality not supported by the full faith
and credit of the United States.
Securities of the sort owned by the Fund generally possess a high degree of
dependability with respect to timely payment of principal and interest. However,
such securities fluctuate in market price (but not in ultimate repayment
amount), primarily with interest rate levels and trends, rising when interest
rates decline and declining when interest rates rise. Consequently, the Fund's
net asset value will fluctuate in response to changing interest rates. The Fund
may invest in U.S. Government Securities of varying maturities and duration, and
the portfolio at times may hold a significant portion of its assets in
securities with longer durations. Long duration securities have greater price
movements in response to interest rate changes than movements in shorter
duration securities and may impact the Fund's net asset value accordingly. The
Adviser's determination of average duration reflects its outlook on interest
rates as well as its determination of best relative value in making investments.
The Fund may invest in mortgage-backed securities not issued or guaranteed by
an agency of the U.S. Government, but for which the underlying mortgages are
guaranteed by an Agency. Mortgage-backed securities have yield and maturity
characteristics corresponding to the underlying mortgage loans. Fluctuating
prepayments of principal may result from the refinancing or foreclosure of the
underlying mortgage loans. Because of the prepayment risks, these securities may
have less potential for capital appreciation during periods of declining
interest rates than other investments of comparable maturities, while having a
comparable risk of decline during periods of rising interest rates.
The Fund may invest in zero coupon treasury securities which consist of
stripped interest or principal components of U.S. Treasury bonds or notes
("STRIPs"). STRIPs involve the separation of the corpus (face amount) of the
bond or note from the coupon (interest portion). The U.S. Treasury redeems the
bond or note corpus (zero coupon bond or note) for the face value thereof at
maturity and redeems the stripped coupon (interest portion) beginning at the
date specified thereon. Zero coupon Treasury securities pay no interest to
holders during their life and usually trade at a deep discount from their face
or par value. They are subject to greater
12
<PAGE>
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make periodic distributions of
interest. On the other hand, zero coupon securities eliminate reinvestment risk
and lock in a rate of return to maturity. Stripped interests in U.S. Treasury
securities that are not issued through the U.S. Treasury's STRIPs program are
not considered to be U.S. Government Securities. The Fund will accrue and
distribute income from zero coupon securities on a current basis and may have to
sell securities to generate cash for distributions.
The Fund's assets will be managed so that the Fund is a permissible investment
for federal credit unions under the Federal Credit Union Act and rules and
regulations established by the National Credit Union Administration. To the
extent that any investment or investment practice under the Fund's investment
policies described herein or in the Statement of Additional Information are not
permissible for federal credit unions, the Fund shall refrain from purchasing
such investment or engaging in such practice. The Fund will notify shareholders
60 days before making any change to this policy. THE GOVERNMENT SECURITIES
FUND'S SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR ITS
AGENCIES OR INSTRUMENTALITIES, OR BY ANY OTHER PERSON OR ENTITY.
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND. The Fund seeks high current
income. The Fund will, under normal market conditions, allocate its investments
among the three fixed income securities markets described below. The Adviser
believes that allocation of the Fund's investments among the three sectors will
better enable the Fund to achieve its objective and may reduce investment risk
and volatility. The Fund will, under normal market conditions, maintain at least
20% of its total assets in each of the three sectors and may not invest more
than 60% of its total assets in any one sector, and have substantially all of
the Fund's assets invested in the three market sectors. No more than 60% of the
Fund's assets may be invested in foreign issuers across all sectors. In the
past, the markets for U.S. Government Securities, high yield corporate fixed
income securities and debt securities of foreign issuers have tended to move
independently of each other and have at times moved in opposite directions.
There is no assurance that they will continue to do so in the future. The
Adviser believes that when financial markets exhibit a lack of correlation, the
ability to respond strategically to market forces by allocating the Fund's
assets among the sectors should result in lower price volatility than would be
experienced by investing exclusively in any one of the markets. See "Risk
Factors -- High Yield Securities and Foreign Investments."
The Adviser will determine the amount of assets to be allocated to each sector
based on its assessment of the maximum level of current income that can be
achieved without incurring undue risks to principal value. In making this
allocation, the Adviser will rely on its analysis of economic conditions,
interest rate risk, currency risk and its analysis of opportunities in each
sector based on current and historical market data. The Adviser will
continuously review its allocations and make adjustments as it deems
appropriate. The Fund's assets allocated to each sector will be managed in
accordance with the investment policies described below.
THE U.S. GOVERNMENT SECURITIES SECTOR. U.S. Government Securities are
considered among the most creditworthy of fixed income securities. For a
description of U.S Government Securities and their characteristics, including
mortgage-backed securities, see "Northstar Advantage Government Securities
Fund." The Fund may invest all or substantially all of this sector's assets in
U.S. Government Securities issued by a single agency or instrumentality. The
Fund may invest in varying maturities and may adjust the average maturity of the
investments held by the Fund from time to time based upon the Adviser's
assessment of relative yields of securities of different maturities and its
expectations of future changes in interest rates.
THE HIGH YIELD SECTOR. The High Yield sector will invest predominantly in
high yielding, higher risk, lower-rated or nonrated foreign government fixed
income securities and corporate fixed income securities traded in the U.S. high
yield corporate market. These securities are rated below investment grade (I.E.,
rated below Baa by Moody's or below BBB by S&P). The Fund may invest without
limitation in securities rated as low as Ca by Moody's or CC by S&P (or in
nonrated securities deemed to be of equivalent standing by the Adviser) and up
to 10% of the Fund's assets allocated to this sector may be in the lowest rating
categories (C by Moody's and D by S&P). The lowest rating categories include
bonds which are in default. High yield securities are subject to greater market
fluctuations, and may be less liquid and subject to greater risk of loss of
income and principal due to default by the issuer than are investments in lower
yielding, higher-rated debt instruments. Investment in these securities involves
special risks. See, "Risk Factors -- High Yield Securities" and the Appendix.
The Adviser will attempt to maximize income and reduce risk within the High
Yield sector through diversification of the sector's portfolio investments and
by credit analysis of each issuer, as well as by monitoring broad economic
trends and corporate developments. The Fund will not necessarily invest in the
highest yielding securities available if, in the Adviser's view, the differences
in yield are not sufficient to justify the accompanying higher risks, and may
invest in securities rated investment grade at the time of purchase.
13
<PAGE>
The foreign government securities in which the Fund invests include securities
issued or guaranteed by foreign national, provincial, state or other governments
with taxing power, or their agencies or instrumentalities, and include
securities issued by developing countries and issuers located in developing
countries. Such foreign government securities may be denominated in U.S. dollars
or other currencies. In selecting and allocating assets among the countries in
which the Fund will invest, the Adviser will develop a long-term view of those
countries and will engage in an analysis of sovereign risk by focusing on
factors such as a country's public finances, monetary policy, external accounts,
financial markets, stability of exchange rate policy and labor conditions.
The high yield securities in which the Fund may invest will consist
predominantly of bonds, but may include to a lesser extent preferred stocks and
securities convertible into or exchangeable for equity securities, or which
carry the right, in the form of a warrant or as part of a unit with the
security, to acquire equity securities. The Fund intends to purchase such
securities for their yield characteristics rather than for the purpose of
exercising the associated rights to obtain equity securities. The Fund may
invest in debt securities of any maturity that pay fixed, floating or adjustable
interest rates. The Fund also may invest in debt securities issued at a discount
to face value, including zero coupon securities, and securities that pay
interest, at the issuer's option, in additional securities (pay-in-kind
securities). The values of debt securities generally fluctuate inversely with
changes in interest rates. This is less likely to be true for adjustable or
floating rate securities, since interest rate changes are more likely to be
reflected in changes in the rates paid on the securities. However, reductions in
interest rates also may translate into lower distributions paid by the Fund.
Additionally, because zero coupon and pay-in-kind securities do not pay interest
but the Fund nevertheless must accrue and distribute the income deemed to be
earned on a current basis, the Fund may have to sell other investments to raise
the cash needed to make income distributions.
The High Yield sector may also invest in participations in (i) entities
organized and operated for the purpose of restructuring the investment
characteristics of instruments issued or guaranteed by foreign governments of
emerging market countries ("Sovereign Debt Obligations"), and (ii) loans between
foreign governments and financial institutions. Sovereign Debt Obligations held
by the Fund generally will not be traded on securities exchanges. The Fund may
invest in Sovereign Debt Obligations customarily referred to as "Brady Bonds,"
which are created through the exchange of existing commercial bank loans to
foreign entities for new obligations in connection with debt restructuring.
Brady Bonds may be collateralized or uncollateralized and issued in various
currencies (although most are dollar denominated), and they are actively traded
in the over-the-counter secondary market. Dollar-denominated, collateralized
Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds,
are generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations which have the same maturity as the Brady
Bonds.
The Fund's investments in loans are expected in most instances to be in the
form of loan participations and loan assignments from third parties. The Fund
may invest up to 15% of its net assets in participations, assignments and other
illiquid investments. See "Illiquid Securities." Both the government that is the
borrower on the loan and the bank selling the participation or assignment will
be considered to be the issuer of the participation or assignment, and the Fund
will acquire participations only if the lender has total assets of more than $25
billion and its senior unsecured debt is rated Baa or higher by Moody's or BBB
or higher by S&P.
THE INTERNATIONAL SECTOR. The International Sector will invest in investment
grade (I.E . rated Baa or better by Moody's or BBB or better by S&P) or in
unrated securities that the Adviser determines to be of equivalent quality) debt
obligations and other fixed income securities denominated predominantly in
currencies (i) issued or guaranteed by foreign national, provincial, state, or
other governments with taxing authority, or by their agencies or
instrumentalities; and (ii) of supranational entities (described below). The
Fund may invest in any country where the Adviser believes there is the potential
for income.
Debt obligations may or may not be supported by the full faith and credit of a
foreign government. Supranational entities include international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples of supranational entities include the World Bank,
the Inter-American Development Bank and the European Bank for Reconstruction and
Development.
NORTHSTAR ADVANTAGE HIGH YIELD FUND. The investment objective of the Fund is
high current income. The Fund normally will be invested substantially in
long-term and intermediate-term fixed income securities, with emphasis on higher
yielding, higher risk, lower-rated or nonrated corporate debt instruments of
U.S. and foreign issuers. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in high yield bonds. The Fund may invest
without limitation in securities rated as low as Ca by Moody's or CC by S&P (or
in securities which are not rated but are considered to be of equivalent quality
by the Adviser), and may invest up to 1% of its assets in the lowest rating
categories (C for Moody's and D for S&P). The lowest rating categories include
bonds which are in default. High yield securities are subject to special risks,
typically are subject to greater market fluctuations and
14
<PAGE>
may be less liquid and subject to greater risk of loss of income and principal
due to default by the issuer. See, "Risk Factors -- High Yield Securities" and
the Appendix. The Adviser will attempt to maximize income and reduce risk
through diversification of the portfolio and by credit analysis of each issuer,
as well as by monitoring broad economic trends and corporate developments.
The Fund may invest in debt securities of any maturity that pay fixed,
floating or adjustable interest rates. The Fund also may invest in discount
obligations, including zero-coupon securities, which do not pay interest but
rather are issued at a significant discount to their maturity values, or
securities that pay interest, at the issuer's option, in additional securities
instead of cash (pay-in-kind securities). The values of debt securities
generally fluctuate inversely with changes in interest rates. This is less
likely to be true for adjustable or floating rate securities, since interest
rate changes are more likely to be reflected in changes in the rates paid on the
securities. However, reductions in interest rates also may translate into lower
distributions paid by the Fund. Additionally, because zero coupon and
pay-in-kind securities do not pay interest but the Fund nevertheless must accrue
and distribute the income deemed to be earned on a current basis, the Fund may
have to sell other investments to raise the cash needed to make income
distributions.
The Fund may invest up to 35% of its assets in securities of foreign issuers,
10% of which may be of issuers which are not traded on a U.S. securities
exchange. See "Risk Factors -- Foreign Investments." The Fund may invest up to
25% of its assets in equity or equity-related securities, such as preferred
stocks (which may or may not have a dividend yield), convertible securities or
rights or warrants associated with debt instruments.
NORTHSTAR ADVANTAGE INCOME FUND. The Fund's primary investment objective is
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
invests in debt securities and equity securities of companies which are listed
or traded on domestic securities exchanges or in the over-the-counter market,
but may to a limited extent, invest in securities traded in markets outside the
U.S. Under normal market conditions, at least 65% of the Fund's total assets
will be invested in income-producing securities. Up to 25% of the Fund's assets
may be invested in debt securities rated below investment grade by a nationally
recognized rating service (ie. rated lower than Baa by Moody's or BBB by S&P),
or are not rated but normally will not invest in securities rated below B by
Moody's or S&P. These securities are considered speculative investments and
generally involve greater risk, including the risk of loss of income and
principal, than higher-rated securities. In addition, the yield and price of a
lower-rated security may tend to fluctuate more than the yield and price of a
higher-rated security. Investment in these securities involves special risks
outlined below under the heading "Risk Factors -- High Yield Securities" and in
the Appendix. The Fund may invest up to 20% of its net assets in securities of
foreign issuers, not more that 10% of which may be invested in issuers that are
not listed on a U.S securities exchange. See "Risk Factors -- Foreign
Investments."
Equity securities include common and preferred stocks, warrants or rights to
purchase such stock, and securities convertible into such stock. Debt securities
may be of any maturity and pay fixed, floating or adjustable interest rates. The
Fund also may invest in discount obligations, including zero coupon securities,
that do not pay interest but rather are issued at a significant discount to
their maturity values, or securities that pay interest, at the issuer's option,
in additional securities instead of cash (pay-in-kind securities). The values of
debt securities generally fluctuate inversely with changes in interest rates.
This is less likely to be true for adjustable or floating rate securities, since
interest rate changes are more likely to be reflected in changes in the rates
paid on the securities. However, reductions in interest rates also may translate
into lower distributions paid by the Fund. Additionally, because zero coupon and
pay-in-kind securities do not pay interest but the Fund nevertheless must accrue
and distribute the income deemed to be earned on a current basis, the Fund may
have to sell other investments to raise the cash needed to make income
distributions.
NORTHSTAR ADVANTAGE GROWTH FUND. The Fund's investment objective is long-term
growth of capital. Under normal conditions, at least 65% of the Fund's total
assets will be invested in securities purchased for their prospect of capital
appreciation. The Fund invests principally in common stocks of companies which
are listed on the domestic securities exchanges or are traded in the domestic
over-the-counter markets, but may, to a limited extent, invest in securities
traded in markets outside the U.S. The Fund also may invest in preferred stocks
and convertible securities issued by such companies.
The Fund invests in industries and companies which, in the opinion of the
Adviser, have potential for capital growth and selects securities of companies
with records of above-average earnings growth or companies which, in its view,
are substantially undervalued in relation to assets. Some of the equity
securities in which the Fund invests may be speculative and involve substantial
risk, since they may experience significant price fluctuations in both rising
and declining markets. The Fund may invest up to 10% of its net assets in
securities of foreign issuers, not more than 10% of which may be invested in
issuers that are not listed on a U.S. securities exchange. See "Risk Factors --
Foreign Investments."
NORTHSTAR ADVANTAGE SPECIAL FUND. The Fund's investment objective is capital
appreciation. The Fund invests in a diversified portfolio of equity securities
selected on the basis of their potential for growth. The Fund invests in equity
securities of
15
<PAGE>
companies which are listed on domestic securities exchanges or are traded in the
over-the-counter markets. However, the Fund may, to a limited extent, invest in
securities traded in markets outside the U.S. Securities purchased by the Fund
are primarily issues of smaller, lesser-known companies. While the Fund does not
limit itself to smaller companies, many of its investments are in small,
emerging growth companies. Small companies are those, for example, with annual
revenues of less than $500 million. Emerging growth companies are those that,
while still in the developmental stage, have demonstrated, or are expected to
achieve, growth of earnings over major business cycles. Smaller, less
established companies may offer greater opportunities for capital appreciation
than larger, better established companies, but may also involve certain special
risks. Such companies often have limited product lines, markets or financial
resources and depend heavily on a small management group. Their securities may
trade less frequently, in smaller volumes, and fluctuate more sharply in value
than exchange listed securities of larger companies.
Equity securities in which the Fund may invest consist of common stocks,
preferred stocks, convertible securities, warrants and other stock purchase
rights, private placements and other restricted equity securities, equity
interests in trusts, limited partnerships and joint ventures and interests in
real estate investment trusts. The Fund may invest up to 20% of its net assets
in the securities of foreign issuers, not more than 10% of which may be in
issuers whose securities are not listed on a U.S. securities exchange. See "Risk
Factors -- Foreign Investments."
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND. The Fund's investment objective
is to seek current income balanced with the objective of achieving capital
appreciation. Under normal market conditions, the Fund will invest at least 65%
of its total assets in income-producing securities. In seeking to achieve its
objective, the Fund will invest in equity securities of domestic and foreign
issuers that have prospects for dividend income and growth of capital, and
selected fixed-income securities of domestic and foreign private and government
issuers. These securities would include U.S. Government Securities (see the
"Northstar Advantage Government Securities Fund" above for a description of
these securities), foreign and domestic investment grade bonds, and bonds issued
by foreign governments considered stable by the Adviser and supported through
the authority to levy taxes by national state or provincial governments or
similar political subdivisions. The proportion of holdings in common stocks,
other equity-related securities, and debt securities will vary in accordance
with the level of return that can be achieved from these various types of
securities. Securities are also purchased on the basis of fundamental attraction
regarding capital appreciation prospects. In this way, income is "balanced" with
capital. The Fund invests in equity securities that are listed primarily on the
New York Stock Exchange or American Stock Exchange or that are traded on the
over-the-counter market. The common and preferred stocks purchased by the Fund
will typically be of large well-established companies, but may also include to a
lesser extent small capitalization companies selected for their growth
potential. Fixed income securities purchased by the Fund will only be securities
rated investment grade (I.E., in the top four rating categories of Moodys or
S&P) at the time of purchase. Securities that are in the lowest investment grade
debt category may have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than in the case with higher grade
securities. In the event that an existing holding is downgraded to below
investment grade, the Fund may nevertheless retain the security.
The Fund may invest up to 20% of its net assets in the securities of foreign
issuers, not more than 10% of which shall be in issuers whose securities are not
listed on a U.S. securities exchange. See "Risk Factors -- Foreign Investments."
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND. The investment objective of the
Fund is to seek high income. As an investment policy, the Fund, consistent with
its objective, purchases and sells portfolio securities in the pursuit of
capital appreciation. The Fund, therefore, also seeks to maximize the total
return on its portfolio by taking advantage of market developments, yield
disparities and variations in the creditworthiness of issuers.
Under normal market conditions, the Fund will seek to achieve its investment
objective by investing at least 65% of its total assets in higher-yielding,
lower-rated U.S. dollar-denominated debt securities of U.S. and foreign issuers,
which involve special risks and are predominantly speculative in character.
Investments in securities offering the high current income sought by the Fund,
while generally providing greater income and potential opportunity for gain than
investments in higher rated securities, also entail greater risk. The value of
high yield securities (and therefore the net asset value per share of the Fund)
can be expected to increase or decrease in response to changes in interest
rates, real or perceived changes in the credit risks associated with its
portfolio investments, and other factors affecting the credit markets generally.
The Fund may invest up to 35% of its assets in non-U.S. Dollar denominated
securities, but is subject to a limit of 50% of its assets in securities of
foreign issuers, including a limit of 35% of assets in emerging market debt,
regardless of the currency in which such securities are denominated. The Fund
intends to restrict it investments in emerging markets to those with sound
economies that are expected to experience strong growth, and therefore higher-
than-average returns, over time. See "Risk Factors -- Foreign Investments."
16
<PAGE>
Most of the debt securities in which the Fund invests are lower rated, and may
include bonds in the lowest rating categories (C for Moody's and D for S&P) and
unrated bonds. Most of the securities will be rated at least Caa by Moody's or
at least CCC by S&P, or if not rated, are of equivalent quality in the opinion
of the Adviser. The Fund may invest up to 10%, and hold up to 25%, of its assets
in securities rated below Caa in the case of Moody's or CCC by S&P. Such debt
securities are highly speculative and may be in default of payment of interest
and/or repayment of principal may be in arrears. The issuers of such debt
securities may be involved in bankruptcy or reorganization proceedings and/or
may be restructuring outstanding debt. Investing in bankrupt and troubled
companies involves special risks. See "Risk Factors -- High Yield Securities"
and the Appendix.
The Fund may invest in debt securities of any maturity that pay fixed,
floating or adjustable interest rates. The Fund also may invest in discount
obligations, including zero-coupon securities, which do not pay interest but,
rather, are issued at a significant discount to their maturity values, or
securities that pay interest, at the issuer's option, in additional securities
instead of cash (pay-in-kind securities). The values of debt securities
generally fluctuate inversely with changes in interest rates. This is less
likely to be true for adjustable or floating rate securities, since interest
rate changes are more likely to be reflected in changes in the rates paid on the
securities. However, reductions in interest rates also may translate into lower
distributions paid by the Fund. Additionally, because zero coupon and
pay-in-kind securities do not pay interest but the Fund nevertheless must accrue
and distribute the income deemed to be earned on a current basis, the Fund may
have to sell other investments to raise the cash needed to make income
distributions. To a lesser extent the Fund may invest in equity or
equity-related securities, including common stock, preferred stock, convertible
securities and rights and warrants attached to debt instruments. Typically the
Fund would purchase a high yield security that is convertible or exchangeable
for equity securities, or which carries the right in the form of a warrant or as
part of a unit with the security to acquire equity securities. The Fund would
ordinarily purchase these securities for their yield characteristics or capital
appreciation potential.
RISK FACTORS
- ----------------------------------------------------------------------
HIGH YIELD SECURITIES. Each of the Strategic Income Fund, High Yield Fund,
Income Fund and High Total Return Fund may invest in higher yielding securities
that carry lower investment grade ratings. These high yield high-risk securities
are rated below investment grade by the primary rating agencies (Moody's and
S&P). See Appendix A for a description of bond rating categories. The value of
lower rated securities generally is more dependent on the ability of the company
to meet interest and principal payments than is the case for higher rated
securities. Conversely, the value of higher rated securities may be more
sensitive to interest rate movements than lower rated securities. Companies
issuing high yield securities may not be as strong financially as those issuing
bonds with higher credit ratings. Investments in such companies are considered
to be more speculative than higher quality investments. In addition, the market
for lower rated securities is generally less liquid than the market for higher
rated securities, and adverse publicity and investor perceptions may also have a
greater negative impact on the market for these securities.
Companies issuing high yield bonds are more vulnerable to real or perceived
economic changes (such as rising interest rates), political changes or adverse
developments specific to the company. Adverse economic, political or other
developments may impair the company's ability to service principal and interest
obligations, to meet projected business goals and to obtain additional
financing, particularly if the company is highly leveraged. In the event of a
default, a Fund would experience a reduction of its income and could expect a
decline in the market value of the defaulted securities.
17
<PAGE>
Weighted average composition of the following Funds' portfolios at the end of
their 1995 fiscal year was:
<TABLE>
<CAPTION>
STRATEGIC HIGH TOTAL
INCOME HIGH YIELD RETURN INCOME
--------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment Grade
BB..................................................... 21.8
B...................................................... 51.3
CCC.................................................... 7.7
CC..................................................... --
C...................................................... --
D...................................................... --
Nonrated............................................... 15.2
U.S. Governments, equities, and other.................. 4.0
TOTAL.................................................. 100% 100% 100% 100%
------ ----------- ---------- ----------
------ ----------- ---------- ----------
</TABLE>
This table does not reflect the current or future composition of any of the
Fund's portfolios.
FOREIGN INVESTMENTS. Each Fund, except the U.S. Government Securities Fund,
may invest in securities of foreign issuers. Securities of some foreign
companies and governments may be traded in the U.S., but many foreign securities
are traded primarily in foreign markets. In addition to generally higher
transaction costs associated with foreign investing, risks of foreign investing
include:
CURRENCY RISKS. A Fund must buy the local currency when its buys a foreign
security, and it sells local currency when it sells the security. The value of a
foreign security held by the Fund will be affected by the value of the local
currency relative to the U.S. dollar, causing the Fund to lose money at times,
despite an increase in the value of the security.
POLITICAL AND ECONOMIC RISK. Political and economic risks may exist,
particularly in underdeveloped or developing countries which may have relatively
unstable governments and economies based on only a few industries. In some
countries, there is the risk that the government may take over the assets or
operations of a company or that the government may impose taxes or limits on the
removal of a Fund's assets from that country.
REGULATORY RISK. There is generally less government supervision of foreign
markets, and issuers are not subject to the uniform accounting, auditing and
financial reporting standards and practices applicable to domestic issuers.
There also may be less publicly available information about foreign issuers.
OTHER INVESTMENT TECHNIQUES
- ----------------------------------------------------------------------
Unless otherwise stated, each of the following strategies and techniques may
be utilized by each of the Funds. The Funds may, but do not currently intend to,
engage in certain additional investment techniques not described in this
Prospectus. These techniques and additional information on the securities and
techniques described in the Prospectus are contained in the Statement of
Additional Information.
OPTIONS AND FUTURES TRANSACTIONS. Each Fund may enter into futures contracts
on securities, financial indices and foreign currencies and options on such
contracts and may invest in options on securities, financial indices and foreign
currencies, and forward contracts (collectively "derivative instruments"). The
Funds intend to use derivative instruments primarily to hedge the value of their
portfolios against potential adverse movements in securities price, foreign
currency markets or interest rates. To a limited extent, the Funds may also use
derivative instruments for non-hedging purposes such as increasing a Fund's
income or otherwise enhancing return. When a Fund invests in a derivative
instrument, it may be required to segregate cash and other high-grade liquid
assets or portfolio securities to "cover" the Fund's position. Assets segregated
or set aside may limit the Fund's portfolio management activities while the Fund
maintains the positions, which could diminish the Fund's return due to foregoing
other potential investments with such assets.
The use of options and futures strategies involves certain other risks,
including the risk that no liquid market will exist and that the Fund will be
unable to effect closing transactions at any particular time or at an acceptable
price, and the risk of imperfect correlation between movements in options and
futures prices and movements in the price of securities which are the subject of
the hedge. The
18
<PAGE>
successful use of options and futures strategies depends on the ability of the
Adviser to forecast correctly rate movements and general stock market price
movements. Expenses and losses incurred as a result of these hedging strategies
will reduce the current return of the Fund. See the Statement of Additional
Information.
REPURCHASE AGREEMENTS. A Fund may invest in repurchase agreements, either for
temporary defensive purposes or to generate income from its cash balances. Under
a repurchase agreement, the Fund buys a security from a bank or dealer, which is
obligated to buy it back at a fixed price and time. The security is held in a
separate account at the Fund's custodian and constitutes the Fund's collateral
for the bank's or dealer's repurchase obligation. Additional collateral may be
added so that the obligation will at all times be fully collateralized. However,
if the bank or dealer defaults or enters into bankruptcy, the Fund may
experience costs and delays in liquidating the collateral, and may experience a
loss if it is unable to demonstrate its right to the collateral in a bankruptcy
proceeding. Repurchase agreements maturing more than seven days in the future
are considered illiquid, and a Fund will invest no more than 5% of its net
assets in such repurchase agreements at any time.
WHEN ISSUED SECURITIES. The Funds may acquire securities on a "when-issued"
basis by contracting to purchase securities for a fixed price on a date beyond
the customary settlement time with no interest accruing until settlement. If
made through a dealer, the contract is dependent on the dealer completing the
sale. The dealer's failure could deprive the Fund of an advantageous yield or
price. These contracts may be considered securities and involve risk to the
extent that the value of the underlying security changes prior to settlement. A
Fund may realize short-term profits or losses if the contracts are sold.
Transactions in when-issued securities may be limited by certain Internal
Revenue Code requirements.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities or private placements. An
illiquid security is a security that cannot be sold quickly in the normal course
of business. Some securities cannot be sold to the U.S. public because of their
terms or because of SEC regulations. The Adviser may determine that securities
that cannot be sold to the U.S. public, but that can be sold to institutional
investors ("Rule 144A" securities) or on foreign markets, are liquid, following
guidelines established by the Trustees of each Fund.
TRADING AND PORTFOLIO TURNOVER. Each Fund generally intends to purchase
securities for long-term investment. However, short-term transactions may result
from liquidity needs, securities having reached a price or yield objective,
changes in interest rates or the credit standing of an issuer, or by reason of
economic or other developments not foreseen at the time of the initial
investment decision. Portfolio turnover rates are usually not a factor in making
buy and sell decisions. Although infrequent, a Fund may purchase a security in
anticipation of relatively short-term price gains. A Fund may also sell one
security and simultaneously purchase the same or comparable security to take
advantage of short-term differentials in yield or price. Increased portfolio
turnover may result in higher costs for brokerage commissions, dealer mark-ups
and other transaction costs and may also result in taxable capital gains. Short
term trading may also be restricted by certain tax rules.
TEMPORARY INVESTMENTS. In periods of unusual market conditions, for temporary
and defensive purposes, when the Adviser considers it appropriate, a Fund may
invest part or all of its assets in cash, U.S. government securities, commercial
paper, bankers' acceptances, repurchase agreements and certificates of deposit.
PERFORMANCE INFORMATION
- ----------------------------------------------------------------------
The Funds may, from time to time, include their yield and total returns in
advertisements or reports to shareholders or prospective investors. Both yield
and total return figures are computed separately for each class of shares of
each Fund in accordance with formulas specified by the Securities and Exchange
Commission. Both yield and total return figures are based on historical earnings
and are not intended to indicate future performance. The yield for each class of
a Fund (which shows the rate of income a Fund earned on its investment as a
percentage of a Fund's share price) will be computed by dividing (a) net
investment income over a 30-day period by (b) an average value of invested
assets (using the average number of shares entitled to receive dividends and the
maximum offering price per share or the maximum redemption price per share) at
the end of the period, as appropriate, all in accordance with applicable
regulatory requirements. Such amounts will be compounded for six months and then
annualized for a twelve-month period to derive the yield of each class.
Standardized quotations of average annual total return for each class of
shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in the class of shares over a period of 1, 5
and 10 years (or up to the life of the class of shares). Total return is the
percentage increase or decrease in the value of an investment over a stated
period of time. Standardized total return quotations reflect the deduction of a
proportional share of expenses (on an annual basis) of a class,
19
<PAGE>
deduction of the maximum initial sales load or the maximum CDSC applicable to a
complete redemption of the investment, as appropriate, and assume that all
dividends and distributions are reinvested when paid. The Funds also may quote a
supplementary rate of total return over different periods of time or by
non-standardized means.
Performance for Class B and Class C shares typically will be less favorable
than that for Class A and Class T shares due to the higher expense ratios for
Class B and Class C shares. Performance for Class T shares will be less
favorable than Class A shares due to higher distribution and service fees. For a
complete description of the methods used to determine yield and total return for
the Funds, see the Statement of Additional Information.
HOW NET ASSET VALUE IS DETERMINED
- ----------------------------------------------------------------------
All purchases, redemptions and exchanges are processed at the net asset value
("NAV") per share next calculated after your request is received and approved.
In order to receive a day's price, your order must be received by 4:00 p.m. EST.
NAV fluctuates and is determined separately for each class as of the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. EST) each day
the Exchange is open. NAV is computed by dividing the total value of a Fund's
securities and other assets, less all liabilities, by the total number of shares
outstanding. The specific expenses borne by each class of shares will be
deducted from that class and will result in different NAVs and dividend
payments. The NAV of a Class B, Class C or Class T share will generally be lower
than that of a Class A share because of the higher distribution fees or certain
other class specific expenses borne by these classes. However, the net asset
value per share of each class will tend to converge immediately after the
payment of dividends.
Under normal market conditions, daily prices for securities are obtained from
independent pricing services determined by them in accordance with the
Registration Statement for each Fund. Securities are valued at market value or,
if a market quotation is not readily available, at their fair value determined
in good faith under procedures established by and under the supervision of the
Trustees. Money market instruments maturing within 60 days are valued at
amortized cost, which approximates market value. See the Statement of Additional
Information.
MANAGEMENT OF THE FUNDS
- ----------------------------------------------------------------------
THE TRUSTEES. The Trustees of each Fund ("Trustees") oversee the operations
of the Fund and perform the various duties imposed on trustees by the laws of
the Commonwealth of Massachusetts and the 1940 Act. The Trustees meet quarterly
to review the Funds' investment policies, performance, expenses and other
business affairs and elect the officers of each Fund annually. The Trustees
delegate day to day management of the Funds to the officers of the respective
Funds.
THE ADVISER AND AFFILIATED SERVICE PROVIDERS. Pursuant to an Investment
Advisory Agreement with each Fund, Northstar Investment Management Corporation
acts as the investment adviser to each Fund. In this capacity, the Adviser,
subject to the authority of the Trustees, is responsible for furnishing
continuous investment supervision to the Funds and is responsible for the
management of the Funds' portfolios. Northstar Administrators Corporation, an
affiliate of the Adviser, furnishes certain administrative, compliance and
accounting services to each Fund. Employees of the Adviser and Administrator
serve as officers of the Funds, and the Adviser provides office space for the
Funds and pays the salaries of all Fund officers and Trustees who are affiliated
with the Adviser. Northstar Distributors, Inc., also an affiliate of the
Adviser, serves as principal underwriter of the shares of each Fund, conducting
a continuous offering pursuant to a "best efforts" arrangement requiring it to
take and pay for only such securities as may be sold to the public through
investment dealers.
The Adviser and its affiliates are indirect, majority owned subsidiaries of
ReliaStar Financial Corp. ("ReliaStar"). Combined minority interests held by
members of senior management currently equal 20%. ReliaStar is a publicly traded
holding company whose subsidiaries specialize in the life and health insurance
businesses. Through Northwestern National Life Insurance Company and other
subsidiaries, ReliaStar issues and distributes individual life insurance,
annuities and mutual funds, group life and health insurance and life and health
reinsurance, and provides related investment management services. Prior to June
2, 1995, the Northstar Advantage Special, Growth, Income, High Yield, Strategic
Income and Government Securities Funds were managed by Boston Security
Counsellors, Inc. ("BSC").
The Adviser's fee is accrued daily against the value of each Fund's net assets
and is payable by each Fund monthly at an annual rate of 0.75% on the first $250
million of each Fund's average daily net assets in the case of the Northstar
Advantage Income and Growth and High Total Return Funds, scaled down to 0.55%
for assets over $1 billion, and at the following rates for the other Northstar
20
<PAGE>
Advantage Funds: Government Securities Fund -- 0.45%; High Yield Fund -- 0.45%;
Income Fund -- 0.65%; Growth Fund -- 0.75%; Special Fund -- 0.75%; Strategic
Income Fund -- 0.65% (each of which may be subject to voluntary waiver or
reimbursement by the Adviser). The investment advisory fees paid by Income and
Growth Fund, High Total Return Fund, Growth Fund and Special Fund are higher
than the fees paid by most mutual funds. The Administrator's fee is accrued
daily against the value of each Fund's net assets and is payable monthly at an
annual rate of .10% of each Fund's average daily net assets. The Administrator
also charges an annual account service fee of $5.00 for each account of
beneficial holders of shares in a Fund for providing certain shareholder
services and assisting broker-dealers in servicing Fund accounts. Until June 2,
1997 the Administrator will receive no administrative or account fees from the
Special, Growth, Income, High Yield, Strategic Income and Government Securities
Funds.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting brokers, the Adviser may consider research and
brokerage services furnished to it. The Adviser also advises other accounts that
may purchase and hold securities in which the Funds may invest and certain
persons affiliated with the Adviser may purchase and hold, directly or
indirectly, securities in which the Funds or other accounts invest, subject to
internal guidelines regarding conflicts of interest.
INVESTMENT PERSONNEL OF ADVISER. Thomas Ole Dial has served as portfolio
manager of the High Total Return Fund since its inception in November 1993, and,
since October 1995 as co-manager of the Strategic Income Fund. Mr. Dial is a
Vice President of each Fund and Executive Vice President and Chief Investment
Officer -- Fixed Income of the Adviser. Mr. Dial also serves as manager of the
Northstar High Yield Bond Fund and Northstar Multi-Sector Bond Fund, series of a
separate open-end management investment company sponsored by the Adviser. Prior
to employment by the Adviser in October 1993, Mr. Dial served as Executive Vice
President and Chief Investment Officer -- Fixed Income of National Securities &
Research Corporation, and as portfolio manager for National Bond Fund, National
Asset Reserve, and National Multi-Sector Fixed Income Fund. Prior to National,
Mr. Dial managed high yield securities portfolios through Dial Capital
Management and Gibraltar Savings. Mr. Dial also manages investments for T.D.
Partners, a limited partnership for which the Adviser serves as subadviser.
Ernest Mysogland has served as portfolio manager of the Income and Growth Fund
since its inception in November 1993, and as portfolio manager of the Growth
Fund since October 1995. Mr. Mysogland is a Vice President of the Funds and
Executive Vice President and Chief Investment Officer -- Equities of the
Adviser. Mr. Mysogland also serves as a manager of the Northstar Income and
Growth Fund, a series of a separate open-end management investment company
sponsored by the Adviser. Prior to employment by the Adviser, Mr. Mysogland
served as Senior Vice President and Chief Investment Officer -- Equities for
National Securities and Research Corporation ("National"), and was portfolio
manager for National Income and Growth Fund, National Total Return Fund, and
National Worldwide Opportunities Fund. Prior to National, Mr. Mysogland served
as an investment manager for Reinoso Asset Management, Gintel Equity Management,
L.F. Rothschild Asset Management, Wertheim Asset Management and Kemper Financial
Services. Mr. Wadsworth is a Vice President and has served as co-manager of
these Funds with Mr. Mysogland over the same periods. Mr. Wadsworth was formerly
a Vice President of National, serving as portfolio manager of the National Stock
Fund, and assistant manager of National's other equity funds.
Margaret D. Patel is the portfolio manager of the Government Securities Fund
and the Income Fund. Ms. Patel is a Vice President of the Funds and of the
Adviser and, prior to June 2, 1995, was Senior Vice President of BSC. She has
been primarily responsible for the day-to-day management of the Government
Securities Fund since 1988, and of the Income Fund since October 1995.
Prescott B. Crocker, C.F.A., is the portfolio manager of the High Yield Fund
and co-manager of the Strategic Income Fund. Mr. Crocker is a Vice President of
the Funds and of the Adviser and, until June 2, 1995, was Senior Vice President
and Director of Fixed Income Investments at BSC. Prior to joining BSC in 1993,
Mr. Crocker served for eighteen years in various capacities, including Group
Head for corporate and international fixed income, at Colonial Management
Associates, Inc. He has been primarily responsible for the day-to-day management
of the High Yield Fund since December 1993, and for the Strategic Income Fund
since its inception in 1994.
SUBADVISER; INVESTMENT PERSONNEL OF SUBADVISER. Navellier Fund Management,
Inc. ("Navellier"), a registered investment adviser, serves as subadviser to the
Special Fund pursuant to a Subadvisory Agreement dated February , 1996, between
the Adviser and Navellier. Navellier is a newly-formed company which is
wholly-owned by Louis G. Navellier. The principal address of Navellier is 920
Incline Way, Incline Village, NV 89450. Mr. Navellier, who has managed
investments since 1986, is also the sole shareholder of two other registered
investment advisory firms which, on a combined basis, manage approximately $1.2
billion of assets for individuals, institutions and a Navellier-sponsored
open-end management investment company, the Navellier Series Fund. Louis G.
Navellier will serve as portfolio manager for the Fund, with primary
responsibility for the day-to-day investment management. For its services,
Navellier will receive a fee equal to 0.48% of the average daily net assets of
the Fund. The Adviser is responsible for overseeing the investment management
provided by Navellier, and assumes all costs and expenses of the subadvisory
arrangement.
21
<PAGE>
OTHER SERVICE PROVIDERS. The custodian for the Income and Growth and High
Total Return Funds is Custodial Trust Company, a bank organized under the laws
of New Jersey, located at 101 Carnegie Center, Princeton, New Jersey 08540-6231.
The custodian and fund accounting agent for the Special, Growth, Income, High
Yield, Strategic Income and Government Securities Funds is State Street Bank and
Trust Company, located at 225 Franklin Street, Boston, Massachusetts 02110. The
transfer agent and Blue Sky administrator for all Funds, and the fund accounting
agent for the Income and Growth and High Total Return Funds, is First Data
Investor Services Group ("First Data" or the "Transfer Agent"), located at One
Exchange Place, Boston, Massachusetts, 02109. Advest Transfer Services, Inc.,
One Commercial Plaza, 280 Trumbull Street, Hartford, Connecticut 06103, serves
as the sub-transfer agent for the Funds offering Class T shares.
HOW TO PURCHASE SHARES
- ----------------------------------------------------------------------
Each Fund continuously offers three classes of shares. Each class is described
below under "Alternative Purchase Arrangements." Shares of each Fund, excluding
Class T shares, may be purchased from the Fund or from investment dealers having
a sales agreement with the Underwriter. Orders received in good form prior to
4:00 p.m. Eastern time or placed with a financial service firm before such time
and transmitted before the Fund processes that day's share transactions, will be
processed at that day's closing NAV, plus any applicable sales charge. The
minimum initial purchase is $2,500, except IRA accounts, for which the minimum
is $250; additional investments for as little as $100 ($25 for IRA accounts) may
be made at any time through an investment dealer or by sending a check payable
to The Northstar Advantage Funds, c/o First Data Investor Services, P.O. Box
9756, Providence, RI 02940, for the purchase of full and fractional shares. Most
shareholders choose not to hold their shares in certificate form because account
transactions such as exchanges and redemptions cannot be completed until the
certificate has been returned to the Funds and certificate holders may not
participate in certain shareholder services, such as telephone exchanges and
redemptions, check-writing and the withdrawal program. Certificates will be
issued only upon written request. Shareholders requesting certificates may incur
a fee for lost or stolen certificates and no certificates are issued for
fractional shares (which shares remain in the shareholder's account in book
entry form). The Fund or the Underwriter may refuse any purchase order for
shares.
At various times, the Underwriter implements programs under which (a) a
dealer's sales force may be eligible to win cash or material awards for certain
sales efforts or under which (b) the Underwriter will reallow an amount not
exceeding the total applicable sales charges on the sales generated by the
dealer during such programs to any dealer that (i) sponsors sales contests or
recognition programs conforming to criteria established by the Underwriter or
(ii) participates in sales programs sponsored by the Underwriter. Pursuant to a
Purchase Agreement that was entered into in connection with the assumption of
management of the Funds by the Adviser, the Underwriter has agreed to provide
Advest, Inc. ("Advest") with certain additional compensation until June 2, 1998.
Any additional compensation is payable annually and is based upon (a)(i) the
level of sales by Advest of shares of the Funds during each year and (ii) the
rate of redemption of Class T shares during such year and (b) the level of sales
of those Funds previously distributed through Advest by persons other than
Advest. Such compensation, which is paid out of the assets of the Underwriter
and not the Funds, is in addition to the compensation otherwise payable to a
dealer in connection with sale of the Funds' shares. Sales personnel of
broker-dealers distributing shares of the Funds may receive differing
compensation for selling different classes of shares.
ALTERNATIVE SALES ARRANGEMENTS
- ----------------------------------------------------------------------
The alternative purchase arrangements permit an investor to choose among three
methods (each a class) of purchasing shares. Each class is described below.
Which class is more beneficial to an investor depends on the amount and intended
length of the investment. Large investments qualifying for a reduced Class A
sales charge avoid the higher distribution fee. Investments in Class B and Class
C shares have 100% of the purchase invested immediately. Purchases of $250,000
or more must be for Class A shares. Please consult your financial service firm.
Prior to June 5, 1995, the Growth, Special, Income, Government Securities,
High Yield and Strategic Income Funds each offered only one Class of shares,
currently designated as "Class T" shares. Class T shares are no longer offered
for sale by a Fund, except in connection with reinvestment of dividends and
other distributions, upon exchanges of Class T shares of another Fund, and upon
exchange of shares from the Class T Account of the Money Market Portfolio. When
Class T shares are redeemed within four years after their purchase, a contingent
deferred sales load will be imposed at rates declining from a maximum of 4% of
the lesser of the net asset value or total cost of shares redeemed within a year
of purchase to 1% of such amount for shares redeemed after three years.
22
<PAGE>
All contingent deferred sales charges are deducted from the redemption
proceeds, not the amount remaining. No contingent deferred sales charge is
imposed on shares acquired through reinvestment of dividends and distributions,
or on amounts representing appreciation. In determining whether a contingent
deferred sales charge is applicable to a redemption, the calculation will be
determined in the manner that results in the lowest possible rate being charged.
Accordingly, in determining whether a contingent deferred sales charge will be
payable and, if so, the percentage charge applicable, shares acquired through
reinvestment and then shares held the longest will be considered the first to be
redeemed.
Class B and Class T shares automatically convert to Class A shares after eight
years from purchase in the case of Class B shares, and on the later of May 31,
1998 or eight years after purchase in the case of Class T shares. The purpose of
the conversion is to relieve the holders from the burden of higher distribution
fees once the Underwriter had been reimbursed for most of its distribution
related expenses. For purposes of conversion to Class A shares, shares purchased
through the reinvestment of dividends and distributions paid in respect of Class
B or Class T shares in a shareholder's Fund account will be considered to be
held in a separate subaccount. Each time any Class B or Class T shares in the
shareholder's Fund account (other than those in the subaccount) convert to Class
A, an equal pro rata portion of the Class B or Class T shares in the subaccount
will also convert to Class A.
Initial or contingent deferred sales charges may be reduced or eliminated for
certain persons or organizations purchasing Fund shares alone or in combination
with other Northstar Advantage Funds. See the Statement of Additional
Information for more details.
CLASS A SHARES. Class A shares are offered at net asset value plus an initial
or a contingent deferred sales charge as set forth below. Class A shares bear a
0.25% annual service fee and a .05% annual distribution fee.
<TABLE>
<CAPTION>
% OF NET % OF AMOUNT RETAINED BY
AMOUNT OFFERING DEALERS AS A % OF
AMOUNT PURCHASED INVESTED PRICE OFFERING PRICE
- ----------------------------------------------------------------------------- ----------- ----------- ---------------------
<S> <C> <C> <C>
Up to $99,999................................................................ 4.99% 4.75% 4.00%
$100,000 to 249,999.......................................................... 3.9 3.75 3.1
250,000 to 499,999........................................................... 2.83 (2.75) 2.3
500,000 to 999,999........................................................... 2.04 2 1.7
*1,000,000 and above......................................................... -- -- --
</TABLE>
- ------------------------
* The Underwriter pays investment dealers or financial service firms a
commission from its own resources of up to 1.00% of the amount invested for
amounts from $1,000,000 to $2,499,999, up to 0.50% on amounts of $2,500,000 to
$4,999,999 and up to 0.25% on amounts of $5 million and above. Purchases of
over $1 Million are subject to a maximum contingent deferred sales charge of
1% (scaled down to 0.50% for amounts of $2.5 million or more, and 0.25% on
amounts over $5 million) on redemptions made within eighteen months.
CLASS B SHARES. Class B shares are offered at net asset value, without an
initial sales charge, subject to a .75% annual distribution fee for
approximately 8 years (at which time they convert to Class A shares bearing only
a .05% annual distribution fee), a 0.25% annual service fee and a contingent
deferred sales charge if shares are redeemed within five years after purchase.
As set forth below, the amount of the deferred sales charge varies depending on
the number of years after purchase that the redemption occurs. For determining
the date of purchase, all payments during a month will be aggregated and deemed
to have been made on the last day of the month. The deferred sales charge will
be assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed.
The Underwriter currently pays investment dealers a sales commission of 4% of
the sale price of Class B shares sold by the dealers, subject to future
amendment or termination. The Underwriter will retain all or a portion of the
continuing distribution fee assessed to
23
<PAGE>
Class B shareholders and will receive the entire amount of the contingent
deferred sales charge paid by shareholders on the redemption of shares to
reimburse the Underwriter in whole or in part for the payment of such sales
commission, plus financing costs and related marketing expenses.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------------- -------------------
<S> <C>
First............................................................................................ 5%
Second........................................................................................... 4%
Third............................................................................................ 3%
Fourth........................................................................................... 2%
Fifth............................................................................................ 2%
Thereafter....................................................................................... 0%
</TABLE>
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If, at such time the investor
makes his first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$400 of the $600 redemption proceeds will be charged at a rate of 4% (the
applicable rate in the second year after purchase).
CLASS C SHARES. Investors choosing Class C shares purchase shares at net
asset value without a sales charge at the time of purchase, subject to a 0.75%
annual distribution fee, a 0.25% annual service fee, and a 1.00% contingent
deferred sales charge on redemptions made within one year from the first day of
the month after purchase.
The Underwriter currently pays investment dealers a sales commission of 1% of
the sale price of Class C shares sold by such dealers, subject to future
amendment or termination. The Underwriter will retain the distribution fee
assessed against Class C shareholders in the first year of investment, and the
entire amount of the contingent deferred sales charge paid by Class C
shareholders upon redemption in year one, in order to compensate the Underwriter
for providing distribution related services to the Funds in connection with the
sale of Class C shares, and to reimburse the Underwriter in whole or in part for
the commissions (and any related financing costs) paid to dealers at the time of
purchase. There is no conversion feature associated with Class C shares;
therefore, Class C shareholders will be subject to the higher distribution fee
associated with such shares for the life of the shareholder's investment.
INVESTOR SERVICES AND ACCOUNT POLICIES
- ----------------------------------------------------------------------
An account will be opened for each investor after an initial investment is
made. Account services are described below. Class T shareholders wishing to add
to their investment or to purchase shares of another Fund must opt to purchase
Class A, Class B or Class C shares of the Fund, and the Transfer Agent will
establish a new account for the shareholder in another Class of a Fund selected
by the shareholder. Shares purchased will be held in the shareholder's account
by the Transfer Agent. Requests for account assistance or additional information
should be directed to the Transfer Agent or to Northstar at (800) 595-7827.
The Funds will send you a confirmation statement after every transaction that
affects your account balance or your account registration. Information regarding
the tax status of income dividends and capital gains distribution will be mailed
to shareholders on or before January 31st of each year. Account tax information
will also be sent to the IRS. Financial reports for the Funds will be mailed
semiannually to shareholders. To reduce expenses, only one copy of most Fund
reports will be mailed to accounts listed under the same social security number
or to households for multiple accounts with the same surname. Please contact
Northstar to request additional copies of shareholder reports.
DIVIDEND AND DISTRIBUTION REINVESTMENT OPTIONS. Shareholders of Class A,
Class B and Class C shares may direct that income dividends and capital gain
distributions be paid to them through any one of the following options: income
dividends and capital gain distributions both paid in additional shares of the
same class of a designated Fund at net asset value; income dividends paid in
cash and capital gain distributions paid in additional shares of the same class
of a designated Fund at net asset value; or income dividends and capital gain
distributions both paid in cash. If a shareholder does not indicate which option
is preferred upon
24
<PAGE>
the opening of an account, both income dividends and capital gain distributions
will be paid in additional shares of the Fund from which the investor earned
such distributions. Class T shareholders may elect only to receive all
distributions in cash or to reinvest in additional shares, regardless of whether
such distribution is an income dividend or a capital gains distribution. In
addition, Class T shareholders opting to reinvest dividends and capital gains
may only invest such proceeds in the Fund making the distribution. Payment
options may be changed at any time by notifying Northstar in writing.
AUTOMATIC INVESTMENT PLAN. Shareholders may elect to purchase shares through
the establishment of an Automatic Investment Plan, in which case the minimum
investment in order to open an account is $25. An Automatic Investment
Authorization Form (available on request from Northstar) provides for funds to
be automatically drawn on a shareholder's bank account and deposited in his or
her Fund account ($25 per month minimum). The shareholder's bank may charge a
nominal fee in connection with the establishment and use of automatic deposit
services. The Automatic Investment Plan is not available for Class T share
accounts.
WITHDRAWAL PROGRAM. A shareholder owning $5,000 or more worth of shares of a
Fund in book-entry form may establish a withdrawal program with the Fund and
provide for the payment monthly or quarterly of any requested dollar amount ($50
minimum per payment) from the account to his or her order. Withdrawal programs
are not available for Class T share accounts. A sufficient number of full and
fractional shares will be redeemed to make the designated payment. The purchase
of shares while participating in a withdrawal program will ordinarily be
disadvantageous to the investor, since a sales charge will be paid by the
investor on the purchase of shares at the same time the shares are being
redeemed in the case of Class A shares. For this reason, shareholders may not
maintain an Automatic Investment Plan while participating in the withdrawal
program. In the case of shares subject to a contingent deferred sales charge,
unless the investor qualifies for a waiver, the investor may incur a sales
charge at the time of each withdrawal. A Fund may terminate an investor's
withdrawal program if the account value falls below $5,000 due to the transfer
or redemption of shares from the account. See the enclosed application form.
TAX-SHELTERED RETIREMENT PLANS. Shares of the Funds may be offered in
connection with the following qualified prototype retirement plans: IRA and
Rollover IRA, SEP-IRA, Profit-Sharing and Money Purchase Pension Plans which can
be adopted by self-employed persons ("Keogh") and by corporations. Call or write
Northstar for further information.
EXCHANGE PRIVILEGES. Shareholders may exchange shares of a Fund for the same
class of shares of another Fund or for shares of The Cash Management Fund of
Salomon Brothers Investment Series (an open-end management investment company
comprised of various portfolios, hereafter referred to as "Money Market
Portfolio," that is not one of the Funds, but is available by purchase or
exchange through the Underwriter). Exchange requests in proper form will be
honored prior to 4:00 p.m. Eastern time. For telephone exchanges or
authorization forms, contact Northstar at 1-800-595-7827. Exchanges will be
based upon each Fund's NAV per share next computed following receipt of a
properly executed exchange request, without a sales charge; provided, however,
in the case of exchanges after a direct purchase into the Money Market Portfolio
from Class A shares of a Fund, a sales charge will be imposed in accordance with
the sales charge table that is applicable to direct purchases. Collection of the
contingent deferred sales charge will be deferred on shares subject to a charge
that are exchanged for shares of the same class of another Fund, or converted to
shares of the Money Market Portfolio. Under these circumstances, the combined
holding period of shares in each Fund, or in a Fund and the Money Market
Portfolio, shall be used to calculate the conversion period, if applicable, and
to determine the deferred sales charge due upon redemption, if any. The exchange
of shares from one Fund to another is treated as a sale of the exchanged shares
and a purchase of the acquired shares for Federal income tax purposes.
Shareholders may, therefore, realize a taxable gain or loss. See Dividends,
Distributions and Taxes" in the Statement of Additional Information.
Each Fund reserves the right to terminate or modify its exchange privileges at
any time upon prominent notice to shareholders. Such notice will be given at
least 60 days in advance. Each Fund and the Money Market Portfolio has different
investment objectives and policies. Shareholders should obtain and review the
prospectus of the Fund into which the exchange is to be made before any exchange
requests are made.
TELEPHONE TRANSACTIONS. Shareholders holding shares in book-entry form may
authorize the Funds to accept telephone redemptions and exchanges. Telephone
transactions are not available for Class T share accounts. Shareholders may
redeem up to $50,000 worth of their shares by telephoning Northstar prior to
4:00 p.m. Eastern time. Redemption proceeds must be payable to the record holder
of the shares and mailed to the shareholder's address of record or wire
transferred to the shareholder's account at a domestic commercial bank that is a
member of the Federal Reserve System, normally within one business day, but in
no event longer than three days after the request. The minimum amount for a wire
transfer is $1,000. If at any time the Funds shall determine that it is
necessary to terminate or modify telephone transaction privileges, shareholders
would be promptly notified. Information on these services is included in the
Application and is available from Northstar. Neither the Adviser, the
Underwriter nor the Funds will be liable
25
<PAGE>
for any loss, damages, expense or cost arising out of any telephone transaction
effected in accordance with the Funds' procedures, upon instructions believed to
be genuine. Shareholders who utilize telephone privileges bear the risk of any
loss, damages, expense or cost arising from their election, including risk of
unauthorized use; provided, however that the Funds shall employ reasonable
procedures to confirm that all telephone instructions are genuine. For this
purpose, the Fund or its agent will require all individuals delivering telephone
instructions to provide specific information to identify themselves as the
account holder, such as the name in which the account is registered, the account
holder's social security number, account number, and broker of record. In the
absence of such procedures, or should the Fund or its agents for any reason fail
to follow such procedures, the Fund or its agents may be liable for losses due
to unauthorized or fraudulent telephone instructions.
INVOLUNTARY REDEMPTIONS. Due to the high cost of maintaining accounts with
small account values, each Fund reserves the right to close all accounts that
have been in existence for at least one year and have a value that is less than
$500. Shareholders will receive 60 days' written notice during which time they
may bring the value up to $500 or more. If the account value is not raised
during that time, the Fund will redeem all shares in the account and send the
proceeds to the shareholder's address of record.
Each Fund reserves the right to close all accounts of a shareholder who has
failed to provide a social security number or other taxpayer identification
number and certification (if required) that such number is correct, or if a
shareholder is deemed to engage in activities which are illegal or otherwise
detrimental to the Funds.
REINSTATEMENT PRIVILEGE. Shareholders have a one time privilege of
reinstating their investment into any of the Funds, subject to the terms of
exchange (see "Exchange Privileges") at the NAV next determined after the
request for reinstatement is made. For Federal income tax purposes, a redemption
and reinstatement will be treated as a sale and purchase of shares; special
rules may apply in computing the amount of gain or loss in these situations. See
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
A written request for reinstatement must be received by the Underwriter within
30 days of the redemption accompanied by payment for the shares (not in excess
of the redemption). Shareholder accounts will be credited with an amount equal
to the deferred sales charge (or pro rata portion thereof) paid upon redemption.
HOW TO SELL SHARES
- ----------------------------------------------------------------------
Shareholders may sell their shares back to the Fund at the NAV next determined
after the Fund receives a redemption request with any other required
documentation in proper form. Investors will be subject to the applicable
deferred sales charge, if any, for such shares. The Transfer Agent requires a
written request, with the signature guaranteed by a bank, a national stock
exchange member or other eligible guarantor institution. The Transfer Agent may
waive the signature guarantee requirement in the case of book-entry share
redemption requests of less than $50,000 if the proceeds are payable to the
account as registered and mailed to the address of record. Redemption requests
must be signed by each person in whose name the account is registered.
Shareholders may also sell shares back to a Fund through dealers who are members
of the selling group. The redemption price in such a case will be the price as
of the close of the New York Stock Exchange on that day, provided the order is
received by the dealer prior to the close of the Exchange and is transmitted to
the Underwriter prior to the close of its business. The dealer is responsible
for the timely transmission of orders to the Underwriter. No service charge is
made by a Fund on redemptions, but shares tendered through investment dealers
may be subject to a service charge by such dealers. Payment for shares redeemed
is normally made within three days. However, for shares recently purchased by
check, the Fund cannot send proceeds until the check has cleared, which may take
up to 15 days.
Redemptions by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians, guardians, or from IRA's or other
retirement plans may require additional documentation. To avoid delay in
redemption or transfer, shareholders having questions about specific
requirements, including eligible guarantor institutions, should contact the
Transfer Agent or Northstar at (800) 595-7827. Redemption requests will not be
honored until all required documents in the proper form have been received.
DISTRIBUTION PLANS
- ----------------------------------------------------------------------
Each Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act for
each class of shares of that Fund (collectively, the "Plans"). The Plans permit
each Fund to compensate the Underwriter in connection with activities intended
to promote the sale of shares of each class of shares of the Fund. Pursuant to
the Plans, each Fund shall pay the Underwriter 0.30% annually of the average
daily net assets of each Fund's Class A shares, 1.00% annually of the average
daily net assets of each Fund's Class B and Class C shares, and 0.95% annually
of the average daily net assets of each Fund's Class T shares in the case of the
Growth Fund, Special Fund
26
<PAGE>
and Strategic Income Fund, 0.75% annually of the average daily net assets of the
Class T shares in the case of the Income Fund and 0.65% annually of the average
daily net assets of the Class T shares in the case of the Government Securities
Fund and High Yield Fund. Under the NASD rules, fees of this type are limited to
0.75% annually for distribution fees and 0.25% annually for service fees,
subject to aggregate limits. The Underwriter uses the fee to defray the costs of
commissions and service fees paid to financial service firms which have sold
Fund shares, and to defray other expenses such as sales literature, prospectus
printing and distribution, shareholder servicing costs and compensation to
wholesalers. Should the fees exceed the Underwriter's expenses in any year, the
Underwriter would realize a profit. With respect to the Class T Plan, it is
anticipated that all of the payments received by the Underwriter under the Plan
will be paid to Advest as compensation for servicing Class T shareholder
accounts and reimbursement for its prior distribution and shareholder servicing
activities in connection with Class T shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS INTENDED FOR GENERAL INFORMATION ONLY. EACH
INVESTOR SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE TAX
CONSEQUENCES OF AN INVESTMENT IN A FUND.
Each Fund intends to continue to qualify annually and elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify, each Fund must meet certain income, distribution and
diversification requirements. In any year in which a Fund qualifies as a
regulated investment company and timely distributes all of its taxable income,
the Fund generally will not pay any U.S. federal income or excise tax.
Each Fund intends to distribute to shareholders substantially all of its net
investment income and any net capital gains at least annually. It is intended
that dividends from net investment income will be paid monthly on the High Total
Return Fund, the Government Securities Fund, the High Yield Fund and the
Strategic Income Fund, annually on the Special Fund, and quarterly on the Income
and Growth, Growth, and Income Funds' shares.
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to a
shareholder as ordinary income. If a portion of the Fund's income consists of
dividends paid by U.S. corporations, a portion of the dividends paid by the Fund
may be eligible for the corporate dividends-received deduction. Distributions of
net capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, designated as capital gain dividends are taxable as
long-term capital gains, regardless of how long the shareholder has held the
Fund's shares. Dividends are taxable to shareholders in the same manner whether
received in cash or reinvested in additional Fund shares.
Each year the Fund will notify shareholders of the tax status of dividends and
distributions. Each Fund may be required to withhold U.S. federal income tax at
the rate of 31% of all taxable distributions payable to shareholders who fail to
provide the Fund with their correct taxpayer identification number or to make
required certifications, or who have been notified by the IRS that they are
subject to backup withholding.
Investors who purchase shares of a Fund just before the distribution will pay
full price for the shares and receive a portion of the purchase price back as a
taxable distribution. Unless your account is set up as a tax-deferred account,
dividends paid to you would be included in your gross income for tax purposes
even though you may not have participated in the increase in the net asset value
of the Fund. Further information relating to tax consequences is contained in
the Statement of Additional Information. Fund distributions also may be subject
to state, local and foreign taxes. Fund distributions that are derived from
interest on obligations of the U.S. Government and certain of its agencies,
authorities and instrumentalities may be exempt from state and local taxes in
certain states.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by a Fund in October, November or December with a record
date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.
Investments in zero coupon securities will result in income to a Fund each
year equal to a portion of the excess of the face value of the securities over
their issue price, even though the Fund receives no cash interest payments from
the securities.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.
27
<PAGE>
GENERAL INFORMATION
- ----------------------------------------------------------------------
ORGANIZATION OF THE FUNDS. The Northstar Advantage Trust (the "Trust") and
each separate Fund is organized under Massachusetts law as a business trust. The
Trust was organized in 1993; the Special, Growth, Income and Government
Securities Funds in 1986; the High Yield Fund in 1989; and the Strategic Income
Fund in 1994. The Trust's Declaration of Trust, as amended, and each Fund's
Amended and Restated Declaration of Trust provides that the Trustees are
authorized to create an unlimited number of series and, with respect to each
series, to issue an unlimited number of full and fractional shares of one or
more classes and to divide or combine the shares into a greater or lesser number
of shares without thereby changing the proportionate beneficial interests in the
series. All shares have equal voting rights, except that only shares of the
respective series or separate classes within a series are entitled to vote on
matters concerning only that series or class. As of the date of this Prospectus,
each Fund within the Trust has three classes of shares; each of the remaining
Funds has four classes of shares.
Neither the Trust nor the Funds are required to hold shareholder meetings, but
special meetings may be called under certain circumstances. Meetings of the
shareholders will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of the affected Fund or
class having voting rights.
REGISTRATION STATEMENT. This prospectus does not contain all the information
included in the Registration Statement filed for each Fund with the Securities
and Exchange Commission under the Securities Act of 1933 and the 1940 Act, with
respect to the securities offered hereby, certain portions of which have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Each Registration Statement, including the exhibits filed therewith,
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C.
28
<PAGE>
<TABLE>
<S><C>
[NORTHSTAR LOGO]
New Account Application
------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
------------------------------------------------------------------------------------------------------------------------------
Type of Account (Choose One Only):
/ / INDIVIDUAL / / JOINT ACCOUNT / / FOR A MINOR / / TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
USE LINE A USE LINES A & B USE LINE C USE LINE D
Print name exactly as account is to be registered:
A. - -
----------------------------------------------------------- -----------
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
B. - -
----------------------------------------------------------- -----------
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
C.
-----------------------------------------------------------
CUSTODIAN'S NAME (FIRST, MIDDLE, LAST)
- -
----------------------------------------------------------- -----------
MINOR'S NAME (FIRST, MIDDLE, LAST) MINOR'S SOCIAL SECURITY NUMBER
-
----------------------------------------------------------- -----------
TAX I.D. NUMBER
UNDER THE UNIFORM GIFTS/TRANSFERS TO MINORS ACT
------------- OR
NAME OF STATE
D.
----------------------------------------------------------- -----------
NAME (IF A TRUST, INCLUDE DATE OF AGREEMENT) - -
SOCIAL SECURITY NUMBER
------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------
STREET
( )
-------------------------------------------------------------
DAYTIME PHONE NUMBER
-------------------------------------------------------------
CITY STATE ZIP
------------------------------------------------------------------------------------------------------------------------------
3 PURCHASE OF SHARES
------------------------------------------------------------------------------------------------------------------------------
MINIMUM INITIAL INVESTMENT $2,500 / / MAKE CHECK PAYABLE TO NORTHSTAR ADVANTAGE FUNDS. Check enclosed for $
------------------
/ / Shares purchased and paid for through my/our investment dealer.
Trade Date Order#
---------- ----------
Number of Shares: Class A Class B Class C
---------- ---------- ----------
Please check the box beside the name of each Northstar Advantage Fund being purchased and enter the dollar amount of each
purchase. All distributions will be reinvested in additional shares unless instructed otherwise.
/ / INCOME FUND $ / / GROWTH FUND $ / / STRATEGIC INCOME FUND $
---------- ---------- ----------
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
- -----------------------------------------------------------------------------------------------------------------------------------
/ / HIGH YIELD FUND $ / / GOVERNMENT SECURITIES FUND $ / / SPECIAL FUND $
---------- ---------- ----------
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
- -----------------------------------------------------------------------------------------------------------------------------------
/ / INCOME AND GROWTH FUND $ / / HIGH TOTAL RETURN FUND $ / / MONEY MARKET PORTFOLIO $
---------- ---------- ----------
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / (Money Market Account)
Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
- -----------------------------------------------------------------------------------------------------------------------------------
*Please reinvest my dividends from to
------------------ --------------------
(Name of Fund) (Name of Fund)
<PAGE>
------------------------------------------------------------------------------------------------------------------------------
4 LETTER OF INTENT, RIGHT OF ACCUMULATION (CLASS A SHARES ONLY)
------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT
Although I/we have made no commitment to do so, I/we intend to invest the dollar amount indicated below within a 13-month
period in shares of one or more of the eligible Northstar Advantage Funds.
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
RIGHTS OF ACCUMULATION
If this account qualifies for a Reduced Sales Charge under the terms of the current Prospectus, please list account
numbers:
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
- -
--- ---------- --- ----------
------------------------------------------------------------------------------------------------------------------------------
5 AGREEMENTS AND SIGNATURES
------------------------------------------------------------------------------------------------------------------------------
I/We am/are of legal age and wish to establish an account in accordance with the terms and conditions of the current applicable
Prospectus, a copy of which has been received and read. I/We understand and agree that neither First Data nor the Northstar
Advantage Funds shall be held liable for any loss, liability, cost or expense for acting in accordance with this application,
or any section thereof. I/We acknowledge that the account(s) established by this application will be subject to the telephone
exchange and redemption privileges described in this current prospectus, unless indicated otherwise, with the understanding
that the Fund, Northstar and the Transfer Agent will not be able to verify the authenticity of any telephone or redemption
order received from persons other than registered representatives of Northstar Distributors, Inc. and that they will not be
liable for following telephone exchange or redemption instructions that prove to be fraudulent. Shareholders would bear the
loss resulting from instructions entered by an unauthorized third party.
Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number and
(2) that I am not* subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal
Revenue Service has notified me that I am no longer subject to backup withholding.
*If you are subject to backup withholding, please cross through the word "not" in part (2) above.
------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE
------------------------------------------------------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE
------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
------------------------------------------------------------------------------------------------------------------------------
6 FOR DEALER USE ONLY
------------------------------------------------------------------------------------------------------------------------------
We guarantee the signature(s) and legal capacity of the applicant(s) referred to herein, and in the case of a withdrawal
program we affirm that, in our opinion, the designated withdrawal is reasonable in view of the circumstances involved.
------------------------------------------------------------------------------------------------------------------------------
DEALER NAME (PLEASE PRINT CAREFULLY) DEALER NO.
------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE (MUST BE PROVIDED FOR WITHDRAWAL PROGRAMS, TELEPHONE REDEMPTIONS AND TELEPHONE EXCHANGES)
------------------------------------------------------------------------------------------------------------------------------
BRANCH NUMBER BRANCH ADDRESS
------------------------------------------------------------------------------------------------------------------------------
REP NAME (PLEASE PRINT CAREFULLY) FIRST AND LAST NAME PHONE NUMBER (IMPORTANT) REP NUMBER
( )
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------
Upon completion of the application, please
return with a check made payable to:
NORTHSTAR ADVANTAGE FUNDS,
C/O FIRST DATA Box 9756 Providence, RI 02940
------------------------------------------------
<PAGE>
SPECIAL ACCOUNT OPTIONS
------------------------------------------------------------------------------------------------------------------------------
7 AUTOMATIC INVESTMENT PLAN
------------------------------------------------------------------------------------------------------------------------------
Attach a VOIDED CHECK from your bank account and a check for an initial deposit to establish this plan (minimum $25).
Please complete the following information to invest automatically the dollar amount stated below on approximately the 15th
/ /, 30th / / or the 15th and 30th / /, of the month.
The applicant authorizes the Northstar Advantage Funds to draw monthly drafts on your bank account number_____ and use the
proceeds ($25 minimum) therefrom to purchase shares of Northstar Advantage
------------------- --------------------------
FUND NAME $ AMOUNT
Registered in the name(s) of
---------------------------------------------------------------------------------------------
RESTRICTIONS
Each purchase of shares will be made at the current offering price determined as of the close of business on the day on
which such purchase is made. Automatic investments may be discontinued by either Northstar Advantage Funds or the
purchaser upon 30 days written notice to the other.
The Northstar Advantage Funds reserves the right to cancel any transaction which was executed in reliance on a draft
authorized where the bank upon which the draft was drawn refused to make payment thereon for any reason.
ATTACH VOID CHECK HERE
------------------------------------------------------------------------------------------------------------------------------
8 WITHDRAWAL PROGRAM
------------------------------------------------------------------------------------------------------------------------------
A Withdrawal Plan is available on Class A shares (non-certificated shares only) provided the Fund being purchased has a value
of $5,000 or more.
Withdrawals with respect to Class B and Class C shares are limited (see the Prospectus) and are conditional upon dividends and
capital gains being automatically reinvested.
1. The amount of each payment shall be ($25 minimum)
--------- -------- --------- ----------
FUND NAME $ AMOUNT FUND NAME $ AMOUNT
2. Payments are to be made / / Monthly / / Quarterly / / Semi-Annually / / Annually on the / / 1st or / / 15th of the month
Choose one of the following methods of distribution.
/ / ACH Please have my payments electronically transferred to my bank. I have attached the required voided check and I have
verified that my bank is a member of the Automated Clearing House (ACH).
/ / MAIL Please have my payments mailed. I understand that the payments will be made payable to me and mailed to my account
mailing address unless a special designation is referenced below:
------------------------------------------------------------------------------------------------------------------------------
NAME (PLEASE PRINT CAREFULLY.)
------------------------------------------------------------------------------------------------------------------------------
STREET
------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE YOUR BANK ACCOUNT NUMBER
------------------------------------------------------------------------------------------------------------------------------
ATTACH VOID CHECK HERE
------------------------------------------------------------------------------------------------------------------------------
9 TELEPHONE EXCHANGE REDEMPTION AND EXPEDITED TELEPHONE REDEMPTION
------------------------------------------------------------------------------------------------------------------------------
Signature guarantees are required if: 1. Redemption is over $50,000.
2. Proceeds are to be sent to address other than record.
ALL SHAREHOLDERS AND THEIR DEALER REPRESENTATIVES WILL AUTOMATICALLY RECEIVE TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES,
(NON-CERTIFICATED SHARES ONLY) UNLESS AN ELECTION NOT TO RECEIVE THESE PRIVILEGES IS EXERCISED BELOW.
/ / DO NOT CODE MY / / DO NOT CODE MY
ACCOUNT FOR TELEPHONE ACCOUNT FOR TELEPHONE
EXCHANGE PRIVILEGE. REDEMPTION PRIVILEGE.
/ / PLEASE WIRE REDEMPTION PROCEEDS TO MY BANK. (I UNDERSTAND THE MINIMUM FOR WIRES IS $1,000.) MY VOIDED CHECK IS
ATTACHED.
</TABLE>
<PAGE>
APPENDIX
- --------------------------------------------------------------------------------
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE BOND
RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally know as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
- --------------------------------------------------------------------------------
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S ("S&P") CORPORATE DEBT RATINGS
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB: Debt rated BBB is regarded as having adequate capacity to pay interest
and repay principal. Whereas it normally exhibits protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than for debt in higher-rated categories.
BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC and C is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI: The rating CI is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
A-1
<PAGE>
[LOGO]
PRINCIPAL UNDERWRITER
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, CT 06830
INVESTMENT ADVISER
Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, CT 06830
TRANSFER AGENT
First Data Investor Services Group
53 State Street
Boston, MA 02109-2873
1-800-595-7827
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied upon. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
state in which, or to any person to whom it is unlawful to make such an offer.
Neither the delivery of this prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that information herein is correct at
any time subsequent to its date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Expense Information............................. 2
Financial Highlights............................ 7
Investment Objectives and Policies of the
Funds.......................................... 12
Risk Factors.................................... 17
Other Investment Techniques..................... 18
Performance Information......................... 19
How Net Asset Value is Determined............... 20
Management of the Funds......................... 20
<CAPTION>
PAGE
---
<S> <C>
How to Purchase Shares.......................... 22
Alternative Sales Arrangements.................. 22
Investor Services and Account Policies.......... 24
How to Sell Shares.............................. 26
Distribution Plans.............................. 26
Dividends, Distributions and Taxes.............. 27
General Information............................. 28
Appendix........................................ A-1
</TABLE>
<PAGE>
FEBRUARY 29, 1996
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND
NORTHSTAR ADVANTAGE HIGH YIELD FUND
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
NORTHSTAR ADVANTAGE INCOME FUND
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
NORTHSTAR ADVANTAGE GROWTH FUND
NORTHSTAR ADVANTAGE SPECIAL FUND
Two Pickwick Plaza
Greenwich, Connecticut 06830
(203) 863-6200
(800) 595-7827
STATEMENT OF ADDITIONAL INFORMATION
Northstar Advantage Government Securities Fund, Northstar Advantage
Strategic Income Fund, Northstar Advantage High Yield Fund, Northstar Advantage
High Total Return Fund, Northstar Advantage Income Fund, Northstar Advantage
Income and Growth Fund, Northstar Advantage Growth Fund and Northstar Advantage
Special Fund (the "Funds") are open-end diversified management investment
companies, each with its own investment objective(s) and specific investment
goals. Each Fund is a separate investment company, except for the Northstar
Advantage High Total Return Fund and Northstar Advantage Income and Growth Fund,
each of which is a series of Northstar Advantage Trust, which is a separate
investment company.
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND ("GOVERNMENT SECURITIES FUND")
seeks to achieve a high level of current income and to conserve principal by
investing in debt obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") seeks to
achieve high current income by allocating its investments among the following
three sectors of the fixed income securities markets: debt obligations of the
U.S. Government, its agencies and instrumentalities; high yield, high risk,
lower-rated and nonrated U.S. and foreign fixed-income securities; and
foreign currency denominated investment grade debt obligations of foreign
governments, their agencies and instrumentalities. At least 20% shall, and
up to 60% of the Fund's assets may, be invested in each sector.
NORTHSTAR ADVANTAGE HIGH YIELD FUND ("HIGH YIELD FUND") seeks to achieve high
current income, primarily through investing in long-term and intermediate-term
fixed income securities, with emphasis on high yield, high risk, lower rated and
nonrated corporate debt instruments.
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NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND ("HIGH TOTAL RETURN FUND") seeks to
achieve high income by investing primarily in high yield, lower rated U.S.
dollar-denominated debt securities. It is the Fund's policy also to seek a high
rate of total return, consistent with the Fund's objective, by taking advantage
of market developments, yield disparities and variations in the creditworthiness
of issuers.
NORTHSTAR ADVANTAGE INCOME FUND ("INCOME FUND") seeks to realize income and,
secondarily, capital appreciation through investing in a balance of debt
securities, common and preferred stocks, and debt securities and preferred
stocks convertible into common stock.
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND ("INCOME AND GROWTH FUND") seeks
current income and capital appreciation through investing in a diversified group
of securities selected for their prospects of current yield and capital
appreciation.
NORTHSTAR ADVANTAGE GROWTH FUND ("GROWTH FUND") seeks to achieve long-term
growth of capital by investing principally in common stocks.
NORTHSTAR ADVANTAGE SPECIAL FUND ("SPECIAL FUND") seeks to achieve capital
appreciation through investment in a diversified portfolio of equity
securities selected for their potential for growth, primarily in small and
mid-capitalization companies which are less known companies that may be
subject to greater price volatility than more mature companies.
There can be no assurance that a Fund will achieve its investment
objective(s). In general, the assets of each Fund are kept fully invested in
securities selected to meet the investment objective(s) of each Fund; however,
for temporary defensive purposes, any part of a Fund's assets may be held from
time to time in cash or cash equivalents. At such times when a Fund's assets
are invested for temporary defensive purposes, the Fund will not be investing in
accordance with its investment objective(s). THE HIGH TOTAL RETURN, HIGH YIELD
AND STRATEGIC INCOME FUNDS MAY NOT BE APPROPRIATE FOR ALL INVESTORS. (SEE "RISK
FACTORS" IN THE CURRENT PROSPECTUS.)
Northstar Investment Management Corporation (the "Adviser") is the
investment adviser for each Fund. Navellier Fund Management, Inc. (the
"Subadviser") is the subadviser for Special Fund. Northstar Distributors,
Inc. (the "Underwriter") is the underwriter to the Funds, and Northstar
Administrators Corporation is the Funds' administrator (the "Administrator").
The Underwriter and Administrator are affiliates of the Adviser.
This document is not the Prospectus of the Funds, but is incorporated
therein by reference and should be read in conjunction with the Prospectus,
dated February 29, 1996. Copies of the Prospectus may be obtained upon
request and without charge by contacting the Adviser at the address or phone
number above.
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TABLE OF CONTENTS
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Northstar Advantage Trust . . . . . . . . . . . . . . . . . . . . . . . 5
Northstar Advantage Government Securities, Strategic Income, High
Yield, Income, Growth and Special Funds . . . . . . . . . . . . . . . . 7
OTHER INVESTMENT TECHNIQUES. . . . . . . . . . . . . . . . . . . . . . . . . 9
Derivative Instruments. . . . . . . . . . . . . . . . . . . . . . . . . 9
Privately Issued Collateralized Mortgage-Backed Obligations, Interest
Obligations and Principal Obligations . . . . . . . . . . . . . . 23
Index Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Additional Investment Techniques. . . . . . . . . . . . . . . . . . . . 25
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION. . . . . . . . . . . . . . . 31
SERVICES OF THE ADVISER AND ADMINISTRATOR. . . . . . . . . . . . . . . . . . 34
NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
PURCHASES AND REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 39
How to Obtain Reduced Sales Charges on Class A Shares . . . . . . . . . 40
Rights of Accumulation . . . . . . . . . . . . . . . . . . . . . . . . 40
Letter of Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
The Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . 41
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Conversion Feature. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . 43
UNDERWRITER AND DISTRIBUTION SERVICES. . . . . . . . . . . . . . . . . . . . 49
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . 60
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 60
Organizational and Related Information. . . . . . . . . . . . . . . . . 61
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PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Total Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Non-Standardized Total Return . . . . . . . . . . . . . . . . . . . . . 63
OTHER INFORMATION CONCERNING FUND PERFORMANCE. . . . . . . . . . . . . . . . 65
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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INVESTMENT RESTRICTIONS
The investment objective(s) and certain of the investment restrictions of
the Funds are fundamental and cannot be changed without the approval of the
holders of a majority of the Funds' outstanding voting securities (defined in
the Investment Company Act of 1940 (the "1940 Act") as the lesser of (a) more
than 50% of the outstanding shares or (b) 67% or more of the shares represented
at a meeting at which more than 50% of the outstanding shares are represented).
All other investment policies or practices are considered by the Funds to be
non-fundamental and, accordingly, may be changed without shareholder approval.
If a percentage restriction on investments or use of assets set forth below is
adhered to at the time a transaction is effected, later changes in percentage
resulting from changing market values will not be considered a deviation from
this policy.
NORTHSTAR ADVANTAGE TRUST
FUNDAMENTAL INVESTMENT POLICIES. Each of these Funds may not: (i) borrow
money, issue senior securities, or pledge, mortgage or hypothecate its assets,
except that it may: (a) borrow from banks or enter into reverse repurchase
agreements, or employ similar investment techniques, but only if immediately
after such borrowing, there is asset coverage of 300%, and (b) enter into
transactions in options, futures, and options on futures (see "Other Investment
Techniques" in the Fund's Prospectus and in this Statement of Additional
Information ("SAI")) (the deposit of assets in escrow in connection with the
writing of covered put and call options and the purchase of securities on a
when-issued or delayed delivery basis and collateral arrangements with respect
to initial or variation margin deposits for futures contracts will not be deemed
to be pledges of the Fund's assets); (ii) underwrite the securities of others;
(iii) purchase or sell real property, including real estate limited partnerships
(each of these Funds may purchase marketable securities of companies that deal
in real estate or interests therein, including real estate investment trusts);
(iv) deal in commodities or commodity contracts, except in the manner described
in the current Prospectus and SAI of the Fund; (v) make loans to other persons
(but each of these Funds may, however, lend portfolio securities, up to 33% of
net assets at the time the loan is made, to brokers or dealers of other
financial institutions not affiliated with the Fund or the Adviser, subject to
conditions established by the Adviser (See "Lending Portfolio Securities" in
this SAI), and may purchase or hold participations in loans, in accordance with
the investment objectives and policies of the Fund, as described in the current
Prospectus and SAI of the Fund; (vi) participate in any joint trading accounts;
(vii) purchase on margin (except that for purposes of this restriction, the
deposit or payment of initial or variation margin in connection with futures
contracts will not be deemed to be purchases of securities on margin); (viii)
sell short, except that these Funds may enter into short sales against the box
in the manner described in the current Prospectus and SAI for the Fund; (ix)
invest more than 25% of its assets in any one industry or related group of
industries; (x) purchase a security (other
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than U.S. Government obligations) if, as a result, more than 5% of the value of
total assets of the Fund would be invested in securities of a single issuer; or
(xi) purchase a security if, as a result, more than 10% of any class of equity
securities, or more than 10% of the outstanding voting securities of an issuer,
would be held by the Fund.
NON-FUNDAMENTAL INVESTMENT POLICIES. These policies may be changed without
shareholder approval. These Funds may not: (i) invest in a security if, as a
result of such investment, more than 5% of its total assets (taken at market
value at the time of such investment) would be invested in securities of issuers
(other than issuers of federal agency obligations) having a record, together
with predecessors or unconditional guarantors, of less than three years of
continuous operation; (ii) purchase securities of other investment companies,
except in connection with a merger, consolidation or sale of assets, and except
that these Funds may purchase shares of other investment companies, subject to
such restrictions as may be imposed by the 1940 Act and rules thereunder or by
any state in which shares of the Fund are registered; (iii) purchase or retain
securities of any issuer if 5% of the securities of such issuer are owned by
those officers and directors or trustees of the Fund or of the Adviser who each
own beneficially more than 1/2 of 1% of its securities; (iv) make an investment
for the purpose of exercising control over management; (v) invest more than 15%
of its net assets (determined at the time of investment) in illiquid securities,
including securities subject to legal or contractual restrictions on resale
(which may include private placements and those 144A securities for which the
Trustees, pursuant to procedures adopted by the Fund, have determined there is
no liquid secondary market), repurchase agreements maturing in more than seven
days, options traded over the counter that a Fund has purchased, securities
being used to cover options a Fund has written, securities for which market
quotations are not readily available, or other securities that, legally or in
the Adviser's or Trustees' opinion, may be deemed illiquid; or (vi) invest in
interests in oil, gas or other mineral exploration development programs
(including oil, gas or other mineral leases).
These Funds, notwithstanding any other investment policy or limitation
(whether or not fundamental) set forth herein, may invest all of its assets in
the securities or beneficial interests of a singly-pooled investment fund having
substantially the same objective(s), policies and limitations as these Funds.
As a Fundamental policy, these Funds may borrow money from banks to the
extent permitted under the 1940 Act. As an operating (non-fundamental) policy,
these Funds do not intend to borrow any amount in excess of 10% of their
respective assets, and would do so only for temporary emergency or
administrative purposes. In addition, to avoid the potential leveraging of
assets, neither of these Funds will make additional investments when its
borrowings are in excess of 5% of total assets. If either of these Funds should
determine to expand its ability to borrow beyond the current operating policy,
the Fund's Prospectus would be amended and shareholders would be notified. This
operating policy applies only to unsecured bank borrowings by each of these
Funds, and not to the use of certain investment techniques, such as reverse
repurchase
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agreements and dollar rolls, which are generally regarded as a form of
borrowing.
In addition to the restrictions described above, each of these Funds may,
from time to time, agree to additional investment restrictions for purposes of
compliance with the securities laws of those state and foreign jurisdictions
where that Fund intends to offer or sell its shares. Any such additional
restrictions that would have a material bearing on either of these Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval. In particular, the Trust has undertaken to
South Dakota to abide by certain limitations. Specifically, for those Fund(s)
in the Northstar Advantage Trust that do not invest more than 80% of assets in
debt securities, such Fund(s) shall not have more than 10% of total assets in
restricted securities (which, for purposes hereof, shall not include 144A
securities), or more than 10% of total assets in real estate investment trusts
or investment companies. Furthermore, these Funds will not invest in real
estate or interests therein, excluding readily marketable securities, or in
commodities futures or options.
NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES, STRATEGIC INCOME, HIGH YIELD, INCOME,
GROWTH AND SPECIAL FUNDS
FUNDAMENTAL INVESTMENT POLICIES. These policies, which are identical for
each of these Funds, provide that these Funds may not: (i) borrow money, except
from a bank and as a temporary measure for extraordinary or emergency purposes,
provided the Fund maintains asset coverage of 300% for all borrowings; (ii)
purchase securities of any one issuer (except Government securities) if, as a
result, more than 5% of the Fund's total assets would be invested in that
issuer, or the Fund would own or hold more than 10% of the outstanding voting
securities of the issuer; PROVIDED, HOWEVER, that up to 25% of the Fund's total
assets may be invested without regard to these limitations; (iii) underwrite the
securities of other issuers, except to the extent that in connection with the
disposition of portfolio securities, the Fund may be deemed to be an
underwriter; (iv) concentrate its assets in the securities of issuers all of
which conduct their principal business activities in the same industry (this
restriction does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities); (v) make any investment in real
estate, commodities or commodities contracts, except that these Funds may: (a)
purchase or sell readily marketable securities that are secured by interest in
real estate or issued by companies that deal in real estate, including real
estate investment and mortgage investment trusts; and (b) engage in financial
futures contracts and related options, as described herein and in the Fund's
Prospectus; (vi) make loans, except that these Funds may: (a) invest in
repurchase agreements, and (b) loan its portfolio securities in amounts up to
one-third of the market or other fair value of its total assets; and (vii) issue
senior securities, except as appropriate to evidence indebtedness that it is
permitted to incur, provided that the deposit or payment by the Fund of initial
or maintenance margin in connection with futures contracts and related options
is not considered the issuance of senior securities.
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NON-FUNDAMENTAL INVESTMENT POLICIES. Each of these Funds has adopted
certain investment restrictions that may be changed at any time by the Trustees
without a vote of shareholders.
These non-fundamental limitations provide that these Funds may not: (i)
borrow money in excess of 5% of its total assets (taken at market value); (ii)
pledge, mortgage or hypothecate in excess of 5% of its total assets (the deposit
or payment by a Fund of initial or maintenance margin in connection with futures
contracts and related options is not considered a pledge or hypothecation of
assets); (iii) purchase more than 10% of the voting securities of any one
issuer, except U.S. Government Securities; (iv) invest more than 15% of its net
assets in illiquid securities, including repurchase agreements maturing in more
than 7 days, that cannot be disposed of within the normal course of business at
approximately the amount at which the Fund has valued the securities, excluding
restricted securities that have been determined by the Trustees of the Fund (or
the persons designated by them to make such determinations) to be readily
marketable; (v) purchase securities of any issuer with a record of less than 3
years of continuous operations, including predecessors, except U.S. Government
Securities and obligations issued or guaranteed by any foreign government or its
agencies or instrumentalities, if such purchase would cause the investments of a
Fund in all such issuers to exceed 5% of the total assets of the Fund taken at
market value; (vi) purchase securities on margin, except these Funds may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities (the deposit or payment by a Fund of initial or maintenance
margin in connection with futures contracts or related options is not considered
the purchase of a security on margin); (vii) write put and call options, unless
the options are covered and the Fund invests through premium payments no more
than 5% of its total assets in options transactions, other than options on
futures contracts; (viii) purchase and sell futures contracts and options on
futures contracts, unless the sum of margin deposits on all futures contracts
held by the Fund, and premiums paid on related options held by the Fund, does
not exceed more than 5% of the Fund's total assets, unless the transaction meets
certain "bona fide hedging" criteria (in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
computing the 5%); (ix) invest in securities of any issuer if any officer or
trustee of the Fund or any officer or director of the Fund's investment adviser
owns more than 1/2 of 1% of the outstanding securities of the issuer, and such
officers, directors and trustees own in the aggregate more than 5% of the
securities of such issuer; (x) invest in interests in oil, gas or other mineral
exploration or development programs (although it may invest in issuers that own
or invest in such interests); (xi) purchase securities of any investment
company, except by purchase in the open market where no commission or profit to
a sponsor or dealer results from such purchase, or except when such purchase,
though not made in the open market, is part of a plan of merger, consolidation,
reorganization or acquisition of assets; (xii) purchase more than 3% of the
outstanding voting securities of another investment company, invest more than 5%
of its total assets in another investment company, or invest more than 10% of
its total assets in other investment companies; (xiii) purchase warrants if, as
a result,
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warrants taken at the lower of cost or market value would represent more than 5%
of the value of the Fund's net assets or if warrants that are not listed on the
New York or American Stock Exchanges or on an exchange with comparable listing
requirements, taken at the lower of cost or market value, would represent more
than 2% of the value of the Fund's net assets (for this purpose, warrants
attached to securities will be deemed to have no value); or (xiv) make short
sales, unless, by virtue of its ownership of other securities, the Fund has the
right to obtain securities equivalent in kind and amount to the securities sold
and, if the right is conditional, the sale is made upon the same conditions,
except in connection with arbitrage transactions. The Strategic Income Fund,
additionally, may not invest in interests of real estate limited partnerships.
OTHER INVESTMENT TECHNIQUES
DERIVATIVE INSTRUMENTS
OPTIONS AND FUTURES STRATEGIES. The Adviser may at times seek to hedge
against a decline in the value of securities included in a Fund's portfolio or
an increase in the price of securities that it plans to purchase for a Fund
through the writing and purchase of options and the purchase and sale of
financial futures contracts and related options. Expenses and losses incurred
as a result of such hedging strategies will reduce the current return of the
Funds employing these hedging strategies. In addition, the Adviser may seek to
increase the current return of a Fund's portfolio by writing covered call or
secured put options.
The ability of the Funds to engage in options and futures strategies
described below will depend on the availability of liquid markets in such
instruments. Accordingly, no assurances can be given that the Funds will be
able to use these instruments effectively for the purposes stated below.
Options and futures transactions will involve certain risks that are described
below under "Risk Factors in Options Transactions" and "Risks of Transactions in
Futures Contracts and Related Options." The Funds will not engage in options
and futures transactions for leveraging purposes.
WRITING COVERED OPTIONS ON SECURITIES. Each Fund may write covered call
options and secured put options on securities of the types in which it is
permitted to invest from time to time as the Adviser determines is appropriate
in seeking to attain its investment objectives. Call options written by a Fund
give the holder the right to buy the underlying security from the Fund at a
stated exercise price; put options written by a Fund give the holder the right
to sell the underlying security to the Fund at a stated price.
Each of High Total Return Fund and Income and Growth Fund will not write
call options on when-issued securities. In addition, each of High Total Return
Fund and Income and Growth Fund will not write a covered call option if, as a
result, the aggregate market value of all portfolio securities of the Fund
covering call options or subject to put options exceeds 10% of the market value
of the Fund's net assets.
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Each of the Funds may only write call options on a covered basis or for
cross-hedging purposes. A call option is covered if the Fund owns or has the
right to acquire the underlying securities subject to the call option (or
comparable securities satisfying the cover requirements of securities exchanges)
at all times during the option period. A call option is for cross-hedging
purposes if it is not covered, but is designed to provide a hedge against
another security that the Fund owns or has the right to acquire. In the case of
a call written for cross-hedging purposes or a put option, the Fund will
maintain, in a segregated account at its custodian bank, cash or short-term U.S.
Government Securities, or, in the case of the Strategic Income Fund, short-term
debt obligations, with a value equal to or greater than the Fund's obligation
under the option. Each of the Funds may also write combinations of secured puts
and covered calls on the same underlying security.
A Fund will receive a premium from writing an option, which increases the
Fund's return in the event the option expires unexercised, or is terminated at a
profit. The amount of the premium will reflect, among other things, the
relationship of the market price of the underlying security to the exercise
price of the option, the term of the option, and the volatility of the market
price of the underlying security. By writing a call option, a Fund will limit
its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put
option, a Fund will assume the risk that it may be required to purchase the
underlying security for an exercise price higher than its then-current market
price, resulting in a potential capital loss if the purchase price exceeds the
market price plus the amount of the premium received.
A Fund may terminate an option that it has written prior to its expiration
by entering into a closing purchase transaction in which it purchases an option
having the same terms as the option written. The Fund will realize a profit (or
loss) from such transaction if the cost of such transaction is less (or more)
than the premium received from the writing of the option. Because increases in
the market price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from the repurchase of a
call option may be offset in whole or in part by unrealized appreciation of the
underlying security owned by the Fund.
When a Fund writes a call option but does not own the underlying security,
and when it writes a put option, the Fund may be required to deposit cash or
securities with its broker as "margin", or collateral, for its obligation to buy
or sell the underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the broker.
PURCHASING PUT AND CALL OPTIONS ON SECURITIES. Each Fund may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This protection is provided during the life of the put
option since the Fund, as holder of the put, is able to sell the underlying
security at the exercise price
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regardless of any decline in the underlying security's market price. For the
purchase of a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, any profit that the
Fund purchasing the put option might otherwise have realized on the underlying
security will be reduced by the premium paid for the put option and by
transaction costs.
A Fund may also purchase a call option to hedge against an increase in
price of a security that it intends to purchase. This protection is provided
during the life of the call option since the Fund, as holder of the call, is
able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. For the purchase of a call
option to be profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and transaction
costs. By using call options in this manner, any profit that the Fund
purchasing the call option might have realized had it bought the underlying
security at the time it purchased the call option will be reduced by the premium
paid for the call option and by transaction costs.
Each Fund, except for High Total Return Fund and Income and Growth Fund, is
restricted from purchasing put or call options if, as a result of any such
transaction, the aggregate cost of options held by a Fund at the time of such
transaction would exceed 5% of the total assets of such Fund.
SHORT SALES. Each of High Total Return Fund and Income and Growth Fund may
make short sales "against the box." A short-sale is a transaction in which a
party sells a security it does not own in anticipation of decline in the market
value of that security. A short sale is "against the box" to the extent that a
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short.
When a Fund makes a short sale, it must borrow the security sold short and
deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities, and is
often obligated to pay over any accrued interest on such borrowed securities.
OVER-THE-COUNTER OPTIONS. Over-the-counter ("OTC") options are purchased
from or sold to dealers or financial institutions that have entered into direct
agreements with a Fund. The Staff of the Division of Investment Management of
the Securities and Exchange Commission (the "SEC") has taken the position that
OTC options purchased by a Fund are illiquid securities. Although the Staff has
indicated that it is continuing to evaluate this issue, pending further
developments, the Funds intend to enter into OTC options transactions only with
primary dealers in U.S. Government Securities and, in the case of OTC options
written by a Fund, only pursuant to an agreement that will assure that the Fund
will at all times have the right to repurchase the option written by it from the
dealer at a specified formula price. The Fund will treat the amount by which
such
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formula price exceeds the amount, if any, by which the option may be
"in-the-money" as an illiquid investment. The Adviser monitors the
creditworthiness of dealers with whom a Fund enters into OTC option transactions
under the general supervision of the Trustees of the Funds. If the transaction
dealer fails to make or take delivery of the U.S. Government securities
underlying an option it has written in accordance with the terms of the option
as written, the Funds would lose the premium paid for the option as well as any
anticipated benefit of the transaction. It is the present policy of the Funds
not to enter into any OTC option transaction if, as a result, more than 15% of
the Fund's net assets would be invested in (i) illiquid investments (determined
under the foregoing formula) relating to OTC options written by the Fund, (ii)
OTC options purchased by the Fund, (iii) securities that are not readily
marketable, and (iv) repurchase agreement maturing in more than seven days.
STOCK INDEX OPTIONS. Each of High Total Return Fund and Income and Growth
Fund may purchase stock index options to hedge against risks of broad price
movements in the equity markets that, in some market environments, may correlate
more closely with movements in the value of lower rated bonds than with changes
in interest rates. When a Fund sells an option on a stock index, it will have to
establish a segregated account with its custodian in which the Fund will deposit
cash or cash equivalents or a combination of both in an amount equal to the
market value of the option, and will have to maintain the account while the
option is open. For some options, no liquid secondary market may exist or the
market may cease to exist.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends in large part on the ability of the Adviser to
forecast correctly interest rate and market movements. For example, if a Fund
were to write a call option based on the Adviser's expectation that the price of
the underlying security would fall, but the price rose instead, the Fund could
be required to sell the security upon exercise at a price below the current
market price. Similarly, if a Fund were to write a put option based on the
Adviser's view that the price of the underlying security would rise, but the
price fell instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.
When a Fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, the Fund will lose part or all
of its investment in the option. This contrasts with an investment by the Fund
in the underlying security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There
is no assurance
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that a Fund will be able to effect closing transactions at any particular time
or at an acceptable price.
If a secondary market in options were to become unavailable, the Funds
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if
unusual events, such as volume in excess of trading or clearing capability, were
to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or the Options Clearing Corporation, new series of options on that
security will no longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options market were to
become unavailable, a Fund, as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Fund, as option
writer, would remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses in trading if the security reopens
at a substantially different price. In addition, the Options Clearing
Corporation, or other options markets, may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, the Fund, as purchaser or writer of an option, will be locked
into its position until one of the two restrictions has been lifted. If the
Options Clearing Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by the writers of
all outstanding calls in the event of exercise, it may prohibit indefinitely the
exercise of put options. The Fund, as holder of such a put option, could lose
its entire investment if the prohibition remained in effect until the put
option's expiration.
Special risks are presented by internationally-traded options. Because of
time differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when United States
markets are closed. As a result, option premiums may not reflect the current
prices of the underlying interest in the United States.
FUTURES CONTRACTS. Each Fund may enter into futures contracts. The Funds
will enter into these transactions solely for the purpose of hedging against the
effects of changes in the value of its portfolio securities or those it intends
to purchase due to
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anticipated changes in interest rates and currency values, and not for the
purpose of speculation. A futures contract to sell, for example, a debt
security or foreign currency (a "Short" futures position), creates an obligation
by the seller to deliver a specified amount of the underlying security at a
certain future time and price. A futures contract to purchase a debt security
or foreign currency (a "long" futures position) creates an obligation by the
purchaser to take delivery of a specified amount of the underlying security at a
certain future time and price. The specific instruments delivered or taken,
respectively, at the settlement date are not determined until on or near that
date. The determination is made in accordance with the rules of the exchange on
which the futures contract sale or purchase was made. Futures contracts are
traded in the United States only on commodity exchanges or boards of trade,
known as "contract markets," approved for such trading by the Commodity Futures
Trading Commission (the "CFTC"), and must be executed through a futures
commission merchant or brokerage firm that is a member of the relevant contract
market.
Although futures contracts by their terms call for actual delivery or
acceptance of commodities or securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures contract
for the same aggregate amount of the specific type of financial instrument or
commodity with the same delivery date. If the price of the initial sale of the
futures contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. Similarly, the closing out of a futures contract purchase is effected by
the purchaser's entering into a futures contract sale. If the offsetting sale
price exceeds the purchase price, the purchaser realizes a gain, and if the
purchase price exceeds the offsetting sale price, he realizes a loss. In
general, 40% of the gain or loss arising from the closing out of a futures
contract traded on an exchange approved by the CFTC is treated as short-term
gain or loss, and 60% is treated as long-term gain or loss.
A Fund may sell, for example, interest rate futures contracts in
anticipation of an increase in the general level of interest rates. Generally,
as interest rates rise, the market value of the securities held by the Funds
will fall, thus reducing their net asset value. This interest rate risk can be
reduced without employing futures as a hedge by selling such securities and
either reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. However, this strategy entails increased transaction
costs in the form of dealer spreads and brokerage commissions and would
typically reduce the Fund's average yield as a result of the shortening of
maturities.
The sale of interest rate futures contracts provides a means of hedging
against rising interest rates. As rates increase, the value of a Fund's short
position in the futures contracts will also tend to increase, thus offsetting
all or a portion of the depreciation in the market value of the Fund's
investments that are being hedged. While the Fund will incur commission
expenses in selling and closing out futures positions (which is done by
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taking an opposite position in the futures contract), commissions on futures
transactions tend to be lower than transaction costs incurred in the purchase
and sale of portfolio securities.
INTEREST RATE FUTURES CONTRACTS. Each Fund may enter into interest rate
futures contracts. An interest rate futures contract provides for the future
sale and purchase of a specified amount of a certain debt security at a stated
date, place and price. The Funds may enter into interest rate futures contracts
to protect against fluctuations in interest rates affecting the value of debt
securities that a Fund either holds or intends to acquire. Interest rate
futures contracts currently are based on long-term Treasury Bonds, Treasury
Notes, three-month Treasury Bills and Government National Mortgage Association
modified pass-through mortgage-backed securities ("GNMA pass-through
securities"), and 90-day commercial paper. If a Fund invests in tax-exempt
securities issued by a governmental entity, the Fund may purchase and sell
futures contracts and related options on U.S. Treasury securities when, in the
opinion of the Adviser, price movements in Treasury security futures and related
options will correlate closely with price movements in the tax-exempt securities
that are the subject of the hedge.
INDEX FUTURES CONTRACTS. Each Fund may enter into stock index futures
contracts. An index futures contract is a contract to buy or sell units of an
index at a specified future date at a price agreed upon when the contract is
made. Entering into a contract to buy units of an index is commonly referred to
as buying or purchasing a contract or holding a long position in the index.
Entering into a contract to sell units of an index is commonly referred to as
selling a contract or holding a short position. A unit is the current value of
the index. A Fund may enter into stock index futures contracts, debt index
futures contracts, or other index futures contracts appropriate to its
objective. A Fund may also purchase and sell options on index futures
contracts.
For example, the Standard & Poor's ("S&P") Composite 500 Stock Price Index
("S&P 500") is composed of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. The S&P 500 assigns relative weightings to the
common stocks included in the Index, and the value fluctuates with changes in
the market values of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one
contract would be worth $75,000 (500 units x $150). The stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if a Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150 and the S&P 500
is at $154 on that future date, the Fund will gain $2,000 (500 units x gain of
$4). If a Fund enters into a futures contract to sell 500 units of the stock
index at a specified future date at a contract price of $150 and the S&P 500 is
at $152 on that future date, the Fund will lose $1,000 (500 units x loss of $2).
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FOREIGN CURRENCY FUTURES CONTRACTS. High Total Return Fund and Income and
Growth Fund may enter into foreign currency futures contracts on domestic and
foreign exchanges. A foreign currency futures contract provides for the future
sale and purchase of a specified amount of a certain foreign currency at a
stated date, place and price. The Funds may enter into foreign currency futures
contracts to attempt to establish the rate at which it would be entitled to make
a future exchange of United States dollars for another currency. At present,
foreign currency futures contracts are based on British pounds, German
deutschmarks, Canadian dollars, Japanese yen, French francs, Swiss francs, and
ECUs.
OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The Funds may purchase and
sell put and call options on interest rate futures contracts as a hedge against
changes in interest rates, in lieu of purchasing and writing options directly on
the underlying security or purchasing and selling the underlying futures
contracts. The purchase of an option on an interest rate futures contract will
give the Funds the right to enter into a futures contract to purchase (in the
case of a call option) or to enter into a futures contract to sell (in the case
of a put option) a particular debt security at a specified exercise price at any
time prior to the expiration date of the option.
OPTIONS ON FOREIGN CURRENCY FUTURES. High Total Return Fund, Income and
Growth Fund and Strategic Income Fund may purchase and sell put and call options
on foreign currency futures. The purchase of options on foreign currency
futures contracts gives each Fund the right to enter into a futures contract to
purchase (in the case of a call option) or to sell (in the case of a put option)
a particular currency at a specified price at any time during the period before
the option expires. Options on foreign currency futures currently are available
with respect to British pounds, German deutsche marks and Swiss francs. The
Funds may purchase options on foreign currency futures as a hedge against
fluctuating currency values. A Fund may use options on futures contracts in
lieu of purchasing or writing options directly on the underlying securities or
purchasing and selling the underlying futures. For example, to hedge against a
possible decrease in the value of its portfolio securities, a Fund may purchase
put options or write call options on futures contracts rather than sell futures
contracts. Similarly, a Fund may purchase call options or write put options on
futures contracts, rather than purchase such futures, to hedge against possible
increases in the price of debt securities that the Fund intends to purchase.
Such options generally operate in the same manner as options purchased or
written directly on the underlying investments. The potential loss related to
the purchase of an option on a futures contract is limited to the premium paid
for the option plus related transaction costs. A call option sold by a Fund
exposes the Fund during the term of the option to the possible loss of an
opportunity to realize appreciation in the market price of the underlying
security or to the possible continued holding of a security that might otherwise
have been sold to protect against depreciation in the market price of the
security. In selling puts, there is a risk that a Fund may be required to buy
the underlying security at a disadvantageous price. Options on interest rate
futures contracts currently are available with respect to Treasury Bonds,
Treasury
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Notes, and Eurodollars.
OPTIONS ON INDEX FUTURES. Options on index futures are similar to options
on securities except that options on index futures give the purchaser the right,
in return for the premium paid, to assume a position in an index futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. The delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the index futures contract, at exercise, exceeds (in
the case of a call) or is less than (in the case of a put) the exercise price of
the option on the index futures. If an option is exercised on the last trading
day prior to its expiration date, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the index of options. Those who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES. As an alternative to purchasing call and put options
on index futures, a Fund may purchase and sell call and put options on the
underlying indices themselves. Such options would be used in a manner identical
to the use of options on index futures.
LIMITATIONS AND OTHER REQUIREMENTS RELATING TO FUTURES AND RELATED OPTIONS.
A Fund will not purchase or sell futures contracts or options on futures
contracts or indices if, as a result, the sum of the margin deposits on its
existing futures contracts and related options positions and premiums paid for
options on futures contracts would exceed 5% of the Fund's total assets. For
each long position that High Total Return Fund, Income and Growth Fund or
Strategic Income Fund enters into, it will segregate cash or cash equivalents
having a value equal to the market value of the contract as collateral with the
custodian of the Fund. For the remaining Funds, with respect to each futures
contract purchased or long position in an option, the Fund will set aside in a
segregated account at its custodian bank an amount of cash or short term U.S.
Government Securities equal to the total market value of such contracts less the
initial margin deposited therefor.
The High Total Return Fund and Income and Growth Fund will not use leverage
when entering into long futures contracts or related options. Each of the
remaining Funds will sell futures contracts only to offset expected declines in
the value of portfolio securities, and the value of such futures contracts will
not exceed the total market value of those securities (plus such additional
amount as may be necessary because of differences in the volatility factor of
the portfolio securities vis-a-vis the futures contracts).
Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the Fund is required to deposit with its custodian in
a segregated account in the name of the
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futures broker an amount of cash and/or U.S. Government Securities, equal to
approximately 1% to 5% of the contract price, which amount is subject to change
by the exchange on which the contract is traded or by the broker. This amount
is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
futures contract margin does not involve the borrowing of funds to finance the
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Futures
contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin" to
and from the broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable. This is known as
"marking to the market." For example, when a Fund has purchased a futures
contract on a security and the price of the underlying security has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment based on that increase in value. Conversely, when a
Fund has purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. Similar requirements
relating to the payment of initial and variation margin apply to parties
engaging in options on futures transactions.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by the Fund. The Fund may close its positions by taking opposite
positions, which will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then made; additional
cash is required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain. Such closing transactions involve additional commission costs.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. Successful
use of futures contracts by a Fund is subject to the Adviser's ability to
predict movements in the direction of interest rates and other factors affecting
securities markets. For example, if a Fund has hedged against the possibility
of decline in the values of its investments and the values of its investments
increase instead, the Fund will have lost part or all of the benefit of the
increase through payments of daily maintenance margin. A Fund may have to sell
investments at a time when it may be disadvantageous to do so in order to meet
margin requirements.
The use of options and futures involves the risk of imperfect correlation
between movements in options and futures prices and movements in the price of
securities that are the subject of the hedge. The successful use of these
strategies also depends on the ability of the Adviser to forecast correctly
interest rate movements and general stock
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market price movements. The risk increases as the composition of the portfolio
of a Fund using these strategies diverges from the composition of the relevant
option or futures contract.
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures that may interfere with the timely execution of customer
orders.
The effective use of options and futures strategies by a Fund depends,
among other things, on the Fund's ability to terminate options and futures
positions at times when the Adviser deems it desirable to do so. Although a
Fund will not enter into an option or futures position unless the Adviser
believes that a liquid market exists for such option or future, there can be no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price. The Funds generally expect that
their options and futures transactions will be conducted on recognized
securities exchanges. In certain instances, however, a Fund may purchase and
sell options in the over-the-counter market. The Staff of the SEC considers
over-the-counter options and securities underlying them to be illiquid. A
Fund's ability to terminate option positions established in the over-the-counter
market may be more limited than in the case of exchange-traded options and may
also involve the risk that securities dealers participating in such transactions
would fail to meet their obligations to the Fund.
For instance, to reduce or eliminate a hedge position held by a Fund, the
Fund may seek to close out a position. The ability to establish and close out
positions will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop or continue
to exist for particular futures contracts or options. Reasons for the absence
of a liquid secondary market on an exchange include the following: (i) there may
be insufficient trading interest in certain contracts or options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of contracts or options,
or underlying securities; (iv) unusual or unforeseen circumstances may interrupt
normal operations on an exchange; (v) the facilities of an exchange or a
clearing corporation may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges
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could, for economic or other reasons, decide or be compelled at some future date
to discontinue the trading of contracts or options (or a particular class or
series of contracts or options), in which event the secondary market on that
exchange for such contracts or options (or in the class or series of contracts
or options) would cease to exist, although outstanding contracts or options on
the exchange that had been issued by a clearing corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each of High Total Return Fund,
Income and Growth Fund and Strategic Income Fund may engage in foreign currency
exchange transactions to hedge against uncertainty in the level of future
exchange rates. The Funds may conduct currency exchange transactions on a
"spot" (i.e., cash) basis at the rate then prevailing in the currency exchange
market, or on a forward basis, by entering into futures or forward contracts to
purchase or sell currency. A Fund's dealings in foreign currency exchange
contracts is limited to hedging.
FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign currency contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract as agreed
upon by the parties, at a price set at the date of the contract. Forward
currency contracts are entered into in the interbank market on a principal basis
directly between currency dealers, which usually are large commercial banks and
brokerage houses, and their customers, and, therefore, generally involve no
margin, commissions or other fees. Forward currency contracts will establish a
rate of exchange that can be achieved in the future and thus involve the risk of
loss due to a decline in the value of the hedged currency increases.
OPTIONS ON FOREIGN CURRENCY. Each of High Total Return Fund, Income and
Growth Fund and Strategic Income Fund may also purchase and sell put and call
options for the purpose of hedging against changes in future currency exchange
rates. An option on a foreign currency gives the purchasers, in return for a
premium paid plus related transaction costs, the right to sell (in the case of a
put option) or to buy (in the case of a call option) the underlying currency at
a specified price until the option expires. The value of an option on foreign
currency depends upon the value of the foreign currency when compared to the
value of the United States dollar.
Currency options traded on United States or other exchanges may be subject
to position limits, which may affect the ability of the Fund to hedge its
positions. The Funds will purchase and sell options on foreign exchanges to the
extent permitted by the CFTC.
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The Funds may purchase or sell options on currency only when the Adviser
believes that a liquid secondary market exists for these options; however, no
assurance can be given that a liquid secondary market will exist for a
particular option at any specific time.
RISKS OF FOREIGN CURRENCY TRANSACTIONS. Foreign currency futures contracts
and related options, forward foreign currency contracts and options on foreign
currency may be traded on foreign exchanges. The regulation of transactions on
these exchanges may be less extensive than the regulation of United States
exchanges. The funds will trade only those options approved by the CFTC.
Transactions on foreign exchanges also may not involve a clearing mechanism and
related guarantees, and may be subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities. The value of such
positions also could be affected adversely by: (1) foreign, political, legal and
economic factors; (2) a lack of information on which to make trading decisions
compared to that which is available in the United States; (3) a delay in the
ability to act on significant events occurring in the foreign markets during
non-business hours in the United States, (4) different exercise and settlement
terms from those imposed in the United States; and (5) less trading volume than
occurs on United States exchanges.
In addition, foreign exchanges offer less protection against defaults in
the forward trading of currencies than is available on United States exchanges.
Because a forward foreign currency contract is not guaranteed by an exchange or
clearinghouse, a default on the contract would deprive the Fund of unrealized
profits or would force the Fund to cover its commitments for purchase of resale,
if any, at the current market price.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved is not generally
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast precisely the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and a decision is made to
sell the security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the amount of foreign
currency the Fund is obligated to deliver.
A Fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times not
involve
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currencies in which its Portfolio securities are then denominated. The Adviser
will engage in such "cross hedging" activities when it believes that such
transactions provide significant hedging opportunities for the Fund. Cross
hedging transactions by the Fund involve the risk of imperfect correlation
between changes in the values of the currencies to which such transactions
relate and changes in the value of the currency or other asset or liability that
is the subject of the hedge.
A holder of a put option on a currency has the right, on or before a
specified date, to sell to the other party to the contract a specified amount of
a currency for a specified price measured in another currency. A holder of a
call option on a currency has a similar right to buy a specified amount of a
currency from the other party. The Fund pays a purchase price (called a
"premium") when it initially acquires the currency option. Currency options
are traded primarily in the over-the-counter market, although options on foreign
currencies have recently been listed on several exchanges. Options are traded
not only on the currencies of individual countries, but also on the European
Currency Unit ("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the European Union's
European Monetary System.
Currency options involve a number of risks. These include the risk, in the
case of over-the-counter options, that the other party will default on its
obligations. Such a default could deprive the Strategic Income Fund of the
expected benefits of the hedging transaction and could result in expenses and
delays if the Fund seeks to pursue remedies against the defaulting party.
Another risk associated with options is that, if anticipated currency price
movements do not occur, the Strategic Income Fund may never exercise its rights
under the option, in which case the option will expire worthless and the Fund
will not recover the value of the premium it paid to acquire the option.
Options on currencies are affected by many of the same factors that
influence exchange rates and investments generally. The value of any currency,
including U.S. dollars and foreign currencies, may be affected by political and
economic factors applicable to the issuing country. The exchange rates of
foreign currencies (and therefore the values of foreign currency options) may be
affected significantly, fixed, or supported directly or indirectly by U.S. and
foreign government actions. Government intervention may increase the risk
involved in purchasing or selling foreign currency options, since exchange rates
may not be free to fluctuate in response to other market forces.
The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, the U.S.
dollar and the particular foreign currency involved. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be
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involved in the exercise of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market for the underlying foreign
currencies in connection with options at prices that are less favorable than for
round lots. Foreign government restrictions or taxes could result in adverse
changes in the cost of acquiring or disposing of foreign currencies.
There is no systematic reporting or last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
round-lot transactions in the interbank market and thus may not reflect exchange
rates for smaller odd-lot transactions (less than $1 million) where rates may be
less favorable. The interbank market in foreign currencies is a 24-hour a day,
global market. To the extent the options markets are closed while the markets
for the underlying currencies are open, significant price and rate movements may
take place in the underlying markets that cannot be reflected in the options
markets.
PRIVATELY ISSUED COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS, INTEREST
OBLIGATIONS AND PRINCIPAL OBLIGATIONS
Each of High Total Return Fund and Income and Growth Fund may invest up to
5% of its net assets in Privately Issued Collateralized Mortgage-Backed
Obligations ("CMOs"), Interest Obligations ("IOs") and Principal Obligations
("POs") when the Adviser believes that such investments are consistent with the
Fund's investment objective. Collateralized mortgage obligations or "CMOs" are
debt obligations collateralized by mortgage loans or mortgage pass-through
securities. Typically, privately issued CMOs are collateralized by Ginnie Mae,
Fannie Mae or Freddie Mac Certificates, but also may be collateralized by whole
loans or private pass-throughs (such collateral collectively hereinafter
referred to as "Mortgage Assets"). Privately issued CMOs are per se illiquid.
Multi-class pass-through securities are equity interest in a trust composed of
Mortgage Assets. Unless the context indicates otherwise, all references herein
to CMOs include multi-class pass-thorough securities. Payments of principal of
and interest on the Mortgage Assets, and any reinvestment income thereon, are
the source of funds used to pay debt service on the CMOs or make scheduled
distribution on the multi-class pass-through securities.
On a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates. The principal of and interest on the Mortgage Assets may be allocated
among the several classes of a series of a CMO in innumerable ways. The Funds
may also invest in, among others, parallel pay CMOs and Planned Amortization
Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to provide payments
of principal on each payment date to more than one class. These
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simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or final distribution
date but may be retired earlier. PAC Bonds generally call for payments of a
specified amount of principal on each payment date.
Stripped mortgage-backed securities ("SMBS") are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class receiving
only a small portion of the interest and a larger portion of the principal from
the Mortgage Assets, while the other classes will receive primarily interest and
only a small portion of the principal. In the most extreme case, one class will
receive all of the interest (the interest-only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying Mortgage Assets, and
a rapid rate of principal payments may have a material adverse effect on such
security's yield to maturity. If the underlying Mortgage Assets experience
greater than anticipated prepayments of principal, a Fund may fail to recoup
fully its initial investment in these securities. The determination of whether
a particular government-issued IO or PO backed by fixed-rate mortgage is liquid
is made by the Adviser under guidelines and standards established by the Board
of Trustees. Such a security may be deemed liquid if it can be disposed of
promptly in the ordinary course of business at a value reasonably close to that
used in the calculation of net asset value per share.
INDEX WARRANTS
The Strategic Income Fund may purchase put warrants and call warrants whose
values vary depending on the change in the value of one or more specified
securities indices ("index warrants"). Index warrants are generally issued by
banks or other financial institutions and give the holder the right, at any time
during the term of the warrant, to receive upon exercise of the warrant a cash
payment from the issuer, based on the value of the underlying index at the time
of exercise. In general, if the value of the underlying index rises above the
exercise price of the index warrant, the holder of a call warrant will be
entitled to receive a cash payment from the issuer upon exercise, based on the
difference between the value of the index and the exercise price of the warrant;
if the value of the underlying index falls, the holder of a put warrant will be
entitled to receive a cash payment from the issuer upon exercise, based on the
difference between the exercise price of the warrant and the value of the index.
The holder of a
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warrant would not be entitled to any payments from the issuer at any time when,
in the case of a call warrant, the exercise price is greater than the value of
the underlying index, or, in the case of a put warrant, the exercise price is
less than the value of the underlying index. If the Strategic Income Fund were
not to exercise an index warrant prior to its expiration, then the Fund would
lose the amount of the purchase price paid by it for the warrant. The Strategic
Income Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of the Fund's use of index warrants
are generally similar to those relating to its use of index options. Unlike
most index options, however, index warrants are issued in limited amounts and
are not obligations of a regulated clearing agency, but are backed only by the
credit of the bank or other institution that issues the warrant. Also, index
warrants generally have longer terms than index options. Although the Strategic
Income Fund will normally invest only in exchange-listed warrants, index
warrants are not likely to be as liquid as certain index options backed by a
recognized clearing agency. In addition, the terms of index warrants may limit
the Fund's ability to exercise the warrants at such time, or in such quantities,
as the Fund would otherwise wish to do.
ADDITIONAL INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a
Fund buys a money market instrument and obtains a simultaneous commitment from
the seller to repurchase the instrument at a specified time and at an agreed-
upon yield. The Adviser will use standards set by the relevant Fund's Trustees
in reviewing the creditworthiness of parties to repurchase agreements with such
Fund. In addition, no more than an aggregate of 15% of a Fund's net assets, at
the time of investment, will be invested in illiquid investments, including
repurchase agreements having maturities longer than seven days. In the event of
failure of the executing bank or broker-dealer, a Fund could experience some
delay in obtaining direct ownership of the underlying collateral and might incur
a loss if the value of the security should decline, as well as costs in
disposing of the security.
Pursuant to an Exemptive Order under Section 17(d) and Rule 17d-1 obtained
by the Funds, excluding the Strategic Income Fund and the Northstar Advantage
Trust, on March 5, 1991, such Funds may deposit uninvested cash balances into a
single joint account to be used to enter into repurchase agreements.
As an alternative to using repurchase agreements, a Fund may, from time to
time, invest up to 5% of its assets in money market investment companies
sponsored by a third party for short-term liquidity purposes. Such investments
are subject to the non-fundamental investment limitations described herein.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLL AGREEMENTS. Each Fund may
enter into reverse repurchase agreements and dollar roll agreements, although it
is not anticipated that such investment techniques will be used. Under a
reverse repurchase
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agreement or a dollar roll agreement, a Fund sells securities and agrees to
repurchase them, or substantially similar securities in the case of a dollar
roll agreement, at a mutually agreed upon date and price. Such agreements are
considered to be a form of borrowing and a Fund is required to have asset
coverage of 300% immediately after entering into any such transaction. At the
time the Fund enters into a reverse repurchase agreement or a dollar roll
agreement, it will establish and maintain a segregated account with its
Custodian, containing cash, U.S. government securities, or other liquid assets
from its portfolio, having a value not less than the repurchase price (including
accrued interest). A Fund's ability to enter into reverse repurchase agreements
and dollar roll agreements is limited by restrictions on borrowings, by the
requirement to maintain assets in segregated accounts, and by requirements
relating to the Fund's status as a regulated investment company under the
Internal Revenue Code (the "Code").
These agreements may involve the risk that the market value of the
securities to be repurchased by a Fund may decline below the price at which the
Fund is obligated to repurchase. Also, in the event the buyer of securities
under a reverse repurchase agreement or a dollar roll agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement or the dollar roll agreement may effectively be
restricted pending such a decision.
LENDING PORTFOLIO SECURITIES. A Fund may lend portfolio securities to
broker-dealers and other financial institutions in an amount up to one-third of
the value of its total assets, provided that such loans are callable at any time
by the Fund and are at all times secured by collateral held by the Fund at least
equal to the market value, determined daily, of the loaned securities. A Fund
will continue to receive any income on the loaned securities, while
simultaneously earning interest on cash collateral (which will be invested in
short-term debt obligations) or a securities lending fee (in the case of
collateral in the form of U.S. Government Securities).
There may be risks of delay in recovery of the loaned securities and, in
some cases, loss of rights in the collateral should the borrower of the
securities fail financially. Loans of portfolio securities will only be made to
firms considered by the Adviser to be creditworthy under guidelines adopted by
the Trustees.
FIRM COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Fund may enter into firm
commitment agreements to purchase securities at an agreed-upon price on a
specified future date. An amount of cash or short-term U.S. Government
Securities equal to the Fund's commitment will be deposited in a segregated
account at the Fund's custodian bank to secure the Fund's obligation. Although
a Fund will generally enter into firm commitments to purchase securities with
the intention of actually acquiring the securities for its portfolio (or for
delivery pursuant to options contracts it has entered into), the
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Fund may dispose of a security prior to settlement if the Adviser deems it
advisable to do so. A Fund entering into the forward commitment may realize
short-term gains or losses in connection with such sales.
A Fund may enter into To Be Announced ("TBA") sale commitments wherein the
unit price and the estimated principal amount are established upon entering into
the contract, with the actual principal amount being within a specified range of
the estimate. A Fund will enter into TBA sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, the Fund will maintain, in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase price. Unsettled
TBA sale commitments are valued at current market value of the underlying
securities. If the TBA sale commitment is closed through the acquisition of an
offsetting purchase commitment, the Fund realizes a gain or loss on the
commitment without regard to any unrealized gain or loss on the underlying
security. If the Fund delivers securities under the commitment, the Fund
realizes a gain or loss from the sale of the securities, based upon the unit
price established at the date the commitment was entered into.
A Fund may also purchase securities on a when-issued or delayed delivery
basis. In such transactions, the price is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place at a
later date, normally within one month. The value of the security on the
settlement date may be more or less than the price paid as a result of, among
other things, changes in the level of interest rates or other market factors.
Accordingly, there is a risk of loss, which is in addition to the risk of
decline in the value of the Fund's other assets. The Fund will establish a
segregated account with its custodian in which it will maintain cash and
marketable securities equal in value to commitments for when-issued or delayed
delivery securities. While when-issued or delayed delivery securities may be
sold prior to the settlement date, it is intended that a Fund will purchase such
securities with the purpose of actually acquiring them, unless a sale appears
desirable for investment reasons.
FLOATING OR VARIABLE RATE INSTRUMENTS. The Funds may purchase floating or
variable rate bonds, which normally provide that the holder can demand payment
of the obligation on short notice at par with accrued interest. Such bonds are
frequently secured by letters of credit or other credit support arrangements
provided by banks. Floating or variable rate instruments provide for
adjustments in the interest rate at specified intervals (weekly, monthly,
semiannually, etc.). A Fund would anticipate using these bonds as cash
equivalents, pending longer term investment of its funds. Other longer term
fixed-rate bonds, with a right of the holder to request redemption at certain
times (often annually, after the lapse of an intermediate term), may also be
purchased by a Fund. These bonds are more defensive than conventional long-term
bonds (protecting to some degree against a rise in interest rates), while
providing greater opportunity than
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comparable intermediate term bonds since the Fund may retain the bond if
interest rates decline. By acquiring these kinds of bonds, a Fund obtains the
contractual right to require the issuer of the security, or some other person
(other than a broker or dealer), to purchase the security at an agreed upon
price, which right is contained in the obligation itself rather than in a
separate agreement with the seller or some other person.
ZERO COUPON SECURITIES. Zero coupon securities are fixed income securities
that have been stripped of their unmatured interest coupons. Zero coupon
securities are sold at a (usually substantial) discount and redeemed at face
value at their maturity date without interim cash payments of interest or
principal. The amount of this discount is accredited over the life of the
security, and the accretion constitutes the income earned on the security for
both accounting and tax purposes. Because of these features, the market prices
of zero coupon securities are generally more volatile than the market prices of
securities that have a similar maturity but that pay interest periodically.
Zero coupon securities are likely to respond to a greater degree to interest
rate changes than are non-zero coupon securities with similar maturity and
credit qualities. Each Fund may invest a portion of its total assets in "zero
coupon" Treasury securities, which consist of Treasury bills or stripped
interest or principal components of U.S. Treasury bonds or notes.
Zero coupon Treasury bonds or notes consist of stripped interest or
principal components held in STRIPS form issued through the U.S. Treasury's
STRIPS program, which permits the beneficial ownership of the component to be
recorded directly in the Treasury book-entry system. The Funds may also
purchase custodial receipts evidencing beneficial ownership of direct interests
in component parts of U.S. Treasury bonds or notes held by a bank in a custodian
or trust account.
ADDITIONAL INFORMATION ON GNMAS. The Funds may invest in U.S. Government
securities, which are obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities. A substantial portion of the assets of the
Government Securities Fund have, at various times, been invested in obligations
of the Government National Mortgage Association (popularly called GNMAs or
Ginnie Maes). All of the other Funds may also invest in GNMAs from time to
time.
GNMAs are mortgage backed securities representing part ownership of a pool
of mortgage loans, in which the timely payment of principal and interest is
guaranteed by the full faith and credit of the U.S. Government. GNMA may borrow
U.S. Treasury funds to the extent needed to make payments under the guarantee.
The Funds purchase "modified pass-through" type GNMA Certificates for which
principal and interest are guaranteed, rather than the "straight pass through"
Certificates for which such guarantee is not available. The Funds also purchase
"variable rate" GNMA Certificates and may purchase other types that may be used
with GNMA's guarantee.
When mortgages in the pool underlying a GNMA Certificate are prepaid by
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mortgagors or when foreclosure occurs, such principal payments are passed
through to the Certificate holders (such as a Fund). Accordingly, the life of
the GNMA Certificate is likely to be substantially shorter than the stated
maturity of the mortgages in the underlying pool, which will have maturities of
up to 30 years. Because of such variation in prepayment rights, it is not
possible to accurately predict the life of a particular GNMA Certificate.
Payments to holders of GNMA Certificates consist of the monthly
distributions of interest and principal, less the GNMA and issuer's fees. The
portion of the monthly payment that represents a return of principal may be
reinvested by a Fund holding the GNMA in then-available GNMA obligations, which
may bear interest at a rate higher or lower than the obligation from which the
payment was received, or in a differing security. The actual yield to be earned
by the holder of a GNMA Certificate is calculated by dividing such payments by
the purchase price paid for the GNMA Certificate (which may be at a premium or a
discount from the face value of the Certificate). Unpredictable prepayments of
principal, however, can greatly change realized yields. In a period of
declining interest rates it is more likely that mortgages contained in GNMA
pools will be prepaid, thus reducing the effective yield. Moreover, any premium
paid on the purchase of a GNMA Certificate will be lost if the obligation is
prepaid. In periods of falling interest rates, this potential for prepayment
may reduce the general upward price increase of GNMA Certificates that might
otherwise occur. As with other debt instruments, the price of GNMA Certificates
is likely to decrease in times of rising interest rates. Price changes of the
GNMA Certificates held by a Fund have a direct impact on the net asset value per
share of the Fund.
When interest rates rise, the value of a GNMA Certificate will generally
decline. Conversely, when rates fall, the GNMA Certificate value may rise,
although not as much as other debt issues, due to the prepayment feature. As a
result, the price per share the shareholder receives on redemption may be more
or less than the price paid for the shares. The dividends per share paid by the
Government Securities Fund may also vary.
ADDITIONAL INFORMATION ON FOREIGN SECURITIES. Each Fund, except
Government Securities Fund, may invest in securities of foreign issuers.
Each of these Funds other than High Total Return, High Yield and Strategic
Income may invest up to 20% of its net assets in foreign securities, of which
10% of its net assets may be invested in foreign securities that are not
listed on a U.S. securities exchange. High Total Return may invest up to 50%
of its assets in securities of foreign issuers, High Yield up to 35%,
and Strategic Income Fund may invest up to 60% of its total assets.
Eurodollar certificates of deposit are excluded for purposes of this
limitation for Strategic Income.
ADDITIONAL INFORMATION ON HIGH YIELD SECURITIES. Strategic Income Fund,
High Yield Fund, High Total Return Fund, and Income Fund each may invest in
lower-rated fixed income securities to the extent described in the
Prospectus. The lower ratings of certain securities held by these Funds
reflect a greater possibility that adverse changes in the financial condition
of the issuer or economic conditions in general, or
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both, or an unanticipated rise in interest rates, may impair the ability of the
issuer to make payments of interest and principal. The inability (or perceived
inability) of issuers to make timely payment of interest and principal would
likely make the values of securities held by these Funds more volatile and could
limit a Fund's ability to sell its securities at prices approximating the values
the Fund had placed on such securities. In the absence of a liquid trading
market for the securities held by it, a Fund may be unable at times to establish
the fair value of such securities. The rating assigned to a security by Moody's
Investors Service, Inc. or S & P (or by any other nationally recognized
securities rating organization) does not reflect an assessment of the volatility
of the security's market value or the liquidity of an investment in the
security. See Appendix A to the Prospectus for a description of security
ratings.
Like those of other fixed income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a decrease
in interest rates will generally result in an increase in the value of a Fund's
assets. Conversely, during periods of rising interest rates, the value of a
Fund's assets will generally decline. In addition, the values of such
securities are also affected by changes in general economic conditions and
business conditions affecting the specific industries of their issuers. Changes
by recognized rating services in their ratings of any fixed income security and
in the ability of an issuer to make payments of interest and principal may also
affect the value of these investments. Changes in the value of portfolio
securities generally will not affect cash income derived from such securities,
but will effect a Fund's net asset value. A Fund will not necessarily dispose
of a security when its rating is reduced below its rating at the time of
purchase, although the Adviser will monitor the investment to determine whether
its retention will assist in meeting a Fund's investment objective.
Certain securities held by a Fund may permit the issuer at its option to
call, or redeem, its securities. If an issuer were to redeem securities held by
a Fund during a time of declining interest rates, the Fund may not be able to
reinvest the proceeds in securities providing the same investment return as the
securities redeemed.
LOAN PARTICIPATIONS AND ASSIGNMENTS. A Fund's investment in Loan
Participations (as defined in the Prospectus) typically will result in the Fund
having a contractual relationship only with the Lender and not with the
borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participations and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any right of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund may be subject
to the credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the
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borrower.
When a Fund purchases Loan Assignments (as defined in the Prospectus) from
Lenders, it will acquire direct rights against the borrowers on the Loan.
Because Assignments are arranged through private negotiations between potential
assignees and potential assignors, however, the rights and obligations acquired
by the Fund as the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender. Because there is no liquid
market for such securities, the Funds anticipate that such securities could be
sold only to a limited number of institutional investors. The lack of a liquid
secondary market may have an adverse impact on the value of such securities and
a Fund's ability to dispose of particular Assignments or Participations when
necessary to meet redemptions of Fund shares, to meet the Fund's liquidity needs
or when necessary in response to a specific economic event, such as
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Fund to value these securities for purposes of calculating its
net asset value.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
The Adviser, and Subadviser in the case of Special Fund, places orders for
the purchase and sale of the Funds' securities, supervises their execution and
negotiates brokerage commissions on behalf of each Fund. For purposes of the
remainder of this section, "Portfolio Transactions and Brokerage Allocation,"
discussion of the Adviser includes the Subadviser, but only with respect to
Special Fund. It is the practice of the Adviser to seek the best prices and
best execution of orders and to negotiate brokerage commissions that in the
Adviser's opinion, are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Funds are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates currently
being quoted by the other brokers selected by the Adviser, the rate is deemed by
the Adviser to be reasonable. Brokers may ask for higher rates of commission if
all or a portion of the securities involved in the transaction are positioned by
the broker, if the broker believes it has brought a Fund an unusually favorable
trading opportunity, or if the broker regards its research services as being of
exceptional value and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that each Fund benefits with a securities industry comprised of many
and diverse firms and that the long-term interest of shareholders of the Funds
is best served by its brokerage policies that include paying a fair commission,
rather than seeking to exploit its leverage to force the lowest possible
commission rate. The primary factors considered in determining the firms to
which brokerage orders are given are the Adviser's appraisal of the firm's
ability to execute the order in the desired manner, the value of research
services provided by the firm, and the firm's attitude toward and interest in
mutual funds
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in general, including the sale of mutual funds managed and sponsored by the
Adviser. The Adviser does not offer or promise to any broker an amount or
percentage of brokerage commissions as an inducement or reward for the sale of
shares of the Funds. Over-the-counter purchases and sales are transacted
directly with principal market-makers, except in those circumstances where, in
the opinion of the Adviser, better prices and execution are available elsewhere.
A change in securities held in the portfolio of a Fund is known as
"Portfolio Turnover" and may involve the payment by a Fund of dealer mark-ups or
brokerage or underwritings commissions and other transaction costs on the sale
of securities, as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover rate for a fiscal year is the percentage
determined by dividing the lesser of the cost of purchases or proceeds from
sales of portfolio securities by the average of the value of portfolio
securities during such year, all excluding securities whose maturities at
acquisition were one year or less. Each Fund cannot accurately predict its
portfolio turnover rate, but the Adviser anticipates that each Fund's rate will
not exceed 100% under normal market conditions. A 100% annual turnover rate
would occur, for example, if all the securities in the portfolio were replaced
once in a period of one year. A Fund's portfolio turnover rate may be higher
than that described above if a Fund finds it necessary to significantly change
its portfolio to adopt a temporary defensive position. A high turnover rate
would increase commission expenses and may involve realization of gains that
would be taxable to shareholders. The ability of a Fund to make purchases and
sales of securities and to engage in options and futures transactions will be
limited by certain requirements of the Code, including a requirement that less
than 30% of the Fund's annual gross income be derived from gains on the sale of
securities and certain other assets held for less than three months.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry groups
and individual issues. Research services will vary from firm to firm, with
broadest coverage generally from the large full-line firms. Smaller firms, in
general, tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff, since the brokers, as a group, tend
to monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, the outside research provides the Adviser with a
diverse perspective on financial markets. Research and investment information
is provided by these and other brokers at no cost to the Adviser and is
available for the benefit of other accounts advised by the Adviser and its
affiliates; and not all of this information will be used in connection with the
Funds. While this information may be useful in varying degrees and may tend to
reduce the Adviser's expenses, it is not possible to estimate its value, and, in
the opinion of the Adviser, it
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does not reduce the Adviser's expenses by a determinable amount. The extent to
which the Adviser makes use of statistical, research and other services
furnished by brokers is considered by the Adviser in the allocation of brokerage
business, but there is no formula by which such business is allocated. The
Adviser does so in accordance with its judgment of the best interests of the
Funds and their shareholders.
Purchases and sales of fixed income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. Each Fund
will also purchase such securities in underwritten offerings and will, on
occasion, purchase securities directly from the issuer. Generally, fixed income
securities are traded on a net basis and do not involve brokerage commissions.
The cost of executing fixed income securities transactions consists primarily of
dealer spreads and underwriting commissions.
In purchasing and selling fixed income securities, it is the policy of each
Fund to obtain the best results, while taking into account the dealer's general
execution and operational facilities, the type of transaction involved and other
factors, such as the dealer's risk in positioning the securities involved.
While the Adviser generally seeks reasonably competitive spreads or commissions,
the Funds will not necessarily pay the lowest spread or commission available.
Each Fund may, under circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer that has
provided statistical or other research services to the Funds. By allocating
transactions in this manner, the Adviser is able to supplement its research and
analysis with the views and information of other securities firms. During the
fiscal years ended October 31, 1995 and December 31, 1995, respectively, each of
the Funds listed below paid the total brokerage commissions indicated below,
including, in the case of the Government, High Yield, Income, Growth, Special
and Strategic Income Funds, commissions to Advest, Inc. ("Advest"), an affiliate
of the Funds' former investment adviser.
BROKERAGE COMMISSIONS PAID DURING
FISCAL YEAR ENDED OCTOBER 31, 1995
Income and Growth Fund $249,474
High Total Return Fund $0
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BROKERAGE COMMISSIONS
PAID DURING FISCAL YEAR ENDED
DECEMBER 31, 1995
Percent of Percent of
Aggregate Dollar
Fund Total Advest Commissions Amount
- ---- ----- ------ ----------- ------
Government Fund $_____ $_____ _____% _____%
High Yield Fund $ _____ $_____ _____% _____%
Income Fund $ _____ $_____ _____% _____%
Growth Fund $_____ $_____ _____% _____%
Special Fund $ _____ $_____ _____% _____%
Strategic Income Fund $______ $_____ _____% _____%
SERVICES OF THE ADVISER AND ADMINISTRATOR
Pursuant to an Investment Advisory Agreement with each Fund, Northstar
Investment Management Corporation acts as the investment adviser to each Fund.
In this capacity, the Adviser, subject to the authority of the Trustees of the
Funds, is responsible for furnishing continuous investment supervision to the
Funds and is responsible for the management of each Fund's portfolio.
The Adviser is an indirect, majority-owned subsidiary of ReliaStar
Financial Corp. ("ReliaStar"). Combined minority interests in the Adviser held
by members of senior management of ReliaStar currently equal 20%. ReliaStar is
a publicly traded holding company whose subsidiaries specialize in the life
insurance business. Through Northwestern National Life Insurance Company
("Northwestern") and other subsidiaries, ReliaStar issues and distributes
individual life insurance and annuities, group life and health insurance and
life and health reinsurance, and provides related investment management
services. The address of the Adviser is Two Pickwick Plaza, Greenwich,
Connecticut 06830. The address of ReliaStar is 20 Washington Avenue South,
Minneapolis, Minnesota 55401.
The Adviser charges a fee under each advisory agreement to Government
Securities Fund, High Yield Fund, Income Fund, Growth Fund, Special Fund and
Strategic Income Fund at an annual rate, after voluntary waivers or expense
reimbursements, of 0.45%, 0.45%, 0.65%, 0.75%, 0.75% and 0.65% of such Fund's
average daily net assets, respectively. This fee is accrued daily and payable
monthly.
The Adviser charges a fee to the High Total Return Fund and Income and
Growth Fund at the annual rate of 0.75% on the first $250,000,000 of aggregate
average daily net assets of each Fund, 0.70% on the next $250,000,000 of such
assets, 0.65% on the next $250,000,000 of such assets; 0.60% on the next
$250,000,000 of such assets, and
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0.55% on the remaining aggregate daily net assets of each Fund in excess of $1
billion.
The Adviser has agreed that if, in any fiscal year, the aggregate expenses
of a Fund, exclusive of taxes, distribution fees, brokerage, interest and (with
the prior consent of any necessary state securities commissions) extraordinary
expenses, but including the management fee, exceed the most restrictive expense
limitations applicable to the Fund under state securities laws or published
regulations thereunder, the Adviser will refund on a proportionate basis to the
Fund whose expenses exceeded such limitation the excess over such amount up to
the total fee received by the Adviser. Currently, the most restrictive of such
limitations would require the Adviser to reimburse such a Fund to the extent
that in any fiscal year such aggregate expenses exceed 2.5% of the first
$30,000,000 of the average net assets, 2.0% of the next $70,000,000 of the
average net assets and 1.5% of any amount of the average net assets in excess of
$100,000,000.
The Investment Advisory Agreement for the Income and Growth Fund and
High Total Return Fund was approved by the Trustees of the Northstar
Advantage Trust on October 23, 1993, and by the sole Shareholder of the
Northstar Income and Growth Fund, and High Total Return Fund on November 8,
1993. The Investment Advisory Agreement continued in effect for a period of
two years and was renewed by the Trustees for one year on October 31, 1995.
It will continue in effect from year to year if specifically approved
annually by (a) the Trustees, acting separately on behalf of each Fund,
including a majority of the Disinterested Trustees, or (b) a majority of the
outstanding voting securities of each class of each Fund as defined in the
1940 Act.
Each Investment Advisory Agreement for the remaining Funds was approved by
the Trustees of the affected Fund on March 1, 1995 and by the shareholders of
such Fund on June 2, 1995. Each such Investment Advisory Agreement will
continue in effect until June 2, 1997, and thereafter, will continue in effect
from year to year if specifically approved annually by (a) the Trustees, acting
separately on behalf of the particular Fund, including a majority of the
Disinterested Trustees, or (b) a majority of the outstanding voting securities
of each class of such Fund as defined in the 1940 Act.
A Fund's Investment Advisory Agreement may be terminated as to any class,
without penalty and at any time, by a similar vote upon not more than 60 days'
nor less than 30 days' written notice by the Adviser, the Trustees, or a
majority of the outstanding voting securities of such class of such Fund as
defined in the 1940 Act. Such agreement will automatically terminate in the
event of its assignment, as defined in Section 2(a)(4) of the 1940 Act.
Pursuant to a Subadvisory Agreement between the Adviser and the
Subadviser, effective February 1, 1996, Navellier acts as subadviser to
Special Fund. In this capacity, Navellier Fund Management, Inc.,
subject to the supervision and control of the Adviser and the Trustees of
Special Fund, will manage Special Fund's portfolio investments, consistently
with such
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Fund's investment objective, and will execute any of Special Fund's
investment policies that it deems appropriate to utilize from time to time.
Fees payable under the Subadvisory Agreement will accrue daily and be paid
monthly by the Adviser. As compensation for its services, the Adviser will
pay the Subadviser at the annual rate of 0.48 of 1% of the average daily net
assets of Special Fund. The Subadviser is wholly-owned and controlled by its
sole stockholder, Louis G. Navellier. The Subadviser's address is: Call Box
10012, Incline Village, Nevada 89450-1012. The Subadvisory Agreement was
approved by the Trustees of the Fund on December 1, 1995, and by vote of the
Shareholders of the Fund on January 30, 1996. The Subadvisory Agreement may
be terminated without payment of any penalty by the Adviser, the Subadviser,
the Trustees of such Fund, or the shareholders of such Fund on
not more than 60 days' and not less than 30 days' prior written notice.
Otherwise, the Subadvisory Agreement will remain in effect for two years and
will, thereafter, continue in effect from year to year, subject to the annual
approval of the Trustees of Special Fund, or the vote of a majority of the
outstanding voting securities of Special Fund, and the vote, cast in person
at a meeting duly called and held, of a majority of the Trustees of Special
Fund who are not parties to the Subadvisory Agreement or "interested persons"
(as defined in the 1940 Act) of any such Party.
Northstar Administrators Corporation serves as administrator for the Funds,
pursuant to an Administrative Services Agreement with each Fund. Subject to the
supervision of the Board of Trustees, the Administrator provides the overall
business management and administrative services necessary to the proper conduct
of the Funds' business, except for those services performed by the Adviser under
the Investment Advisory Agreements, the custodian for the Funds under the
Custodian Agreements, the transfer agent for the Funds under the Transfer Agency
Agreements, and such other service providers as may be retained by the Funds
from time to time. The Administrator acts as liaison among these service
providers to the Funds. The Administrator is also responsible for ensuring that
the Funds operate in compliance with applicable legal requirements and for
monitoring the Adviser for compliance with requirements under applicable law and
with the investment policies and restrictions of the Funds. The Administrator
is an affiliate of the Adviser. The address of the Administrator is: Two
Pickwick Plaza, Greenwich, Connecticut 06830.
The Administrative Services Agreement was approved by the Trustees of
the Trust on behalf of the Income and Growth Fund and High Total Return Fund
on October 23, 1993, and continued in effect for a period of two years. The
Agreement was renewed by the Trustees for one year on October 31, 1995 and
will continue in effect from year to year thereafter, provided such
continuance is approved annually by a majority of the Trustees of the Trust.
The Administrator's fee is accrued daily against the value of each Fund's net
assets and is payable by each Fund monthly at an annual rate of .10% of each
Fund's average daily net assets. In addition, the Administrator charges an
annual account fee of $5.00 for each account of beneficial owners of shares
in a Fund for providing certain shareholder services and assisting
broker-dealer shareholder accounts.
Each Administrative Services Agreement for the remaining Funds was approved
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by the Trustees of the particular Fund on March 1, 1995. The Agreements provide
that until June 2, 1997, the Administrator will not receive any compensation
under such agreements and thereafter shall receive such compensation as the
Board of Trustees of the Funds may determine. The Agreements will continue in
effect until June 2, 1997, and from year to year thereafter, provided such
continuance is approved annually by a majority of the Disinterested Trustees of
the affected Fund.
During the fiscal year ended October 31, 1995, the Funds listed below paid
the Adviser and Administrator the following investment advisory and
administrative fees, respectively:
FISCAL YEAR ENDED OCTOBER 31, 1995
Advisory Fees Administrative Fees
Income and Growth Fund (1) $1,258,432 $154,457
High Total Return Fund (2) $941,310 $125,508
(1) There was no expense reimbursement.
(2) There was no expense reimbursement.
Prior to June 5, 1995, the Government Securities, Strategic Income, High
Yield, Income, Growth and Special Funds were managed by Boston Security
Counsellors, Inc. ("BSC") and did not utilize the services of an administrator.
During the fiscal years ended December 31, 1994, 1993 and 1992, the Funds listed
below paid BSC the following investment advisory fees:
TOTAL ADVISORY FEES PAID
DURING YEAR ENDED DECEMBER 31,
Fund 1995 1994 1993
Government Fund (1) $747,846 $767,370
High Yield Fund $622,761 $432,063
Income Fund $519,729 $447,631
Growth Fund $604,576 $517,203
Special Fund $268,139 $145,178
Strategic Income Fund $57,726(3) --
(1) Net of waiver of investment advisory fees of $______, $332,370 and
$341,054 for the years ended December 31, 1995, 1994 and 1993,
respectively. BSC elected to waive 0.20% of its investment advisory
fee,
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effective January 1, 1989 for the Government Securities Fund.
(2) For the period July 1, 1994 (commencement of the Strategic Income
Fund's operations) through December 31, 1994, Advest, an affiliate of
BSC, voluntarily reimbursed the Strategic Income Fund for $57,336 in
expenses. Accordingly, expenses borne by Strategic Income Fund for
the six-month period ended December 31, 1994, amounted to $170,198,
representing 1.90% of the Strategic Income Fund's average net assets.
NET ASSET VALUE
For each Fund in the Northstar Advantage Trust, equity securities are
valued at the last sale price on the exchange or in the principal OTC market in
which such securities are being valued, or lacking any sales, at the last
available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities obtained from a quotation reporting system or from established
market makers, or at prices for securities of comparable maturity, quality and
type. For the Northstar Advantage Special, Growth, Income, High Yield,
Strategic Income, and Government Securities Funds, portfolio securities, options
and futures contracts and options thereon that are traded on national exchanges
or in the NASDAQ System are valued at the last sale or settlement price on the
exchange or market where primarily traded or, if none that day, at the mean of
the last reported bid and asked prices, using prices as of the close of trading
on the applicable exchange or market. Securities and options that are traded in
the OTC market (other than on the NASDAQ System) are valued at the mean of the
last available bid and asked prices. Such valuations are based on quotations of
one or more dealers that make markets in the securities as obtained from such
dealers or from a pricing service. Securities (including OTC options) for which
market quotations are not readily available (which may constitute a major
portion of the High Yield Fund's portfolio) and other assets are valued at their
fair value as determined by or under the direction of the Trustees. Such fair
value may be determined by various methods, including utilizing information
furnished by pricing services that determine calculations for such securities
using methods based, among other things, upon market transactions for comparable
securities and various relationships between securities that are generally
recognized as relevant.
The net asset value of each Fund's shares fluctuates and is determined
separately for each class as of the close of regular trading on the New York
Stock Exchange (currently 4:00 p.m. EST), on each business day that the Exchange
is open. Net asset value per share is computed by determining the value of a
Fund's assets (securities held plus cash and other assets, including dividend
and interest accrued but not received) less all liabilities of the Fund
(including accrued expenses other than class specific expenses), and dividing
the result by the total number of shares outstanding at such time. The specific
expenses borne by each class of shares will be deducted from that class and will
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result in different net asset values and dividends. The net asset value per
share of the Class B, Class C and Class T shares of each Fund will generally be
lower than that of the Class A shares because of the higher class-specific
expenses borne by each of the Class B, Class C and Class T shares. Class A
shares of the Funds may be purchased at net asset value, through a dealer, where
the amount invested represents redemption proceeds from another open-ended fund
with the same or similar investment objective, and PROVIDED the following
conditions are met: such redemption occurred no more than 60 days prior to the
purchase of shares of a Northstar Fund, the redeemed shares were held for at
least six months prior to redemption, and the proceeds of the redemption are
sent directly to Northstar or its agent, or maintained in cash or a money market
fund. No commissions will be paid to dealers in connection with such purchases.
Under normal market conditions, daily prices for securities are obtained from
independent pricing services, determined by them in accordance with the
registration statement for each Fund. Securities are valued at market value or,
if a market quotation is not readily available, at their fair value, determined
in good faith under procedures established by and under the supervision of the
Trustees. Money market instruments maturing within 60 days are valued using the
amortized cost method of valuation. This involves valuing a security at cost on
the date of acquisition and thereafter assuming a constant accretion of a
discount or amortization of a premium to maturity, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the instrument. See "How Net Asset Value is
Determined" in the Prospectus.
PURCHASES AND REDEMPTIONS
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to a front-end or contingent
deferred sales load. There is no sales charge for qualified persons.
"Qualified Persons" are the following (a) active or retired Trustees,
Directors, Officers, Partners or Employees (including immediate family) of
(i) the Adviser or any of its affiliated companies, (ii) the Funds or any
Northstar affiliated investment company or (iii) dealers having a sales
agreement with the Underwriter, (b) trustees or custodians of any qualified
retirement plan or IRA established for the benefit of a person in (a) above;
(c) dealers, brokers or registered investment advisers that have entered into
an agreement with the Underwriter providing for the use of shares of the
Funds in particular investment products such as "wrap accounts" or other
similar managed accounts for the benefit of the clients of such brokers,
dealers and registered investment advisers, and (d) pension, profit sharing
or other benefit plans created pursuant to a plan qualified under Section 401
of the Code or plans under Section 457 of the Code, provided that such shares
are purchased by an employer sponsored plan with at least 100 eligible
employees. Class A shares of the Funds may be purchased at net asset value,
through a dealer, where the amount invested represents redemption proceeds
from another open-end fund with the same or similar investment objective, and
PROVIDED the following conditions are met: such redemption occurred no more
than 60 days prior to the purchase of shares of a Northstar Fund, the
redeemed shares were held for at least six months prior to redemption, and
the proceeds of the redemption are sent directly to Northstar or its agent,
or maintained in cash or a money market fund. No commissions will be paid to
dealers in connection with such purchases. There is also no initial sales
charge for "Purchasers" (defined below) if the initial amount invested in the
Funds) is at least $1,000,000 or the Purchaser signs a $1,000,000 Letter of
Intent, as hereinafter defined.
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HOW TO OBTAIN REDUCED SALES CHARGES ON CLASS A SHARES
Investors choosing the initial sales alternative may under certain
circumstances be entitled to pay reduced sales charges. The sales charge varies
with the size of the purchase and reduced charges apply to the aggregate of
purchases of a Fund made at one time by any "Purchaser," which term includes (i)
an individual and his/her spouse and their children under the age of 21, (ii) a
trustee or fiduciary purchasing for a single trust, estate or single fiduciary
account (including IRAs, pension, profit-sharing or other employee benefit
trusts created pursuant to a plan qualified under Section 401 of the Code, a
Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension Accounts ("SARSEP")) and 403(b) and 457 plans,
although more than one beneficiary or participant is involved; and (iii) any
other organized group of persons, whether incorporated or not, provided the
organization has been in existence for at least six months and has some purpose
other than the purchase at a discount of redeemable securities of a registered
investment company. The circumstances under which "Purchasers" may pay reduced
sales charges are described below.
RIGHTS OF ACCUMULATION
A Purchaser may qualify for reduced initial sales charges based upon the
Purchaser's existing investment in shares of the Funds at the time of purchase.
The applicable sales charge is determined by aggregating the dollar amount of
the new purchase and the greater of the Purchaser's total (i) net asset value or
(ii) cost of all shares owned in the Funds sold subject to a front-end sales
charge and/or designated as "Class A" shares then held by such Purchaser, and
applying the sales charge applicable to such aggregate.
In order to obtain this discount, the Underwriter (if a purchase is made
through an investment dealer) or Transfer Agent (if made by mail) must be
provided with sufficient information, including the Purchaser's total cost at
the time of purchase, to permit verification that the Purchaser qualifies for a
cumulative quantity discount, and confirmation of the order is subject to such
verification. The privilege of cumulative quantity discounts may be modified or
discontinued at any time.
LETTER OF INTENT
Purchasers may also qualify for reduced sales charges by signing a Letter
of Intent ("LOI"). This enables the Purchasers to aggregate purchases over a
13-month period of all Funds sold subject to a front-end sales charge and/or
designated as "Class A" shares. The sales charge is based on the total amount
invested during the 13-month period. A 90-day back-dated period can be used to
include earlier purchases (with a partial retroactive downward adjustment in an
amount equal to the commission paid to the broker-dealer); the 13-month period
would then begin on the date of the first purchase during the 90-day period. No
retroactive adjustment will be made if purchases exceed
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the amount indicted in the LOI. A shareholder must notify the Transfer Agent
whenever a purchase is being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase the full
amount indicated; however, on the initial purchase, if required (or on
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in shares registered in
the shareholder's name in order to assure payment of the proper sales charge.
If total purchases pursuant to the LOI (less any dispositions and exclusive of
any distributions on such shares automatically reinvested) are less than the
amount specified, the investor will be requested to remit to the Underwriter an
amount equal to the difference between the sales charge paid and the sales
charge applicable to the aggregate purchases actually made. If not remitted
within 20 days after written request, an appropriate number of escrowed shares
will be redeemed in order to realize the difference.
THE RIGHT OF REDEMPTION
The right to redeem shares may be suspended and payment therefor postponed
during periods when the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or, if permitted by rules of the SEC, during
periods when trading on the Exchange is restricted, or during any emergency that
makes it impracticable for any Fund to dispose of its securities or to determine
fairly the value of its net assets or during any other period permitted by order
of the SEC for the protection of investors. Furthermore, the Transfer Agent
will not mail redemption proceeds until checks received for shares purchased
have cleared, but payment will be forwarded immediately upon the funds becoming
available. Class B, Class C and Class T shareholders will be subject to the
applicable deferred sales charge, if any, for their shares at the time of
redemption.
The contingent deferred sales load will be waived with respect to Class T
shares in the following instances: (i) any partial or complete redemption of
shares of a shareholder who dies or becomes disabled, so long as the redemption
is requested within one year of death or the initial determination of
disability; (ii) any partial or complete redemption in connection with
distributions under Individual Retirement Accounts ("IRAs") or other qualified
retirement plans in connection with a lump-sum or other form of distribution
following retirement within the meaning of Section 72(t)(2)(A)(iv) or (v) of the
Code, disability or death, or after attaining the age of 59 1/2 in the case of
an IRA, Keogh Plan or custodial account pursuant to Section 403(b)(7) of the
Code, or on any redemption that results from a tax-free return of an excess
contribution pursuant to Section 408(d)(4) or (5) of the Code or Section 4979(f)
of the Code; (iii) redemptions effected pursuant to the Funds' right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than $500; (iv) redemptions effected by (A)
employees of The Advest Group, Inc. ("AGI") and its subsidiaries, (B) IRAs,
Keogh plans and employee benefit plans for those employees, and (C) spouses and
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minor children of those employees, so long as orders for shares are placed on
behalf of the spouses or children by the employees; (v) redemptions effected by
accounts managed by investment advisory subsidiaries of AGI registered under the
Investment Advisers Act of 1940; and (vi) redemptions in connection with
exchanges of Fund Class T shares, including shares of the Class T account of the
Money Market Portfolio. Class T Shares convert to Class A shares at the end of
the month that is the later of (i) eight years after the Class T Shares were
purchased or (ii) May 31, 1998. The holding period for determining the
preferred sale load, if any, of Class T shares purchased with proceeds from
Advantage Insured Account shares includes any holding period applicable to the
withdrawal charge on such account.
The contingent deferred sales charge is waived on redemptions of shares (a)
following the death or disability, as defined in Section 72(m)(7) of the Code,
of a shareholder if redemption is made within one year of the death or
disability of the shareholder, as relevant; (b) in connection with redemptions
of shares made pursuant to a shareholder's participation in any systematic
withdrawal plan adopted by the Funds provided, however, that such withdrawals
shall not exceed in any calendar year 7% (9% in the case of the High Total
Return Fund and the High Yield Fund) of the original principal amount invested
(any excess being assessed the applicable deferred sales charge, if any), and
provided further that the redeeming shareholder reinvests all dividends and
capital gain distributions during his/her participation in the withdrawal plan;
(c) in connection with a partial or complete redemption in connection with
distributions under IRAs or other qualified retirement plans in connection with
a lump-sum or other form of distribution following retirement within the meaning
of Section 72(t)(2)(A)(iv) or (v) of the Code, disability or death, or after
attaining the age of 59 1/2 in the case of an IRA, Keogh plan or custodial
account pursuant to Section 403(b)(7) of the Code, or on any redemption
resulting from the tax-free return of an excess contribution pursuant to Section
408(d)(4) or (5) of the Code or Section 4979(f) of the Code; and (d) in
connection with the exercise of certain exchange privileges among Class B shares
of the Funds, including shares of the Class B Account of the Money Market
Portfolio.
EXCHANGES
The following conditions must be met for all exchanges among the Funds and
the Money Market Portfolio: (1) the shares that will be acquired in the exchange
(the "Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired shares will be registered to the same shareholder
account as the shares to be surrendered (the "Exchanged Shares"); (3) the
Exchanged Shares must have been held in the shareholder's account for at least
30 days prior to the exchange; (4) except for exchanges into the Money Market
Portfolios, the account value of the Fund whose shares are to be acquired must
equal or exceed the minimum initial investment amount required by that Fund
after the exchange is implemented; and (5) a properly executed exchange request
has been received by the Transfer Agent.
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Each Fund reserves the right to delay the actual purchase of the Acquired
Shares for up to five business days if it determines that it would be
disadvantaged by an immediate transfer of proceeds from the redemption of
Exchanged Shares. Normally, however, the redemption of Exchanged Shares and the
purchase of Acquired Shares will take place on the day that the exchange request
is received in proper form. Each Fund reserves the right to terminate or
modify its exchange privileges at any time upon prominent notice to
shareholders. Such notice will be given at least 60 days in advance. It is
the policy of the Adviser to discourage and prevent frequent trading by
shareholders among the Funds in response to market fluctuations.
Accordingly, in order to maintain a stable asset base in each Fund and to
reduce administrative expenses borne by each Fund, the Adviser generally
restricts shareholders to a maximum of six exchanges out of a Fund each
calendar year. If a shareholder exceeds this limit, future exchange requests
may be denied.
CONVERSION FEATURE
Class B shares of each Fund will automatically convert to Class A shares
without a sales charge at the relative net asset values of each of the classes
after eight years from the acquisition of the Class B shares, and as a result,
will thereafter be subject to the lower distribution fee (but same service fee)
under the Class A Rule 12b-1 plan for each Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to so qualify, the Fund must, among
other things, (i) derive each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, gains
from the sale of securities or foreign currencies, or other income (including
but not limited to gains from options, futures or forward contracts) derived
with respect to its business of investing in stock, securities or currencies;
(ii) derive less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets, including securities, held for less than
three months (the "30% Limitation"; and (iii) at the end of each quarter of the
taxable year maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers that represent, with respect to each issuer, no more
than 5% the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that the Fund
controls and that are engaged in the same, similar or related trades and
businesses. As a regulated investment company, each Fund generally will not be
subject to federal income tax on its income and gains that it distributes to
shareholders, if at
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least 90% of its investment company taxable income (which includes dividends,
interest and the excess of any short-term capital gains over long-term capital
losses) for the taxable year is distributed.
An excise tax at the rate of 4% will be imposed on the excess, if any, of a
Fund's "required distribution" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on October 31 plus undistributed amounts from prior
years. Each Fund intends to make distributions sufficient to avoid imposition
of the excise tax. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund during October, November or
December of the year with a record date in such a month and paid by the Fund
during January of the following year. Such distributions will be taxable as if
received on December 31 in the year they are declared by the Fund, rather than
the year in which they are received.
The taxation of equity options and OTC options on debt securities is
governed by Code section 1234. Pursuant to Code section 1234, the premium
received by a Fund for selling a put or call option is not included in income at
the time of receipt. If the option expires, the premium is short-term capital
gain to the Fund. If the Fund enters into a closing transaction, the difference
between the amount paid to close out its position and the premium received is
short-term capital gain or loss. If a call option written by a Fund is
exercised, thereby requiring the Fund to sell the underlying security, the
premium will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With respect to a
put or call option that is purchased by a Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised,
the cost of the option, in the case of a call option, is added to the basis of
the purchased security and, in the case of a put option, reduces the amount
realized on the underlying security in determining gain or loss.
Certain options, futures contracts and forward contracts in which a Fund
may invest are "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40 gains or losses"); however, foreign currency gains or
losses (as discussed below) arising from certain section 1256 contracts may be
treated as ordinary income or loss. Also, section 1256 contracts held by a Fund
at the end of each taxable year (and, generally, for purposes of the 4% excise
tax, on October 31 of each year) are treated as sold on such date at fair market
value, resulting in unrealized gains or losses being treated as though they were
realized.
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Hedging transactions undertaken by a Fund may result in straddles for U.S.
federal income tax purposes. The straddle rules may accelerate income to a
Fund, defer losses to a Fund, and affect the character of gains (or losses)
realized by a Fund. Hedging transactions may increase the amount of short-term
capital gain realized by a Fund that is taxed as ordinary income when
distributed to shareholders. A Fund may make one or more of the various
elections available under the Code with respect to hedging transactions. If a
Fund makes any of the elections, the amount, character and timing of the
recognition of gains or losses from the affected positions will be determined
under rules that vary according to the elections made. The 30% limitation may
limit the extent to which a Fund will be able to engage in transactions in
options, futures contracts and forward contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time a Fund accrues interest or other receivables,
or accrues expenses or other liabilities, denominated in a foreign currency and
the time the Fund actually collects such receivables, or pays such liabilities,
generally are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and certain
options, futures and forward contracts, gains or losses attributable to
fluctuations in the value of foreign currency between the date of acquisition of
the security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase or decrease the amount of a Fund's
investment company taxable income to be distributed to its shareholders as
ordinary income.
A Fund will not realize gain or loss on a short sale of a security until it
closes the transaction by delivering the borrowed security to the lender. All
or a portion of any gain arising from a short sale may be treated as short-term
capital gain, regardless of the period for which the Fund held the security used
to close the short sale. In addition, the Fund's holding period for any
security that is substantially identical to that which is sold short may be
reduced or eliminated as a result of the short sale.
Investments by a Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no cash interest payments.
This income is included in determining the amount of income that the Fund must
distribute to maintain its status as a regulated investment company and to avoid
the payment of federal income tax and the 4% excise tax. If a Fund invests in
certain high yield original issue discount obligations issued by corporations, a
portion of the original issue discount accruing on the obligations may be
eligible for the deduction for dividends received by corporations. In such
event, a portion of the dividends of investment company taxable income received
from the Fund by its corporate shareholders may be eligible for this deduction.
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<PAGE>
Gain derived by a Fund from the disposition of any market discount bonds
(i.e., bonds purchased other than at original issue, where the face value of the
bonds exceeds their purchase price) held by the Fund will be taxed as ordinary
income to the extent of the accrued market discount on the bonds, unless the
Fund elects to include the market discount in income as it accrues.
If a Fund invests in stock of certain foreign corporations that generate
largely passive investment-type income, or which hold a significant percentage
of assets that generate such income (referred to as "passive foreign investment
companies" or "PFICs"), these investments would be subject to special tax rules
designed to prevent deferral of U.S. taxation of the Fund's share of the PFIC's
earnings. In the absence of certain elections to report these earnings on a
current basis, regardless of whether the Fund actually receives any
distributions from the PFIC, investors in the Fund would be required to report
certain "excess distributions" from, and any gain from the disposition of stock
of, the PFIC as ordinary income. This ordinary income would be allocated
ratably to the Fund's holding period for the stock. Any amounts allocated to
prior years would be taxable at the highest rate of tax applicable in that year,
increased by an interest charge determined as though the amounts were
underpayments of stock.
Income received by the Funds from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. If more than
50% of the value of a Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, the Fund will be eligible and
may elect to "pass through" to the Fund's shareholders the amount of foreign
taxes paid by the Fund. Pursuant to this election, a shareholder will be
required to include in gross income (in addition to dividends actually received)
its pro rata share of the foreign taxes paid by the Fund, and may be entitled
either to deduct its pro rata share of the foreign taxes in computing its
taxable income or to use the amount as a foreign tax credit against its U.S.
federal income tax liability, subject to limitations. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will "pass through" for that year. If a Fund is
not eligible to make the election to "pass through" to its shareholders its
foreign taxes, the foreign taxes it pays will reduce its investment company
taxable income and distributions by the Fund will be treated as U.S. source
income.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to its foreign source
taxable income. For this purpose, if the pass-through election is made, the
source of the Fund's income flows through to its shareholders. With respect to
the Funds, gains from the sale of securities will be treated as derived from
U.S. sources and certain currency fluctuation gains, including fluctuation gains
from foreign currency denominated debt securities, receivables and payables, and
options, futures and forward transactions, will be treated as ordinary income
derived from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income (as defined for purposes of the
foreign tax
46
<PAGE>
credit), including the foreign source passive income passed through by the
Funds.
The current position of the Internal Revenue Service (the "IRS") generally
is to treat a regulated investment company, such as the Special Fund, as owning
its proportionate share of the income and assets of any partnership in which it
is a partner, in applying the 90% qualifying income requirement, the 30%
Limitation and the asset diversification requirements that, as described above,
each Fund must satisfy to qualify as a regulated investment company under the
Code. These requirements may limit the extent to which the Special Fund may
invest in limited partnerships, especially in the case of limited partnerships
that do not primarily invest in a diversified portfolio of stocks and
securities.
Dividends paid out of a Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of a Fund's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the corporate dividends-received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated as capital
gain dividends are taxable as long-term capital gains, regardless of how long
the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the relevant Fund on the
reinvestment date. A distribution of an amount in excess of a Fund's current
and accumulated earnings and profits will be treated by a shareholder as a
return of capital that is applied against and reduces the shareholder's basis in
his or her shares. To the extent that the amount of any such distribution
exceeds the shareholder's basis in his or her shares, the excess will be treated
by the shareholder as gain from a sale or exchange of the shares. Shareholders
will be notified annually as to the U.S. federal tax status of distributions,
and shareholders receiving distributions in the form of additional shares will
receive a report as to the net asset value of those shares.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss that will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
ending 30 days after disposition of the shares. In such a case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
Under certain circumstances, the sales charge incurred in acquiring shares
of a Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund originally
acquired with a sales
47
<PAGE>
charge are disposed of within 90 days after the date on which they were acquired
and new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized on
the disposition will be determined by excluding from the tax basis of the shares
all or a portion of the sales charge incurred in acquiring those shares. This
exclusion applies to the extent that the otherwise applicable sales charge with
respect to the newly acquired shares is reduced as a result of the shareholder
having incurred a sales charge paid for the new shares. This rule may be
applied to successive acquisitions of shares of stock.
Distributions by a Fund reduce the net asset value of that particular
Fund's shares. Should a distribution reduce the net asset value of a share
below a shareholder's cost for the share, such a distribution nevertheless
generally would be taxable to the shareholder as ordinary income or long-term
capital gain, even though, from an investment standpoint, it may constitute a
partial return of capital. In particular, investors should be careful to
consider the tax implications of buying shares just prior to a distribution by a
Fund. The price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from a Fund ("backup withholding") at the rate
of 31%. Corporate shareholders and certain other shareholders specified in the
Code generally are exempt from such backup withholding. Generally, shareholders
subject to backup withholding will be (i) those for whom a certified taxpayer
identification number is not on file with a Fund, (ii) those about whom
notification has been received (either by the shareholder or by a Fund) from the
IRS that they are subject to backup withholding or (iii) those who, to a Fund's
knowledge, have furnished an incorrect taxpayer identification number.
Generally, to avoid backup withholding, an investor must, at the time an account
is opened, certify under penalties of perjury that the taxpayer identification
number furnished is correct and that he or she is not subject to backup
withholding.
The foregoing discussion relates solely to U.S. Federal income tax law.
Dividends and distributions also may be subject to state, local and foreign
taxes. Dividends paid by a Fund from income attributable to interest on
obligations of the U.S. Government and certain of its agencies and
instrumentalities may be exempt from state and local taxes in certain states.
Shareholders should consult their tax advisers regarding the possible exclusion
of this portion of their dividends for state and local tax purposes. Non-U.S.
investors also should consult their tax advisers concerning the tax consequences
of ownership of shares of a Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
Shareholders of Class A, Class B and Class C shares may direct that income
48
<PAGE>
dividends and capital gain distributions be paid to them through various options
listed in the "Dividends and Distributions Reinvestment Options" section of the
Funds' current Prospectus. If a shareholder selects either of two such options
(that: (a) income dividends be paid in cash and capital gain distributions be
paid in additional shares of the same class of a designated Fund at net asset
value; or (b) income dividends and capital gain distributions both be paid in
cash), and the dividend/distribution checks cannot be delivered, or, if such
checks remain uncashed for six months, each Fund reserves the right to reinvest
the dividend or distribution in the shareholder's account at the then-current
net asset value and to convert the shareholder's election to automatic
reinvestment in shares of the Fund from which the distributions were made.
UNDERWRITER AND DISTRIBUTION SERVICES
Each Fund has received from the IRS, rulings to the effect that (i) the
implementation of the multiple class purchase arrangement will not result in a
Fund's dividends or distributions constituting "preferential dividends" under
the Code, and (ii) that any conversion feature associated with a class of shares
does not constitute a taxable event under federal income tax law.
The shares of each Fund, when issued, will be fully paid and non-
assessable, have no preference, preemptive, or similar rights, and will be
freely transferable. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. Shareholders may, in accordance with the Declaration of Trust,
cause a meeting of shareholders to be held for the purpose of voting on the
removal of Trustees. Meetings of the shareholders will be called upon written
request of shareholders holding in the aggregate not less than 10% of the
outstanding shares of the affected Fund or class having voting rights. Except
as set forth above and subject to the 1940 Act, the Trustees will continue to
hold office and appoint successor Trustees.
Pursuant to Underwriting Agreements, Northstar Distributors, Inc. is the
Underwriter for each Fund and as such conducts a continuous offering pursuant to
a "best efforts" arrangement requiring it to take and pay for only such
securities as may be sold to the public. The Underwriter is an affiliate of the
Adviser and the Administrator.
Each Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (collectively the "Plans"). The
Plans permit each Fund to compensate the Underwriter in connection with
activities intended to promote the sale of shares of each class of shares of
each Fund.
Pursuant to the Plan for Class A shares, each Fund may compensate the
Underwriter up to 0.30% of average daily net assets of such Fund's Class A
shares. Under the Plans for Class B and Class C shares, each Fund may
compensate the
49
<PAGE>
Underwriter up to 1.00% of the average daily net assets attributable to the
respective class of such Fund. Pursuant to the Plan for Class T shares, each
Fund compensates the Underwriter in an amount equal to 0.95% (in the case of
Growth Fund, Special Fund and Strategic Income Fund), 0.75% (in the case of
Income Fund) and 0.65% (in the case of Government Securities Fund and High Yield
Fund) of annual average daily net assets of such Fund's Class T shares.
However, each of the Class T Plans provides for compensation of up to 1.00% of
annual average daily net assets. Expenditures by the Underwriter under the
Plans shall consist of: (i) commissions to sales personnel for selling shares
of the Funds (including underwriting fees and financing expenses incurred in
connection with the sale of Class B and Class C shares); (ii) compensation,
sales incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions that have entered
into agreements with the Underwriter in the form of a Dealer Agreement for
Northstar Advantage Funds for services rendered in connection with the sale and
distribution of shares of the Funds; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Funds; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Funds' Prospectus and SAI for distribution to potential
investors; and (vii) other activities that are reasonably calculated to result
in the sale of shares of the Funds. With respect to each Class T Plan, it is
anticipated that all of the payments received by the Underwriter under the Plan
will be paid to Advest as compensation for its prior distribution related and
current shareholder servicing related activities in connection with the Class T
Shares.
A portion of the fees paid to the Underwriter pursuant to the 12b-1 plans
not exceeding 0.25% annually of the average daily net assets of each Fund's
shares may be paid as compensation for providing services to each Fund's
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee"). In order to receive Service Fees
under the Plans, participants must meet such qualifications as are established
in the sole discretion of the Underwriter, such as services to each Fund's
shareholders; or services providing each Fund with more efficient methods of
offering shares to coherent groups of clients, members or prospects of a
participant; or services permitting purchases or sales of shares, or
transmission of such purchases or sales by computerized tape or other electronic
equipment; or other processing.
If the Plans are terminated in accordance with their terms, the obligations
of a Fund to compensate the Underwriter for distribution related services
pursuant to the Plans will cease; however, subject to approval by the Trustees,
including a majority of the independent Trustees, a Fund may continue to make
payments past the date on which each Plan terminates up to the annual limits set
forth in each Plan for the purpose of compensating the Underwriter for services
that were incurred during the term of the Plan.
In addition to the amount paid to dealers pursuant to the sales charge
table in the
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Prospectus, the Underwriter from time to time pays, from its own resources or
pursuant to the Plans, a bonus or other incentive to dealers (other than the
Underwriter) that employ a registered representative who sells a minimum dollar
amount of the shares of a Fund during a specific period of time. Dealers may
not use sales of any of the Fund's shares to qualify for or participate in such
programs to the extent such may be prohibited by a dealer's internal procedures
or by the laws of any state or any self-regulatory agency, such as the National
Association of Securities Dealers, Inc. Such bonuses or other incentives take
the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and members
of their families to places within or without the United States, or other
bonuses such as certificates for airline tickets, dining establishments or the
cash equivalent of such bonuses. The Underwriter, from time to time, reallows
all or a portion of the sales charge on Class A shares, which it normally
reallows to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings. The Underwriter has also agreed to
pay Advest, which through June 2, 1995 acted as principal underwriter to the
Funds, certain additional contingent compensation until June 2, 1998, based upon
a formula that takes into account both the sale by Advest of shares of the Funds
and other Northstar affiliated investment companies, the length of times of
investment and the annual redemption rates of the Funds' shares sold by Advest.
Such incentive compensation is in addition to the dealers' reallowance to which
Advest would otherwise be entitled.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit each Fund and its shareholders and that the Plans should
result in greater sales and/or fewer redemptions of Fund shares. On a quarterly
basis, the Trustees will review a report on expenditures under the Plans and the
purposes for which expenditures were made. The Trustees will conduct an
additional, more extensive review annually in determining whether the Plans
shall be continued. By their terms, continuation of the Plans from year to year
is contingent on annual approval by a majority of the Trustees acting separately
on behalf of each Fund and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements (the
"Plan Trustees"). The Plans provide that they may not be amended to increase
materially the costs that a Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the affected Fund and that other
material amendments to the Plans must be approved by a majority of the Plan
Trustees acting separately on behalf of each Fund, by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans
further provide that while each plan is in effect, the selection and nomination
of Trustees who are not "interested persons" shall be committed to the
discretion of the Trustees who are not "interested persons." A Plan may be
terminated at any time by vote of a majority of the Plan Trustees or a majority
of the outstanding Class of shares of the affected Fund to which the Plan
relates.
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During their fiscal year-ended October 31, 1995, each class of shares of
the Funds listed below paid the following 12b-1 distribution and service fees
pursuant to the Plan of Distribution for each class:
12 b-1 FEES
CLASS A CLASS B CLASS C
Income and Growth Fund $_____ $_____ $_____
High Total Return Fund $_____ $_____ $_____
For the year ended October 31, 1995, expenses incurred by the Distributor
for distribution related activities with respect to each class of shares of each
Fund listed below were as follows:
INCOME AND GROWTH
CLASS A CLASS B CLASS C
Salaries/Overrides $_____ $_____ $_____
Regional Marketing Manager $_____ $_____ $_____
Expenses/Convention Expense $_____ $_____ $_____
Commissions Paid $_____ $_____ $_____
Marketing Expense $_____ $_____ $_____
Total $_____ $_____ $_____
HIGH TOTAL RETURN FUND
CLASS A CLASS B CLASS C
Salaries/Overrides $_____ $_____ $_____
Regional Marketing Manager $_____ $_____ $_____
Expenses/Convention Expense $_____ $_____ $_____
Commissions Paid $_____ $_____ $_____
Marketing Expense $_____ $_____ $_____
Total $_____ $_____ $_____
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For the following Funds' fiscal year ended October 31, 1995, the
Distributor received the following amounts in sales charges, after reallowance
to Dealers.
UNDERWRITING FEES
CLASS A CLASS B CLASS C
Income and Growth Fund $_____ $_____ $_____
High Total Return Fund $_____ $_____ $_____
During their fiscal year ended December 31, 1994, expenses incurred by
Advest for certain distribution related activities with respect to each of the
Funds listed below in the following two tables were as follows:
GOVERNMENT HIGH STRATEGIC
SECURITIES YIELD INCOME
EXPENSE FUND FUND FUND
Salaries/Overrides _______ _______ _______
Regional Marketing Manager _______ _______ _______
Expenses/Convention Expense _______ _______ _______
Commissions Paid _______ _______ _______
Marketing Expense _______ _______ _______
GROWTH SPECIAL INCOME
EXPENSE FUND FUND FUND
Salaries/Overrides _______ _______ _______
Regional Marketing Manager _______ _______ _______
Expenses/Convention Expense _______ _______ _______
Commissions Paid _______ _______ _______
Marketing Expense _______ _______ _______
The Underwriting Agreements may be terminated at any time on not more than
60 days' written notice, without payment of a penalty, by the Underwriter, by
vote of a majority of the outstanding class of voting securities of the affected
Fund, or by vote of a majority of the Trustees of such Fund, who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements. The Underwriting
Agreements will terminate automatically in the event of
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their assignment.
TRUSTEES AND OFFICERS
The Trustees and principal Officers of each Fund and their business
affiliations for the past five years are set forth below. Unless otherwise
noted, the mailing address of the Trustees and Officers of the Northstar
Advantage Trust and each Northstar Advantage Fund is c/o the particular Fund,
Two Pickwick Plaza, Greenwich, CT 06830. The current Trustees were elected by
shareholders of the Fund, effective June 2, 1995:
- --------------------------------------------------------------------------------
POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------
Robert B. Goode, Jr. Trustee Retired. From 1990 to 1991,
27 Rushleigh Road Chairman of The First Reinsurance
West Hartford, CT 06117 Company of Hartford. From 1987 to
1989, President and Director of
American Skandia Life Assurance
Company. Since October 1993,
Trustee of the Northstar affiliated
investment companies.
Paul S. Doherty Trustee President, Doherty, Wallace,
One Monarch Place Pillsbury and Murphy, P.C.,
Springfield, MA 01144 Attorneys. Director, Tambrands,
Inc. Since October 1993, Trustee
of the Northstar affiliated
investment companies.
David W. Wallace Trustee Chairman of Putnam Trust Company,
33 Midwood Road Lone Star Industries and FECO
Deer Park, Greenwich, CT Engineered Systems, Inc. He is
also President and Trustee of
Robert R. Young Foundation and
Governor of the New York Hospital.
Director of UMC Electronics and
Zurn Industries, Inc. Former
Chairman and Chief Executive
Officer, Todd Shipyards and Bangor
Punta Corporation, and former
Chairman and Chief Executive
Officer of National Securities &
Research Corporation. Since October
1993, Trustee of the Northstar
affiliated investment companies.
Mark L. Lipson* Trustee and Director, Chairman and Chief
President Executive Officer of Northstar and
NWNL Northstar Inc. Director and
President of Northstar
Administrators Corporation and
Director and Chairman of NWNL
Northstar Distributors, Inc.,
President and Trustee of the
Northstar affiliated investment
companies since October 1993.
Prior to August, 1993, Director,
President and Chief Executive
Officer of National Securities &
Research Corporation and President
and Director/Trustee of the
National Affiliated Investment
Companies and certain of National's
subsidiaries.
54
<PAGE>
- --------------------------------------------------------------------------------
POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------
John G. Turner* Trustee and Since May 1991, Chairman and CEO of
20 Washington Avenue Chairman of ReliaStar. Since October 1993,
Minneapolis, MN 55401 the Board Director of Northstar and
affiliates and Chairman and Trustee
of the Northstar affiliated
investment companies. Prior to May
1991, President and CEO of the NWNL
Companies, Inc.
Alan L. Gosule Trustee Partner, Rogers & Wells
200 Park Avenue
New York, NY 10166
David W.C. Putnam Trustee President, Clerk and Director of
10 Langeley Place F.L. Putnam Securities Company,
Newton Center, MA 02159 Incorporated, F.L. Putnam
Investment Management Company,
Incorporated, Interstate Power
Company, Inc., Trust Realty Corp.
and Bow Ridge Mining Co.; Director
of Anchor Investment Management
Corporation; President and Trustee
of Anchor Capital Accumulation
Trust, Anchor International Bond
Trust, Anchor Gold and Currency
Trust, Anchor Resources and
Commodities Trust and Anchor
Strategic Assets Trust.
John R. Smith Trustee Financial Vice President of Boston
67 Windsor Street College (1970-1991); President
Sudbury, MA 01776 (since 1991) of New England
Fiduciary Company (financial
planning); Chairman (since 1987) of
Massachusetts Educational Financing
Authority; Vice Chairman of
Massachusetts Health and Education
Authority.
Ernest N. Mysogland Vice (Income and Growth Fund, Growth
President Fund, Income Fund, Special Fund).
Executive Vice President and Chief
Investment Officer-Equities of
Northstar. From 1992 to August
1993, Senior Vice President and
Chief Investment Officer-Equities
of National Securities & Research
Corporation and Vice President of
National Affiliated Investment
Companies. Prior to joining
National in 1992, Mr. Mysogland was
the President & Chief Investment
Officer of Reinoso Asset
Management. From 1988 to 1991, Mr.
Mysogland was Executive Vice
President and Chief Investment
Officer of Gintel Equity
Management.
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<PAGE>
- --------------------------------------------------------------------------------
POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------
Thomas Ole Dial Vice (High Total Return Fund, Income
President Fund, Strategic Income Fund, High
Yield Fund, Government Securities
Fund). Executive Vice President
and Chief Investment Officer-Fixed
Income of Northstar and Principal,
T.D. & Associates, Inc. From 1989
to August 1993, Executive Vice
President and Chief Investment
Officer-Fixed Income of National
Securities & Research Corporation,
Vice President of National
Affiliated Investment Companies,
and Vice President of NSR Asset
Management Corp. From 1988 to
1989, President, Dial Capital
Management.
Robert L. Thomas Vice President of Northstar. Former
President President of BSC (1989 to May
1995) and former Vice President of
Advest, Director of Advest Group,
Inc. and Advest; Former President
and Trustee of each of The
Advantage Funds, The Scottish
Widows International Fund and the
Advantage Municipal Bond Fund.
Margaret D. Patel Vice (Government Securities Fund, Income
President Fund, Strategic Income Fund). Vice
President and Managing Director of
Northstar. Former Senior Vice
President of BSC (1988 to May
1995); Former President and
Portfolio Manager at Fixed Income
Asset Management, Inc. (1986 to
1988); Former Portfolio Manager at
American Capital and Dreyfus
Corporation (prior to 1988).
Prescott B. Crocker CFA, (Strategic Income Fund, High Yield
Vice Fund). Vice President and Managing
President Director of Northstar. Former
Senior Vice President and Director,
Fixed Income Investments of BSC
(November 1993 to May 1995); Former
Senior Portfolio Manager at
Colonial Management Associates,
Inc. (1975-1993); prior to 1993,
Mr. Crocker served in various
senior investment management
positions at Colonial Management
Associates, Inc.
Geoffrey Wadsworth Vice (Income and Growth Fund, Growth
President Fund, Special Fund). Vice President
of Northstar. Co-Manager of
Northstar Advantage Income and
Growth Fund and other Northstar
affiliated equity funds. Former
Vice President and Portfolio
Manager with National Securities &
Research Corporation.
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<PAGE>
- --------------------------------------------------------------------------------
POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------
Agnes Mullady Vice Senior Vice President and Chief
President and Financial Officer of Northstar,
Treasurer Senior Vice President and Treasurer
of Northstar Administrators
Corporation, and Vice President and
Treasurer of NWNL Northstar
Distributors, Inc. From 1987 to
1993 Treasurer and Vice President
of National Securities & Research
Corporation.
Lisa M. Hurley Vice Senior Vice President, General
President and Counsel of Northstar. Executive
Secretary Vice President and Secretary of
Northstar Administrators
Corporation, and Vice President and
Secretary of NWNL Northstar
Distributors, Inc. Former Vice
President and General Counsel of
National Securities & Research
Corporation.
*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act.
Mone Anathan, III, Dr. Loring E. Hart, Reverend Bartley MacPhaidin and
Edward T. Sullivan, each of whom were previously Trustees of the Funds, serve on
an Advisory Board. The Advisory Board is expected to provide advice to the Board
of Trustees in order to facilitate a smooth management transition regarding the
advisory services to be provided by Northstar and to provide such other advise
as the Board of Trustees may request from time to time. The Advisory Board will
have no authority or control over the Funds. It is expected that Advisory Board
members will receive the same fees they received as Trustees (see the
"Compensation Table" below). Northstar has agreed to reimburse the Funds for
the expenses associated with the Advisory Board for three years.
Northstar and Northstar Administrators Corporation make their personnel
available to serve as Officers and "Interested Trustees" of the Funds. All
Officers and Interested Trustees of the Funds are compensated by Northstar or
Northstar Administrators Corporation. Trustees who are not "interested persons"
of the Adviser are paid an annual retainer fee of $6,000 for their combined
services as Trustees to the Funds and to retail funds sponsored or advised by
the Adviser, and a per meeting fee of $1,500 for attendance at each joint
meeting of the Funds and the other Northstar retail funds. The Funds also
reimburse Trustees for expenses incurred by them in connection with such
meetings.
As of _____________, all Trustees and executive officers of each Fund as a
group owned beneficially or of record less than 1% of the outstanding securities
of such Fund.
To the knowledge of the Funds, as of ______________, 1995, no shareholder
owned beneficially or of record more than 5% of a Fund's outstanding shares,
except that _____________.
57
<PAGE>
COMPENSATION TABLE
Fiscal year Ended October 31, 1995
Northstar Advantage Trust
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION BENEFITS ACCRUED AS PART ESTIMATED ANNUAL ALL FUNDS CURRENTLY IN
NAME, FROM EACH FUND(a) OF FUND EXPENSES BENEFITS UPON NORTHSTAR FUNDS
POSITION RETIREMENT COMPLEX(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alan L. Gosule, Esq. $1,417 N/A N/A $6,167
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Smith, Ph.D. $1,667 N/A N/A $6,167
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W.C. Putnam $1,417 N/A N/A $13,667
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert B. Goode, Jr. $4,083 N/A N/A $12,333
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Paul S. Doherty $4,083 N/A N/A $12,333
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W. Wallace $4,083 N/A N/A $12,333
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Lipson -0- N/A N/A -0-
(President and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John G. Turner -0- N/A N/A -0-
(Chairman and Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
COMPENSATION TABLE
Fiscal year Ended December 31, 1995
Government Securities, Strategic Income, High Yield, Income,
Growth and Special Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION BENEFITS ACCRUED AS ESTIMATED ANNUAL ALL FUNDS CURRENTLY IN
NAME, FROM EACH FUND(a) PART OF FUND EXPENSES BENEFITS UPON NORTHSTAR FUNDS
POSITION RETIREMENT COMPLEX(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alan L. Gosule, Esq. ---- ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Smith, Ph.D. ---- ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W.C. Putnam ----(c) ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert B. Goode, Jr. ---- ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Paul S. Doherty ---- ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W. Wallace ---- ---- ---- ----
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Lipson ---- ---- ---- ----
(President and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John G. Turner ---- ---- ---- ----
(Chairman and Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Trustees and officers who are affiliated with the Adviser or
Underwriter or their affiliates ("interested persons" as defined under
the 1940 Act) do not receive any compensation for services rendered to
the Funds in addition to their compensation for services rendered to
the Adviser or affiliated companies. Prior to June 2, 1995 the
Trustees who were not interested persons were paid a per fund fee of
$500 for each full calendar year during which services were rendered
to the Funds. In addition, they were paid a per fund fee of $250 for
attending each of the Trustees' meetings, $100 per fund for attending
each audit committee meeting, $100 audit committee retainer per fund
and were reimbursed for out-of-pocket expenses.
(b) Compensation paid by six Advantage Fund trusts formerly advised by
BSC.
59
<PAGE>
(c) As Chairman, David Putnam received the amount listed above from the
six former BSC advised funds, which included compensation as a Trustee
(see (a) above), and for additional services. Each Fund is allocated
a proportionate share of the amount paid for additional services based
on net assets. Mr. Putnam resigned as Chairman effective June 2,
1995.
OTHER INFORMATION
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. has been selected as the independent
accountants of the Northstar Advantage Trust and each Northstar Advantage
Fund. Coopers & Lybrand L.L.P. audits the Funds' annual financial statements
and expresses an opinion thereon.
CUSTODIAN
Custodial Trust Company, Princeton, New Jersey, acts as custodian for the
High Total Return and Income and Growth Funds, and First Data Investor Services,
Inc. ("First Data"), Boston, Massachusetts, serves as Fund Accounting Agent for
these Funds; State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as custodian for the remaining Funds.
TRANSFER AGENT
Pursuant to a Transfer Agency Agreement with each Fund, First Data (the
"Transfer Agent") acts as the Transfer Agent for each Fund. Pursuant to a Sub-
Transfer Agreement between Advest Transfer Services, Inc. ("ATS") and First
Data, ATS serves as the sub-transfer agent for the Funds offering Class T
shares, and, prior to June 5, 1995, ATS acted as transfer agent to these Funds.
For calendar year 1995, fees and out-of-pocket costs payable to ATS under such
transfer agency agreements by each of those Funds were as follows:
FUND FEES COSTS
Government Fund $95,636 $2,526
High Yield Fund 87,663 2,762
Income Fund 55,748 1,866
Growth Fund 68,258 1,001
Special Fund 36,611 310
Strategic Income Fund 6,508 225
REPORTS TO SHAREHOLDERS
The fiscal year of the Northstar Advantage Trust ends on October 31. The
fiscal year of each other Fund ends on December 31. Each Fund will send
financial statements to its shareholders at least semi-annually. An annual
report containing financial statements audited by the independent
60
<PAGE>
accountants will be sent to shareholders each year.
ORGANIZATIONAL AND RELATED INFORMATION
Government Securities Fund (formerly The Advantage Government
Securities Fund) was organized in 1986; Strategic Income Fund (formerly The
Advantage Strategic Income Fund) was organized in 1994; High Yield Fund
(formerly The Advantage High Yield Bond Fund) was organized 1989; Income Fund
(formerly The Advantage Income Fund) was organized in 1986; Growth Fund
(formerly The Advantage Growth Fund) was organized in 1986; and Special Fund
(formerly The Advantage Special Fund) was organized in 1986. Northstar
Advantage Trust (formerly NWNL Northstar Series Trust), and two of its series
High Total Return Fund (formerly NWNL Northstar High Yield Bond Fund) and
Income and Growth Fund (formerly NWNL Northstar Income and Growth Fund), was
organized in 1993.
Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Amended and Restated
Declaration of Trust for each Fund contains provisions intended to limit such
liability and to provide indemnification out of Fund property of any shareholder
charged or held personally liable for obligations or liabilities of a Fund
solely by reason of being or having been a shareholder of a Fund and not because
of such shareholder's acts or omissions or for some other reason. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which a Fund itself would be unable to
meet its obligations.
PERFORMANCE INFORMATION
Performance information for the Funds may be compared in reports and
promotional literature to (1) the S&P 500, Dow Jones Industrial Average
("DJIA"), or other unmanaged indices, so that investors may compare each Fund's
results to those of a group of unmanaged securities that are widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, Inc., a widely
used independent research firm that ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications or persons who rank mutual funds on overall performance or other
criteria; (iii) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in a Fund; and (iv) well known monitoring
sources of CD performance rates, such as Solomon Brothers, Federal Reserve
Bulletin, American Bankers and Tower Data/The Wall Street Journal. Unmanaged
indices may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Performance
rankings are based on historical information and are not intended to indicate
future performance.
In addition, the Funds may, from time to time, include various measures of
a Fund's performance, including the current yield, the tax-equivalent yield and
the average annual total return of shares of the Funds in advertisements,
promotional literature or reports to shareholders or prospective investors.
Such materials may occasionally cite statistics to reflect a Fund's volatility
risk.
61
<PAGE>
TOTAL RETURN
Standardized quotations of average annual total return ("Standardized
Return") for each class of shares will be expressed in terms of the average
annual compounded rate of return for a hypothetical investment in such class of
shares over periods of 1, 5 and 10 years or up to the life of the class of
shares, calculated for each class separately pursuant to the following formula:
P(1+T)TO THE POWER OF n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and ERV =
the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), the deduction
of the maximum initial sales load (in the case of Class A shares) and the
maximum contingent deferred sales charge applicable to a complete redemption of
the investment (in the case of Class B, Class C and Class T shares), and assume
that all dividends and distributions are reinvested when paid.
YIELD
Quotations of yield for a specific class of shares of a Fund will be based
on all investment income attributable to that class earned during a particular
30-day (or one month) period (including dividends and interest), less expenses
accrued during the period ("net investment income"), and will be computed by
dividing the net investment income per share of that class earned during the
period by the maximum offering price per share on the last day of the month,
according to the following formula:
Yield = 2[(a-b + 1)TO THE POWER OF 6 -1]
---
cd
Where:
a = dividends and interest earned during the period attributable to a
specific class of shares
b = expenses accrued for the period attributable to that class (net of
reimbursements)
c = the average daily number of shares of that class outstanding during
the period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period
The maximum offering price includes a maximum contingent deferred sales
load of 4%, in the case of Class T shares, 5% for Class B shares, and 1%, for
Class C shares.
All accrued expenses are taken into account as follows. Accrued expenses
include all recurring expenses that are charged to all shareholder accounts in
proportion to the length of the base period, including but not limited to
expenses under the Funds' distribution plans. Except as noted, the performance
results take the contingent deferred sales load into account.
The yield for Class A, B, C and T shares of the Government Securities Fund,
the High Yield
62
<PAGE>
Fund, the Strategic Income Fund, and the Income Fund, and the yield for Class A,
B and C of the High Total Return Fund for the month ended January 1, 1996 was
as follows:
YIELD
FUND CLASS A CLASS B CLASS C CLASS T
Government Fund ____% ____% ____% ____%
High Yield Fund ____ ____ ____ ____
Strategic Income Fund ____ ____ ____ ____
Income Fund ____ ____ ____ ____
High Total Return Fund ____ ____ ____ N.A
NON-STANDARDIZED TOTAL RETURN
In addition to the performance information described above, the Funds may
provide total return information that is not calculated according to the formula
set forth above ("None-Standardized Return"). Neither initial nor contingent
deferred sales charges are taken into account in calculating Non-Standardized
Return. Excluding a Fund's sales charge from a total return calculation
produces a higher total return figure.
The following table summarizes the calculation of Standardized and Non-
Standardized Return for Class A, Class B and Class C shares of each Fund in
Northstar Advantage Trust and for Class A, Class B, Class C and Class T shares
of the other Funds for the periods indicated.
NORTHSTAR ADVANTAGE TRUST. The following table summarizes the calculation
of Total Return for the periods indicated through October 31, 1995, assuming the
contingent deferred sales load HAS been assessed.
SINCE
ONE YEAR INCEPTION*
HIGH TOTAL RETURN FUND
Class A 7.66% 2.14%
Class B 6.97% (1.05)%
Class C 11.44% 2.38%
INCOME AND GROWTH FUND
Class A 6.93% 4.68%
Class B 6.41% 1.57%
Class C 10.43% 5.79%
The following table summarizes the calculation of Total Return for the
periods indicated
63
<PAGE>
through October 31, 1995, assuming the contingent deferred sales load HAS NOT
been assessed.
SINCE
ONE YEAR INCEPTION*
HIGH TOTAL RETURN FUND
Class A 13.02% 4.68%
Class B 11.97% 0.94%
Class C 12.44% 2.38%
INCOME AND GROWTH FUND
Class A 13.19% 7.29%
Class B 12.31% 3.84%
Class C 12.33% 5.79%
___________________________
* The inception date for Class A, Class B and Class C shares of High Total
Return Fund and Income and Growth Fund is November 8, 1993, February 9,
1994 and March 21, 1994, respectively.
THE REMAINING FUNDS. The following table summarizes the calculation of
Total Return for Class T shares of the remaining Funds for the periods indicated
through December 31, 1995, assuming the maximum sales charge HAS been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION*
Government Fund ____% ____% ____%
High Yield Fund ____% ____% ____%
Income Fund ____% ____% ____%
Growth Fund ____% ____% ____%
Special Fund ____% ____% ____%
Strategic Income Fund ____% ____% ____%
The following table summarizes the calculation of Total Return for Class T
shares of the remaining Funds for the periods indicated through December 31,
1995, assuming the maximum sales charge HAS NOT been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION*
Government Fund ____% ____% ____%
High Yield Fund ____% ____% ____%
64
<PAGE>
Income Fund ____% ____% ____%
Growth Fund ____% ____% ____%
Special Fund ____% ____% ____%
Strategic Income Fund ____% N/A ____
___________________________
* The inception date for Class T shares of Government Securities, Income,
Growth and Special Funds was February 1, 1986. The inception date for
Class T shares of the High Yield Fund was July 5, 1989. The inception date
for Class T shares of the Strategic Income Fund was July 1, 1994.
The following table summarizes the calculation of Total Return for Class A,
Class B and Class C shares of the remaining Funds for the period from
commencement of operations of such classes (June 5, 1995) through December 31,
1995, assuming the maximum sales charge HAS been assessed.
CLASS A CLASS B CLASS C
Government Fund ____% ____% ____%
High Yield Fund ____% ____% ____%
Income Fund ____% ____% ____%
Growth Fund ____% ____% ____%
Special Fund ____% ____% ____%
Strategic Income Fund ____% ____% ____%
The following table summarizes the calculation of Total Return for Class A,
Class B and Class C shares of the remaining Funds for the period from
commencement of operations of such classes (June 5, 1995) through December 31,
1995, assuming the maximum sales charge HAS NOT been assessed.
CLASS A CLASS B CLASS C
Government Fund ____% ____% ____%
High Yield Fund ____% ____% ____%
Income Fund ____% ____% ____%
Growth Fund ____% ____% ____%
Special Fund ____% ____% ____%
Strategic Income Fund ____% ____% ____%
OTHER INFORMATION CONCERNING FUND PERFORMANCE
A Fund may quote its performance in various ways, using various types of
comparisons to market indices, other funds or investment alternatives, or to
general increases in the cost of living. All performance information supplied
by the Funds in advertising is historical and is not intended to indicate future
returns. Each Fund's share prices and total returns fluctuate in response to
market conditions and other factors, and the value of the Fund's shares when
redeemed may be more or less
65
<PAGE>
than their original cost.
Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning the Funds, including reprints of, or
selections from, editorials or articles about a Fund. These editorials or
articles may include quotations of performance from other sources, such as
Lipper or Morningstar. Sources for Fund performance information and articles
about the Fund may include the following: BANXQUOTE, BARRON'S, BUSINESS WEEK,
CDA INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES, CONSUMER DIGEST, FINANCIAL
WORLD, FORBES, FORTUNE, IBC/DONOGHUES'S MONEY FUND REPORT, IBBOTSON ASSOCIATES,
INC., INVESTMENT COMPANY DATA, INC., INVESTOR'S DAILY, LIPPER ANALYTICAL
SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, MONEY, MUTUAL FUND VALUES,
THE NEW YORK TIMES, PERSONAL INVESTING NEWS, PERSONAL INVESTOR, SUCCESS, USA
TODAY, U.S. NEWS AND WORLD REPORT, WALL STREET JOURNAL, WIESENBERGER INVESTMENT
COMPANIES SERVICES, WORKING WOMAN.
When comparing yield, total return and investment risk of shares of a Fund
with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while a Fund's
returns will fluctuate and its share values and returns are not guaranteed.
Money market accounts offered by banks also may be insured by the FDIC and may
offer stability of principal. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S. government.
Money market mutual funds may seek to offer a fixed price per share.
The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of the
Fund for any period in the future. The performance of a Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest, and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
FINANCIAL STATEMENTS
The Northstar Advantage Trust's audited financial statements dated October
31, 1995 and the report of the independent accountants, Coopers & Lybrand
L.L.P. with respect to such financial statements, are hereby incorporated by
reference to the Annual Report to Shareholders of the Northstar Advantage Trust
for the fiscal year ended October 31, 1995.
The audited financial statements of Government Securities Fund, High Yield
Fund, Income Fund, Growth Fund, Special Fund and Strategic Income Fund as of and
for the fiscal period ended December 31, 1995 and the report of the independent
accountants, ____________, with respect to such financial statements are hereby
incorporated by reference to the Annual Report to Shareholders of The Advantage
Family of Funds for the fiscal year ended December 31, 1995.
66
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Included in Part A:
NORTHSTAR ADVANTAGE TRUST - Financial Highlights for a share
outstanding throughout the period November 8, 1993 (Class A) February 9, 1994
(Class B) and March 21, 1994 (Class C) (commencement of offering of each Class)
through October 31, 1995.
GOVERNMENT SECURITIES, INCOME, GROWTH AND SPECIAL FUNDS:
Financial Highlights for a share outstanding throughout the period February 3,
1986 (commencement of operations) to December 31, 1994.
HIGH YIELD FUND: Financial Highlights for a share outstanding
throughout the period June 5, 1989 (commencement of operations) through December
31, 1994.
STRATEGIC INCOME FUND: Financial Highlights for a share outstanding
throughout the period July 1, 1994 (commencement of operations) to December 31,
1994.
Included in Part B: The audited financial statements for the year
ended October 31, 1995 for the Northstar Advantage Trust and for the year ended
December 31, 1994 for the Government Securities, Strategic Income, High Yield,
Income, Growth and Special Funds, and the report of the independent accountants
with respect to such financial statements are incorporated in the Statement of
Additional Information for the Trust and each Fund by reference to the annual
Report to Shareholders for the Trust and each Fund for the fiscal years ended
October 31, 1995 and December 31, 1994, respectively; however the material
appearing on the inside front and back covers and pages 1 and 36 of the December
31, 1994 Annual Report is not incorporated herein by reference. The
incorporated financial information for the years ended October 31, 1995 for the
Trust and December 31, 1994 for the other Funds includes the following:
Statement of Investments, Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Financial Highlights, Notes to
Financial Statements, and report of independent accountants.
(b) EXHIBITS - NORTHSTAR ADVANTAGE TRUST
(1) (a) Declaration of Trust (1)
(b) Amendment of Declaration of Trust (3)
(c) Amendment to Declaration of Trust (5)
(2) By-Laws (1)
(3)(4) N/A
(5) Investment Advisory Agreement (2)
(6) Underwriting Agreements (4)
(8) Custody Agreements (3)
(9) (a) Transfer Agency Agreement (3)
<PAGE>
(b) Administrative Services Agreement (3)
(c) Accounting Services Agreement (3)
(10) Inapplicable
(11) Consent of Independent Public Accountants*
(12) Annual Report to Shareholders*
(13) Subscription Agreement (3)
(15) Plans of Distribution pursuant to Rule 12b-1 (7)
(a) Class A Shares
(b) Class B Shares
(c) Class C Shares
(16) Performance Information*
(17) Powers of Attorney(8)
(18) Inapplicable
- ------------------------------------------------
1. Included in Registrant's Registration Statement filed August 24, 1993 and
incorporated herein by reference.
2. Included in Registrant's Pre-effective Amendment No. 1 filed October 7,
1993 and incorporated herein by reference
3. Included in Pre-Effective Amendment No. 2 filed November 3, 1993 and
incorporated herein by reference.
4. Included in Post-Effective Amendment No. 1 filed January 19, 1994 and
incorporated herein by reference.
5. Included in Post-Effective Amendment No. 2 filed March 19, 1994 and
incorporated herein by reference.
6. Not Applicable.
7. Included in Post-Effective Amendment No. 3 filed August 1, 1994 and
incorporated herein by reference
8. Included in Post-Effective Amendment No. 6 filed November 1, 1995 and
incorporated herein by reference.
<PAGE>
EXHIBITS - GOVERNMENT SECURITIES, INCOME, GROWTH, SPECIAL, HIGH YIELD AND
STRATEGIC INCOME FUNDS.
(1) Form of Amended and Restated Declaration of Trust*
(2) By-Laws *
(3)(4) Not Applicable
(5) Form of Investment Advisory Agreement *
(6) (a)Form of Underwriting Agreements for Classes A, B, C and T Shares*
(b)Form of Dealer Agreement for Northstar Affiliated Investment Cos.*
(c)Form of Special Dealer Agreement between Northstar Distributors and
Advest, Inc.*
(7) Not Applicable
(8) Form of Custody Agreement*
(9) (a)Form of Transfer Agency Agreement*
(b)Form of Sub-Transfer Agency Agreement *
(c)Form of Administrative Services Agreement*
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Form of Distribution Plan for Classes A, B, C and T Shares
(16) Not Applicable
(17) Powers of Attorney[1]
(18) Not Applicable
NOTES TO EXHIBIT LISTING
* Filled herewith
[1] Previously filed as an exhibit to the Registrants Post-Effective Amendments
as follows and incorporated herein by reference:
Government Securities Fund - PEA No. 15
Income Fund - PEA No. 14
Growth Fund - PEA No. 14
Special Fund - PEA No. 14
High Yield Fund - PEA No. 10
Strategic Income Fund - PEA No. 6
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
There are no persons controlled by or under common control with Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of November 30, 1995, the Registrant had the following number of record
security holders:
Title of Class Fund Number of Shareholders
- -------------- ---- ----------------------
Shares of Income & Growth Fund (A) 1582 (B) 2257 (C)1575
Benefical High Total Return Fund (A) 3144 (B) 3557 (C) 458
Interest Government Securities (A) 91 (B) 275 (C) 3 (T) 7699
High Yield Bond (A) 396 (B) 396 (C) 53 (T) 9131
Income (A) 69 (B) 280 (C) 20 (T) 5821
Growth (A) 146 (B) 441 (C) 24 (T) 7581
Special (A) 152 (B) 353 (C) 10 (T) 4404
Strategic Income (A) 367 (B) 809 (C) 60 (T) 2082
<PAGE>
ITEM 27. INDEMNIFICATION
Section 5.4 of Registrant's Declaration of Trust provides the following:
(a) Subject to Paragraph (c) hereof every person who is, or has been, a
Trustee, Officer, employee or agent of the Trust shall be indemnified by the
Trust to the fullest extent permitted by law against all liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, employee or agent and
against amounts paid or incurred by him in the settlement thereof in such
manner, provided, that to the extent any claim, action, suit or proceeding
involves any particular Series or Classes of Shares of the Trust or the assets
or operations of one or more Series or Classes of Shares, such indemnification
shall be provided only from the assets (or proceeds thereof or income therefrom)
of such one or more Series or Classes of Shares and not from the assets (or
proceeds thereof or income therefrom) of any other Series or Class of Shares of
the Trust.
(b) The words "claim", "action", "suit" or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, or other including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include without limitation, attorneys fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a series thereof, or the
Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought or that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in reasonable belief that his
action was in the best interest of the Trust; and
(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b) (i) or (b) (ii) resulting
in a payment by a Trustee or officer, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement or other
disposition; or
(B) based upon the review of readily available facts (as opposed to full
trial-type inquiry) by (x) vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(d) The rights of indemnification herein provided may be insured against by
policies
<PAGE>
maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee or officer
and shall inure to the benefit of the heirs, executors, administrators and
assigns of such a person. Nothing contained herein shall affect any rights
to indemnification to which personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise under law.
(e) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this
Section may be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled
to indemnification under this Section, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security provided by the recipient or the Trust shall be insured against
losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section, a "Disinterested Trustee" is one who is not (i) an
Interested Person of the Trust (including anyone who has been exempted from
being an Interested Person by any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Funds" in the Prospectus and Services of the Adviser and
Affiliated Service Providers" and "Trustees and Officers" in the Statement of
Additional Information, each of which is included in the Registration Statement.
Set forth is a list of each officer and director of the Adviser indicating each
business, profession, vocation or employment of a substantial nature in which
each such person has been engaged since November 30, 1993.
POSITION WITH OTHER SUBSTANTIAL
INVESTMENT BUSINESS, PROFESSION
NAME ADVISER VOCATION OR EMPLOYMENT
- ---- ------- ----------------------
- ---- ------- ----------------------
John Turner Director Chairman and CEO,
ReliaStar Financial Corp.
John Flittie Director President,
ReliaStar Financial Corp.
Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar
Administrators Corp. and NWNL Northstar,
Inc.
Robert Thomas President Former President of Boston Security
Counsellors, Inc. ("BSC"); former
Executive Vice President and Director of
Advest, Inc., former Director of the
Advest Group Inc. and former President
and Trustee of the Advest Advantage
Family of Funds.
Thomas Ole Dial Executive Vice Vice President, Northstar Affiliated
President - Chief Investment Companies, and Principal, TD
Investment Officer Associates Inc.
Fixed Income
Prescott Crocker Vice President/ Vice President, Northstar Affiliated
Managing Director Investment Cos. Former Vice President
and Portfolio Manager for BSC.
Margaret Patel Vice President/ Vice President, Northstar Affiliate
Managing Director Investment Cos. Former Vice President
and Portfolio Manager for BSC.
<PAGE>
Robert J. Adler Executive Vice President Northstar Distributors, Inc.
President, Sales &
Marketing
Agnes Mullady Sr. Vice President Vice President & Treasurer of Northstar
and CFO Affiliates and the Northstar Affiliated
Investment Companies.
Ernest Mysogland Exec.Vice President Vice President - Northstar Affiliated
Chief Investment Investment Companies.
Officer - Equities
Geoffrey Wadsworth Vice President/
Investments and
Portfolio Manager
Jeffrey Aurigemma Vice President -
Investments
Michael Graves Vice President
Investments
Lisa M. Hurley Sr. Vice President Executive Vice President, Northstar
General Counsel & Administrators Corp., Vice President
Secretary Northstar Distributors and Northstar
Affiliated Investment Companies.
Gertrude Purus Vice President Vice President Northstar Distributors
Operations and Northstar Administrators Corp.
Stephen Vondrak Vice President Former Regional Marketing
Sales & Marketing Manager with Roger Engemann
and Associates from 1991-1994.
Mark Sfarra Vice President -
Marketing
ITEM 29 . PRINCIPAL UNDERWRITER
(a) See "Management of the Funds - The Adviser and Affiliated Service Providers"
and "How to Purchase Shares" in the Prospectus and "Underwriter and Distribution
Services" in the Statement of Additional Information, both of which are included
in this Post-Effective Amendment to the Registration Statement. Unless
otherwise indicated, the principal business address for each person is c/o
Northstar, Two Pickwick Plaza, Greenwich, CT 06830.
<PAGE>
(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- ------------------ -------------------- --------------------
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN
John Flittie Director Trustee
20 Washington Ave. South
Minneapolis, MN
Mark L. Lipson Chairman & Director Trustee
Robert J. Adler President None
Mark Blinder Reg. Vice President None
Richard Frances Reg. Vice President None
Daniel Leonard Reg. Vice President None
Stephen O'Brien Reg. Vice President None
David Linton Reg. Vice President None
Charles Dolce Reg. Vice President None
Hyman Glasman Reg. Vice President None
Stephen Vondrak Vice President None
Mark Sfarra Vice President None
Gertrude Purus Vice President None
Agnes Mullady Vice President Vice President
& Treasurer & Treasurer
Lisa Hurley Vice President Vice President
& Secretary & Secretary
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
<PAGE>
Custodial Trust Company acts as Custodian and maintains the following records at
its principal office at 101 Carnegie Center, Princeton, New Jersey 08540-6231
for the Northstar Advantage Trust, and State Street Bank and Trust Co. maintains
such records as Custodian for the Government Securities, High Yield, Strategic
Income, Income, Growth, and Special Funds:
(1) Receipts and delivery of securities including certificate
numbers;
(2) Receipts and disbursement of cash;
(3) Records of securities in transfer, securities in physical
possession, securities owned and securities loaned.
First Data Investor Services Group, ("First Data") maintains the following
records at One Exchange Place, 11th Floor, Boston, Massachusetts, 02109, as
Transfer Agent for the Funds.
(1) Shareholder Records;
(2) Share accumulation accounts: Details as to dates and number of
shares of each accumulation, price of each accumulation.
All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830 or the offices of First
Data, as the Fund Accounting Agent for the Northstar Advantage Trust, or at
State Street Bank as the Fund Accounting Agent for the Government Securities,
High Yield, Strategic, Income, Growth and Special Funds.
ITEM 31. Management Services
Not Applicable
ITEM 32. Undertakings
(a) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the Trusts'
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(b) Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Greenwich and the State of Connecticut on the 27th
day of December, 1995.
REGISTRANT
By: LISA HURLEY
-----------------------------
Lisa Hurley, Vice President
SIGNATURES TITLE DATE
JOHN G. TURNER Chairman and December 27, 1995
John G. Turner* Trustee
MARK L. LIPSON Trustee December 27, 1995
Mark L. Lipson*
JOHN R. SMITH Trustee December 27, 1995
John R. Smith*
PAUL S. DOHERTY Trustee December 27, 1995
Paul S. Doherty*
DAVID W. WALLACE Trustee December 27, 1995
David W. Wallace*
ROBERT B. GOODE, JR. Trustee December 27, 1995
Robert B. Goode, Jr.*
<PAGE>
SIGNATURES TITLE DATE
MARJORY WILLIAMS Trustee December 27, 1995
Marjory Williams
ALAN L. GOSULE Trustee December 27, 1995
Alan L. Gosule*
DAVID W.C. PUTNAM Trustee December 27, 1995
David W.C. Putnam*
AGNES MULLADY Principal December 27, 1995
Agnes Mullady Financial and
Accounting Officer
By: LISA HURLEY*
Lisa Hurley
Attorney-in-fact
* Executed pursuant to powers of attorney filed with PEA No. 6 (Northstar
Advantage Trust and Northstar Advantage Strategic Income Fund), PEA No.10
(Northstar Advantage High Yield Fund), PEA No. 15 (Northstar Advantage
Government Securities Fund), and PEA No. 14 (Northstar Advantage Income Fund,
Northstar Advantage Special Fund and Northstar Advantage Growth Fund).
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Under
Part C of Form N-1A Name of Exhibit Page Number Herein
------------------- --------------- ------------------
1 Form of Amended and Restated
Declaration of Trust
2 Form of By-Laws
5 (a) Form of Advisory Agreement
6 (a) - (d) Form of Underwriting
Agreements for Class A, Class B,
Class C and Class T Shares
(e) Form of Dealer Agreement for
Northstar Affiliated Investment
Companies
(f) Special Dealer Agreement
8 Form of Custody Agreement
9 (a) Form of Transfer Agency Agreement
(b) Form of Sub-Transfer Agency Agreement
(c) Form of Administrative Services
Agreement
15 Form of Amended and Restated
Distribution and Service Plan for Class A,
Class B, Class C and Class T Shares
<PAGE>
Exhibit 1
Form of Amended and Restated Declaration of Trust
<PAGE>
FORM OF
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
THE NORTHSTAR ADVANTAGE ____________ FUND
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
JUNE 2, 1995
<PAGE>
TABLE OF CONTENTS
Page
- ----
ARTICLE I 2
NAME AND DEFINITIONS 2
Section 1.1. Name 2
Section 1.2. Definitions 2
ARTICLE II 5
TRUSTEES 5
Section 2.1. Number of Trustees 5
Section 2.2. Election or Appointment and Term 5
Section 2.3. Resignation and Removal 5
Section 2.4. Vacancies 6
Section 2.5. Delegation of Power to Other Trustees 6
ARTICLE III 7
POWERS OF TRUSTEES 7
Section 3.1. General 7
Section 3.2. Business and Investments 7
Section 3.3. Legal Title 9
Section 3.4. Issuance and Repurchase of Securities 9
Section 3.5. Borrowing Money; Lending Trust Assets 9
Section 3.6. Delegation; Committees 9
Section 3.7. Collection and Payment 10
Section 3.8. Expenses 10
Section 3.9. Litigation 10
Section 3.10. Miscellaneous Powers 10
Section 3.11. Manner of Acting; Bylaws 11
Section 3.12. Principal Transactions 11
ARTICLE IV 12
CONTRACTS 12
Section 4.1. Advisory or Management Contract 12
Section 4.2. Distribution Contract 12
Section 4.3. Transfer Agent and Shareholder Servicing Contract 13
Section 4.4. Custodian 13
Section 4.5. Administrator 13
Section 4.6. Affiliations of Trustees or Officers, Etc. 13
ARTICLE V 14
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS . . . . . . . . . . . . . . . . . . . 14
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. 14
Section 5.2. Non-Liability of Trustees, etc 15
<PAGE>
Section 5.3. No Protection Against Certain 1940 Act Liabilities 15
Section 5.4. Mandatory Indemnification 15
Section 5.5. No Bond Required of Trustees 17
Section 5.6. No Duty of Investigation; Notice in Trust Instruments, etc. 17
Section 5.7. Reliance on Experts, etc. 18
ARTICLE VI 18
SHARES OF BENEFICIAL INTEREST 18
Section 6.1. Beneficial Interest. 18
Section 6.2. Rights of Shareholders 18
Section 6.3. Trust Only 19
Section 6.4. Issuance of Shares 19
Section 6.5. Register of Shares 19
Section 6.6. Transfer of Shares 20
Section 6.7. Notices, Reports 20
Section 6.8. Treasury Shares 21
Section 6.9. Voting Powers 21
Section 6.10. Shareholder Approval 22
Section 6.11. Meetings of Shareholders 22
Section 6.12. Series of Shares 22
Section 6.13. Class Designation 25
Section 6.14. Assent to Declaration of Trust 26
ARTICLE VII 26
REDEMPTIONS 26
Section 7.1. Redemptions 26
Section 7.2. Price 27
Section 7.3. Payment 27
Section 7.4. Effect of Suspension of Determination of Net Asset Value 27
Section 7.5. Redemption of Shares in Order to Qualify as Regulated Investment
Company; Disclosure of Holding 27
Section 7.6. Redemption of Shareholder's Interest 28
Section 7.7. Repurchase of Shares by Agreement with Shareholder 28
Section 7.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula 28
Section 7.9. Suspension of Right of Redemption 28
ARTICLE VIII 29
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DIVIDENDS AND DISTRIBUTIONS 29
Section 8.1. Net Asset Value 29
Section 8.2. Net Income 30
Section 8.3. Dividends and Distributions 31
Section 8.4. Allocation Between Principal and Income 31
Section 8.5. Power to Modify Foregoing Procedures 32
- ii -
<PAGE>
ARTICLE IX 32
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC. 32
Section 9.1. Duration 32
Section 9.2. Termination of Trust 32
Section 9.3. Amendment Procedure 33
Section 9.4. Merger, Consolidation and Sale of Assets 34
Section 9.5. Incorporation 34
ARTICLE X 34
FINANCIAL REPORTS; BOOKS AND RECORDS 34
ARTICLE XI 35
MISCELLANEOUS 35
Section 11.1. Filing 35
Section 11.2. Resident Agent 35
Section 11.3. Governing Law 35
Section 11.4. Counterparts 35
Section 11.5. Reliance by Third Parties 35
Section 11.6. Provisions in Conflict with Law or Regulations 36
Section 11.7. Use of the Names "Advantage" and "Northstar" 36
- iii -
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
THE NORTHSTAR ADVANTAGE _________________ FUND
June 2, 1995
AMENDED AND RESTATED DECLARATION OF TRUST of the Northstar Advantage
_________________ Fund made the second day of June, 1995, by the persons named
at the foot of this Declaration of Trust, as trustees (such individuals, so long
as they shall continue in office in accordance with the provisions of this
Declaration of Trust, and all other individuals who may hereafter be duly
elected or appointed, qualified and serving as trustees in accordance with the
provisions hereof, being hereinafter called "Trustees");
WHEREAS, there has heretofore been established a trust under the name "Northstar
Advantage _________________ Fund" for the investment and reinvestment of the
funds contributed thereto;
WHEREAS, a Declaration of Trust was filed with the Secretary of State of the
Commonwealth of Massachusetts and with the Clerk of the City of Boston dated
March 1, 1988 establishing and designating the trust into one series, the Advest
Advantage _________________ Fund;
WHEREAS, at a meeting of the Trustees on March 1, 1995, the Trustees approved,
pursuant to Section 9.3 of such Declaration of Trust, an amendment to change the
name of the trust to "Northstar Advantage _________________ Fund," and subject
to shareholder approval, certain other amendments to such Declaration;
WHEREAS, at a special meeting of trust Shareholders held on May 17, 1995, the
Shareholders approved such other amendments to the Declaration of Trust and
authorized the Trustees to execute and file an amended and restated Declaration
reflecting the changes of the Trust's name and such other amendments; and
WHEREAS, pursuant to Section 9.3 of the Declaration of Trust, the amendment and
restatement of such Declaration of Trust has been duly approved as herein
provided, and shall become effective upon the filing thereof with the Secretary
of State of the Commonwealth of Massachusetts.
NOW, THEREFORE, the Trustees declare that the Declaration of Trust of this Trust
as amended and restated, shall read as follows:
<PAGE>
PREAMBLE
All money and property contributed to the Trust established hereunder shall
be held and managed in trust for the benefit of the holders, from time to time,
of the shares of beneficial interest issued hereunder and subject to the
provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust established hereby (the "Trust")
is the "Northstar Advantage _________________ Fund" and so far as may be
practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word "Trust"
wherever herein used) shall refer to the Trustees as trustees, and not as
individuals, or personally, and shall not refer to the officers, agents,
employees or Shareholders of the Trust.
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the respective meanings assigned to them below:
(a) "ADMINISTRATOR" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.5 hereof.
(b) the terms "AFFILIATED PERSON," "INTERESTED PERSON" and "COMMISSION"
have the meanings assigned to them in the 1940 Act, as modified by any
applicable order or orders of the Commission. Except as otherwise defined by the
Trustees in conjunction with the establishment of any series of Shares, the term
"APPROVAL OF A MAJORITY OF THE OUTSTANDING SHARES ENTITLED TO VOTE" shall have
the same meaning as the term "VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" given it in the 1940 Act.
(c) "BYLAWS" means the Bylaws referred to in Section 3.11 hereof, as
amended and in effect from time to time.
(d) "CLASS" means the two or more Classes as may be established and
designated from time to time by the Trustees pursuant to Section 6.13 hereof.
(e) "CUSTODIAN" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
- 2 -
<PAGE>
(f) "DECLARATION" means this Declaration of Trust, as amended and in
effect from time to time. Reference in this Declaration of Trust to
"DECLARATION," "HEREOF," "HEREIN," "HEREBY" and "HEREUNDER" shall be deemed to
refer to this Declaration rather than the article or section in which such words
appear.
(g) "DISTRIBUTOR" means a party, other than the Trust, to an agreement
described in Section 4.2 hereof.
(h) "FUNDAMENTAL POLICIES" as used with respect to any Series or Class of
Shares of the Trust, means the investment policies and restrictions applicable
to such Series or Class which are set forth in the Prospectus or the Statement
of Additional Information relating to such Series or Class and are designated
therein as fundamental policies.
(i) "HIS" shall include the feminine and neuter, as well as the masculine
genders.
(j) "INVESTMENT ADVISER" means a party, other than the Trust, to an
agreement described in Section 4.1 hereof.
(k) "MUNICIPAL BONDS" means obligations issued by or on behalf of states,
territories of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is exempt from regular Federal income tax.
(l) "1940 ACT" means the provisions of the Investment Company Act of 1940
and the rules and regulations thereunder as amended from time to time and any
order or orders thereunder which may from time to time be applicable to the
Trust.
(m) "PERSON" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(n) "PROSPECTUS" as used with respect to any Shares of the Trust, means
the prospectus relating to such Shares, which constitutes part of the currently
effective Registration Statement of the Trust under the Securities Act of l933,
as such prospectus may be amended or supplemented from time to time.
(o) "SHAREHOLDER" means a record holder of Outstanding Shares.
(p) "SHAREHOLDER SERVICING AGENT" means the party, other than the Trust,
to the agreement described in Section 4.3 hereof.
- 3 -
<PAGE>
(q) "SHARES" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series and Classes which may be established
by the Trustees and includes fractions of Shares as well as whole Shares.
"Outstanding Shares" means those shares shown from time to time on the books of
the Trust or its Transfer Agent as then issued and outstanding, but shall not
include Shares which have been redeemed or repurchased by the Trust and which
are at the time held in the Treasury of the Trust.
(r) "SINGLE CLASS VOTING," as used with respect to any matter to be acted
upon at a meeting or by written consent of Shareholders, means that on such
matter each holder of one or more Shares shall be entitled to one vote for each
Share standing in his or her name on the records of the Trust, irrespective of
Series or Class, as applicable, and all outstanding Shares of all Series or
Classes, as applicable, vote as a single Class.
(s) "STATEMENT OF ADDITIONAL INFORMATION," as used with respect to any
Shares of the Trust, means the statement of additional information relating to
such Shares, which constitutes part of the currently effective Registration
Statement of the Trust under the Securities Act of l933, as such statement of
additional information may be amended or supplemented from time to time.
(t) "TRANSFER AGENT" means any one or more Persons other than the Trust
who maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
(u) "TRUST" means the trust established hereby by whatever name it may
then be known.
(v) "TRUST PROPERTY" means any and all assets and property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust or the Trustees.
(w) "TRUSTEES" means the individuals who have signed this Declaration, so
long as they shall continue in office in accordance with the provisions hereof,
and all other individuals who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and reference herein to Trustee or the Trustees shall refer to such
individual or individuals in their capacity as trustees hereunder.
- 4 -
<PAGE>
ARTICLE II
TRUSTEES
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall such number
as shall be fixed from time to time by a written instrument signed by a majority
of the Trustees, PROVIDED, HOWEVER, that the number of Trustees shall in no
event be more than fifteen (15) or less than one (1).
SECTION 2.2. ELECTION OR APPOINTMENT AND TERM. Except for the initial
Trustees named herein or the Trustees appointed to fill vacancies pursuant to
Section 2.4 hereof, the Trustees shall be elected by the Shareholders owning of
record a plurality of the Shares voting at a meeting of Shareholders. Such a
meeting shall be held on a date fixed by the Trustees. Except in the event of
resignation or removals pursuant to Section 2.3 hereof, each Trustee shall hold
office until such time as less than a majority of the Trustees holding office
have been elected by Shareholders. In such event the Trustees then in office
will call a Shareholders' meeting for the election of Trustees. Except for the
foregoing circumstances, the Trustees shall continue to hold office and may
appoint successor Trustees.
SECTION 2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees, and such resignation shall be
effective upon such delivery or at any later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number
of Trustees after such removal shall not be less than one) with cause, by the
action of two-thirds of the remaining Trustees; Any Trustee may be removed at
any meeting of Shareholders by vote of two-thirds of the Outstanding Shares.
The Trustees shall promptly call a meeting of the shareholders for the purpose
of voting upon the question of removal of any such Trustee or Trustees when
requested in writing so to do by the holders of not less than ten percent of the
Outstanding Shares and, in that connection, the Trustees will assist shareholder
communications to the extent provided for in Section 16(c) under the 1940 Act.
Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in his name. Upon the incapacity or death of
any Trustee, his legal representative shall execute and deliver on his behalf
such documents as the remaining Trustees shall require as provided in the
preceding sentence. However, the execution and delivery of such documents by a
former Trustee or his legal representative shall not be requisite to the vesting
of title to the Trust
- 5 -
<PAGE>
Property in the remaining Trustees as provided in Section 3.3 hereof.
SECTION 2.4. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of such Trustee's death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16 of the 1940 Act, the remaining Trustees, or, if only
one Trustee shall then remain in office, the sole remaining Trustee, shall
appoint such individual to fill such vacancy as they or he, in their or his
discretion, shall see fit, made by a written instrument signed by a majority of
the Trustees then in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement or
resignation of a Trustee or an increase in the number of Trustees; PROVIDED,
that such appointment shall not become effective prior to such retirement or
resignation or such increase in the number of Trustees. Whenever a vacancy in
the number of Trustees shall occur, until such vacancy is filled as provided in
this Section 2.4, the Trustees in office, regardless of their number, shall have
all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A written instrument certifying
the existence of such vacancy signed by a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
- 6 -
<PAGE>
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2. BUSINESS AND INVESTMENTS. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, securities,
including shares of open-end investment companies; common and preferred stocks;
warrants; bonds, debentures, bills, time notes and all other evidences of
indebtedness; negotiable or non-negotiable instruments; government securities,
including securities of any state, municipality or other political subdivision
thereof, or any governmental or quasi-governmental agency or instrumentality;
and money market instruments including bank certificates of deposit, finance
paper, commercial paper, bankers acceptances and all kinds of repurchase
agreements, of any corporation, company, trust, association, firm or other
business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or quasi-
governmental agency or instrumentality.
- 7 -
<PAGE>
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend, and to pledge any such securities and to enter
into repurchase agreements and forward foreign currency exchange contracts, to
purchase and sell futures contracts on securities, securities indices and
foreign currencies, to purchase or sell options on such contracts, foreign
currency contracts, and foreign currencies and to engage in all types of hedging
and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities, repurchase agreements, futures contracts and options and
other assets included in the Trust Property, including the right to vote thereon
and otherwise act with respect thereto and to do all acts for the preservation,
protection, improvement and enhancement in value of all such assets.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.
(f) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest, and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(g) To enter into a plan of distribution and any related agreements
whereby the Trust may finance directly or indirectly any activity which is
primarily intended to result in the sale of Shares.
(h) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses (a) through (h) shall be construed both as objects
and powers, and the foregoing enumeration of specific powers shall not be held
to limit or restrict in any manner the general powers of the Trustees.
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The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property,
including the property of any Series of the Trust, shall be vested in the
Trustees as joint tenants, except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, PROVIDED that the interest
of the Trust therein is appropriately protected. The right, title and interest
of the Trustees in the Trust Property shall vest automatically in each Person
who may hereafter become a Trustee. Upon the termination of the term of office
of a Trustee, such Trustee shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered as provided in Section
2.3 hereof.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares of the
Trust, and, subject to Articles VII, VIII and IX hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or other assets of the Trust, whether constituting capital or surplus or
otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. Subject to any
applicable Fundamental Policies of the Trust or any applicable provision of the
Bylaws, the Trustees shall have power to borrow money, and in this connection
issue notes or other evidence of indebtedness, or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as security the
assets of the Trust, to endorse, guarantee, or undertake the performance of any
obligation, contract or engagement of any other Person and to lend Trust
Property.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
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SECTION 3.7. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
SECTION 3.8. EXPENSES. The Trustees shall have the power to incur and pay
any expenses which, in the opinion of the Trustees, are necessary or incidental
to carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The
Trustees shall fix the compensation of all officers, employees and Trustees of
the Trust.
SECTION 3.9. LITIGATION. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust or the Trust Property, and, out of the Trust Property, to
pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to consent to the
dismissal of any action, suit, proceeding, dispute, claim, or demand, derivative
or otherwise, brought by any person, including a Shareholder in such
Shareholder's own name or in the name of the Trust, whether or not the Trust or
any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, subject to and in accordance with
Sections 2.3 and 2.4 hereof; elect and remove at will such officers and appoint
and terminate such agents or employees as they consider appropriate; and appoint
from their own number and terminate at will any one or more committees which may
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; (d) purchase, and pay for out of Trust Property, insurance
policies insuring the Trust Property, and, to the extent permitted by law and
not inconsistent with any applicable provision of this Declaration or the
Bylaws, insuring the Shareholders, Administrator, Trustees, officers, employees,
agents, Investment Advisers, Distributors, selected dealers or
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independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted to be
taken by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) indemnify any person with whom
the Trust has dealings, including the Shareholders, Trustees, officers,
employees, agents, Investment Advisers, Distributors, selected dealers and
independent contractors of the Trust, to such extent permitted by law and not
inconsistent with any applicable provision of the Bylaws as the Trustees shall
determine; (g) guarantee indebtedness or contractual obligations of others; (h)
determine and change the fiscal year of the Trust and the method by which its
accounts shall be kept; and (i) adopt a seal for the Trust, but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.
SECTION 3.11. MANNER OF ACTING; BYLAWS. Except as otherwise provided
herein, in the Bylaws or in any applicable provision of law, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment by
means of which all persons participating in the meeting can hear each other, or
by written consent or consents of all the Trustees. The Trustees may adopt
Bylaws not inconsistent with this Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such Bylaws to the extent such
power is not reserved to the Shareholders by express provision of such Bylaws.
Notwithstanding the foregoing provisions of this Section 3.11 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
SECTION 3.12. PRINCIPAL TRANSACTIONS. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or
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officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with the Investment
Adviser, Distributor or Transfer Agent or with any Interested Person or such
Person; and the Trust may employ any such Person, or firm or company in which
such Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or Custodian upon customary terms.
ARTICLE IV
CONTRACTS
SECTION 4.1. ADVISORY OR MANAGEMENT CONTRACT. The Trustees may in their
discretion from time to time enter into investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish the Trust
such management, investment advisory or supervisory, administrative,
accounting, legal, statistical and research facilities and services, and such
other facilities and services, if any, as the Trustees shall from time to time
consider desirable, all upon such terms and conditions as the Trustees may in
their discretion determine, including the grant of authority to such other party
to determine what securities shall be purchased or sold by the Trust and what
portion of its assets shall be uninvested, which authority shall include the
power to make changes in the investments of the Trust or any Series.
The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.
SECTION 4.2. DISTRIBUTION CONTRACT. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of the Shares at a price based on the net
asset value per Share (as described in Article VIII hereof), pursuant to which
the Trustees may either agree to sell the Shares to the other party to the
contract or appoint such other party their sales agent for the Shares, and in
either case on such terms and conditions as the Trustees may in their discretion
determine to be not inconsistent with this Declaration, the applicable
provisions of the 1940 Act and any applicable provisions of the Bylaws of the
Trust. Such contract may also provide for the repurchase of the Shares by such
other party as agent of the
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Trustees. Such contract may also further provide that such other party may
enter into selected dealer agreements with registered securities dealers to
further the purpose of the distribution or repurchase of the Shares. The
following services may be provided by one or more Persons.
SECTION 4.3. TRANSFER AGENT AND SHAREHOLDER SERVICING CONTRACT. The
Trustees may in their discretion from time enter into a shareholder servicing
agreement whereby the other party to such agreement shall undertake to furnish
transfer agency, shareholder and dividend disbursing services to the Trust and
its Shareholders. The agreement shall contain such terms and conditions as the
Trustees may in their discretion determine to be not inconsistent with this
Declaration and any applicable provisions of the 1940 Act and the Bylaws of the
Trust. Such services may be provided by one or more Persons.
SECTION 4.4. CUSTODIAN. The Trustees may appoint a bank or trust company
having an aggregate capital, surplus and undivided profits (as shown in its last
published report) of at least two million dollars ($2,000,000) as custodian of
the securities and cash of the Trust. The custodian agreement shall contain
such terms and conditions as the Trustees in their discretion determine to be
not inconsistent with this Declaration, the applicable provisions of the 1940
Act and any applicable provisions of the Bylaws of the Trust.
SECTION 4.5. ADMINISTRATOR. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract ("Administrator") shall undertake to
furnish such administrative services to the Trust as the Trustees shall from
time to time considerable desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws. Such services may be provided by one or more Persons.
SECTION 4.6. AFFILIATIONS OF TRUSTEES OR OFFICERS, ETC.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser or distributor of or for any partnership, corporation, trust,
association or other organization or of or for any parent or affiliate of
any organization, with which a contract of the character described in this
Article above or for services as Custodian, Administrator, Transfer Agent
or disbursing agent or for related services may have been or may hereafter
be made, or that any such organization, or any parent or
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affiliate thereof, is a Shareholder of or has an interest in the Trust, or
that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in this
Article above or for services as Custodian, Administrator, Transfer Agent
or disbursing agent or for related services may have been or may hereafter
be made also has any one or more of such contracts with one or more other
partnerships, corporations, trusts, associations or other organizations, or
has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. Subject to Section 5.3 hereof, no Trustee, officer, employee or agent of
the Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Shareholders, in connection with Trust Property or
the affairs of the Trust, and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in connection with the
affairs of the Trust. If any Shareholder, Trustee, officer, employee or agent,
as such, of the Trust is made a party to any suit or proceeding to enforce any
such liability, he shall not, on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each Shareholder harmless from
and against all claims and liabilities to which such Shareholder may become
subject by reason of his being or having been a Shareholder, and shall reimburse
such Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability; PROVIDED, that such indemnity or
reimbursement shall be made from assets (or proceeds thereof or income
therefrom) of the one or more Series or Classes of Shares of the Trust of which
such Shareholder is a holder and in respect of which such claim or liability
arose and not from the assets (or proceeds or income therefrom) of any other
Series or Classes of Shares of the Trust. The rights accruing to a Shareholder
under this Section 5.1 shall not impair any other right to which such
Shareholder may be lawfully entitled, nor shall anything herein contained
restrict
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the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. Subject to Section 5.3
hereof, no Trustee, officer, employee or agent of the Trust shall be liable to
the Trust or to any Shareholder, Trustee, officer, employee or agent of the
Trust for any action or failure to act (including without limitation the failure
to compel in any way any former or acting Trustee to redress any breach of
trust).
SECTION 5.3. NO PROTECTION AGAINST CERTAIN 1940 ACT LIABILITIES. Nothing
contained in Sections 5.1 or 5.2 hereof or in any provision of the By-laws shall
protect any Trustee officer of the Trust from any liability to the Trust or its
Shareholders for which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Nothing contained in Sections 5.1 or 5.2
hereof or in any agreement of the character described in Article IV hereof shall
protect any Investment Adviser to the Trust or Distributor of its Shares against
any liability to the Trust or its Shareholders to which he or it would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his or its duties to the Trust, or by reason of his or its
reckless disregard of his or its obligations and duties under the agreement
pursuant to which he or it serves as Investment Adviser to the Trust or
Distributor of its Shares.
SECTION 5.4. MANDATORY INDEMNIFICATION.
(a) Subject to paragraph (c) hereof, every Person who is, or has been, a
Trustee, officer, employee or agent of the Trust shall be indemnified by the
Trust to the fullest extent permitted by law against all liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, employee or agent and
against amounts paid or incurred by him in the settlement thereof in such
manner, PROVIDED, that, to the extent any claim, action, suit or proceeding
involves any act or omission of such Person with respect to one or more
particular Series or Classes of Shares of the Trust or the assets or operations
of one or more Series or Classes of Shares, such indemnification shall be
provided only from the assets (or proceeds thereof or income therefrom) of such
one or more Series or Classes of Shares and not from the assets (or proceeds
thereof or income therefrom) of any other Series or Class of Shares of the
Trust.
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(b) The words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof, or the
Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b)(i) or (b)(ii) resulting in
a payment by a Trustee or officer, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement or other
disposition; or
(B) based upon a review of readily available facts (as opposed
to a full trial-type inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter (provided that a majority
of the Disinterested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(d) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors, administrators and assigns
of such a person. Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust
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other than Trustees and officers may be entitled by contract or otherwise under
law.
(e) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section may be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section, a "Disinterested Trustee" is one who is not
(i) an Interested Person of the Trust (including anyone who has been
exempted from being an Interested Person by any rule, regulation or order
of the Commission), or (ii) involved in the claim, action, suit or
proceeding.
SECTION 5.5. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
SECTION 5.6. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC.
No purchaser, lender or other Person dealing with the Trustees or with any
officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every contract, undertaking, instrument,
certificate, Share or obligation or other security of the Trust, and every other
act or thing whatsoever executed in connection with the Trust, shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees or agents of the Trust. Every written agreement,
contract, instrument, undertaking, certificate, Share or other security of the
Trust executed, made or issued by the Trustees may recite that the same
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is executed, made or issued by them not individually, but as Trustees under this
Declaration, and that the obligations created or evidenced thereby are not
binding upon any of the Trustees or Shareholders individually, but bind only the
Trust Property, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees or Shareholders individually. The Trustees shall at all times maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
SECTION 5.7. RELIANCE ON EXPERTS, ETC. Each Trustee, officer or employee
of the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by the Investment Adviser, the Distributor,
Shareholder Servicing Agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. BENEFICIAL INTEREST. The interest of the Trust shall be
divided into transferable units to be called Shares of Beneficial Interest,
without par value. The number of such Shares of Beneficial Interest authorized
hereunder is unlimited. Except as otherwise provided in this Section 6.12 and
in Section 6.13 hereof, each Share shall represent an equal proportionate share
in the net assets of the Trust. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend or distribution in
Shares or a division of Shares, shall be fully paid and nonassessable.
SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described shall be vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition or division
of any property, profits, rights or interests of the Trust nor can they be
called upon to assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares.
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The Shares shall be personal property giving only the rights specifically set
forth in this Declaration. Shares shall not entitle any holder thereof to
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to any Series of Shares.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 6.4. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time without vote of the Shareholders, issue Shares of any Series
in addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares (or
Series or Classes thereof) into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Trust. Contributions to
the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or 1/1,000ths of a Share or integral multiples thereof.
Reductions in the number of outstanding Shares of any Series with respect
to which the Trustees shall have established a policy of maintaining a constant
net asset value per Share of such Series may be made pursuant to the provisions
of Section 7.8 hereof in order to satisfy such policy.
SECTION 6.5. REGISTER OF SHARES. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the
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By-laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
hereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
SECTION 6.6. TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matters as may reasonably be required. Upon such
delivery the transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor any
transfer agent or registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
SECTION 6.7. NOTICES, REPORTS. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the register of the Trust. A
notice of a meeting, an annual report and any other communication to
Shareholders need not be sent to a Shareholder (i) if an annual report and a
proxy statement for two consecutive shareholder meetings have been mailed to
such Shareholder's address and have been returned as undeliverable, (ii) if all,
and at least two, checks (if sent by first class mail) in payment of dividends
on Shares during a twelve-month period have been mailed to such Shareholder's
address and have been returned as undeliverable or (iii) in any other case in
which a proxy statement concerning a meeting of security holders is not required
to be given pursuant to the Commission's proxy rules as from time to time in
effect under the Securities Exchange Act of
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1934. However, delivery of such proxy statements, annual reports and other
communications shall resume if and when such Shareholder delivers or causes to
be delivered to the Trust written notice setting forth such Shareholder's then
current address.
SECTION 6.8. TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 6.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
SECTION 6.9. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election and removal of Trustees as provided in Article II
hereof; (ii) with respect to any investment advisory or management contract
entered into pursuant to Article IV hereof; (iii) with respect to termination of
the Trust as provided in Section 9.2 hereof, (iv) with respect to any amendment
of this Declaration to the extent and as provided in Section 9.5 hereof; (v)
with respect to any merger, consolidation or sale of assets as provided in
Section 9.4 hereof; (vi) with respect to incorporation of the Trust, or any
Series to the extent and as provided in Section 9.5 hereof; (vii) to the same
extent as the stockholders of a Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Series or Class thereof or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); (viii) with respect to
any plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940
Act; and (ix) with respect to such additional matters relating to the Trust as
may be required by this Declaration, the By-laws or any registration of the
trust as an investment company under the 1940 Act with the Commission (or any
successor agency) or as to which the Trustees in their discretion shall
determine such Shareholder vote to be required by law or otherwise to be
necessary, appropriate or advisable.
Each whole Share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that the Trustees may, in conjunction with
the establishment of any Series or Class of Shares, establish or reserve the
right to establish conditions under which the several Series or Classes shall
have separate voting rights or, if a Series or Class would not, in the sole
judgment of the Trustees, be materially affected by a proposal, no voting
rights. Shares held in the treasury of the Trust as of the record date, as
determined in accordance with the Bylaws, shall not be voted. There shall be no
cumulative
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voting of Shares in any election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the Bylaws to be taken by Shareholders.
The Bylaws may include further provisions relating to Shareholders' votes and
meetings and related matters.
SECTION 6.10. SHAREHOLDER APPROVAL. Unless otherwise provided for in this
Declaration, all matters subject to a Shareholder vote, as described in Section
6.9 hereof, shall require the approval of a majority of the Outstanding Shares
entitled to vote.
SECTION 6.11. MEETINGS OF SHAREHOLDERS. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of the Trust entitled
to vote at such meeting. Any such request shall state the purpose of the
proposed meeting. At any meeting of Shareholders of the Trust or of any Series
of the Trust, a Shareholder Servicing Agent may vote any shares as to which such
Shareholder Servicing Agent is the agent of record and which are not otherwise
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for Quorum purposes.
SECTION 6.12. SERIES OF SHARES. The Trustees, in their discretion, may
authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all Series as the context may require.
Without limiting the authority of the Trustees to establish and designate
any additional Series of Shares (or Classes of Shares under Section 6.13
herein), there shall be established one Series to be known as the "Northstar
Advantage _________________ Fund."
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(a) All provisions herein relating to the Trust shall apply equally to
each Series of the Trust except as the context requires otherwise.
(b) The number of authorized Shares and the number of Shares of each
Series of Shares that may be issued shall be unlimited. The Trustees may
classify or reclassify any Shares of any Series of Shares previously issued and
reacquired of any Series into one or more Series that may be established and
designated from time to time. The Trustees may hold as treasury Shares and
reissue as Shares (of the same or some other Series), for such consideration as
provided in Article VIII hereof and on such terms as they may determine, or
cancel, any Shares of any Series reacquired by the Trust in their discretion
from time to time.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from reinvestment
of such proceeds in whatever form the same may be, shall irrevocably belong to
that Series, for all purposes subject only to the rights of creditors, and
except as may otherwise be required by applicable laws, and shall be so recorded
upon the books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series, the Trustees shall
allocate them among any one or more of the Series, established and designated
from time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such allocation by the Trustees shall
be conclusive and binding upon the Shareholders of all Series for all purposes.
(d) The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the Series established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all Series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the
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Shareholders. The assets of a particular Series of the Trust shall, under no
circumstances, be charged with liabilities attributable to any other Series of
the Trust. All persons extending credit to, or contracting with or having any
claim against a particular Series of the Trust shall look only to the assets of
that particular Series for payment of such credit, contract or claim. No
Shareholder or former Shareholder of any Series shall have any claim on or right
to any assets allocated or belonging to any other Series.
(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains made with respect to such Series. Upon redemption of his Shares
or indemnification for liabilities incurred by reason of his being or having
been a Shareholder of a Series, such Shareholder shall be paid solely out of the
funds and property of such Series of the Trust. Upon liquidation or termination
of a Series of the Trust, Shareholders of such Series shall be entitled to
receive a pro rata share of the net assets of such Series. A Shareholder of a
particular Series of the Trust shall not be entitled to participate in a
derivative or class action on behalf of any other Series or the Shareholders of
any other Series of the Trust.
(f) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and dividend
rights, of each Series. Subject to the provisions of Section 6.13 and this
Section 6.12, all Shares of all Series or Classes shall have identical rights
and privileges, except insofar as variations thereof among Series or Classes
shall have been determined and fixed by the Trustees.
(g) Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of any
Series shall have the right to convert or exchange said Shares for or into
Shares of one or more other Series in accordance with such requirements and
procedures as may be established by the Trustees.
(h) The establishment and designation of any Series of Shares in addition
to those established and designated in this Section shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights, preferences, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of such Series, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by an instrument
executed by a majority of their number abolish
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that Series and the establishment and designation thereof. Except as otherwise
provided in this Article, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each Series of
Shares. Each instrument referred to in this paragraph shall have the status of
an amendment to this Declaration.
(i) The Trustees may divide or combine the Shares of any Series into a
greater or lesser number of Shares of that Series without thereby changing the
proportionate interests in the assets of that Series.
SECTION 6.13. CLASS DESIGNATION. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different Classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
Without limiting the authority of the Trustees to establish and designate
any additional Classes of Shares, the Trustees hereby establish and designate
the following Class of Shares: The Northstar Advantage _________________ Fund
- -- Class T; and the Trustees hereby redesignate all Outstanding Shares of the
Trust as Northstar Advantage _________________ Fund -- Class T Shares.
(a) Shares of each Class of Shares may vary as to fees and expenses,
purchase, redemption and conversion rights, special and relative rights as to
dividends, rights upon liquidation, and conditions under which the several
Classes shall have separate voting rights, as set forth in the then current
prospectus of the Trust. The Trustees may from time to time reallocate assets
and expenses or to change the designation of any Class, or to otherwise change
the special and relative rights of the Shareholders of a Class.
(b) All provisions herein relating to the Trust, or any Series of the
Trust, shall apply equally to each Class of Shares of the Trust, except as the
context requires otherwise.
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(c) The number of Shares of each Class that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares of the
Trust or any Series or any Shares previously issued and reacquired of any Class
of the Trust or of any Series into one or more Classes that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other Class), reissue for such consideration and on such terms
as they may determine, or cancel any Shares of any Class required by the Trust
at their discretion from time to time.
(d) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.
(e) The establishment and designation of any Class of Shares in addition
to those established and designated in this section, shall be effective upon the
execution of a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
Class, or as otherwise provided in such instrument. The Trustees may, by an
instrument executed by a majority of their number, abolish any Class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
SECTION 6.14. ASSENT TO DECLARATION OF TRUST. Every Shareholder, by
virtue of having become a shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.
ARTICLE VII
REDEMPTIONS
SECTION 7.1. REDEMPTIONS. All Shares of the Trust shall be redeemable, at
the redemption price determined in the manner set out in this Declaration.
Redeemed or repurchased Shares may be resold by the Trust.
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The Trust shall redeem the Shares upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at such office or agency as may be designated from
time to time for that purpose in the Trust's then effective registration
statement under the Securities Act of 1933. The Trustees may from time to time
specify additional conditions, not inconsistent with the 1940 Act, regarding the
redemption of Shares in the Trust's the effective registration statement under
the Securities Act of 1933.
SECTION 7.2. PRICE. Shares shall be redeemed at their net asset value
determined as set forth in Section 8.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 8.1 hereof after
receipt of such application.
SECTION 7.3. PAYMENT. Payment for such Shares shall be made in cash or in
property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 7.4 hereof.
SECTION 7.4. EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE.
If, pursuant to Section 7.9 hereof, the Trustees shall declare a suspension of
redemption, the rights of Shareholders (including those who shall have applied
for redemption pursuant to Section 7.1 hereof but who shall not yet have
received payment) to have Shares redeemed and paid for by the Trust shall be
suspended until the termination of such suspension is declared. Any record
holder who shall have his redemption right so suspended may, during the period
of such suspension, by appropriate written notice of revocation at the office or
agency where application was made, revoke any application for redemption not
honored and withdraw any certificates on deposit. The redemption price of
Shares for which redemption applications have not been revoked shall be the net
asset value of such Shares next determined as set forth in Section __ after the
termination of such suspension, and payment shall be made within seven (7) days
after the date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.
SECTION 7.5. REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY; DISCLOSURE OF HOLDING. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
of the Trust (or of
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any Series of Shares of the Trust) has or may become concentrated in any Person
to an extent which would disqualify the Trust (or such Series) as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption from any such Person a number, or principal amount, of Shares of the
Trust (or of such Series) sufficient, in the opinion of the Trustees, to
maintain or bring the direct or indirect ownership of Shares of the Trust (or of
such Series) into conformity with the requirements for such qualification, and
(ii) to refuse to transfer or issue Shares of the Trust (or of such Series) to
any Person whose acquisition of the Shares of the Trust (or of such Series)
would, in the opinion of the Trustees, result in such disqualification. The
redemption shall be effected at the redemption price and in the manner provided
in this Article.
The holders of Shares of the Trust shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares of the Trust as the Trustees deem necessary to comply with
the provisions of the Internal Revenue Code of 1986, as amended or any successor
statute, or to comply with the requirements of any other taxing authority.
SECTION 7.6. REDEMPTION OF SHAREHOLDER'S INTEREST. The Trust shall have
the right at any time without prior notice to the Shareholder to redeem Shares
of any Shareholder for their then current net asset value per Share if at such
time the Shareholder owns Shares having an aggregate net asset value of less
than an amount set from time to time by the Trustees subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all Shareholders of its intention to avail itself of such
right, either by publication in the Trust's registration statement, if any, or
by such other means as the Trustees may determine.
SECTION 7.7. REPURCHASE OF SHARES BY AGREEMENT WITH SHAREHOLDER. The
Trust may repurchase its Shares from any Shareholder directly or through an
agent designated by it for the purpose, by agreement with such Shareholder, at a
price not exceeding the redemption price of such Shares determined pursuant to
this Article, provided payment is not made for the Shares prior to the time as
of which such a price is determined.
SECTION 7.8. REDUCTIONS IN NUMBER OF OUTSTANDING SHARES PURSUANT TO NET
ASSET VALUE FORMULA. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.5.
SECTION 7.9. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of
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any period (i) during which the New York Stock Exchange is closed other than
customary week-end and holiday closings, (ii) during which trading on the New
York Stock Exchange is restricted, (iii) during which an emergency exists as a
result of which disposal by the Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust fairly
to determine the value of its net assets, or (iv) during any other period when
the Commission may for the protection of Shareholders of the Trust by order
permit suspension of the right of redemption or postponement of the date of
payment or redemption; provided that applicable rules and regulations of the
Commission shall govern as to whether the conditions prescribed in (ii), (iii),
or (iv) exist. Such suspension shall take effect at such time as the Trust
shall specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no right
of redemption or payment on redemption until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which said stock exchange shall have reopened or the period
specified in (ii) or (iii) shall have expired (as to which in the absence of an
official ruling by the Commission, the determination of the Trust shall be
conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value existing after the termination of the suspension.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DIVIDENDS AND DISTRIBUTIONS
SECTION 8.1. NET ASSET VALUE. The value of the assets of the Trust or any
Series of the Trust shall be determined by appraisal of the securities of the
Trust or allocated to such Series, such appraisal to be on the basis of the
amortized cost of such securities in the case of money market securities, market
value in the case of other securities, or by such other method as shall be
deemed to reflect the fair value thereof, determined in good faith by or under
the direction of the trustees. From the total value of said assets, there shall
be deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series or Class thereof which shall be deemed appropriate.
The net asset value of a Share shall be determined by dividing the net asset
value of the Class, or, if no Class has been established, of the Series, or, if
no Series has been established, of the Trust, by the number of Shares of that
Class,
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or Series, or of the Trust, as applicable, outstanding. The net asset value of
Shares of the Trust or any Class or Series of the Trust shall be determined
pursuant to the procedure and methods prescribed or approved by the Trustees in
their discretion and as set forth in the most recent Registration Statement of
the Trust as filed with the Securities and Exchange Commission pursuant to the
requirements of the Securities Act of 1933, as amended, the Investment Company
Act of 1940, as amended, and the Rules thereunder. The net asset value of the
Shares shall be determined at least once on each business day, as of the close
of trading on the New York Stock Exchange or as of such other time or times as
the Trustees shall determine. The power and duty to make the daily calculations
may be delegated by the Trustees to the Investment Adviser, the Custodian, the
Transfer Agent or such other Person as the Trustees may determine by resolution
or by approving a contract which delegates such duty to another Person. The
Trustees may suspend the daily determination of net asset value to the extent
permitted by the 1940 Act.
SECTION 8.2. NET INCOME. Constant Net Asset Value; Reduction of
Outstanding Shares. Subject to Section 6.12 hereof, the net income of the Trust
or any Series (or Class) shall be determined in such manner as the Trustees
shall provide by resolution. Expenses of the Trust or a Series, including the
advisory or management fee, shall be accrued each day. Such net income may be
determined by or under the direction of the Trustees as of the close of trading
on the New York Stock Exchange on each day on which such Exchange is open or as
of such other time or times as the Trustees shall determine, and, except as
provided herein, all the net income of the Trust or any Series, as so
determined, may be declared as a dividend on the Outstanding Shares of the Trust
or such Series. If, for any reason, the net income of the Trust or any Series,
determined at any time is a negative amount, the Trustees shall have the power
with respect to the Trust or such Series (i) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, or (ii) to reduce the number of Outstanding Shares of the Trust or
such Series by reducing the number of Shares in the account of such Shareholder
by that number of full and fractional Shares which represents the amount of such
excess negative net income, or (iii) to cause to be recorded on the books of the
Trust or such Series an asset account in the amount of such negative net income,
which account may be reduced by the amount, provided that the same shall
thereupon become the property of the Trust or such Series with respect to the
Trust or such Series and shall not be paid to any Shareholder, of dividends
declared thereafter upon the Outstanding Shares of the Trust or such Series on
the day such negative net income is experienced, until such asset account is
reduced to zero; or (iv) to combine the methods described in clauses (i) and
(ii) and (iii) of this sentence, in order to cause the net asset value per Share
of the Trust or such Series
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to remain at a constant amount per Outstanding Share immediately after each such
determination and declaration. The Trustees shall also have the power to fail
to declare a dividend out of net income for the purpose of causing the net asset
value per Share to be increased to a constant amount. The Trustees shall not be
required to adopt, but may at any time adopt, discontinue or amend the practice
of maintaining the net asset value per Share of the Trust or a Series at a
constant amount.
SECTION 8.3. DIVIDENDS AND DISTRIBUTIONS. The Trustees shall have the
power to declare and pay ratably to the Shareholders of any Series (or Class) as
dividends or distributions on their Shares, such proportion of the net income,
capital gains, surplus (including paid-in surplus), capital or assets of such
Series as the Trustees may deem proper. Dividends and distributions on any
Series of Shares may be paid with such frequency (which may be daily or at such
other intervals as shall be specified in a standing resolution or resolutions
adopted by the Trustees) and may be paid in cash or other property, or in
additional Shares, in such manner, at such times, and on such terms as the
Trustees shall determine. Dividends and distributions may be paid to the
Shareholders of record at the time of declaring the dividend or distribution or
to the Shareholders of record at such other date as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, Outstanding Shares shall exclude Shares for
which orders have been placed subsequent to a specified time on the date the
distribution is declared or on the next preceding day if the distribution is
declared as of a day on which Boston banks are not open for business, all as
described in the registration statement under the Securities Act of 1933. The
Trustees may always retain from the net income of the Trust such amount as they
may deem necessary to pay debts or expenses or to meet obligations of the Trust
or as they may deem desirable to use in the conduct of the affairs or to retain
for future requirements of the business of the Trust. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books of the Trust, the
foregoing provisions of this Section 8.3 shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal year as
income dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust to avoid or reduce liability for taxes.
SECTION 8.4. ALLOCATION BETWEEN PRINCIPAL AND INCOME. The Trustees shall
have full discretion to determine whether any cash or property received shall be
treated as income or as principal
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and whether any item of expense shall be charged to the income or the principal
amount, and their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much if any of the value thereof shall be treated as income, the balance, if
any, to be treated as principal.
SECTION 8.5. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the net
asset value per Share of outstanding Shares, the net income of the Trust, or for
the declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF
TRUST; AMENDMENT; MERGERS, ETC.
SECTION 9.1. DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST. (a) The Trust or any Series may be
terminated by the vote or written consent of a majority of the Trustees, or by
the approval of a majority of the Outstanding Shares entitled to vote, at any
meeting of Shareholders. Upon any such termination:
(i) The Trust, or Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
or Series terminated and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or Series
terminated shall have been wound up, including the power to fulfill or
discharge the contracts of the Trust or Series, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part
of its remaining Trust Property to one or more persons at public or private
sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind and discharge or pay its
liabilities, and to do all other acts appropriate to liquidate its
business.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem
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necessary for their protection, the Trustees may distribute the remaining
Trust Property of the Trust or Series terminated in cash or in kind or
partly each, among its Shareholders according to their respective rights
and interests.
(b) After termination of the Trust and distribution to the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders of the Trust or Series terminated shall thereupon cease.
SECTION 9.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended by
a vote of the majority of the Outstanding Shares entitled to vote. Amendments
shall be effective upon the taking of action as provided in this section or at
such later time as shall be specified in the applicable vote or instrument. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders if they deem it necessary to conform this Declaration to the
requirements of applicable federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code (including those provisions of such Code relating to the retention
of the exemption from federal income tax with respect to dividends paid by the
Trust out of interest income received on Municipal Bonds), but the Trustees
shall not be liable for failing so to do. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
necessary or desirable to change the name of the Trust or to make any other
changes in the Declaration which do not materially adversely affect the rights
of Shareholders hereunder, or where this Declaration specifically provides that
an amendment may be made by the Trustees without Shareholder approval.
(b) No amendment may be made under this Section which would change any
rights with respect to any Shares of the Trust or Series by reducing the amount
payable thereon upon liquidation of the Trust or Series or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote of a
majority of the Outstanding Shares entitled to vote. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the
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Trustees, shall be conclusive evidence of such amendment when lodged among the
records of the Trust.
SECTION 9.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any
Series or Class may merge into or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange any or
all or substantially all of its Trust Property, including its good will, upon
such terms and conditions and for such consideration when and as authorized at
any meeting of Shareholders of the Trust or Series called for the purpose by the
affirmative vote of the holders of a majority of the Outstanding Shares entitled
to vote.
SECTION 9.5. INCORPORATION. With the approval of the holders of a
majority of the Shares of the Trust or any Series Outstanding and Entitled to
Vote, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all or any
part of the Trust Property or the property of any Series or to carry on any
business in which the Trust or the Series shall directly or indirectly have any
interest, and to sell, convey and transfer all or any part of the Trust Property
or any Series to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust or any Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any Series or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organizations or entities.
ARTICLE X
FINANCIAL REPORTS; BOOKS AND RECORDS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus or
statement of additional information, of the transactions of the Trust, including
financial statements which shall at least annually be certified by independent
public accountants. Shareholders may inspect the books and records of the Trust
only at the discretion of the Trustees.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto, or other
document required to be so filed, shall be filed in the office of the Secretary
of The Commonwealth of Massachusetts and in such other places as may be required
under the laws of The Commonwealth of Massachusetts and may also be filed or
recorded in such other places as the Trustees deem appropriate. Unless the
amendment is embodied in an instrument signed by a majority of the Trustees,
each such amendment or document so filed shall be accompanied by a certificate
signed and acknowledged by a Trustee or by the Secretary or any Assistant
Secretary of the Trust stating that such action was duly taken in a manner
provided herein. Such amendment or document shall become effective as provided
by applicable law. A restated Declaration, amending and integrating into a
single instrument all of the provisions of this Declaration which are then in
effect and operative, may be executed from time to time by a majority of the
Trustees and shall be conclusive evidence of all amendments contained therein
and may thereafter be referred to in lieu of the original Declaration and the
various amendments thereto. The restated Declaration may include any amendment
which the Trustees are empowered to adopt, whether or not such amendment has
been adopted prior to the execution of the restated Declaration.
SECTION 11.2. RESIDENT AGENT. To the extent required, the Trustees shall
have power to appoint a resident agent for the Trust in The Commonwealth of
Massachusetts, and from time to time to replace the resident agent so appointed.
SECTION 11.3. GOVERNING LAW. This Declaration is executed and delivered
by the Trustees with reference to the laws of The Commonwealth of Massachusetts,
and the rights of all parties and the validity and construction of every
provision hereof shall be subject to and construed according to the laws of said
Commonwealth without regard to the choice of law rules thereof.
SECTION 11.4. COUNTERPARTS. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Trust, certifying to: (i)
the number or identity of Trustees or Shareholders, (ii) the due
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authorization of the execution of any instrument or writing, (iii) the form of
any vote passed at a meeting of Trustees or Shareholders, (iv) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (v) the form
of any Bylaws adopted by or the identity of any officers elected by the
Trustees, or (vi) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986, as amended, or any successor statute or with
other applicable laws and regulations, the conflicting provisions shall be
deemed superseded by such law or regulation to the extent required to eliminate
such conflict, if required by law; PROVIDED, HOWEVER, that such determination
shall not affect any of the remaining provisions of this Declaration or render
invalid or improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
SECTION 11.7. USE OF THE NAMES "ADVANTAGE" AND "NORTHSTAR". Northstar
Investment Management Corporation ("NIMC") has consented to the use by the Trust
of the identifying names "Advantage," and "Northstar," which are property rights
of NIMC. The Trust will only use the names "Advantage" and "Northstar" as
components of its name and for no other purpose, and will not purport to grant
to any third party the right to use such names for any purpose. NIMC or any
corporate affiliate thereof may use or grant to others the right to use the
names "Advantage" and "Northstar," as all or a portion of a corporate or
business name or for any commercial purpose, including a grant of such right to
any other investment company. At the request of NIMC, the Trust will take such
action as may be required to provide its consent to the use of the name
"Advantage" or "Northstar," by NIMC or any corporate affiliate of NIMC, or by
any person to whom NIMC or an affiliate of NIMC shall have granted the right to
the use of the name "Advantage" or "Northstar." Upon the termination of any
investment advisory or management agreement or underwriting agreement into which
NIMC, or any affiliate of NIMC, and the
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Trust may enter, the Trust shall, upon request by NIMC, cease to use the name
"Advantage" or "Northstar" as a component of its name, and shall not use such
name or initials as a part of its name or for any other commercial purpose, and
shall cause its officers and trustees to take any and all actions which NIMC may
request to effect the foregoing and to reconvey to NIMC or such corporate
affiliate any and all rights to such name.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands, all as
of the day and year first above written.
-----------------------------------
, as Trustee and
not individually
-----------------------------------
, as Trustee and
not individually
-----------------------------------
, as Trustee and
not individually
-----------------------------------
, as Trustee and
not individually
-----------------------------------
, as Trustee and
not individually
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<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk June 2, 1995
Then personally appeared the above-named ___________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
and _____________________________, who acknowledged the foregoing instrument to
be their free act and deed.
Before me,
------------------------------
Notary Public
My commission expires: ______________
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<PAGE>
Exhibit 2
Form of By-Laws
<PAGE>
BY-LAWS OF
NORTHSTAR ADVANTAGE ______ FUND
ARTICLE 1
DEFINITIONS
The terms "Custodian", "Declaration", "Distributor", "His", "Interested Person",
"Investment Adviser", "1940 Act", "Person", "Series", "Shareholder",
"Shareholder Servicing Agent", "Shares", "Transfer Agent", "Trust", "Trust
Property", "Trustees", and "vote of a majority of the shares outstanding and
entitled to vote", have the respective meanings given them in the Amended and
Restated Declaration of Trust - Northstar Advantage ______ Fund dated June 2,
1995, as amended from time to time.
ARTICLE II
OFFICES
SECTION 1. RESIDENT AGENT. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof it delivered to the
office of the Secretary of the Commonwealth.
SECTION 2. OFFICES. The Trust may have its principal office and other
offices in such places without as well as within the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
SECTION 1. MEETINGS. A meeting of Shareholder may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request, which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held as provided in the Declaration at such
place within or without the Commonwealth of Massachusetts as the Trustees shall
designate. The holders of a MAJORITY of outstanding shares present in person or
by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.
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<PAGE>
SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of the
Shareholders, stating the time, place and purpose of the meeting, shall be given
by the Trustees by mail to each Shareholder at his address as recorded on the
register of the Trust mailed at least (10) days and not more than sixty (60)
days before the meeting. Only the business stated in the notice of the meeting
shall be considered at such meeting. Any adjourned meeting may be held as
adjourned without further notice. No notice need be given to any Shareholder
who shall have failed to inform the Trust of his current address or if a written
waiver of notice, executed before or after the meeting by the Shareholder or his
attorney thereunto authorized, is filed with the records of the meeting.
SECTION 3. RECORD DATE FOR MEETINGS AND OTHER PURPOSES. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.
SECTION 4. PROXIES. At any meeting of Shareholders, any holder of Shares
entitled to vote threat may vote by proxy, provided that no proxy shall be voted
at any meeting unless it shall have been placed on file with the Secretary, or
with such other officer or agent for the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Proxies may
be solicited in the name of one or more of the officers of the Trust. Only
Shareholders of record shall be entitled to vote. Each whole shares shall be
entitled to one vote as to any matter on which it is entitled by the Declaration
to vote, and each fractional share shall be entitled to a proportionate
fractional vote. When any Shares is held jointly by several persons, any one of
them may vote at any meeting in person or by proxy, and such joint owners or
their proxies so present disagree as to any vote to be cast, such vote shall not
be received in respect of such Share. A proxy purporting to be executed by or
on behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such share is a minor or a person of unsound
mind, and subject to guardianship or the legal control of any other person as
regards the charge or management of such shares, he may vote by his guardian or
such other person appointed or having such control, and such vote may be given
in person or by proxy.
SECTION 5. INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted shareholders of
a Massachusetts business corporation.
SECTION 6. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of the Shareholders. Such consents shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
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ARTICLE IV
TRUSTEES
SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given, meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by any one
of the Trustees, at the time being in office. Notice of meetings shall be given
by the Secretary or an Assistant Secretary or by the officer or Trustees called
the meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be telegraphed, cabled, wirelessed, or transmitted by
facsimile to each Trustee at his business address, or personally delivered to
him at least one day before the meeting. Such notice may, however, be waived by
any Trustee. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him before or after the meeting, is filed with the
records of the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice need not specify the
purpose of any meeting. The Trustees may meet by means of a telephone
conference circuit or similar communications equipment by means of which all
persons participating in the meeting shall be deemed to have been held at a
place designated by the Trustees at the meeting. Participation in a telephone
conference meeting shall constitute presence in person at such meeting. Any
action required or permitted to be taken by the Trustees without a meeting if
all the Trustees consent to the action in writing and the written consents are
filed with the records of the Trustees meetings. Such consents shall be treated
as a vote for all purposes.
SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees shall
be present in person at any regular or special meeting of the Trustees in order
to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
quorum shall be present. Notice of an adjourned meeting need not be given.
SECTION 3. ADVISORY TRUSTEES. The Trustees may from time to time designate
and appoint one or more qualified persons to the position of "advisory Trustee".
Each advisory Trustee shall serve for such term as shall be specified in the
resolution of the Trustees appointing such person or until his earlier
resignation or removal. An advisory Trustee may be removed from such position
with or without cause by the vote of a majority of the Trustees given at any
regular or special meeting. An advisory Trustee may be invited to attend all
meetings of the Trustees but shall not be present at any portion of a meeting
from which the advisory Trustee shall have been excluded by vote of the
Trustees. An advisory Trustee shall provide to the Trust information and advice
about securities and currency markets, political developments, economic and
business factors and trends and provide such other advice as the Trustees may
request from time to time, but shall not provide advice or make recommendations
regarding the purchase or sale of securities. An advisory Trustee shall not be
a "Trustee" or "Officer" within the meaning of the Declaration, or of these By-
Laws, shall not hold himself out as any of the foregoing, and shall not be
liable to any person for any act of the Trust. Notice of special meetings may
be given to an advisory Trustee but the failure to give such notice shall not
affect the validity of any meeting or the action taken thereat. An advisory
Trustee shall not have the powers of a Trustee, may not
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<PAGE>
vote at meetings of the Trustees and shall not take part in the operation or
governance of the Trust. An advisory Trustee shall receive compensation in such
amounts and in such manner as the Trustees of the Trust shall determine from
time to time and may be reimbursed for expenses incurred in attending meetings
of the Trustees or otherwise.
ARTICLE V
COMMITTEES
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Declaration or these By-Laws they are prohibited from
delegating. The Trustees may also elect from their own number other Committees
from time to time, the number composing such Committees, the powers conferred
upon the same (subject to the same limitations as with respect to the Executive
Committee) and the term of membership on such Committees to be determined by the
Trustees. The Trustees may designate a chairman of any such Committee. In the
absence of such designation the Committee may elect its own Chairman.
SECTION 2. MEETINGS, QUORUM AND MANNER OF ACTING. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.
SECTION 3. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successors shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder.
The Chairman shall preside at all meetings of the Trustees and shall have such
other duties as from time to time may be assigned to him by the Trustees.
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<PAGE>
ARTICLE VI
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as
the business of the Trust may require, including one or more Vice Presidents,
one or more Assistant Secretaries, and one or more Assistant Treasurers. The
Trustees may delegate to any officer or committee the power to appoint any
subordinate officers or agents.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall each hold office until his successor shall have been
duly elected and qualified, and all other officers shall hold office at the
please of the Trustees. The Secretary and Treasurer shall not be held by the
same person. The President shall hold no other office. Except as above
provided, any two offices may be held by the same person. Any officer may be
but none need be a Trustee or Shareholder.
SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without cause, by a vote of a majority of
the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such officer or committee.
SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control
of the Trustees and to the control of any Committees of the Trustees, within
their respective spheres, as provided by the Trustees, he shall at all times
exercise a general supervision and direction over the affairs of the Trust. He
shall have the power to employ attorneys and counsel for the Trust and to employ
such subordinate officers, agents, clerks and employees as he may find necessary
to transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interest of the
Trust. The President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.
SECTION 5. POWERS AND DUTIES OF VICE PRESIDENT. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any other powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be the
principal financial and accounting officer of the Trust, he shall deliver all
funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to the Declaration or these By-Laws. He shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and he shall in general perform all the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the Trustees. The Treasurer shall give a bond
for the faithful discharge of his duties, if
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<PAGE>
required so to do by the Trustees, in such sum and with such surety or sureties
as the Trustee shall require.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provide for that purpose; he shall have custody of the seal of the Trust
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of the Transfer Agent. He shall attend to the giving and
serving of all notices by the Trust in accordance with the provisions of these
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from
time to time may be assigned to him by the Trustees. Each Assistant Treasurer
shall give a bond for the faithful discharge of his duties, if required so to do
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
SECTION 10. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE
ADVISORY BOARD. Subject to any applicable provisions of the Declaration, the
compensation of the officers and Trustees and members of any Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any Committee or officer upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
SHARES OF BENEFICIAL INTEREST
SECTION 1. CERTIFICATES OF SHARES. For any Series of Shares for which the
Trustees shall issue Share certificates each Shareholder of such Series shall be
entitled, upon written request made to the Trust or the Shareholder Servicing
Agent, to a certificate or certificates which shall represent and certify the
number of Shares held by him in the Trust. Each certificate shall be signed by
the chairman, if there is one, the president or a vice-president and
countersigned by the secretary or an assistant secretary or the treasurer or an
assistant treasurer and may be sealed with the seal of the Trust. The
signatures and seal, if any, on a certificate may be either manual or facsimile.
A certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. A full record of the issuance of each
certificate and the identifying number assigned thereto shall be made on the
books and records of the Trust usually kept for the purpose or required by
statute.
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<PAGE>
SECTION 2. TRANSFERS OF SHARES. Upon surrender to the Trust or the
Shareholder Servicing Agent of a certificate duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the Trust
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books. Shares of the Trust not
represented by certificate shall be transferred by recording the transaction on
the books of the Trust maintained by the Shareholder Servicing Agent upon
presentation of proper evidence of succession, assignment or authority to
transfer.
The Trust shall be entitled to treat the holder of record of any Share or
Shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such Share or Shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by applicable law.
SECTION 3. LOST CERTIFICATES. The Trustees may by resolution establish
procedures pursuant to which a new certificate may be issued in place of any
certificate theretofore issued by the Trust which has been mutilated or which is
alleged to have been lost, stolen or destroyed, upon presentation of each such
mutilated certificate, or the making by the person claiming any such
certificate, or the making by the person claiming any such certificate to have
been lost, stolen or destroyed of an affidavit as to the fact and circumstances
of the loss, theft or destruction thereof. The Trustees, in their discretion
and as a condition precedent to the issuance of any new certificate, may include
among such procedures a requirement that the owner of any certificate alleged to
have been lost, stolen or destroyed, or his legal representative, furnish the
trust with a bond, in such sum and with such surety or sureties as they may
direct, as indemnity against any claim that may be made against the Trust in
respect of such lost, stolen or destroyed certificate.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall be established by the Trustees and the
Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
- 8 -
<PAGE>
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
herein, shall be deemed equivalent thereto. A notice shall be deemed to have
been telegraphed, cabled or sent by facsimile or other communication leaving a
visual record for the purposes of these By-Laws when it has been delivered to a
representative of any telegraph, cable or facsimile or other such communications
company with instructions that it be telegraphed, cabled or sent by facsimile or
other communication leaving a visual record.
ARTICLE X
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or new
By-Laws may be adopted by (a) vote of a majority of the Shares outstanding and
entitled to vote or (b) the Trustees, provided, however, that no By-Law may be
amended, adopted or repealed by the Trustees if such amendment, adoption or
repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
- 9 -
<PAGE>
Exhibit 5(a)
Form of Advisory Agreement
1
<PAGE>
NORTHSTAR ADVANTAGE ______ FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____th day of May 1995, by and between NORTHSTAR
ADVANTAGE ______ FUND, a Massachusetts business trust, (the "Fund") and
NORTHSTAR INVESTMENT MANAGEMENT CORPORATION, a Delaware corporation (the
"Adviser").
The Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
The Fund desires to retain the Adviser to render investment advisory
services to the Fund, and the Adviser is willing to render such investment
advisory services on the terms set forth below.
The parties agree as follows:
1. The Fund hereby appoints the Adviser to act as investment adviser to
the Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the services described,
for the compensation provided, in this Agreement.
2. Subject to the supervision of the Trustees, the Adviser shall manage
the investment operations of the Fund and the composition of the Fund's
portfolio, including the purchase and retention and disposition of portfolio
securities, in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Fund's Prospectus and Statement of Additional
Information (as defined below) subject to the following understandings:
A. The Adviser shall provide supervision of the Fund's investments
and determine from time to time what investments will be made, held or disposed
of or what securities will be purchased and retained, sold or loaned by the
Fund, and what portion of the assets will be invested or held uninvested as
cash.
B. The Adviser shall use its best judgment in the performance of its
duties under this Agreement.
C. The Adviser, in the performance of its duties and obligations
under this Agreement, shall (i) act in conformity with the Declaration of Trust,
By-Laws, Prospectus
2
<PAGE>
and Statement of Additional Information of the Fund, with the instructions and
directions of the Trustees and (ii) conform to and comply with the requirements
of the Investment Company Act and all other applicable federal and state laws
and regulations.
D. (i) The Adviser shall determine the securities to be purchased
or sold by the Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Fund's Prospectus and Statement of Additional
Information or as the Trustees may direct from time to time. In providing the
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also
consider the financial responsibility, research and investment information and
other services and research related products provided by brokers or dealers who
may effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Fund recognizes that the
services and research related products provided by such brokers may be useful to
the Adviser in connection with its services to other clients.
(ii) When the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transactions, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
E. The Adviser shall maintain, or cause to be maintained, all books
and records required under the Investment Company Act to the extent not
maintained by the custodian of the Fund. The Adviser shall render to the
Trustees such periodic and special reports as the Trustees may reasonably
request.
F. The Adviser shall provide the Fund's custodian on each business
day information relating to all transactions concerning the Fund's assets.
G. The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services to others.
3
<PAGE>
3. The Fund has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
A. Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on
the date hereof and as further amended from time to time, are herein called the
"Declaration of Trust");
B. By-Laws of the Fund (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
C. Certified resolutions of the Trustees authorizing the appointment
of the Adviser and approving this Agreement on behalf of the Fund;
D. Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission"), relating to the Fund and shares of beneficial interest of
the Fund and all amendments thereto;
E. Notification of Registration of the Fund under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments
thereto; and
F. Prospectus and Statement of Additional Information included in
the Registration Statement, as amended from time to time. All references in
this Agreement to the Prospectus and the Statement of Additional Information
shall be to such documents as most recently amended or supplemented and in
effect.
4. The Adviser shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Fund to serve in
the capacities in which they are elected. All services to be furnished by the
Adviser under this Agreement may be furnished through such directors, officers
or employees of the Adviser.
5. The Adviser agrees that all records which it maintains for the Fund
are property of the Fund. The Adviser will surrender promptly to the Fund any
such records upon the Fund's request. The Adviser further agrees to preserve
such records for the periods prescribed in Rule 3la-2 under the Investment
Company Act.
6. (i) In connection with the services rendered by the Adviser under this
Agreement, the Adviser will pay all of the following expenses:
4
<PAGE>
(a) the salaries and expenses of all personnel of the Fund and the
Adviser required to perform the services to be provided pursuant to this
Agreement, except the fees of the trustees who are not affiliated persons of the
Adviser; and
(b) all expenses incurred by the Adviser or the Fund in connection
with the performance of the Adviser's responsibilities hereunder, other than
brokers' commissions and any issue or transfer taxes chargeable to the Fund in
connection with its securities transactions.
7. In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Adviser but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the lowest applicable annual expense limitation established
pursuant to the statutes or regulations of any jurisdictions in which shares of
the Fund are then qualified for offer and sale, the compensation due the Adviser
will be reduced by the amount of such excess, or, if such reduction exceeds the
compensation payable to the Adviser, the Adviser will pay the Fund, whose
expenses exceed such expense limitation, the amount of such reduction which
exceeds the amount of such compensation.
8. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Adviser as compensation a fee accrued daily
and paid monthly at the annual rate of .75% of the Fund's aggregate average
daily net assets.
9. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Fund in connection
with or arising out of the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
10. This Agreement shall continue in effect for a period of two years from
the date hereof and shall continue in effect thereafter for so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the Trustees of the Fund who are not interested persons of
the Fund, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) a majority of the Trustees of the Fund or the holders of a
majority of the outstanding voting securities of the Fund; provided however,
that this Agreement may be terminated by the Fund at any time, without the
payment of any penalty, by a majority of the Trustees acting on behalf of the
Fund or by vote of a majority of the outstanding voting securities of the Fund,
or by the
5
<PAGE>
Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other party.
11. This agreement shall terminate automatically in the event of its
assignment; the term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act.
12. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a trustee, officer
or employee of the Fund to engage in any other business or to devote his time
and attention in part to the management or other aspect of any business, whether
of a similar or dissimilar nature, nor limit or restrict the right of the
Adviser to engage in any other business or to render services of any kind to any
other person or entity.
13. During the term of this Agreement, the Fund agrees to furnish the
Adviser at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for distribution to
shareholders of the Fund or the public, which refer in any way to the Adviser,
prior to use thereof and not to use such material if the Adviser reasonably
objects in writing within five business days (or such other time as may be
mutually agreed) after receipt. In the event of termination of the Agreement,
the Fund will continue to furnish to the Adviser such other information relating
to the business affairs of the Fund as the Adviser at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
14. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders of
the majority of the outstanding voting securities of the Fund and (ii) a
majority of the members of the Trustees who are not interested persons of the
Fund or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval.
15. The Adviser and the Fund each agree that the names "Northstar" and
"Advantage" are proprietary to, and property rights of, the Adviser. The Fund
agrees and consents that (i) it will only use the name "Northstar Advantage" as
part of its name and for no other purpose, (ii) it will not purport to grant any
third party the right to use the name or any part of the name "Northstar
Advantage" and (iii) upon the termination of this Agreement, the Fund shall,
upon the request of the Adviser, cease to use the name "Northstar Advantage",
and shall use its best efforts to cause its officers, trustees and shareholders
to take any and all actions which the Adviser may request to effect the
foregoing.
6
<PAGE>
16. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Adviser at Two Pickwick Plaza, Greenwich, CT
06830, Attention: Secretary; or (2) to the Fund, Two Pickwick Plaza, Greenwich,
CT 06830, Attention: Secretary.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut. The terms "interested person",
"assignment", and "vote of the majority of the outstanding voting securities"
shall have the meaning set forth in the Investment Company Act.
18. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
NORTHSTAR ADVANTAGE ______ FUND
Attest: By:
--------------------- --------------------------------------
President
7
<PAGE>
NORTHSTAR INVESTMENT MANAGEMENT
CORPORATION
Attest: By:
-------------------- ---------------------------------------
Senior Vice President
8
<PAGE>
Exhibit 6(a)
Form of Underwriting Agreement
for
Class A Shares
1
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS A SHARES OF
NORTHSTAR ADVANTAGE ______ FUND
AGREEMENT made and entered into and by and between NORTHSTAR ADVANTAGE ______
FUND (the "Fund"), a Massachusetts business trust and NWNL NORTHSTAR
DISTRIBUTORS, INC., a Minnesota Corporation (the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class A shares of beneficial
interest of the Fund, including both unissued shares and treasury shares,
through broker-dealers or otherwise, in all parts of the United States and
elsewhere throughout the world. The Fund agrees to sell and deliver its Class A
shares, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury Class A shares available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust of the Fund, to accept, for the account of the Fund, orders
for the purchase of its Class A shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer -- or as otherwise described
in the Prospectus of the Fund.
(b) The public offering price of Class A shares shall be based on the net
asset value per share (as determined by the Fund) of the outstanding Class A
shares of the Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price based upon such net asset value shall
become effective as set forth from time to time in the Fund's Prospectus; such
net asset value shall also be regularly determined, and the public offering
price based thereon shall become effective, as of such other times for the
regular determination of net asset value as may be required or permitted by
rules of the National Association of Securities Dealers, Inc., or of the
Securities and Exchange Commission. The Fund shall furnish daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class A shares.
The public offering price of such shares shall be equal to the net asset
value, as described above plus a commission to be fixed from time to time by the
Underwriter not to exceed 6% of the public offering price except that such price
per share may be adjusted to the nearest cent. The Underwriter may fix quantity
discounts and other similar terms not inconsistent with the provisions of the
Investment Company Act of 1940. The Underwriter shall not impose any
commission, permit any quantity discounts or impose any other similar terms in
connection with the sale of Class A shares of the Fund except as disclosed in
the Prospectus of the Fund.
2
<PAGE>
(c) The Underwriter shall be entitled to deduct a commission on all Class
A shares sold equal to the difference between the public offering price and the
net asset value on which such price is based. If any such commission is
received by the Fund, it will pay the commission to the Underwriter. Out of
such commission, the Underwriter may allow to dealers such concessions as the
Underwriter may determine from time to time. Notwithstanding anything in the
Agreement otherwise provided, sales may be made at net asset value as provided
in the Prospectus of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class A shares of the Fund, and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class A shares of the Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. The Fund reserves the right to issue Class A shares in connection
with any merger or consolidation of the Fund with any other investment company
or any personal holding company or in connection with offers of exchange
exempted from Section 22(d) of the Investment Company Act of 1940.
3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class A
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class A shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class A shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with
the sale or arranging for the sale of its Class A shares to give only such
information and to make only such statements or representations as are contained
in the Fund Prospectus or in sales literature or advertisements approved by the
Fund or in such financial statements and reports as are furnished to the
Underwriter pursuant to paragraph 6 below. The Fund shall not be responsible in
any way for any information, statements or representations given or made by the
Underwriter or its representatives or agents other than such information,
statements and representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class A shares for redemption at prices not in
excess of their net asset value, determined as prescribed in the Prospectus of
the Fund. The Fund shall reimburse the Underwriter monthly for its out-of-pocket
expenses reasonably incurred on behalf of the Fund in carrying out the foregoing
authorization, but the Underwriter shall not be entitled to any commissions or
other compensation in respect to such redemption. The Underwriter shall report
all redemptions promptly to the Fund.
3
<PAGE>
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class A shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class A shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class A shares of
the Fund, for fees and expenses incident to the issuance of Class A shares of
beneficial interest such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost of
preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and such notices and reports as may be required
from time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class A shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
A shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by the Fund with any Federal or State law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to the Fund's
distribution plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940.
9. The Fund agrees to register, from time to time as necessary,
additional Class A shares with the Securities and Exchange Commission, state and
other regulatory bodies and to pay the related filing fees therefor and to file
such amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in the Registration
Statement or Prospectus or that there may be no omission
4
<PAGE>
to state a material fact therein necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As used in this Agreement, the term "Registration Statement" shall
mean the Registration Statement most recently filed by the Fund with the
Securities and Exchange Commission and effective under the Securities Act of
1933, as amended, as such Registration Statement is amended from time to time,
and the term "Prospectus" shall mean the most recent form of prospectus
authorized by the Trust for use by the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days'
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the outstanding voting securities as defined in the Investment
Company Act of 1940 of the Class A shares of the Fund, or by vote of a majority
of the Trustees who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 and who have no direct or indirect financial
interest in the operation of the Plan or agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Fund and shall
continue in effect for two years from its effective date, and thereafter for
successive annual periods, provided that such continuance is specifically
approved annually by a majority of the Trustees of the Fund who are not
interested persons of the parties hereto as defined in the Investment Company
Act of 1940 and either (a) a majority of the Trustees of the Fund or (b) by vote
of a majority of the outstanding voting securities of the Class A shares of the
Fund, as defined in the Investment Company Act of 1940.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of the
____ day of May, 1995.
Attest: NORTHSTAR ADVANTAGE ______ FUND
By: By:
------------------------ ----------------------------
Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.
By: By:
------------------------ ----------------------------
6
<PAGE>
Exhibit 6(b)
Form of Underwriting Agreement
for
Class B Shares
1
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS B SHARES OF
NORTHSTAR ADVANTAGE ______ FUND
AGREEMENT made and entered into by and between NORTHSTAR ADVANTAGE ______ FUND
(the "Fund"), a Massachusetts business trust, and NWNL NORTHSTAR DISTRIBUTORS,
INC., a Minnesota corporation (the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class B shares of beneficial
interest of the Fund, including both unissued shares and treasury shares,
through broker-dealers or otherwise, in all parts of the United States and
elsewhere throughout the world. The Fund agrees to sell and deliver its Class B
shares, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury Class B shares available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and
the Declaration of Trust of the Fund, to accept, for the account of the Fund,
orders for the purchase of its Class B shares, satisfactory to the Underwriter,
as of the time of receipt of such orders by the dealer--or as otherwise
described in the Prospectus of the Fund.
(b) The public offering price of Class B shares shall be the net
asset value per share (as determined by the Fund) of the outstanding Class B
shares of the Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price shall become effective as set forth from
time to time in the Fund's Prospectus; such net asset value shall also be
regularly determined, and the public offering price shall become effective, as
of such other times for the regular determination of net asset value as may be
required or permitted by rules of the National Association of Securities
Dealers, Inc. or of the Securities and Exchange Commission. The Fund shall
furnish daily to the Underwriter, with all possible promptness, a detailed
computation of net asset value of its Class B shares.
(c) As compensation for providing services under this Agreement, (i)
the Underwriter shall receive from the Fund distribution and service fees under
the terms and conditions set forth in the Distribution Plan for the Fund adopted
under Rule 12b-1 under the Investment Company Act of 1940, as amended, as that
Plan may be amended from time to time and subject to any further limitations on
such fees as the Trustees may impose, and (ii) the Underwriter shall receive
from the Fund all contingent deferred sales charges applied on redemption of
Class B shares of the Fund. Whether and to what extent a contingent deferred
sales charge will be imposed with respect to a redemption shall be determined in
accordance with, and in a manner set forth in, the Fund's Prospectus.
2
<PAGE>
(d) The Underwriter may reallow any or all of the distribution and
services fees and contingent deferred sales charges which it is paid under this
Agreement to such dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not inconsistent
with the provisions of the Investment Company Act of 1940; provided however,
that the Underwriter shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class B shares except as disclosed in the Prospectus of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class B shares of the Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of the Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. The Fund reserves the right to issue Class B shares in connection
with any merger or consolidation of the Fund with any other investment company
or any personal holding company or in connection with offers of exchange
exempted from Section 22(d) of the Investment Company Act of 1940.
3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class B
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class B shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class B shares of the Fund shall be subject to the
approval of the respective Fund to which such literature relates. The Fund
authorizes the Underwriter in connection with the sale or arranging for the sale
of its Class B shares to give only such information and to make only such
statements or representations as are contained in the Prospectus or in sales
literature or advertisements approved by the Fund or in such financial
statements and reports as are furnished to the Underwriter pursuant to paragraph
6 below. The Fund shall not be responsible in any way for any information,
statements or representations given or made by the Underwriter or its
representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Fund. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set
3
<PAGE>
forth in the Fund's Prospectus. The Fund shall reimburse the Underwriter
monthly for its out-of-pocket expenses reasonably incurred on behalf of the Fund
in carrying out the foregoing authorization. The Underwriter shall report all
redemptions promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class B shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class B shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class B shares of
the Fund, for fees and expenses incident to the issuance of Class B shares of
beneficial interest, such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost
for preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and notices and reports as may be required from
time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class B shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
B shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by the Fund with any Federal or state law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to the Fund's
distribution plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940.
4
<PAGE>
9. The Fund agrees to register, from time to time as necessary,
additional Class B shares with the Securities and Exchange Commission, State and
other regulatory bodies and to pay the related filing fees therefor and to file
such amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in the Registration
Statement or Prospectus or that their may be no omission to state a material
fact therein necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As used in this
Agreement, the term "Registration Statement" shall mean the Registration
Statement most recently filed by the Fund with the Securities and Exchange
Commission and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Fund for use by
the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the outstanding voting securities as defined in the Investment
Company Act of 1940 of the Class B shares of the Fund or by vote of a majority
of the Trustees who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Fund and shall
continue in effect for two years from its effective date. Thereafter, this
Agreement shall continue for successive annual periods, provided that such
continuance is specifically approved annually by a majority of the Trustees of
the Fund who are not interested persons of the parties hereto as defined in the
Investment Company Act of 1940 and either (a) by vote of a majority of the
Trustees of the Fund or (b) by vote of a majority of the outstanding voting
securities of the Class B shares of the Fund, as defined in the Investment
Company Act of 1940.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of this
____ day of May, 1995.
Attest: NORTHSTAR ADVANTAGE ______ FUND
By: By:
------------------------ ----------------------------
Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.
By: By:
------------------------ ----------------------------
6
<PAGE>
Exhibit 6(c)
Form of Underwriting Agreement
for
Class C Shares
1
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS C SHARES OF
NORTHSTAR ADVANTAGE ______ FUND
AGREEMENT made and entered into by and between NORTHSTAR ADVANTAGE ______ FUND
(the "Fund"), a Massachusetts business trust, and NWNL NORTHSTAR DISTRIBUTORS,
INC., a Minnesota corporation (the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class C shares of beneficial
interest of the Fund, including both unissued shares and treasury shares,
through broker-dealers or otherwise, in all parts of the United States and
elsewhere throughout the world. The Fund agrees to sell and deliver its Class C
shares, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury Class C shares available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and
the Declaration of Trust of the Fund, to accept, for the account of the Fund,
orders for the purchase of its Class C shares, satisfactory to the Underwriter,
as of the time of receipt of such orders by the dealer--or as otherwise
described in the Prospectus of the Fund.
(b) The public offering price of Class C shares shall be the net
asset value per share (as determined by the Fund) of the outstanding Class C
shares of the Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price shall become effective as set forth from
time to time in the Prospectus; such net asset value shall also be regularly
determined, and the public offering price shall become effective, as of such
other times for the regular determination of net asset value as may be required
or permitted by rules of the National Association of Securities Dealers, Inc.
or of the Securities and Exchange Commission. The Fund shall furnish daily to
the Underwriter, with all possible promptness, a detailed computation of net
asset value of its Class C shares.
(c) As compensation for providing services under this Agreement, (i)
the Underwriter shall receive from the Fund distribution and service fees under
the terms and conditions set forth in the Class C Distribution Plan for the Fund
adopted under Rule 12b-1 under the Investment Company Act of 1940, as amended,
as that Plan may be amended from time to time and subject to any further
limitations on such fees as the Trustees may impose, and (ii) the Underwriter
shall receive from the Fund all contingent deferred sales charges applied on
redemption of Class C shares of the Fund. Whether and to what extent a
contingent deferred sales charge will be imposed with respect to a redemption
shall be determined in accordance with, and in a manner set forth in, the Fund's
Prospectus.
2
<PAGE>
(d) The Underwriter may reallow any or all of the distribution and
services fees and contingent deferred sales charges which it is paid under the
Agreement to such dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not inconsistent
with the provisions of the Investment Company Act of 1940; provided however,
that the Underwriter shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class C shares except as disclosed in the Prospectus of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class C shares of the Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class C shares of the Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. The Fund reserves the right to issue Class C shares in connection
with any merger or consolidation of a Fund with any other investment company or
any personal holding company or in connection with offers of exchange exempted
from Section 22(d) of the Investment Company Act of 1940.
3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class C
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class C shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class C shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with
the sale or arranging for the sale of its Class C shares to give only such
information and to make only such statements or representations as are contained
in the Prospectus or in sales literature or advertisements approved by the Fund
or in such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class C shares for redemption at prices
determined as prescribed in the Prospectus of the Fund. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set forth in the Fund's
Prospectus. The Fund shall reimburse the Underwriter monthly for its
3
<PAGE>
out-of-pocket expenses reasonably incurred on behalf of the Fund in carrying
out the foregoing authorization. The Underwriter shall report all redemptions
promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class C shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class C shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class C shares of
the Fund, for fees and expenses incident to the issuance of Class C shares of
beneficial interest, such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost
for preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and notices and reports as may be required from
time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class C shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
C shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by each Fund with any Federal or state law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to the Fund's
distribution plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940.
4
<PAGE>
9. The Fund agrees to register, from time to time as necessary,
additional Class C shares with the Securities and Exchange Commission, State and
other regulatory bodies and to pay the related filing fees therefor and to file
such amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in the Registration
Statement or Prospectus or that their may be no omission to state a material
fact therein necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As used in this
Agreement, the term "Registration Statement" shall mean the Registration
Statement most recently filed by the Fund with the Securities and Exchange
Commission and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Fund for use by
the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the outstanding voting securities as defined in the Investment
Company Act of 1940 of the Class C shares of the Fund or by vote of a majority
of the Trustees who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 and who have no direct or indirect financial
interest in the operation of the Plan or in any related agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Fund and shall
continue in effect for two years from its effective date. Thereafter, this
Agreement shall continue for successive annual periods, provided that such
continuance is specifically approved annually by a majority of the Trustees of
the Fund who are not interested persons of the parties hereto as defined in the
Investment Company Act of 1940 and either (a) by vote of a majority of the
Trustees of the Trust or (b) by vote of a majority of the outstanding voting
securities of the Class C shares of the Fund, as defined in the Investment
Company Act of 1940.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and to become effective as
of the ____ day of May, 1995.
Attest: NORTHSTAR ADVANTAGE ______ FUND
By: By:
------------------------ ----------------------------
Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.
By: By:
------------------------ ----------------------------
6
<PAGE>
Exhibit 6(d)
Form of Underwriting Agreement
for
Class T Shares
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS T SHARES OF
THE NORTHSTAR ADVANTAGE ______ FUND
AGREEMENT made and entered into and by and between THE NORTHSTAR ADVANTAGE
______ FUND (the "Fund"), a Massachusetts business trust and NWNL NORTHSTAR
DISTRIBUTORS, INC., a Minnesota Corporation (the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class T shares of beneficial
interest of the Fund, including both unissued shares and treasury shares in
connection with exchanges of Class T shares and in certain other limited
situations, as described in the Fund's Prospectus.
(a) The Fund hereby authorizes the Underwriter, subject to law and
the Declaration of Trust of the Fund, to accept, for the account of the Fund,
orders for the purchase of its Class T shares as described in the Prospectus of
the Fund.
(b) The public offering price of Class T shares shall be based on the
net asset value per share (as determined by the Fund) of the outstanding Class T
shares of the Fund. The net asset value of Class T shares shall be regularly
determined on every business day as of the time of the regular closing of the
New York Stock Exchange and the offering price based upon such net asset value
shall become effective as set forth from time to time in the Fund's Prospectus;
such net asset value shall also be regularly determined, and the offering price
based thereon shall become effective, as of such other times for the regular
determination of net asset value as may be required or permitted by rules of the
National Association of Securities Dealers, Inc., or of the Securities and
Exchange Commission. The Fund shall furnish daily to the Underwriter, with all
possible promptness, a detailed computation of net asset value of its Class T
shares.
(c) As compensation for providing services under this Agreement, (i)
the Underwriter shall receive from the Fund distribution and service fees under
the terms and conditions set forth in the Distribution Plan for the Fund adopted
under Rule 12b-1 under the Investment Company Act of 1940, as amended, as that
Plan may be amended from time to time and subject to any further limitations on
such fees as the Trustees may impose, and (ii) the Underwriter shall receive
from the Fund all contingent deferred sales charges applied on redemption of
Class T shares of the Fund. Whether and to what extent a contingent deferred
sales charge will be imposed with respect to a redemption shall be
- 2 -
<PAGE>
determined in accordance with, and in a manner set forth in, the Fund's
Prospectus.
(d) The Underwriter may reallow any or all of the distribution and
services fees and contingent deferred sales charges which it is paid under the
Agreement to such dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not inconsistent
with the provisions of the Investment Company Act of 1940; provided however,
that the Underwriter shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class T shares except as disclosed in the Prospectus of the Fund.
2. Nothing herein contained shall prevent the Underwriter from entering
into similar arrangements with other funds and to engage in other activities.
The Fund reserves the right to issue Class T shares in connection with any
merger or consolidation of the Fund with any other investment company or any
personal holding company or in connection with offers of exchange exempted from
Section 22(d) of the Investment Company Act 1940.
3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class T
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class T shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
4. The Fund authorizes the Underwriter in connection with the sale or
arranging for the sale of its Class T shares to give only such information and
to make only such statements or representations as are contained in the Fund
Prospectus or in sales literature or advertisements approved by the Fund or in
such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class T shares for redemption at prices not in
excess of their net asset value, determined as prescribed in the Prospectus of
the Fund. Such
- 3 -
<PAGE>
price shall reflect the subtraction of the applicable contingent deferred sales
charge, if any, computed in accordance with and in the manner set forth in the
Fund's Prospectus. The Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred on behalf of the Fund in carrying out
the foregoing authorization, but the Underwriter shall not be entitled to any
commissions or other compensation in respect to such redemption. The
Underwriter shall report all redemptions promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class T shares.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class T shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class T shares of
the Fund, for fees and expenses incident to the issuance of Class T shares of
beneficial interest such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost of
preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and such notices and reports as may be required
from time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class T shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
T shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation,
- 4 -
<PAGE>
printing and distribution of the Prospectus or any report or other communication
to shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by the Fund with any Federal or State law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to the Fund's
distribution plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940.
9. The Fund agrees to register, from time to time as necessary,
additional Class T shares with the Securities and Exchange Commission, state and
other regulatory bodies and to pay the related filing fees therefor and to file
such amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in the Registration
Statement or Prospectus or that there may be no omission to state a material
fact therein necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. As used in this
Agreement, the term "Registration Statement" shall mean the Registration
Statement most recently filed by the Fund with the Securities and Exchange
Commission and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Trust for use by
the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days'
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the outstanding voting securities as defined in the Investment
Company Act of 1940 of the Class T shares of the Fund, or by vote of a majority
of the Trustees who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 and who have no direct or indirect financial
interest in the operation of the Plan or agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940. This
Agreement shall also terminate automatically when T Class shares no longer
exist; Class T shares will convert into Class A shares on the later of (i) eight
years after the purchase of such shares or (ii) three years after June 2, 1995.
12. This Agreement has been approved by the Trustees of the Fund and shall
continue in effect for two years from its effective date, and thereafter for
successive annual periods, subject to the terms of Paragraph 11 above, provided
that such continuance is specifically approved annually by a majority of
- 5 -
<PAGE>
the Trustees of the Fund who are not interested persons of the parties hereto
as defined in the Investment Company Act of 1940 and either (a) a majority of
the Trustees of the Fund or (b) by vote of a majority of the outstanding
voting securities of the Class T shares of the Fund, as defined in the
Investment Company Act of 1940.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and to become effective as
of the second day of June, 1995.
Attest: THE NORTHSTAR ADVANTAGE ______ FUND
By: By:
------------------------ ----------------------------
Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.
By: By:
------------------------ ----------------------------
- 6 -
<PAGE>
Exhibit 6(e)
Form of Dealer Agreement
for
Northstar Affiliated Investment Companies
<PAGE>
NORTHSTAR DISTRIBUTORS, INC.
Two Pickwick Plaza
Greenwich, CT 06830
DEALER AGREEMENT FOR THE NORTHSTAR AFFILIATED MUTUAL FUNDS
Gentlemen:
We invite you to become a member of the selling group to distribute shares of
the open-end investment companies (hereinafter collectively referred to as the
"Funds" or, individually as the "Fund") for which we are or may become a
principal underwriter, (as defined in the Investment Company Act of 1940), on
the following terms:
1. You represent and warranty that you are a member of the National
Association of Securities Dealers, Inc., ("NASD") and that you will
continue to maintain membership in the NASD, or that you are a foreign
dealer, not eligible for membership in the NASD. You and we agree to abide
by the rules and regulations of the Securities and Exchange Commission and
the NASD, including, without limitation, Section 26 of Articles III of the
NASD Rules of Fair Practice, all of which are incorporated herein as if set
forth in full.
2. Orders received from you will be accepted by us only at the public offering
price applicable to each order, as described in the then current Fund
prospectus. Procedures relating to the handling of orders will be subject
to the terms of the then current prospectus of the Fund and to written
instructions which we shall forward from time to time to you, which shall
become a part of this Agreement. All orders are subject to acceptance or
rejection by us in our sole discretion. No conditional order will be
accepted on any basis other than a definite price. You understand and
agree that you are acting as principal under this agreement and not as our
agent or agent of the Funds, and that you are in no way responsible for the
manner of our performance or for any of our acts or omissions in connection
therewith.
3. You understand and agree that the applicable sales charge and dealer
concession pertaining to any sales of Fund shares will be in an amount as
set forth in the then current prospectus of such Fund, subject to
reductions under a variety of circumstances described in each Fund's
current prospectus. To obtain these reductions, we must receive notice
when the sale takes place which would qualify for the reduction.
4. The provisions of this Paragraph 4 are applicable to each of the Funds
which have adopted or which may, in the future, adopt a Plan or Plans (the
"Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Act"). The Plans and the provisions of this Paragraph 4 have been
approved by a majority of the Trustees/Directors of the applicable Fund,
including a majority of the Trustees/Directors who are not interested
persons of the Funds and who have no direct or indirect financial interest
in the operation of the Plans or any related agreements (the "non-
interested Trustees"), cast in person at a meeting called for the purpose
of voting thereon. Such approval included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that each of the Plans will
benefit the Fund and its shareholders. The Plans have also been approved
by a vote of at least a majority of the Fund's outstanding voting
securities, as defined in the Act. We represent and warrant that the Funds
will conform in all respects to the requirements of Section 26 of the
NASD's Rules of Fair Practice and that the prospectuses for the Funds will
contain disclosure with respect to fees paid and charges imposed in a
manner to evidence compliance with the NASD's rules regarding such fees and
charges.
(a) To the extent you provide services in connection with the sale of the
Fund's shares pursuant to the Plans and the Fund's prospectus, we
shall pay you quarterly a fee thereof based on the net asset value of
Fund shares which are owned of record by your firm as nominee for your
customers or which are owned by those customers of your firm whose
records, as maintained by the Fund or its agent, designate your firm
as the customer's dealer of record. No such quarterly fee will be
paid if the average net asset value of all of you customer accounts
upon which the fee is based is less than $1,000,000. Payment of such
quarterly fee shall be made within 45 days after the close of each
quarter for which such fee is payable, provided however, that you
shall waive payment until we are in receipt of such payment from the
Fund under whose Plan the amount is payable. No such quarterly fee
will be paid to you with respect to shares purchased by you and
redeemed or repurchased by the Fund or by us as agent within seven (7)
business days after the date of our confirmation of such purchase.
(b) You shall furnish us and the Fund with such information as shall
reasonably be requested by the Trustees/Directors of the Fund with
respect to the fees paid to you pursuant to this Paragraph 4.
(c) We shall furnish to the Trustees/Directors of the Fund, for their
review, on a quarterly basis a written report of the amounts expended
under the Plan by us and the purposes for which such expenditures were
made.
(d) The provisions of this Paragraph 4 may be terminated by the vote of a
majority of the non-interested Trustees/Directors or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days' written
notice without payment of any penalty. Such provisions will be
terminated by any act which terminates either the Fund's Underwriting
Agreement with us or this Dealer Agreement and shall terminate
immediately in the event of the assignment, as that term is defined in
the Act, of this Dealer Agreement.
(e) The provisions of the Underwriting Agreement between the Fund and
Northstar Distributors, Inc., insofar as they relate to the Plan, are
incorporated herein by reference. The provisions of this Paragraph 4
shall continue in full force and effect only so long as the
continuance of the Plan and these provisions are approved at least
annually by a vote of the Trustees, including a majority of the non-
interested Trustees, case in person at a meeting called for the
purpose of voting thereon.
5. Payment for Fund shares sold to you shall be made on or before the
settlement date specified in our confirmation, at our office and by check
or wire. We reserve the right to delay issuance or transfer of shares
until such check has cleared. If such payment is not received by us, we
reserve the right, without notice, forthwith either to cancel the sale, or,
at our option, to sell the shares ordered back to such Fund, and in either
case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by such Fund resulting from your failure to make payment
as aforesaid. You shall assume responsibility for any loss to a Fund
caused by a correction made by you subsequent to trade date, and you shall
immediately pay such loss to the Fund upon notification.
6. You agree to purchase shares only from us or from our customers. If you
purchase shares from us, you agree that all such purchases shall be made
only to cover orders received by you from your customers, or for your own
bona fide investment. If you purchase shares from your customers, you
agree to pay such customers not less than the applicable liquidating price
determined as set forth in the then current Fund prospectus.
<PAGE>
7. You agree to sell shares only (a) to your customers at the applicable
public offering price or (b) to the Fund or to us as selling agent for the
Fund at the liquidating price, in each case determined as set forth in the
Fund's current prospectus. With respect to Funds offering both shares
subject to a front-end sales charge, shares subject to a contingent
deferred sales charge, or shares subject to a level load, you agree to
conform to our written compliance standards as we may from time to time
provide them to you.
8. You shall not withhold placing with us orders received from your customers
so as to profit yourself as a result of such withholding; e.g., by a change
in the net asset value from that used in determining the public offering
price to your customers. You will place orders for purchases and
redemptions for your customers promptly upon receipt from your customers.
9. If any shares sold by us under the terms of this Agreement are repurchased
or liquidated by the funds, or by us as agent for the Funds, or is tendered
for liquidation to the Funds, within seven (7) business days after such
confirmation of your original order, then you shall forthwith repay to the
Funds the full concession or commission allowed to you on such sale and we
shall forthwith repay to the Funds our share of the selling commission
thereon. We shall notify you of such repurchase or liquidation within ten
(10) days from the day on which written redemption requests and if
applicable, share certificates are delivered to us or to the Funds.
10. You will not offer the Funds for sale in any state where they are not
qualified for sale under the securities laws of such state or where you are
not qualified to act as a dealer, except for states in which they or you
are exempt from qualification. On request we will provide you with a list
of states where the Funds are qualified for sale. You will not offer or
sell shares of the Funds except under circumstances that will result in
compliance with applicable federal and state securities laws.
11. No person is authorized to make any representation relating to the shares
of the Funds, except those contained in the then current Funds
prospectuses, statements of additional information and any authorized
supplemental material supplied by us. In ordering shares you rely solely
and conclusively on the representations contained in the then current
prospectuses and statements of additional information, and supplemental
material, if any, above described. Reasonable numbers of additional copies
of the then current prospectuses and statements of additional information
are and will be available on written request. In no transaction shall you
have any authority to take any action or make any representation binding
upon the Funds, any other member of the Selling Group, or ourselves. You
shall provide a currently effective prospectus to every purchaser or
shares, except to the extent that we expressly undertake to do so on
your behalf. In the event shares will be held by you in nominee name, it
is agreed to that you will pass the prospectus on to the ultimate purchaser
to the extent known to you. All advertising and promotion of the Funds by
foreign dealers shall conform to the standards applicable to members in the
United States.
12. We and you agree that all disputes between us of whatever subject matter,
whether existing on the date thereof or arising hereafter, shall be
submitted to arbitration in accordance with the Code of Arbitration
Procedure of the NASD, or similar rules or code, in effect at the time of
the submission of any such dispute.
13. Each Fund reserves the right in its discretion and we reserve the right, in
our discretion and without notice to you or to any members of the Selling
Group, to suspend sales, to withdraw the offering, to change the offering
price, or to amend, modify or cancel this Agreement and concessions,
discounts or commissions at any time payable or allowable hereunder
(including, without limitation, concessions, or commissions on future
periodic investments or reinvestment). This Agreement may be amended by us
at any time by written notice to you, and upon your receipt thereof, such
amendment shall become effective. Each party to this Agreement may cancel
its participation in this Agreement by giving written notice to the other
parties. Such notice shall be deemed to have been given and to be
effective on the date on which it was either delivered personally to the
other parties or any officer or member thereof, or was mailed postpaid or
delivered to a telegraph office for transmission to the other parties at
their address as shown herein. This agreement shall terminate immediately
upon the appointment of a Trustee under the Securities Investor Protection
Act or any other act of insolvency by you. The termination of this
Agreement by any of the foregoing means shall have no effect upon
transactions entered into prior to the effective date of termination. A
trade placed by you subsequent to your voluntary termination of the
Agreement will not serve to reinstate the Agreement. Reinstatement, except
in the case of a temporary suspension of a dealer will only be effective
upon written notification by us.
14. This Agreement also permits you to offer variable contracts ("Contracts")
issued by Northwestern National Life Insurance Company ("NWNL") for which
we serve as distributor. You may offer and sell Contracts to customers
only through your registered representatives who are variable contract
licensed pursuant to applicable state law and who have been specifically
appointed by NWNL to solicit Contracts in the applicable jurisdiction. You
may offer and sell the Contracts only in accordance with the terms and
conditions of the currently effective Prospectus or offering brochures
applicable to the Contracts and to any Fund which may serve as a funding
vehicle for the Contracts. You may not make any representation, including
any representation regarding the tax status of the Contract, not included
in such Prospectuses or offering brochures or in any written, authorized
advertising or sales material supplied by NWNL and you shall further be
liable for any claim against NWNL or us arising from your failure to comply
with this provision. Any proposed advertising, printed material or
presentation script relating to the Contracts must be approved in writing
by NWNL prior to its use. In no event shall you forward to NWNL less than
any payment collected by your registered representative, without deduction
for compensation or commission. You agree to observe NWNL's written
procedures, rules and guidelines relating to the Contracts. You agree that
references in this Agreement to "FUND" OR "FUNDS" with respect to the
Contracts shall mean or include all or any of the NWNL/Northstar Variable
Account, NWNL, or us, and that such provisions shall be and hereby are
deemed amended as necessary to comply with Section 29 of Article III of the
NASD Rules of Fair Practice, federal and state laws, and the rules and
regulations of the SEC applicable to variable contracts.
15. All communications shall be sent to us at our offices at Two Pickwick
Plaza, Greenwich, CT 06830. Any notice to you shall be duly given if
mailed or telegraphed to you at the address shown on this Agreement.
16. This Agreement shall become effective as of the date when it is executed
and dated by you below. This Agreement and all the rights and obligations
of the parties hereunder shall be governed by and construed under the laws
of the State of New York.
NORTHSTAR DISTRIBUTORS, INC.
Date By
------------------------- -----------------------------------
Accepted:
Date Investment Dealer
------------------------------- -------------------
Authorized Signature
-----------------
Print Name
---------------------------
<PAGE>
Title
---------------------------------
Address
-------------------------------
City State Zip Code
---------- -------- ---
Phone
---------------------------------
NASD Broker/Dealer No.
----------------
Clear Trades Through Broker/Dealer
--------------------------------------
<PAGE>
Exhibit 6(f)
Special Dealer Agreement
<PAGE>
NORTHSTAR DISTRIBUTORS, INC.
Two Pickwick Plaza
Greenwich, CT 06830
Dealer Agreement with Advest, Inc.
for the Northstar Affiliated Mutual Funds
Gentlemen:
We invite you to become a member of the selling group to distribute shares of
the open-end investment companies or series thereof (hereinafter collectively
referred to as the "Funds" or, individually as the "Fund") for which we
currently or in the future serve as a principal underwriter, (as defined in the
Investment Company Act of 1940 ("Act")), on the following terms:
1. You represent and warrant that you are a member of the National Association
of Securities Dealers, Inc., ("NASD") and that you will continue to
maintain membership in the NASD, or that you are a foreign dealer not
eligible for membership in the NASD. You and we agree to abide by the
rules and regulations of the Securities and Exchange Commission ("SEC") and
the NASD, including, without limitation, Section 26 of Article III of the
NASD Rules of Fair Practice, all of which are incorporated herein as if set
forth in full.
2. You served as principal underwriter of the shares of The Advantage
Government Securities Fund, The Advantage High Yield Bond Fund, The
Advantage Income Fund, The Advantage Growth Fund, The Advantage Special
Fund, and The Advantage Strategic Income Fund (collectively, the "Advantage
Funds") from the commencement of operations of each Advantage Fund to the
closing of the transactions contemplated by a certain Acquisition Agreement
among Northstar Investment Management Corp., ReliaStar Financial Corp., The
Advest Group, Inc., Advest, Inc. and Boston Security Counsellors, Inc. (the
"Acquisition Agreement") on June 2, 1995 ("Closing Date"), on which date we
became the principal underwriter for the Advantage Funds. You and we agree
that you shall continue to receive compensation paid by the Funds with
respect to shares of Advantage Funds sold prior to the Closing Date ("Old
Shares") (and with respect to any Old Shares which have been exchanged for
"Money Market Shares," as that term is defined in the Acquisition
Agreement), as provided in this Agreement, and you also agree to solicit
future orders of Class A, B and C shares of the Funds, as well as all
additional classes of the Funds hereafter offered through us other than the
Old Shares ("Shares"), under the terms of this Agreement.
3. Orders received from you for sales of Shares will be accepted by us only at
the public offering price applicable to each order, as described in the
then current Fund prospectus. Procedures relating to the handling of
orders will be subject to the terms of the then current prospectus of the
Fund and to written instruments which we shall forward from time to time to
you, which shall become a part of this Agreement. All orders are subject
to acceptance or rejection by us in our sole discretion. No conditional
order will be accepted on any basis other than a definite price. You
understand and agree that you are acting as principal under this Agreement
and not as our agent or agent of the Funds, and that you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith.
4. You understand and agree that you will be compensated by us with respect to
the Old Shares as provided for in Sections 5.20 and 5.29 of the Acquisition
Agreement. In addition to, and not in lieu of, the compensation provided
for in this Agreement with respect to the Shares, you shall be entitled to
the additional compensation contemplated by Section 2.3.5 of the
Acquisition Agreement. You further understand and agree that the
applicable sales charge and dealers concession pertaining to any sales of
Shares will be in an amount as set forth in the then current prospectus of
such Fund, subject to reductions under a variety of circumstances described
in each Fund's current prospectus. To obtain these reductions, we must
receive notice when the sale takes place which would qualify for the
reduction. In addition, you may receive distribution and services fees in
respect of Shares sold in accordance with Paragraph 5 below.
5. The provisions of this Paragraph 5 are applicable to each of the Funds
which have adopted a Plan or Plans (the "Plans") pursuant to Rule 12b-1
under the Act. The Plans and the provisions of this Paragraph 5 have been
approved by a majority of the Trustees/Directors of the applicable Fund,
including a majority of the Trustees/Directors who are not interested
persons of that Fund and who have no direct or indirect financial interest
in the operation of the Plans or any related agreements (the
"non-interested Trustees"), cast in person at a meeting called for the
purpose of voting thereon. Such approval included a determination that in
the exercise of reasonable business judgment and in light of the fiduciary
duties of such Trustees/Directors, there is a reasonable likelihood that
each of the Plans will benefit the Fund and its shareholders. The Plans
have also been approved by a vote of at least a majority of the Fund's
outstanding voting securities, as defined in the Act. We represent and
warrant that after the date of this Agreement the Funds will conform in all
respects to the requirements of Section 26 of the NASD's Rules of Fair
Practice and that the prospectuses for the Funds will contain disclosure
with respect to fees paid and charges imposed in a manner to evidence
compliance with the NASD's rules regarding such fees and charges.
(a) In compensation for your services in connection with the sale of
Shares pursuant to the Fund's Plans and the Fund's prospectus, we shall pay
you quarterly a fee therefor at an annual rate based on the net asset value
of Fund shares which are owned of record by your firm as nominee for your
customers or which are owned by those customers of your firm whose records,
as maintained by the Fund or its agent, designate your firm as the
customer's dealer of record. No such quarterly fee will be paid until the
average net asset value of all of your customer accounts
<PAGE>
in a Fund is at least $1,000,000, and, in the case of the Class B and C
Shares, such accounts have been maintained for at least one year. Payment
of such quarterly fee shall be made within 45 days after the close of each
quarter for which such fee is payable, provided however, that you shall
waive payment until we are in receipt of such payment from the Fund under
whose Plan the amount is payable. No such quarterly fee will be paid to
you with respect to shares purchased by you and redeemed or repurchased by
a Fund or by us as agent within seven (7) business days after the date of
our confirmation of such purchase.
(b) You shall furnish us and the Funds with such information as shall
reasonably be requested by the Trustees/Directors of the Funds with respect
to the fees paid to you pursuant to this Paragraph 5.
(c) We shall furnish to the Trustees/Directors of each Fund, for their
review, on a quarterly basis a written report of the amounts expended under
the Plan by us and the purposes for which such expenditures were made.
(d) The provisions of this Paragraph 5 may be terminated by the vote of a
majority of the non-interested Trustees/Directors or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days' written
notice without payment of any penalty. Such provisions will be terminated
by any act which terminates either the Fund's Underwriting Agreement with
us or this Dealer Agreement and shall terminate immediately in the event of
the assignment, as that term is defined in the Act, of this Dealer
Agreement.
(e) The provisions of the Underwriting Agreement between the Fund and us,
insofar as they relate to a Plan, are incorporated herein by reference.
The provisions of this Paragraph 5 shall continue in full force and effect
only so long as the continuance of the Plan and these provisions are
approved at least annually by a vote of the Trustees/Directors, including a
majority of the non-interested Trustees/Directors, cast in person at a
meeting called for the purpose of voting thereon.
(f) For a period of three years from the Closing Date, we shall use, for
purposes of determining your compensation in respect to Shares sold in
accordance with this Paragraph 5, our compensation rates, as in effect on
the date of the Acquisition Agreement, for distribution and service fees
payable to members of our selling group; provided, however, that if the
fees payable to us by a Fund pursuant to the Fund's Plan are reduced
following the Closing Date, such compensation rates would be reduced
proportionately with respect to that Fund's Shares.
6. Payment for Shares sold to you shall be made on or before the settlement
dates specified in our confirmation, at our office and by check or wire.
We reserve the right to delay issuance or transfer of Shares until such
check has cleared. If such payment is not received by us, we reserve the
right, without notice, forthwith either to cancel the sale, or, at our
option, to sell the Shares ordered back to such Fund, and in either case,
we may hold you responsible for any loss, including loss of profit,
suffered by us or by such Fund resulting from your failure to make payment
as aforesaid. You shall assume responsibility for any loss to a Fund
caused by a correction made by you subsequent to trade date, and you shall
immediately pay such loss to the Fund upon notification.
7. You agree to purchase Shares only from us or from our customers. If you
purchase Shares from us, you agree that all such purchases shall be made
only to cover orders received by you from your customers, or for your own
bona fide investment. If you purchase Shares from your customers, you
agree to pay such customers not less than the applicable liquidating price
determined as set forth in the then current Fund prospectus.
8. You agree to sell Shares only (a) to your customers at the applicable
public offering price or (b) to a Fund or to us as selling agent for the
Funds at the liquidating price, in each case determined as set forth in the
Fund's current prospectus. You agree to conform to our written compliance
standards applicable to our multiple class offering of Shares subject to a
front-end sales charge, Shares subject to a contingent deferred sales
charge, and Shares subject to a level load in the form in which we may
provide to you from time to time.
9. You shall not withhold placing with us orders received from your customers
so as to profit yourself as a result of such withholding, e.g., by a change
in the net asset value from that used in determining the public offering
price to your customers. You will place orders for purchases and
redemptions for your customers promptly upon receipt from your customers.
10. If any shares sold by us under the terms of this Agreement are repurchased
or liquidated by the Funds, or by us as agent for the Funds, or are
tendered for liquidation to the Funds, within seven (7) business days after
such confirmation of your original order, then you shall forthwith repay to
the Funds the full concession or commission allowed to you on such sale and
we shall forthwith repay to the Funds our share of the selling commission
thereon. We shall notify you of such repurchase or liquidation within ten
(10) days from the day on which written redemption requests and, if
applicable, share certificates are delivered to us or to the Funds.
<PAGE>
11. You will not offer for sale in any state where they are not qualified for
sale under the securities laws of such state or where you are not qualified
to act as a dealer, except for states in which they or you are exempt from
qualification. On request we will provide you with a list of states where
the Shares are qualified for sale and will inform you of any changes in
such registration or qualification. You will not offer or sell Shares
except under circumstances that will result in compliance with applicable
federal and state securities laws.
12. No person is authorized to make any representation relating to the Shares
or the Old Shares, except those contained in the then current Funds
prospectuses, statements of additional information and any authorized
supplemental material supplied by us. In ordering Shares you rely solely
and conclusively on the representations contained in the then current
prospectuses and statements of additional information, and supplemental
material, if any, above described. Reasonable numbers of additional copies
of the then current prospectuses and statements of additional information
are and will be available on written request. In no transaction shall you
have any authority to take any action or make any representation binding
upon the Funds, any other member of the Selling Group, or ourselves. You
shall provide a currently effective prospectus to every purchaser of
Shares, except to the extent that we expressly undertake to do so on your
behalf. In the event Shares will be held by you in nominee name, it is
agreed to that you will pass the prospectus on to the ultimate purchaser to
the extent known to you. All advertising and promotion of the Funds by
foreign dealers shall conform to the standards applicable to members in the
United States.
13. We and you agree that all disputes between us of whatever subject matter
(other than any subject matter dealt with in the Acquisition Agreement),
whether existing on the date hereof or arising hereafter, shall be
submitted to arbitration in accordance with the Code of Arbitration
Procedure of the NASD, or similar rules or code, in effect at the time of
the submission of any such dispute.
14. Each Fund reserves the right in its discretion and we reserve the right, in
our discretion and without notice to you or to any members of the Selling
Group, to suspend sales of Shares, to withdraw the offering, to change the
offering price, or to amend, modify or cancel this Agreement and
concessions, discounts or commissions at any time payable or allowable
hereunder (including, without limitation, concessions, or commissions on
future periodic investments or reinvestment); provided that no such
amendment shall have the effect of reducing the compensation payable to you
with respect to the Shares or the Old Shares as provided in the Acquisition
Agreement. This Agreement may be amended by us at any time by written
notice to you, and upon your receipt thereof, such amendment shall become
effective, provided that no such amendment shall have the effect of
reducing the compensation payable to you with respect to the Shares or the
Old Shares as provided in the Acquisition Agreement. Each party to this
Agreement may cancel its participation in this Agreement by giving written
notice to the other parties; provided that it may not be terminated without
your written consent prior to June 2, 1998, except in the case of a
termination pursuant to Rule 12b-1 under the 1940 Act. Such notice shall
be deemed to have been given and to be effective on the date on which it
was either delivered personally to the other parties or any officer or
member thereof, or was mailed postpaid or delivered to a telegraph office
for transmission to the other parties at their address as shown herein.
This Agreement shall terminate immediately upon the appointment of a
Trustee under the Securities Investor Protection Act or any other act of
insolvency by you. The termination of this Agreement by any of the
foregoing means shall have no effect upon the payment of dealers
concessions with respect to Shares sold prior to the effective date of
termination. In addition, notwithstanding the foregoing, the first
sentence of Paragraph 4 shall survive termination or amendment of this
Agreement, except upon your written consent otherwise. A trade placed by
you subsequent to your voluntary termination of the Agreement will not
serve to reinstate the Agreement. Reinstatement, except in the case of a
temporary suspension of a dealer, will only be effective upon written
notification by us. No termination of this Agreement shall terminate,
reduce or modify the compensation with respect to the Shares or the Old
Shares to be provided to you in accordance with the Acquisition Agreement.
To the extent that the terms of this Agreement conflict with or are
inconsistent with the terms of the Acquisition Agreement, the terms of the
Acquisition Agreement shall be controlling.
15. Shares of The Cash Management Fund of the Solomon Brothers Investment
Series, a registered series investment company (or any similar money market
investment vehicle hereafter offered in connection with exchanges of shares
of the Funds through the Funds' principal underwriter) ("Money Market
Fund"), are available through and may be ordered from Northstar
Distributors, Inc. Northstar Distributors, Inc. will pay you quarterly on
combined assets invested in the Class T Account of the Money Market Fund
pursuant to orders received from you by us if and to the extend we collect
12b-1 fees in our capacity as dealer for the Money Market Fund. No such
fee will be paid if in any quarter the average daily net assets of your
customer accounts in the Fund are less than $1 million. This program may
be terminated by us at any time without prior notice to you. With respect
to Money Market Fund shares in the Class A, B and C Accounts for which
Advest is the dealer of record, Advest shall receive such portion of any
12b-1 fees received by the Underwriter as the Underwriter shall determine
from time to time, with respect to all members of its selling group.
16. This Agreement also permits you to offer variable contracts ("Contracts")
issued by Northwestern National Life Insurance Company ("NWNL") for which
we serve as distributor. You may offer and sell Contracts to customers
only through your registered representatives who are variable contract
licensed pursuant to applicable state law and who have been specifically
appointed by NWNL to solicit Contracts in the applicable jurisdiction. You
may offer and sell the Contracts only in accordance with the terms and
conditions of the currently effective prospectus or offering brochures
applicable to the Contracts and to any Fund which may serve as a funding
vehicle for the Contracts. You may not make any representation, including
any representation regarding the tax status of the Contract, not included
in such prospectuses or offering brochures or in any written, authorized
advertising or sales material supplied by NWNL and you shall further be
liable for any claim against NWNL or us
<PAGE>
arising from your failure to comply with this provision. Any proposed
advertising, printed material or presentation script relating to the
Contracts must be approved in writing by NWNL prior to its use. In no
event shall you forward to NWNL less than any payment collected by your
registered representative, without deduction for compensation or
commission. You agree to observe NWNL's written procedures, rules and
guidelines relating to the Contracts. You agree that references in this
Agreement to "FUND" or "FUNDS" with respect to the Contracts shall mean or
include all or any of the NWNL/Northstar Variable Account, NWNL, or us, and
that such provisions shall be and hereby are deemed amended as necessary to
comply with Section 29 of Article III of the NASD Rules of Fair Practice,
federal and state laws, and the rules and regulations of the SEC applicable
to variable contracts.
17. All communications shall be sent to us at our offices at Two Pickwick
Plaza, Greenwich, CT 06830. Any notice to you shall be duly given if
mailed to you at the address shown on this Agreement.
18. This Agreement shall become effective as of the date when it is executed
and dated by you below. This Agreement and all the rights and obligations
of the parties hereunder shall be governed by and construed under the laws
of the State of Connecticut.
NORTHSTAR DISTRIBUTORS, INC.
Date: June 2, 1995 By:
-------------------------------------------------
Date: June 2, 1995 Accepted: ADVEST, INC.
Investment Dealer
--------------------------------
Authorized Signature
-----------------------------
Print Name David Horowitz
---------------------------------------
Title Assistant General Counsel
--------------------------------------------
Address 280 Trumbull St., #
------------------------------------------
City Hartford State CT Zip Code
-------- -- ------------
Phone (203) 525-1421
-----------------
NASD Broker/Dealer No.
---------------------------
Clear Trades Through Broker/Dealer Advest, Inc.
---------------
<PAGE>
Exhibit 8
Form of Custody Agreement
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE FUNDS LISTED ON ATTACHMENT I HERETO
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Employment of Custodian and Property to be
Held By It.............................................1
2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States....2
2.1 Holding Securities................................2
2.2 Delivery of Securities............................3
2.3 Registration of Securities........................7
2.4 Bank Accounts.....................................8
2.5 Availability of Federal Funds.....................9
2.6 Collection of Income..............................9
2.7 Payment of Fund Monies ..........................10
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased..................13
2.9 Appointment of Agents............................13
2.10 Deposit of Securities in Securities System.......14
2.10A Fund Assets Held in the Custodian's Direct
Paper System.....................................17
2.11 Segregated Account...............................18
2.12 Ownership Certificates for Tax Purposes..........20
2.13 Proxies..........................................20
2.14 Communications Relating to Fund
Portfolio Securities.............................20
2.15 Reports to Fund by Independent Public
Accountants......................................21
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.............22
3.1 Appointment of Foreign Sub-Custodians............22
3.2 Assets to be Held................................22
3.3 Foreign Securities Depositories..................23
3.4 Segregation of Securities........................23
3.5 Agreements with Foreign Banking Institutions.....23
3.6 Access of Independent Accountants of the Fund....24
3.7 Reports by Custodian.............................24
3.8 Transactions in Foreign Custody Account..........25
3.9 Liability of Foreign Sub-Custodians..............26
3.10 Liability of Custodian...........................26
3.11 Reimbursement for Advances.......................27
3.12 Monitoring Responsibilities......................28
3.13 Branches of U.S. Banks...........................29
<PAGE>
3.14 Tax Law..........................................29
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund..................................30
5. Proper Instructions....................................31
6. Actions Permitted Without Express Authority............32
7. Evidence of Authority..................................33
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income.............................................33
9. Records................................................34
10. Opinion of Fund's Independent Accountant...............34
11. Compensation of Custodian..............................35
12. Responsibility of Custodian............................35
13. Effective Period, Termination and Amendment............37
14. Successor Custodian....................................38
15. Interpretive and Additional Provisions.................40
16. Massachusetts Law to Apply.............................40
17. Prior Contracts........................................40
CUSTODIAN CONTRACT
This Contract between Each of the Funds listed on Attachment I hereto, each
a business trust organized and existing under the laws of Massachusetts, having
its principal place of business at 100 Federal Street, 29th Floor, Boston,
Massachusetts 02110, each of which is hereinafter called a "Fund", and State
Street Bank and Trust Company, a Massachusetts trust company, having its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
<PAGE>
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's
Declaration of Trust. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Fund from time to time, and the cash consideration received by it
for such new or treasury shares of beneficial interest ("Shares") of the Fund as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not delivered to
the Custodian or a foreign sub-custodian (as defined in Section 3.1 of this
Contract).
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Trustees of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as
<PAGE>
sub-custodians for the Fund's securities and other assets the foreign banking
institutions and foreign securities depositories designated in Schedule "A"
hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property, to be
held by it in the United States, including all domestic securities
owned by the Fund, other than (a) securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by the Fund held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's
Direct Paper book-entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
<PAGE>
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into
by the Fund;
3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.9 or into the name or
nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; PROVIDED that, in
any such case, the new
<PAGE>
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts
<PAGE>
or temporary securities for definitive securities; provided
that, in any such case, the new securities and cash, if any,
are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, BUT ONLY against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, BUT
ONLY against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange
<PAGE>
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time to
time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or
<PAGE>
redemption; and
15) For any other proper corporate purpose, BUT ONLY upon
receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming
the person or persons to whom delivery of such securities
shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the
name of the Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, UNLESS the Fund has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the Fund,
or in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Fund under the terms of this Contract
shall be in "street
<PAGE>
name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect
income due the Fund on such securities and to notify the Fund on a
best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund,
subject only to draft or order by the Custodian acting pursuant to
the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Fund, other than cash maintained by
the Fund in a bank account established andused in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by
the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary
or desirable; PROVIDED, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian
<PAGE>
in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Fund and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal funds available to the Fund as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
the Fund which are deposited into the Fund's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to United States registered securities held
hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to United
States bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. Income
due the Fund on United States securities loaned pursuant to the
provisions of
<PAGE>
Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or
data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the Fund is
properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out monies of the Fund in the
following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Fund but only (a) against the delivery of such
securities, or evidence of title to such options, futures
contracts or options on futures contracts, to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund
or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities
<PAGE>
System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions
set forth in Section 2.10A; (d) in the case of repurchase
agreements entered into between the Fund and the Custodian,
or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt
evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund or
(e) for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions
from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
<PAGE>
3) For the redemption or repurchase of Shares issued by the
Fund as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments
for the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be
in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect
of securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the
<PAGE>
person or persons to whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may
from time to time direct; PROVIDED, however, that the appointment of
any agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 DEPOSIT OF SECURITIES IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-entry system
authorized by the
<PAGE>
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as a "Securities System," in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to
the following provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased
for the account of the Fund upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall
transfer domestic
<PAGE>
securities sold for the account of the Fund upon (i) receipt
of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Securities System of
transfers of domestic securities for the account of the Fund
shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the Fund in the
form of a written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account
of the Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding domestic securities deposited in
the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be,
<PAGE>
required by Article 13 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM
The Custodian may deposit and/or maintain securities owned by the
Fund in the Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund
<PAGE>
in the Direct Paper System only if such securities are
represented in an account ("Account") of the Custodian in
the Direct Paper System which shall not include any assets
of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund copies
of daily transaction
<PAGE>
sheets reflecting each day's transaction in the Securities System
for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may reasonably
request from time to time;
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i)
in accordance with the provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the procedures
<PAGE>
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Fund held by it
and in connection with transfers of such securities.
2.13 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Fund or a nominee of the
Fund, all proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to
such
<PAGE>
securities.
2.14 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES
Subject to the provisions of Section 2.3, the Custodian shall
transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic securities
being held for the Fund. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the domestic
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the Custodian is
to take such action.
2.15 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
<PAGE>
contracts, including domestic securities deposited and/or maintained
in a Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of sufficient
scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained
outside the United States the foreign banking institutions and
foreign securities depositories designated on Schedule A hereto
("foreign sub-custodians"). Upon receipt of "Proper Instructions",
as defined in Section 5 of this Contract, together with a certified
resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Fund's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the
<PAGE>
securities and other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities", as defined in paragraph
(c)(1) of Rule 17f-5 under the Investment Company Act of 1940, and
(b) cash and cash equivalents in such amounts as the Custodian or the
Fund may determine to be reasonably necessary to effect the Fund's
foreign securities transactions.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the Fund
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 SEGREGATION OF SECURITIES
The Custodian shall identify on its books as belonging to the Fund,
the foreign securities of the Fund held by each foreign sub-
custodian. Each agreement pursuant to which the Custodian employs a
foreign banking institution shall require that such institution
establish a custody account for the Custodian on behalf of the Fund
and physically segregate in that account, securities and other assets
of the Fund, and, in the event that such institution deposits the
Fund's securities in a foreign securities depository, that it shall
identify on its books as belonging to the
<PAGE>
Custodian, as agent for the Fund, the securities so deposited.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the Fund's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership of the Fund's
assets will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Fund;
(d) officers of or auditors employed by, or other representatives of
the Custodian, including to the extent permitted under applicable law
the independent public accountants for the Fund, will be given access
to the books and records of the foreign banking institution relating
to its actions under its agreement with the Custodian; and (e) assets
of the Fund held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any
<PAGE>
foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by foreign sub-
custodians, including but not limited to an identification of
entities having possession of the Fund's securities and other assets
and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of the Fund indicating, as to
securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT
(a) Except as otherwise provided in paragraph (b) of this Section
3.8, the provisions of Sections 2.2 and 2.7 of this Contract shall
apply, MUTATIS MUTANDIS, to the foreign securities of the Fund held
outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the
Fund may be effected in accordance with the customary established
securities
<PAGE>
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a
holder of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and each Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage,
<PAGE>
cost, expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-custodians generally in this Contract
and, regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the
<PAGE>
Custodian to advance cash or securities for any purpose including the
purchase or sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash
and to dispose of the Fund assets to the extent necessary to obtain
reimbursement. The Custodian will dispose of assets of the Fund, as
provided in the foregoing sentence, only upon 10 days' advance
written notice to the Fund, stating the Custodian's intention to
dispose of Fund assets and specifying the assets to be disposed of
and the date on which the disposition is expected to occur.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund in
connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the
<PAGE>
financial condition of a foreign sub-custodian or any material loss
of the assets of the Fund or in the case of any foreign sub-custodian
not the subject of an exemptive order from the Securities and
Exchange Commission is notified by such foreign sub-custodian that
there appears to be a substantial likelihood that its shareholders'
equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined
below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of Fund assets is maintained
in a foreign branch of a banking institution which is a "bank" as
defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 TAX LAW
The Custodian shall have no responsibility or liability for
<PAGE>
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those mentioned in
the above sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility
of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the
Fund has provided such information.
4. PAYMENTS FOR REPURCHASES OR REDEMPTIONS AND SALES OF
SHARES OF THE FUND
From such funds as may be available for the purpose but subject to the
limitations of the Fund's Declaration of Trust and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the
<PAGE>
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian
by a holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time between
the Fund and the Custodian.
The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.
5. PROPER INSTRUCTIONS
Proper Instructions as used herein means a writing signed or initialled by
one or more officers of the Fund or one or more other person or persons as the
Board of Trustees or the Fund's adviser or sub-adviser shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund or the Fund's adviser or sub-adviser shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
<PAGE>
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Fund or the Fund's adviser or sub-adviser
accompanied by a detailed description of procedures approved by the Board of
Trustees or the Fund's adviser or sub-adviser, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees or the Fund's adviser or sub-adviser
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in accordance with Section
2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
PROVIDED that all such payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of the Fund except as otherwise directed by the
Board of Trustees of the
<PAGE>
Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Fund's Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information
to the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so,
<PAGE>
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
9. RECORDS
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect
<PAGE>
to any other requirements of such Commission.
11. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.
12. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States and,
<PAGE>
regardless of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.11 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should
<PAGE>
the Fund fail to repay the Custodian promptly, the Custodian shall be entitled
to utilize available cash and to dispose of the Fund assets to the extent
necessary to obtain reimbursement. The Custodian will dispose of assets of the
Fund, as provided in the foregoing sentence, only upon 10 days' advance written
notice to the Fund, stating the Custodian's intention to dispose of Fund assets
and specifying the assets to be disposed of and the date on which the
disposition is expected to occur.
13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT This
Contract shall become effective as of its execution, shall continue in full
force and effect until terminated as hereinafter provided, may be amended at
any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid
to the other party, such termination to take effect not sooner than thirty
(30) days after the date of such delivery or mailing; PROVIDED, however that
the Custodian shall not act under Section 2.10 hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Trustees of the Fund has approved the initial use of a
particular Securities System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has reviewed
the use by the Fund of such Securities System, as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section 2.10A hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant
<PAGE>
Secretary that the Board of Trustees has approved the initial use of the
Direct Paper System and the receipt of an annual certificate of the Secretary
or an Assistant Secretary that the Board of Trustees has reviewed the use by
the Fund of the Direct Paper System; PROVIDED FURTHER, however, that the Fund
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of the Fund's Declaration of
Trust, and further provided, that the Fund may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
14. SUCCESSOR CUSTODIAN
If a successor custodian shall be appointed by the Board of Trustees
of the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
<PAGE>
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Trustees of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
<PAGE>
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
15. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Fund's Declaration of Trust of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
16. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
17. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
<PAGE>
IN WITNESS WHEREOF, each
of the parties has casued has caused this instrument to be executed in its name
and behalf by its duly authorized representative and its seal to be hereunder
affixed as of the day of May, 1994.
ATTEST EACH OF THE FUNDS LISTED ON
ATTACHMENT I HERETO
By
ATTEST STATE STREET BANK AND TRUST COMPANY
By
Executive Vice President
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Each of the Funds
Listed on Attachment I for use as sub-custodians for the Fund's securities and
other assets:
(Insert banks and securities depositories)
<PAGE>
Certified:
- -----------------------------
Fund's Authorized Officer
Date:
---------------------
ATTACHMENT I
The Advantage Growth Fund
The Advantage Special Fund
The Advantage High Yield Bond Fund
The Advantage Income Fund
The Advantage Government Securities Fund
The Advantage Strategic Income Fund
<PAGE>
Exhibit 9(a)
Form of
Transfer Agency Agreement
<PAGE>
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 5th day of June, 1995, is by and between
THE NORTHSTAR ADVANTAGE _______ FUND (the "Fund"), organized under the laws of
Massachusetts and having its principal place of business at Two Pickwick Plaza,
Greenwich, Connecticut 06830 and THE SHAREHOLDER SERVICES GROUP, INC. (the
"Transfer Agent"), a Massachusetts corporation with principal offices at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109.
WITNESSETH
WHEREAS, the Fund desires to appoint the Transfer Agent as its transfer
agent, dividend disbursing agent and agent in connection with certain other
activities and the Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
Article 1 DEFINITIONS
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended from
time to time.
(b) "Authorized Person" shall be deemed to include (i) any authorized
officer of the Fund; or (ii) any person, whether or not such person is an
officer or employee of the Fund, duly authorized to give Oral Instructions
or Written Instructions on behalf of the Fund as indicated in writing to
the Transfer Agent from time to time.
(c) "Board of Directors" shall mean the Board of Directors or Board
of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Custodian" refers to any custodian or subcustodian of securities
and other property which the Fund may from time to time deposit, or cause
to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.
2
<PAGE>
(f) "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to
time.
(g) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized Person;
(h) "Prospectus" shall mean the most recently dated Fund Prospectus
and Statement of Additional Information, including any supplements thereto
if an, which has become effective under the Securities Act of 1933 and the
1940 Act.
(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of the Fund as
may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares.
(k) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by the Transfer Agent to be an Authorized
Person and actually received by the Transfer Agent. Written Instructions
shall include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original or
other process.
Article 2 APPOINTMENT OF THE TRANSFER AGENT
2.1 The Fund hereby appoints and constitutes the Transfer Agent as
transfer agent and dividend disbursing agent for Shares of the Fund and as
shareholder servicing agent for the Fund and the Transfer Agent hereby accepts
such appointments and agrees to perform the duties hereinafter set forth.
Article 3 DUTIES OF THE TRANSFER AGENT
3.1 The Transfer Agent shall be responsible for:
(a) Administering and/or performing the customary services of a
transfer agent; service agent in connection with dividend and distribution
functions; and for performing shareholder account and administrative agent
functions in connection with the issuance, transfer and redemption or
repurchase (including coordination with the Custodian) of Shares, as more
fully described in the written schedule of Duties of the Transfer Agent
annexed hereto as Schedule A and incorporated herein, and in accordance
with the terms of the Prospectus, applicable law and the procedures
established from time to time between the Transfer Agent and the Fund.
3
<PAGE>
(b) Recording the issuance of Shares and maintaining pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares which are
authorized, based upon data provided to it by the Fund, and issued and
outstanding. The Transfer Agent shall provide the Fund on a regular basis
with the total number of Shares which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance of
Shares, to monitor the issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares, which functions shall be
the sole responsibility of the Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality of
the issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to the Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Transfer Agent for the
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
3.3 In addition to the duties set forth herein, the Transfer Agent shall
perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and the Transfer Agent.
Article 4 RECORDKEEPING AND OTHER INFORMATION
4.1 The Transfer Agent shall create and maintain all records required of
it pursuant to its duties hereunder and as set forth in Schedule A in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. All records shall be available during regular
business hours for inspection and use by the Fund. Where applicable, such
records shall be maintained by the Transfer Agent for the periods and in the
places required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, the
4
<PAGE>
Transfer Agent agrees that all such records prepared or maintained by the
Transfer Agent relating to the services to be performed by the Transfer Agent
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such section, and will be surrendered promptly
to the Fund on and in accordance with the Fund's request.
4.3 In case of any requests or demands for the inspection of Shareholder
records of the Fund, the Transfer Agent will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request. The
Transfer Agent reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to comply with such request.
4.4 Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as may
be necessary for the Fund to evaluate the quality of the services performed by
the Transfer Agent pursuant hereto.
Article 5 FUND INSTRUCTIONS
5.1 The Transfer Agent will have no liability when acting upon Written or
Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. The Transfer Agent will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Fund and the proper countersignature of the
Transfer Agent.
5.2 At any time, the Transfer Agent may request Written Instructions from
the Fund and may seek advice from legal counsel for the Fund, or its own legal
counsel, with respect to any matter arising in connection with this Agreement,
and it shall not be liable for any action taken or not taken or suffered by it
in good faith in accordance with such Written Instructions or in accordance with
the opinion of counsel for the Fund or for the Transfer Agent. Written
Instructions requested by the Transfer Agent will be provided by the Fund within
a reasonable period of time.
5.3 The Transfer Agent, its officers, agents or employees, shall accept
Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect the
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Transfer Agent's right to rely on Oral Instructions.
Article 6 COMPENSATION
6.1 The Fund will compensate the Transfer Agent for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule B and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by the Transfer Agent in the performance of its duties hereunder.
Out-of-pocket expenses shall include, but shall not be limited to, the items
specified in the written schedule of out-of-pocket charges annexed hereto as
Schedule C and incorporated herein. Schedule B may be modified by written
agreement between the parties. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by the Transfer
Agent in the performance of its obligations hereunder.
6.3 The Fund agrees to pay all fees and out-of-pocket expenses within
fifteen (15) days following the receipt of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule B, a revised Fee Schedule executed and dated by the
parties hereto.
Article 7 DOCUMENTS
7.1 In connection with the appointment of the Transfer Agent, the Fund
shall, on or before the date this Agreement goes into effect, but in any case
within a reasonable period of time for the Transfer Agent to prepare to perform
its duties hereunder, deliver or caused to be delivered to the Transfer Agent
the documents set forth in the written schedule of Fund Documents annexed hereto
as Schedule D.
Article 8 TRANSFER AGENT SYSTEM
8.1 The Transfer Agent shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by the Transfer Agent in connection with
the services provided by the Transfer Agent to the Fund herein (the "Transfer
Agent System").
8.2 The Transfer Agent hereby grants to the Fund a limited license to the
Transfer Agent System for the sole and limited
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purpose of having the Transfer Agent provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or interpreted
otherwise and such license shall immediately terminate with the termination of
this Agreement.
Article 9 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
9.1 The Transfer Agent represents and warrants to the Fund that:
(a) It is a corporation duly organized an existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) All requisite corporate proceedings have been taken to authorized
it to enter into this Agreement;
(d) It is duly registered with its appropriate regulatory agency as a
transfer agent and such registration will remain in effect for the duration
of this Agreement;
(e) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.
Article 11 REPRESENTATIONS AND WARRANTIES OF THE FUND
11.1 The Fund represents and warrants to the Transfer Agent that:
(a) It is duly organized and existing and in good standing under the
laws of the jurisdiction in which it is organized;
(b) It is empowered under applicable laws and by its Article of
Incorporation and By-Laws to enter into this Agreement;
(c) All corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorized it
to enter into this Agreement;
(d) A registration statement under the Securities Act of 1933, as
amended, is currently effective and will remain effective, and all
appropriate state securities law filings have been made and will continue
to be made, with respect to all Shares of the Fund being offered for sale;
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<PAGE>
(e) All outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its Prospectus, such
Shares shall be validly issued, fully paid and non-assessable; and
Article 12 INDEMNIFICATION
12.1 The Transfer Agent shall not be responsible for and the Fund shall
indemnify and hold the Transfer Agent harmless from and against any and all
claims, costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which may be asserted
against the Transfer Agent or for which the Transfer Agent may be held to be
liable (a "Claim") arising out of or attributable to any of the following:
(a) Any actions of the Transfer Agent required to be taken pursuant
to this Agreement unless such Claim resulted from a negligent act or
omission to act or bad faith by the Transfer Agent in the performance of
its duties hereunder.
(b) The Transfer Agent's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by the Transfer Agent from the Fund, or any authorized third party
acting on behalf of the Fund, including but not limited the prior transfer
agent for the Fund, in the performance of the Transfer Agent's duties and
obligations hereunder.
(c) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund.
(d) The offer or sales of shares in violation of any requirement
under the securities laws or regulations of any state that such shares be
registered in such state or in violation of any stop order or other
determination or ruling by any state with respect to the offer or sale of
such shares in such state.
(e) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund made
herein.
12.2 In any case in which the Fund may be asked to indemnify or hold the
Transfer Agent harmless, the Transfer Agent will notify the Fund promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Fund although the failure to do
so shall not prevent
8
<PAGE>
recovery by the Transfer Agent and shall keep the Fund advised with respect to
all developments concerning such situation. The Fund shall have the option to
defend the Transfer Agent against any Claim which may be the subject of this
indemnification, and, in the event that the Fund so elects, such defense shall
be conducted by counsel chosen by the Fund and satisfactory to the Transfer
Agent, and thereupon the Fund shall take over complete defense of the Claim and
the Transfer Agent shall sustain no further legal or other expenses in respect
of such Claim. The Transfer Agent will not confess any Claim or make any
compromise in any case in which the Fund will be asked to provide
indemnification, except with the Fund's prior written consent. The obligations
of the parties hereto under this Section shall survive the termination of this
Agreement.
Article 13 STANDARD OF CARE
13.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within commercially reasonable limits to ensure the
accuracy of all services performed under this Agreement, but assume no
responsibility for loss or damage to the Fund unless said errors are caused by
the Transfer Agent's own negligence, bad faith or willful misconduct or that of
its employees.
13.2 Notwithstanding the foregoing Section 12(a) or anything else
contained in this Agreement to the contrary, the Transfer Agent's entire
liability to the Fund for any loss or damage, direct or indirect for any cause
whatsoever (including but not limited to those arising out of this Agreement),
and regardless of the form of action, shall be limited to one million dollars
($1,000,000).
Article 14 CONSEQUENTIAL DAMAGES
14.1 In no event and under no circumstances shall either party to this
Agreement be liable to the other party for consequential or indirect loss of
profits, reputation or business or any other special damages under any provision
of this Agreement or for any act or failure to act hereunder.
Article 15 TERM AND TERMINATION
15.1 This Agreement shall be effective on the date first written above and
shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.
15.2 Either party may terminate this Agreement at the end of the Initial
Term or any subsequent Renewal Term upon not less than
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ninety (90) days or more than one-hundred eighty (180) days prior written notice
to the other party.
15.3 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion thereof to a
successor transfer agent will be borne by the Fund.
15.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If the Transfer Agent is the Non-Defaulting Party, its
termination of this Agreement shall not constitute a waiver of any other rights
or remedies of the Transfer Agent with respect to services performed prior to
such termination or rights of the Transfer Agent to be reimbursed for
out-of-pocket expenses. In all cases, termination by the Non-Defaulting Party
shall not constitute a waiver by the Non-Defaulting Party of any other rights it
might have under this Agreement or otherwise against the Defaulting Party.
Article 16. CONFIDENTIALITY
16.1 In connection with the services provided by the Transfer Agent
hereunder, certain confidential and proprietary information regarding the
Transfer Agent and the Fund may be disclosed to the other. In connection
therewith, the parties agree as follows:
(a) Confidential Information disclosed under this Agreement shall
mean:
(i) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating
to the past, present or future business activities of the Transfer
Agent or the Fund, their respective parent corporation, their
respective subsidiaries and affiliated companies and the customers,
clients and suppliers of any of the foregoing;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Transfer
Agent or the Fund a competitive advantage over its competitors; and
10
<PAGE>
(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
(b) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment,
prototypes and models, and any other tangible manifestation of the
foregoing which now exist or come into the control or possession of the
party.
16.2 Except as expressly authorized by prior written consent of the
disclosing party ("Discloser"), the party receiving Confidential Information
("Recipient") shall:
(a) limit access to Discloser's Confidential Information to
Recipient's employees who have a need-to-know in connection with the
subject matter thereof;
(b) advise those employees who have access to the Confidential
Information of the proprietary nature thereof and of the obligations set
forth in this Confidentiality Agreement;
(c) take appropriate action by instruction or agreement with the
employees having access to Discloser's Confidential Information to fulfill
Recipient's obligations under this Confidentiality Agreement;
(d) safeguard all of Discloser's Confidential Information by using a
reasonable degree of care, but not less than that degree of care used by
Recipient in safeguarding its own similar information or material;
(e) use all of Discloser's Confidential Information solely for
purposes that it was intended;
(f) not disclose any of Discloser's Confidential Information to third
parties; and
(g) not disclose the existence of the discussions to any third party.
16.3 Upon Discloser's request, Recipient shall surrender to Discloser all
memoranda, notes, records, drawings, manuals, records, and other documents or
materials (and all copies of same) relating to or containing Discloser's
Confidential Information. When Recipient returns the materials, Recipient shall
certify in writing that it has returned all materials containing or relating to
the Confidential Information.
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16.4 The obligations of confidentiality and restriction on use in this
Article 16 shall not apply to any Confidential Information that Recipient
proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of Recipient; or
(b) Was lawfully received by Recipient from a third party free of any
obligation of confidence to the third party; or
(c) Was already in Recipient's possession prior to receipt from
Discloser; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not limited
to, giving Discloser as much advance notice as practical of the possibility
of disclosure to allow Discloser to stop such disclosure or obtain a
protective order concerning such disclosure; or
(e) Is subsequently and independently developed by Recipient's
employees, consultants or agents without reference to Confidential
Information.
16.5 The Fund and the Transfer Agent agree that money damages would not be
a sufficient remedy for breach of this Section 16. Accordingly, in addition to
all other remedies that either party may have, a party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any breach of this Agreement. The parties agree to waive any requirement for a
bond in connection with any such injunctive or other equitable relief.
Article 17 FORCE MAJEURE
17.1 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, labor difficulties,
mechanical breakdowns, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
Article 18 AMENDMENTS
18.1 This Agreement may only be amended or modified by a written
instrument executed by both parties.
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Article 19 SUBCONTRACTING
19.1 The Fund agrees that the Transfer Agent may, in its discretion,
subcontract for certain of the services described under this Agreement or the
Schedules hereto; provided that the appointment of any such Transfer Agent shall
not relieve the Transfer Agent of its responsibilities hereunder.
Article 20 ARBITRATION
20.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
20.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
20.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Section 20.
Article 21 NOTICE
21.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund:
The Northstar Advantage ______ Fund
Two Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Mr. Mark Lipson, President
To the Transfer Agent:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
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with a copy to the Transfer Agent's General Counsel
Article 22 SUCCESSORS
22.1 This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.
Article 23 GOVERNING LAW
23.1 This Agreement shall be governed exclusively by the laws of the
Commonwealth of Massachusetts without reference to the choice of law provisions
thereof. Each party hereto hereby (i) consents to the personal jurisdiction of
the Commonwealth of Massachusetts courts over the parties hereto, hereby waiving
any defense of lack of personal jurisdiction; and (iii) appoints the person to
whom notices hereunder are to be sent as agent for service of process.
Article 24 COUNTERPARTS
24.1 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 25 CAPTIONS
25.1 The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 26 USE OF TRANSFER AGENT/FUND NAME
26.1 The Fund shall not use the name of the Transfer Agent in any
Prospectus, Statement of Additional Information, Shareholders' report, sales
literature or other material relating to the Fund in a manner not approved prior
thereto in writing; provided, that the Transfer Agent need only receive notice
of all reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule.
26.2 The Transfer Agent shall not use the name of the Fund or material
relating to the Fund on any documents or forms for other than internal use in a
manner not approved prior thereto in writing; provided, that the Fund need only
receive notice of all reasonable uses of its name which merely refer in accurate
terms to the appointment of the Transfer Agent or which are required by any
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government agency or applicable law or rule.
Article 27 RELATIONSHIP OF PARTIES
27.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 28 ENTIRE AGREEMENT; SEVERABILITY
28.1 This Agreement and the Schedules attached hereto constitute the
entire agreement of the parties hereto relating to the matters covered hereby
and supersede any previous agreements. If any provision is held to be illegal,
unenforceable or invalid for any reason, the remaining provisions shall not be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
THE NORTHSTAR ADVANTAGE ______
FUND:
By:
-----------------------------------------------
- -------------------
Title:
--------------------------------------------
- -------------------
THE SHAREHOLDER SERVICES GROUP, INC.:
By:
-----------------------------------------------
- -------------------
Title:
--------------------------------------------
- -------------------
Schedule A
DUTIES OF THE TRANSFER AGENT
1. SHAREHOLDER INFORMATION. The Transfer Agent shall
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maintain a record of the number of Shares held by each Shareholder of record
which shall include name, address, taxpayer identification and which shall
indicate whether such Shares are held in certificates or uncertificated form.
2. SHAREHOLDER SERVICES. The Transfer Agent shall respond as
appropriate to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as may be from
time to time mutually agreed upon between the Transfer Agent and the Fund.
3. SHARE CERTIFICATES.
(a) At the expense of the Fund, the Fund shall supply the Transfer
Agent with an adequate supply of blank share certificates to meet the Transfer
Agent requirements therefor. Such Share certificates shall be properly signed by
facsimile. The Fund agrees that, notwithstanding the death, resignation, or
removal of any officer of the Fund whose signature appears on such certificates,
the Transfer Agent or its agent may continue to countersign certificates which
bear such signatures until otherwise directed by Written Instructions.
(b) The Transfer Agent shall issue replacement Share certificates in
lieu of certificates which have been lost, stolen or destroyed, upon receipt by
the Transfer Agent of properly executed affidavits and lost certificate bonds,
in form satisfactory to the Transfer Agent, with the Fund and the Transfer Agent
as obligees under the bond.
(c) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby and the Shareholder
of record. With respect to Shares held in open accounts or uncertificated form
(i.e., no certificate being issued with respect thereto) the Transfer Agent
shall maintain comparable records of the Shareholders thereof, including their
names, addresses and taxpayer identification. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced certificates.
4. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS. The Transfer
Agent will address and mail to Shareholders of the Fund, all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders. In connection with meetings of Shareholders,
the Transfer Agent will prepare Shareholder lists, mail and certify as to the
mailing of proxy materials, process and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as inspector of election at meetings and
certify Shares voted at meetings.
5. SALES OF SHARES
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(a) The Transfer Agent shall not be required to issue any Shares of
the Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of the
Transfer Agent to rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, the Transfer Agent will endeavor to:
(i) give prompt notice of such return to the Fund or its designee; (ii) place a
stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as the Transfer Agent may from time to time
deem appropriate.
6. TRANSFER AND REPURCHASE
(a) The Transfer Agent shall process all requests to transfer or
redeem Shares in accordance with the transfer or repurchase procedures set forth
in the Fund's Prospectus.
(b) The Transfer Agent will transfer or repurchase Shares upon
receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorsed for transfer or redemption,
accompanied by such documents as the Transfer Agent reasonably may deem
necessary.
(c) The Transfer Agent reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the instructions
is valid and genuine. The Transfer Agent also reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the requested transfer
or repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which the Transfer
Agent, in its good judgement, deems improper or unauthorized, or until it is
reasonably satisfied that there is no basis to any claims adverse to such
transfer or repurchase.
(d) When Shares are redeemed, the Transfer Agent shall, upon receipt
of the instructions and documents in proper form, deliver to the Custodian and
the Fund or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by the Transfer Agent reflecting outstanding Shares of the Fund and
Shares attributed to individual accounts.
(e) The Transfer Agent, upon receipt of the monies paid to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by the
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Transfer Agent from the Fund.
(f) The Transfer Agent shall not process or effect any repurchase
with respect to Shares of the Fund after receipt by the Transfer Agent or its
agent of notification of the suspension of the determination of the net asset
value of the Fund.
7. DIVIDENDS
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to Shares of the
Fund, the Fund shall furnish or cause to be furnished to the Transfer Agent
Written Instructions setting forth the date of the declaration of such dividend
or distribution, the ex-dividend date, the date of payment thereof, the record
date as of which Shareholders entitled to payment shall be determined, the
amount payable per Share to the Shareholders of record as of that date, the
total amount payable to the Transfer Agent on the payment date and whether such
dividend or distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution of the
Board of Directors, the Fund will pay to the Transfer Agent sufficient cash to
make payment to the Shareholders of record as of such payment date.
(c) If the Transfer Agent does not receive sufficient cash from the
Fund to make total dividend and/or distribution payments to all Shareholders of
the Fund as of the record date, the Transfer Agent will, upon notifying the
Fund, withhold payment to all Shareholders of record as of the record date until
sufficient cash is provided to the Transfer Agent.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, the Transfer Agent shall: (i) perform all the
customary services of a transfer agent, registrar, dividend disbursing agent and
agent of the dividend reinvestment and cash purchase plan as described herein
consistent with those requirements in effect as at the date of this Agreement.
The detailed definition, frequency, limitations and associated costs (if any)
set out in the attached fee schedule, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, tabulating proxies, mailing Shareholder reports to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
where applicable, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
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Schedule B
FEE SCHEDULE
The fees set forth herein shall apply jointly to each of the mutual funds
sponsored, managed or advised by Northstar Investment Management Corporation or
its affiliates (collectively, the "Funds") that have appointed The Shareholder
Services Group, Inc. ("TSSG") as transfer agent.
I. Fees
CLASS A, B, C
With respect to Class A, B, and C Shares, the Funds shall jointly pay TSSG an
annualized fee as detailed below.
ASSET LEVEL NETWORK LEVEL III ASSETS NON-NETWORKED ASSETS
----------- ------------------------ --------------------
1st 500 million 12.5 b.p. 15.0 b.p.
Next 500 million 11.0 b.p. 13.5 b.p.
Next 500 million 9.5 b.p. 12.0 b.p.
Over 1.5 billion 8.0 b.p. 10.5 b.p.
TSSG's fees will be discounted to a rate of 12.0 b.p. on all assets until
12/3/95.
After 12/3/95, asset based breakpoints will be applied specifically to each
asset category (re: networked vs. non-networked).
TSSG's fees shall be billed by TSSG monthly in arrears on a prorated basis of
1/12 of the annualized fee based on average net assets for the month in each
category (i.e. networked vs. non-networked).
CLASS T
With respect to Class T Shares, the Funds shall jointly pay TSSG an annualized
fee as detailed below.
- - Actual fees will be determined based on final approval of TSSG's Fees
by the Funds' board. The Funds will provide TSSG with the portion of
the minutes of the board meeting applicable to the fee discussion.
However, in no instance will fees fall below the current level of:
Strategic Income $8.00
Government Securities $8.00
High Yield Bond $8.00
Income Fund $6.75
Growth Fund $6.75
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Special Fund $6.75
- - A separate Sub Transfer Agency agreement will be executed between TSSG
and Advest Transfer Services, Inc. TSSG will pay Advest Transfer
Services, Inc. $3.00 per internal account and $6.00 per external
account, payable annually for each position held by them.
- - TSSG's fees shall be billed by TSSG monthly in arrears on a prorated
basis of 1/12 of the annualized fee based on number of open accounts
per Fund.
II. RETIREMENT PLAN FEES
- - The Funds shall also pay TSSG an annual per account charge for each
retirement account maintained by TSSG at a rate of $10.00 per account
number. Specifically, if a shareowner maintains a retirement account
with the same account number across multiple Funds, TSSG will be paid
$10.00.
III. START-UP COSTS
- - TSSG will provide a reconciliation of the remaining start-up costs
(total cost $253,000) by December 11, 1995.
- - Since Fund A have moved their fund accounting business to TSSG, TSSG
will forgive $75,000 of the $253,000 conversion costs.
- - The reconciliation will reflect actual revenues generated in year one
(12/4/94-12/3/95) as a result of two increases to the basis point
agreement as noted below:
1. 7.5 b.p. to 10 b.p. (Offset start-up costs)
2. 10 b.p. to 12 b.p. (Cover conversion payment)
- - If the Funds (excluding Class T shares) collectively achieve an
average asset balance of $350 M for year one (12/4/94-12/3/95), TSSG
will forgive up to a maximum of 25% of the remaining start-up costs.
- - If the Funds (excluding Class T shares) collectively achieve an
average asset balance of less than $350 M for year one (12/4/94-
12/3/95), TSSG will forgive a pro rata portion of the year one maximum
forgiveness.
- - The Funds will have a one-time option, exercisable by December 15,
1995, to split the remaining start-up costs evenly with TSSG. Payment
must be made in full by December 29, 1995.
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- - In the event the Funds elect not to exercise the one-time option, the
remaining start-up costs will be amortized equally over the next three
years. Reimbursement will be forgiven on each anniversary date of
conversion, if the Funds collectively achieve the following average
asset balances for the prior year (excluding Class T asset balances):
December 4, 1996 500m
December 4, 1997 750m
December 4, 1998 1,000m
The forgiveness in any year will not exceed 25% of the remaining start-up
costs. In any year that target asset levels are not achieved, a pro rata
portion of the maximum forgiveness will be applied.
An example of the reconciliation is attached as part of this Schedule B Fee
Schedule.
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RECONCILIATION EXAMPLE
NORTHSTAR START-UP COSTS
Conversion Cost $203,500
Conversion Payment 49,500
-----------------
TOTAL $253,000
-----------------
-----------------
Fund Accounting Credit ($75,000) Converted by 12/4/95
*2.5 BP (First Year) ($60,500) (Estimated Flat Assets)
*2.0 BP (First Year) ($48,400) (Estimated Flat Assets)
--------
$69,100 Remaining
* To be recalculated based on actual revenue/assets on 12/4/95.
ASSUMPTIONS EXAMPLE 1
- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One exceed $350M.
- - TSSG would forgive 25% of start-up costs ($15,000) per original
Agreement.
- - Leaving balance of $45,000, which Northstar could either:
1. Pay 1/2 ($22,500) prior to 12/29/95 as payment in full, or
2. Defer remainder of reimbursement based on future year asset
targets.
EXAMPLE 1
---------
Remaining Balance $60,000
Average Assets Year One greater than $350M
Forgiveness ($15,000)
Balance Due $45,000
One-time Split Option $22,500
Note: Actual reimbursement will be based on actual results from 12/4/94 through
12/3/95.
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ASSUMPTIONS EXAMPLE 2
- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One do not exceed $350M target.
- - Assume average assets are $325M.
- - TSSG would forgive 92.8% of 1/4 of start-up costs.
- - Leaving balance of $46,080, which Northstar could either:
1. Pay 1/2 ($23,040) prior to 12/29/95 as payment in full, or
2. Pay difference between Year One maximum forgiveness and pro rata
forgiveness based on asset levels achieved. Then defer remainder
of reimbursement based on future year asset level targets.
EXAMPLE 2
---------
Remaining Balance $60,000
Average Assets Year One $325M (less than $350)
Year One Forgiveness ($13,920) (92.8% of $15,000)
Balance Due $46,080
One-time Split Option $23,040
or
Year One Payment $1,080 ($15,000 -$13,920)
Note: Actual reimbursement will be based on actual results from 12/4/94
through 12/3/95.
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Schedule C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes,
checks and stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all
lease, maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other
equipment and any expenses incurred in connection
with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by
third party record keeping vendors
- Third party audit reviews
- All conversion costs: including System start up costs
- All Systems enhancements after the conversion at the
rate of $95.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred
by the Transfer Agent in performing its duties and
responsibilities under this Agreement.
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The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with the Transfer Agent. In addition, the Fund
will promptly reimburse the Transfer Agent for any other unscheduled expenses
incurred by the Transfer Agent whenever the Fund and the Transfer Agent mutually
agree that such expenses are not otherwise properly borne by the Transfer Agent
as part of its duties and obligations under the Agreement.
Schedule D
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund, as
amended
- Certified copy of the By-laws of the Fund, as amended,
- Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of the
Fund, with a certificate of the Secretary of the Fund as to such
approval
- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered
by the Fund
- Certified list of Shareholders of the Fund with the name, address
and taxpayer identification number of each Shareholder, and the
number of Shares of the Fund held by each, certificate numbers
and denominations (if any certificates have been issued), lists
of any accounts against which stop transfer orders have been
placed, together with the reasons therefore, and the number of
Shares redeemed by the Fund
- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
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Exhibit 9(b)
Sub-Transfer Agency Agreement
1
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SUB-TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 2nd day of June, 1995, is by and between
THE SHAREHOLDER SERVICES GROUP, INC. ("TSSG", also referred to as the "Transfer
Agent"), a Massachusetts corporation with principal offices at One Exchange
Place, 53 State Street, Boston, Massachusetts 02109 and ADVEST TRANSFER
SERVICES, INC. ("Advest"), a Delaware corporation with principal offices at 280
Trumbull Street, Hartford, Connecticut 06103.
WITNESSETH
WHEREAS, TSSG has been appointed transfer agent for the Northstar Advantage
Government Securities Fund, the Northstar Advantage High Yield Fund, the
Northstar Advantage Managed Income Fund, the Northstar Advantage Growth Fund,
the Northstar Advantage Special Fund, and the Northstar Advantage Strategic
Income Fund, each an open-end registered investment company (the "Funds")
pursuant to the terms of the Transfer Agency and Services Agreement (the
"Transfer Agent Agreement") with each Fund;
WHEREAS, each Fund issues multiple classes of shares, including Class T
Shares (the "Class T Shares"); and
WHEREAS, the Funds have instructed TSSG to subcontract to and appoint
Advest, as its agent to perform certain administrative and ministerial duties
and obligations that the Transfer Agent has to the Funds with respect to the
Class T Shares issued by the Funds and Advest desires to accept such
appointment;
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, TSSG and Advest agree as follows:
Article 1 DEFINITIONS
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Declaration of Trust
of a Fund as the same may be amended from time to time.
(b) "Authorized Person" shall be deemed to include (i) any authorized
officer of TSSG or a Fund; or (ii) any person, whether or not such person
is an officer or employee of TSSG or a Fund, duly appointed by TSSG or a
Fund as an Authorized Person and authorized to give Oral Instructions or
Written Instructions on behalf of TSSG or a Fund as indicated in writing to
the Advest from time to time.
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<PAGE>
(c) "Board of Trustees" shall mean the Board of Trustees of a Fund.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Custodian" refers to any custodian or subcustodian of securities
and other property which a Fund may from time to time deposit, or cause to
be deposited or held under the name or account of such a custodian pursuant
to a Custodian Agreement.
(f) "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to
time.
(g) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by Advest from a person reasonably believed
by Advest to be an Authorized Person;
(h) "Prospectus" shall mean the most recently dated Fund Prospectus
and Statement of Additional Information, including any supplements thereto
if any, which has become effective under the Securities Exchange Act of
1933 and the 1940 Act.
(i) "Shares" refers collectively to such Class T Shares of the Funds
as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares.
(k) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by Advest to be an Authorized Person and
actually received by Advest. Written Instructions shall include manually
executed originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
Article 2 APPOINTMENT OF ADVEST
2.1 TSSG hereby appoints and constitutes Advest as its subcontractor and
agent to perform certain administrative and ministerial duties on behalf of the
Funds and Advest hereby accepts such appointment and agrees to perform the
duties hereinafter set forth.
Article 3 DUTIES OF ADVEST
3.1 Advest shall be responsible for administering and/or performing the
customary services of a transfer agent; service
3
<PAGE>
agent in connection with dividend and distribution functions; and for performing
shareholder account and administrative agent functions in connection with the
issuance, transfer and redemption or repurchase (including coordination with the
Custodian) of Shares, as more fully described in the written Schedule of Duties
of Advest annexed hereto as Schedule A and incorporated herein, and in
accordance with the terms of the Prospectus, applicable law and the procedures
established from time to time between Advest and the Transfer Agent and/or the
Funds.
3.2 In addition, each Fund shall (i) identify to Advest in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of Advest for the Funds' blue sky State registration
status is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such transactions to the
Funds as provided above.
Article 4 RECORDKEEPING AND OTHER INFORMATION
4.1 Advest shall create and maintain all records required of it pursuant
to its duties hereunder and as set forth in Schedule A in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act. All records shall be available during regular business
hours for inspection and use by the Transfer Agent and the Funds. Where
applicable, such records shall be maintained by Advest for the periods and in
the places required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Advest agrees
that all such records prepared or maintained by Advest relating to the services
to be performed by Advest hereunder are the property of the Funds and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Funds on and in accordance with each Fund's
request.
4.3 In case of any requests or demands for the inspection of Shareholder
records of the Funds, Advest will endeavor to notify the Transfer Agent of such
request and secure Written Instructions as to the handling of such request.
Advest reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to comply with such request.
4.4 Upon reasonable notice by either TSSG or a Fund, Advest shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance
4
<PAGE>
of its duties under this Agreement for reasonable visitation by TSSG or a Fund,
or any person retained by TSSG or a Fund as may be necessary for TSSG or a Fund
to evaluate the quality of the services performed by Advest pursuant hereto.
Article 5 INSTRUCTIONS
5.1 Advest will have no liability when acting upon Written or Oral
Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from TSSG
or a Fund. Advest will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of a Fund and the proper countersignature of the
Transfer Agent.
5.2 At any time, Advest may request Written Instructions from TSSG with
respect to any matter arising in connection with this Agreement, and it shall
not be liable for any action taken or not taken or suffered by it in good faith
in accordance with such Written Instructions. Written Instructions requested by
Advest will be provided by TSSG within a reasonable period of time.
5.3 Advest, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of TSSG and only if said representative is an Authorized
Person. TSSG agrees that all Oral Instructions shall be followed within a
reasonable period of time by confirming Written Instructions and that TSSG's
failure to so confirm shall not impair in any respect Advest's right to rely on
Oral Instructions.
Article 6 COMPENSATION
6.1 The Transfer Agent will compensate Advest for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule B and incorporated herein. In addition to
the fees provided for in Section 6.1, and provided such is reimbursable to the
Transfer Agent by the Funds under the Transfer Agent Agreements, the Transfer
Agent shall arrange payment to Advest for out-of-pocket expenses (i) incurred in
connection with conforming the Funds' records for the period prior to the
effective date of this Agreement to the systems employed by the Transfer Agent
and (ii) reasonably incurred by Advest in the performance of its obligations
under this Agreement.
Article 7 REPRESENTATIONS AND WARRANTIES OF ADVEST
7.1 Advest represents and warrants to the Transfer
5
<PAGE>
Agent that:
(a) It is a corporation duly organized an existing and in good
standing under the laws of Delaware;
(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement;
(d) It is duly registered with its appropriate regulatory agency as a
transfer agent and such registration will remain in effect for the duration
of this Agreement;
(e) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.
Article 8 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
8.1 The Transfer Agent represents and warrants to Advest that:
(a) It is duly organized and existing and in good standing under the
laws of the Commonwealth of Massachusetts;
(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws and the Transfer Agent Agreements to enter into
this Agreement;
(c) All corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize it
to enter into this Agreement;
Article 9 STANDARD OF CARE/INDEMNIFICATION
9.1 Advest shall at all times act in good faith and agrees to use its best
efforts within commercially reasonable terms to ensure the accuracy of all
services to be performed under this Agreement, but assumes no responsibility for
loss or damage to the Fund unless said errors are caused by Advest's own
negligence, bad faith or willful misconduct or that of its employees.
9.2 Advest shall not be responsible for and the Transfer Agent shall
indemnify and hold Advest harmless from and against any and all claims, costs,
expenses (including reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind which may be asserted against
Advest or for which Advest may be held to be liable (a "Claim") arising out of
or
6
<PAGE>
attributable to any of the following:
(a) Any actions of Advest required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or omission to
act or bad faith by Advest in the performance of its duties hereunder.
(b) Advest's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by Advest from the Funds, or any authorized third party acting on
behalf of the Funds, including but not limited the Transfer Agent or any
prior transfer agent for the Fund, in the performance of Advest's duties
and obligations hereunder.
(c) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of a Fund.
9.3 Advest shall indemnify and hold the Transfer Agent harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against the Transfer Agent for which the Transfer Agent or
the Funds shall be held to be liable arising out of or attributable to Advest's
negligence, bad faith or willful misconduct in the performance of its
obligations under this Agreement.
9.4 In any case in which either party (the "Indemnifying Party") may be
asked to indemnify or hold the other (the "Indemnified Party") harmless,
Indemnified Party will notify the Indemnifying Party promptly after identifying
any situation which it believes presents or appears likely to present a claim
for indemnification against the Indemnifying Party although the failure to do so
shall not prevent recovery by Indemnified Party and the Indemnified Party shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to Indemnified Party, and thereupon the Indemnifying Party shall
take over complete defense of the Claim and the Indemnified Party shall sustain
no further legal or other expenses in respect of such Claim. The Indemnified
Party will not confess any Claim or make any compromise in any case in which the
Indemnifying Party will be asked to provide indemnification, except with the
Indemnifying Party's prior written consent. The obligations of the parties
hereto under this Section shall survive the termination of this Agreement.
7
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9.5 Notwithstanding the foregoing or anything else contained in this
Agreement to the contrary, either party's entire liability to the other for any
loss or damage, direct or indirect for any cause whatsoever (including but not
limited to those arising out of this Agreement), and regardless of the form of
action, shall be limited to the fees actually paid or owing to Advest pursuant
to Section 6 of this Agreement.
Article 10 CONSEQUENTIAL DAMAGES
10.1 In no event and under no circumstances shall either party to this
Agreement be liable to the other party for consequential or indirect loss of
profits, reputation or business or any other special damages under any provision
of this Agreement or for any act or failure to act hereunder.
Article 11 TERM AND TERMINATION
11.1 This Agreement shall be effective on the date first written above and
shall continue for a period of two (2) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of one (1) years
("Renewal Terms") each.
11.2 Advest may terminate this Agreement at the end of the Initial Term or
any subsequent Renewal Term upon not less than ninety (90) days or more than
one-hundred eighty (180) days prior written notice to the other party. TSSG may
terminate this Agreement at any time upon ninety (90) days written notice to
Advest.
11.3 In the event a termination notice is given by the Transfer Agent, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Funds. In the event
termination notice is given by Advest, all expenses associated with movement of
records and materials and conversion thereof to a successor transfer agent will
be borne by Advest.
11.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Advest is the Non-Defaulting Party, its termination of
this Agreement shall not constitute a waiver of any other rights or remedies of
Advest with respect to services performed prior to such termination or rights
8
<PAGE>
of Advest to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this Agreement or
otherwise against the Defaulting Party.
11.5 Notwithstanding any provision of this Article 12 to the contrary,
this Agreement shall terminate simultaneously with the termination of the
Transfer Agent Agreement.
Article 12 CONFIDENTIALITY
12.1 In connection with the services provided by Advest hereunder, certain
confidential and proprietary information regarding Advest and the Transfer Agent
may be disclosed to the other. In connection therewith, the parties agree as
follows:
(a) Confidential Information disclosed under this Agreement shall
mean:
(i) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating
to the past, present or future business activities of Advest, the
Transfer Agent or the Funds, their respective parent corporation,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of the foregoing;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords Advest, the
Transfer Agent or the Funds a competitive advantage over its
competitors; and
(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
(b) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment,
prototypes and models, and any other tangible manifestation of the
foregoing which now exist or come into the control or possession of the
party.
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12.2 Except as expressly authorized by prior written consent of the
disclosing party ("Discloser"), the party receiving Confidential Information
("Recipient") shall:
(a) limit access to Discloser's Confidential Information to
Recipient's employees who have a need-to-know in connection with the
subject matter thereof;
(b) advise those employees who have access to the Confidential
Information of the proprietary nature thereof and of the obligations set
forth in this Confidentiality Agreement;
(c) take appropriate action by instruction or agreement with the
employees having access to Discloser's Confidential Information to fulfill
Recipient's obligations under this Confidentiality Agreement;
(d) safeguard all of Discloser's Confidential Information by using a
reasonable degree of care, but not less than that degree of care used by
Recipient in safeguarding its own similar information or material;
(e) use all of Discloser's Confidential Information solely for
purposes that it was intended;
(f) not disclose any of Discloser's Confidential Information to third
parties; and
(g) not disclose the existence of the discussions to any third party.
12.3 Upon Discloser's request, Recipient shall surrender to Discloser all
memoranda, notes, records, drawings, manuals, records, and other documents or
materials (and all copies of same) relating to or containing Discloser's
Confidential Information. When Recipient returns the materials, Recipient shall
certify in writing that it has returned all materials containing or relating to
the Confidential Information.
12.4 The obligations of confidentiality and restriction on use in this
Article 13 shall not apply to any Confidential Information that Recipient
proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of Recipient; or
(b) Was lawfully received by Recipient from a third party free of any
obligation of confidence to the third party; or
10
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(c) Was already in Recipient's possession prior to receipt from
Discloser; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not limited
to, giving Discloser as much advance notice as practical of the possibility
of disclosure to allow Discloser to stop such disclosure or obtain a
protective order concerning such disclosure; or
(e) Is subsequently and independently developed by Recipient's
employees, consultants or agents without reference to Confidential
Information.
12.5 Advest and the Transfer Agent agree that money damages would not be a
sufficient remedy for breach of this Section 13. Accordingly, in addition to
all other remedies that either party may have, a party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any breach of this Agreement. The parties agree to waive any requirement for a
bond in connection with any such injunctive or other equitable relief.
Article 13 FORCE MAJEURE
13.1 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, labor difficulties,
mechanical breakdowns, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
Article 14 AMENDMENTS
14.1 This Agreement may only be amended or modified by a written
instrument executed by both parties.
Article 15 SUBCONTRACTING
15.1 The Transfer Agent agrees that, upon written notice to the Transfer
Agent, Advest may subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
subcontractor shall not relieve Advest of its responsibilities hereunder.
Article 16 ARBITRATION
16.1 Any claim or controversy arising out of or relating to
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this Agreement, or breach hereof, shall be settled by arbitration administered
by the American Arbitration Association in Boston, Massachusetts in accordance
with its applicable rules, except that the Federal Rules of Evidence and the
Federal Rules of Civil Procedure with respect to the discovery process shall
apply.
16.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
16.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Section 18.
Article 17 NOTICE
17.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to Advest or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Transfer Agent:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to TSSG's General Counsel
To Advest:
Advest Transfer Services, Inc.
280 Trumbull Street
Hartford, Connecticut 06103
Attention: David Horowitz, Assistant General Counsel
Article 18 SUCCESSORS
18.1 This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under
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common control with the assignor without the written consent of the other party,
which consent shall not be unreasonably withheld.
Article 19 GOVERNING LAW
19.1 This Agreement shall be governed exclusively by the laws of the
Commonwealth of Massachusetts without reference to the choice of law provisions
thereof.
Article 20 COUNTERPARTS
20.1 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 21 CAPTIONS
21.1 The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 22 RELATIONSHIP OF PARTIES
22.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 23 ENTIRE AGREEMENT; SEVERABILITY
23.1 This Agreement and the Schedules attached hereto constitute the
entire agreement of the parties hereto relating to the matters covered hereby
and supersede any previous agreements. If any provision is held to be illegal,
unenforceable or invalid for any reason, the remaining provisions shall not be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
THE SHAREHOLDER SERVICES GROUP, INC.:
By:
---------------------------------------
Title:
-------------------------------------
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ADVEST TRANSFER SERVICES, INC.:
By:
--------------------------------------
Title:
-------------------------------------
14
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SCHEDULE A
DUTIES OF ADVEST
1. SHAREHOLDER INFORMATION. Advest shall maintain a record of the number
of Shares held by each Shareholder of record which shall include name, address,
taxpayer identification and which shall indicate whether such Shares are held in
certificates or uncertificated form.
2. SHAREHOLDER SERVICES. Advest shall respond as appropriate to all
inquiries and communications from Shareholders relating to Shareholder accounts
with respect to its duties hereunder and as may be from time to time mutually
agreed upon between Advest and the Transfer Agent (or the Fund as the case
maybe).
3. SHARE CERTIFICATES.
(a) At the expense of each Fund, the Funds shall supply Advest with
an adequate supply of blank share certificates to meet Advest's requirements
therefor. Such Share certificates shall be properly signed by facsimile.
Notwithstanding the death, resignation, or removal of any officer of the Funds
whose signature appears on such certificates, Advest or its agent may continue
to countersign certificates which bear such signatures until otherwise directed
by Written Instructions.
(b) Advest shall issue replacement Share certificates in lieu of
certificates which have been lost, stolen or destroyed, upon receipt by Advest
of properly executed affidavits and lost certificate bonds, in form satisfactory
to Advest, with the applicable Fund and Advest as obligees under the bond.
(c) Advest shall also maintain a record of each certificate issued,
the number of Shares represented thereby and the Shareholder of record. With
respect to Shares held in open accounts or uncertificated form (i.e., no
certificate being issued with respect thereto), Advest shall maintain
comparable records of the Shareholders thereof, including their names, addresses
and taxpayer identification. Advest shall further maintain a stop transfer
record on lost and/or replaced certificates.
4. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS. Advest will
address and mail to Shareholders of the Funds, all reports to Shareholders,
dividend and distribution notices and proxy material for each Fund's meetings of
Shareholders. In connection with meetings of Shareholders, Advest will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at
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meetings and certify Shares voted at meetings.
5. SALES OF SHARES
(a) Advest shall not be required to issue any Shares of a Fund where
it has received a Written Instruction from the Transfer Agent or the Fund or
official notice from any appropriate authority that the sale of the Shares of
such Fund has been suspended or discontinued. The existence of such Written
Instructions or such official notice shall be conclusive evidence of the right
of Advest to rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, Advest will endeavor to: (i) give
prompt notice of such return to the applicable Fund or its designee; (ii) place
a stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as Advest may from time to time deem
appropriate.
6. TRANSFER AND REPURCHASE
(a) Advest shall process all requests to transfer or redeem Shares in
accordance with the transfer or repurchase procedures set forth in each Fund's
Prospectus.
(b) Advest will transfer or repurchase Shares upon receipt of Oral or
Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as Advest reasonably may deem necessary.
(c) Advest reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the endorsement on the instructions is valid
and genuine. Advest also reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the requested transfer or repurchase is
legally authorized, and it shall incur no liability for the refusal, in good
faith, to make transfers or repurchases which Advest, in its good judgement,
deems improper or unauthorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer or repurchase.
(d) When Shares are redeemed, Advest shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the Fund
or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by Advest
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reflecting outstanding Shares of each Fund and Shares attributed to individual
accounts.
(e) Advest, upon receipt of the monies paid to it by the Custodian
for the repurchase of Shares, shall pay such monies as are received from the
Custodian, all in accordance with the procedures of each Fund.
(f) Advest shall not process or effect any repurchase with respect to
Shares of a Fund after receipt by Advest or its agent of notification of the
suspension of the determination of the net asset value of the Fund.
7. DIVIDENDS
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Trustees of a Fund with respect to Shares of the
Fund, the Fund shall furnish or cause to be furnished to Advest Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable to Advest on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution of the
Board of Trustees, the Fund will pay to Advest sufficient cash to make payment
to the Shareholders of record as of such payment date.
(c) If Advest does not receive sufficient cash from the Fund to make
total dividend and/or distribution payments to all Shareholders of the Fund as
of the record date, Advest will, upon notifying such Fund, withhold payment to
all Shareholders of record as of the record date until sufficient cash is
provided to Advest.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, Advest shall: perform all the customary services of a
transfer agent, registrar, dividend disbursing agent and agent of the dividend
reinvestment consistent with those requirements in effect as of the date of this
Agreement. The detailed definition, frequency, limitations and associated costs
(if any) set out in Schedule C of the Agreement, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, tabulating proxies, mailing Shareholder reports to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
where applicable, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends
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and distributions by federal authorities for all Shareholders.
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SCHEDULE B
FEE SCHEDULE
The Shareholder Services Group, Inc. agrees to pay Advest Transfer Services,
Inc. ("Advest") the annual per account fee as described below.
Internal Accounts - $3.00 per account
External Accounts - $6.00 per account
Such fees shall be billed by Advest monthly in arrears on a prorated basis of
1/12 of the annualized fee based on the number of open accounts held by Advest.
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Exhibit 9(c)
Form of
Administrative Services Agreement
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ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 30th day of May, 1995, between Northstar Advantage ______
Fund (the "Fund") and Northstar Administrators Corporation, a Delaware
corporation (the "Administrator").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Northstar Investment Management Corporation (the "Adviser") serves
as investment adviser to the Fund, and the Fund wishes to retain the
Administrator to render administrative and other services to the Fund, and the
Administrator is willing to render such services to the Fund;
NOW THEREFORE, in consideration of the premises, the promises and mutual
covenants herein contained, it is agreed between the parties as follows:
1. APPOINTMENT
The Fund hereby appoints the Administrator to serve as administrator to the Fund
for the periods and on the terms set forth herein. The Administrator accepts
this appointment and agrees to furnish the services set forth herein for the
compensation provided herein.
2. SERVICES AS ADMINISTRATOR
A. GENERAL SERVICES
Subject to the supervision and direction of the Board of Trustees of the Fund,
the Administrator will (a) assist in supervising all aspects of the Fund's
operations except those performed by the Fund's Adviser under its investment
advisory agreement; (b) furnish statistical or other factual information, advice
regarding economic factors and trends and advice and guidelines as to
transactions in specific securities (but without generally furnishing advice or
making recommendations regarding the purchase or sale of securities); (c)
maintain or supervise, as the case may be, the maintenance by the Adviser or
third parties approved by the Fund of such books and records of the Fund as may
be required by applicable federal or state law; (d) perform all corporate
secretarial functions on behalf of the Fund; (e) provide the Fund with office
facilities, assemble and provide statistical and research data, provide data
processing, clerical, internal legal, internal executive, administrative and
bookkeeping services, and provide stationary and office supplies; (f) supervise
the performance by third parties of fund accounting and portfolio pricing
services, internal audits and audits by independent accountants for the Fund;
(g) prepare and arrange for the printing, filing and distribution of
prospectuses, proxy materials, and periodic reports
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to the shareholders of the Fund as required by applicable law; (h) prepare or
supervise the preparation by third parties approved by the Fund of all federal,
state, and local tax returns and reports of the Fund required by applicable law;
(i) prepare, update, and arrange for the filing of the Fund's registration
statement and amendments thereto and such other documents as the Securities and
Exchange Commission ("Commission") and other federal regulatory authorities may
require by applicable law, and oversee compliance under all state regulatory
requirements to which the Fund is subject; (j) render to the Board of Trustees
of the Fund such periodic and special reports respecting the Fund as the Board
may reasonably request; (k) arrange, assemble information and reports for, and
attend meetings of, the Trustees and the shareholders of the Fund; (l) maintain
a fidelity bond as required under the 1940 Act for the Fund and liability
insurance for the Trustees and officers of the Fund; and (m) make available its
officers and employees to the Board of Trustees and officers of the Fund for
consultation and discussions regarding the administration of the Fund.
B. SHAREHOLDER SERVICING
Subject to the supervision and direction of the Board of Trustees, the
Administrator will (a) provide customer service to all shareholder accounts,
including responding to all telephone inquiries and written correspondence; and
(b) maintain records of all broker-dealers holding shareholder accounts in the
Fund; and (c) assist broker-dealers in servicing shareholder accounts, including
processing broker wire orders for purchases of shares of the Fund.
C. PERFORMANCE OF DUTIES
The Administrator, at its discretion, may enter into contracts with third
parties for the per- formance of the services to be provided by the
Administrator under this Agreement.
The Administrator, in the performance of its duties and obligations under this
Agreement, shall act in conformity with the Registration Statement, as amended,
of the Fund and with the instructions and directions of the Board of Trustees of
the Fund and will conform to, and comply with, the requirements of the 1940 Act
and all other applicable federal and state laws and regulations. In performing
its shareholder servicing duties listed in subparagraph B herein, the
Administrator shall not engage in any activities that would require it to
register as a transfer agent under the Securities Exchange Act of 1934.
3. DOCUMENTS
The Fund has delivered to the Administrator copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Declaration of Trust, as amended, as filed with the Secretary of the
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Commonwealth of Massachusetts;
(b) By-Laws of the Trust;
(c) Certified resolutions of the Trustees authorizing the appointment of
the Administrator and approving this Agreement on behalf of the Fund;
(d) Registration Statement on Form N-1A under the 1940 Act and the
Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Commission, relating to
the Fund and shares of beneficial interest of the Fund and all
amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto;
(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references
to this Agreement, the Prospectus and the Statement of Additional
Information shall be to such documents as most recently amended or
supplemented and in effect.
4. DIRECTORS, OFFICERS AND EMPLOYEES
The Administrator shall authorize and permit any of its directors, officers and
employees who may be elected as trustees or officers of the Fund to serve in the
capacities in which they are elected. All services to be furnished by the
Administrator under this Agreement may be furnished through such directors,
officers or employees of the Administrator.
5. RECORDS
The Administrator agrees that all records which it maintains for the Fund are
property of the Fund. The Administrator will surrender promptly to the Fund any
such records upon the Fund's request. The Administrator further agrees to
preserve such records for the periods prescribed in Rule 31a-2 of the Commission
under the 1940 Act.
6. COMPENSATION
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During the Initial Term (as hereinafter defined) hereof, no fee shall be
assessed the Fund for the services rendered pursuant to Section 2.A. or 2.B.
hereunder. Should this Agreement be renewed thereafter, the Administrator shall
receive a fee for such services in an amount that shall be submitted to and
approved by the Board of Trustees of the Fund.
7. EXPENSES
The Administrator will bear all expenses in connection with the performance of
its services under this Agreement, except that the Administrator will be
reimbursed by the Fund for the out-of-pocket costs incurred in connection with
this Agreement or by third parties who are performing services as permitted by
paragraph 2. The Fund will bear certain other expenses to be incurred in their
operation, including: taxes, interest, brokerage fees and commissions, if any;
fees of Trustees of the Trust who are not officers, directors, or employees of
the Adviser or Administrator; Securities and Exchange Commission fees and state
blue sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; cost of maintenance of the Fund's existence; costs attributable to
investor services, including without limitation, telephone and personnel
expenses; charges of accounting, internal auditing, and pricing of portfolio
securities for the Fund, including the charges of an independent pricing
service; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Trustees of the Fund; and any
extraordinary expenses.
8. REIMBURSEMENT TO THE FUNDS
If in any fiscal year, the aggregate expense of the Fund (including fees
pursuant to this Agreement and the Fund's investment advisory agreement, but
excluding interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitations of any state having jurisdiction over the Fund, the
Administrator will reduce its fees or reimburse the Fund for such excess expense
in the same proportion as its administration fee bears to the Fund's combined
fee for investment advice and administration. The expense reimbursement
obligation of the Administrator will be limited to the amount of its fees
received pursuant to this Agreement. Such fee reduction or reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis.
9. STANDARD OF CARE
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The Administrator shall exercise its best judgment in rendering the services
under this Agreement. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund's shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the
Administrator against liability to the Fund or to its shareholders to which the
Administrator would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement. As used in this Section 9, the term "Administrator" shall include
any officers, directors, employees, or other affiliates of the Administrator
performing services with respect to the Fund.
10. DURATION AND TERMINATION
This Agreement shall continue in effect unless sooner terminated as provided
herein, for two years from the date hereof ("Initial Term") and shall continue
from year to year thereafter, provided each continuance is specifically approved
at least annually by a majority of the Board of Trustees of the Fund, including
a majority of the Board of Trustees who are not "interested persons" (as defined
in the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting such approval. This Agreement is
terminable, without penalty, on 60 days' written notice by the Board of Trustees
of the Fund or by vote of holders of a majority of the Fund's shares, or upon 90
days' written notice by the Administrator.
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11. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The administrative services of the Administrator to the Fund under this
Agreement are not to be deemed exclusive, and the Administrator, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Fund) and to engage in other activities, so
long as it services hereunder are not impaired thereby.
12. ASSIGNMENT
This Agreement may be assigned by either party only upon the prior written
consent of the other party.
13. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance
with, the laws of The State of Connecticut.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Administrator by the Fund shall
be in writing and shall be duly given if mailed or delivered to the
Administrator at Two Pickwick Plaza, Greenwich, Connecticut 06830, or at such
other address or to such individual as shall be specified by the Administrator
to the Fund. Notices of any kind to be given to the Fund by the Administrator
shall be in writing and shall be duly given if mailed or delivered to Two
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Pickwick Plaza, Greenwich, Connecticut 06830, or at such other address or to
such individual as shall be specified by the Fund to the Administrator.
(g) The Administrator and the Fund each agree that the name "Northstar
Advantage" is proprietary to, and a property right of, the Administrator. The
Fund agrees and consents that (i) it will only use the name "Northstar
Advantage" as part of its name and for no other purpose, (ii) it will not
purport to grant any third party the right to use the name "Northstar Advantage"
and (iii) upon the termination of this Agreement, the Fund shall, upon the
request of the Administrator, cease to use the name "Northstar Advantage," and
shall use its best efforts to cause its officers, trustees and shareholders to
take any and all actions which the Administrator may request to effect the
foregoing.
(h) A copy of the Declaration of Trust establishing the Fund which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name "Northstar Advantage Strategic Income Fund" refers to the Trustees under
the Declaration collectively as trustees, but not individually or personally;
and no Trustee, shareholder, officer, employee or agent of the Fund may be held
to any personal liability, nor may resort be had to their private property for
the satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Fund, but the Fund property only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
NORTHSTAR ADVANTAGE ______ NORTHSTAR ADMINISTRATORS
FUND CORP.
By: By:
------------------------------- ---------------------------------
President Executive Vice President
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Exhibit 15
Form of
Amended and Restated
Distribution and Service Plan
for
Class A, Class B, Class C and Class T Shares
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NORTHSTAR ADVANTAGE ______ FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN
This Amended and Restated Plan (the "Plan") constitutes the Distribution and
Service Plan of NORTHSTAR ADVANTAGE ______ FUND, a Massachusetts business trust
(the "Fund").
SECTION 1. SERVICE FEE. The Fund will pay to NWNL NORTHSTAR DISTRIBUTORS,
INC., a Minnesota corporation (the "Distributor"), a monthly service fee (the
"Service Fee") at the annual rate of 0.25 of 1% of the average net asset value
of the Fund (or such lower rate as the Trustees of the Fund may establish from
time to time), as determined at the close of each business day during the month.
The Distributor may pay all or any portion of the Service Fee to securities
dealers as service fees pursuant to agreements with such dealers for providing
personal services to investors in shares of the Fund and/or the maintenance of
shareholder accounts, or may use all or any portion of the Service Fee to pay
for expenses of the Distributor (including overhead expenses) incurred in
connection with the provision of personal services provided to investors in
shares of the Fund and/or the maintenance of shareholder accounts, including
without limitation, expenses of personnel and communications equipment used in
servicing shareholder accounts. All payments of Service Fees under this plan are
intended to qualify as "service fees" within the meaning of Section 26 of
Article III of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (or any successor provision) as in effect from time to
time (the "NASD Rule").
SECTION 2. DISTRIBUTION FEE. In addition to the Service Fee, the Fund
will pay to the Distributor, for acting as the Distributor of the Fund's shares,
a monthly distribution fee for distributions related expenses (the "Distribution
Fee") (i) at the annual rate of 0.75 of 1% (or such lower rate as the Trustees
of the Fund may establish from time to time) of the average net asset value of
the Fund attributable to Class B shares and Class C shares; (ii) at the annual
rate of 0.70% of 1% (or such lows rate as the Trustees of the Fund may establish
from time to time) of the average net asset value of the Fund attributable to
Class T shares; and (iii) at the annual rate of 0.05 of 1% (or such lower rate
as the Trustees of the Fund may establish from time to time) of the average net
asset value of the Fund attributable to Class A shares, as determined at the
close of each business day during the month. Such expenditures may consist of:
(i) commissions to sales personnel for selling shares of the Fund (including
interest thereon in the case of Class B, Class C and Class T shares); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with Distributors in the form of the Dealer
Agreement for Northstar Affiliated Investment Companies for distribution
services rendered in connection with the sale and distribution of shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to each class of shares of the Funds;
(v) the costs of preparing and distributing promotional materials; (vi)
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the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees determine are reasonably calculated to result
in sales of shares of the Fund.
With respect to that portion of the Distribution Fee derived from Class T
shares, the Distributor may use all or a portion of that amount to compensate
Advest Inc. for services provided to holders of Class T shares, and to
compensate Advest, Inc. for distribution-related expenses incurred by Advest,
Inc. together with interest thereon, including but not limited to commissions
paid by Advest, Inc. to selling dealers in connection with the sale of Class T
shares.
Any payment of Distribution Fees under this Plan is intended to constitute an
"asset-based sales charge" within the meaning of the NASD Rule.
SECTION 3. This Plan shall not take effect with respect to any class until
it has been approved by the vote of a majority of the outstanding voting
securities of such class of the Fund.
SECTION 4. This Plan shall not take effect with respect to any class until
it has been approved, together with any related agreements, by votes of the
majority (or whatever greater percentage may, from time to time, be required by
Section 12(b) of the Investment Company Act of 1940 (the "Act") or the rules and
regulations thereunder) of both (a) the Trustees of the Fund, and (b) the
Qualified Trustees of the Fund, cast in person at a meeting called for the
purpose of voting on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4.
SECTION 6. Any person authorized to direct the disposition of monies paid
or payable by the Fund pursuant to this Plan or any related agreement shall
provide to the Trustees of the Fund, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
SECTION 7. This Plan may be terminated in its entirety or with respect to
any class at any time by vote of a majority of the Qualified Trustees, or, with
respect to any class, by the vote of a majority of the outstanding voting
securities of such class of the Fund. Amounts paid or payable by the Fund under
this Plan or any agreement with any person or entity relating to the
implementation of this Plan ("related agreement") shall only be used to pay for,
or reimburse payment for, the expenditures described in Sections 1 and 2 and
shall, given all surrounding circumstances, represent charges within the range
of what would have been negotiated at arm's-length as payment for the specific
sales or promotional services and
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activities to be financed hereunder and any related agreement, as determined by
the Trustees, in the exercise of reasonable business judgment, in light of their
fiduciary duties under state law and Sections 36(a) and (b) of the Investment
Company Act of 1940, as amended (the "Act") and based upon appropriate business
estimates and projections. In the event this Plan is terminated or otherwise
discontinued with respect to a class, the Fund no longer will be obligated to
pay Distributors for distribution related expenses incurred under the Plan with
respect to such class, unless payment by the Fund of all or any distribution
expenses incurred prior to termination of this Plan shall be specifically
approved by the Trustees, including a majority of the Disinterested Trustees, of
the Funds.
SECTION 8. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time in its entirety
with respect to a class, without payment of any penalty, by vote of a
majority of the Qualified Trustees or with respect to any class, by
vote of a majority of the outstanding voting securities of such class
of the Fund, on not more than 60 days' written notice to any other
party to the agreement, and
B. That such agreement shall terminate automatically in the event of
its assignment.
SECTION 9. This Plan may not be amended to increase materially the amount
of distribution fees paid by any class of shares of the Fund pursuant to Section
1 or Section 2 hereof without the vote of a majority of the outstanding voting
securities of such class of the Fund, and all material amendments to this Plan
shall be approved in the manner provided for approval of this Plan in Section 4.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees" shall
mean those Trustees of the Fund who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
SECTION 11. While this Plan is effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) shall be
committed to the discretion of the Disinterested Trustees then in office.
SECTION 12. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Section 6 hereof, and any
information,
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estimates, projections and other materials, that serve as a basis therefor,
considered by the Trustees, for a period of not less than six years from the
date of this Plan, or the agreements or reports, as the case may be, the first
two years in an easily accessible place.
SECTION 13. The Declaration of Trust, establishing the Fund a copy of which
together with all amendments thereto (the "Declaration") is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name "Northstar Advantage ______ Fund" refers to the Trustees under the
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund may be held to any
personal liability, no may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Fund, but the Fund property only shall be liable.
SECTION 14. The provisions of this Plan are severable for each Class of
shares of the Fund and if the provisions of the Plan applicable to a particular
class of shares are terminated, the remainder of the Plan provisions application
to the other remaining classes shall not be invalidated thereby and shall be
given full force and effect.
In Witness Whereof, the Fund has executed this Amended and Restated Plan on June
____, 1995.
Northstar Advantage ______ Fund
By:
---------------------------------
Attest:
- -----------------------
5
