<PAGE>
As filed with the Securities and Exchange Commission on July 7, 1997
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. 17
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20
NORTHSTAR 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, CT 06830
-----------------------------------------------------
(Name and address for agent for service)
Copies of all correspondence to:
Jeff Steele, Esq.
Dechert, Price & Rhodes
1500 K. Street, N.W., Suite 500
Washington, D.C. 20003
<PAGE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
- - -
X on July 7, 1997 pursuant to paragraph (b)
- - -
60 days after filing pursuant to paragraph (a)(1)
- - -
on [date] 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 Invesment
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 16,
1996.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(a)
UNDER THE SECURITIES ACT OF 1933
PART A
HIGH YIELD PROSPECTUS
<TABLE>
<CAPTION>
FORM N-1A PART A ITEM PROSPECTUS CAPTION
<S> <C>
1. Cover Page Cover Page
2. Synopsis What you pay to invest
3. Condensed Financial Information Cover Page; Objective; Investment
Strategy; Holdings; Risks; The Risks
of Investing in Mutual Funds; Investment
Practices; The Business of Mutual Funds;
Where to go for more Information
4. General Description of Registrant Cover Page; Objective; Investment
Strategy; Holdings; Risks; The Risks
of Investing in Mutual Funds; Investment
Practices; The Business of Mutual Funds;
Where to go for more Information
5. Management of the Fund Meet the Portfolio Managers; The
Business of Mutual Funds
6. Capital Stock and Other Securities Buying, Selling and Exchanging;
Choosing a Share Class; Opening a
NorthStar Account; Mutual Fund Earnings
and your Taxes; Where to go for more
Information
7. Purchases of Securities Being Offered Buying, Selling and Exchanging;
Choosing a Share Class; Opening a
NorthStar Account; How Dealers
are Compensated
8. Redemption or Repurchase Buying, Selling and Exchanging
9. Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
FORM N-1A PART B ITEM STATEMENT OF ADDITIONAL INFORMATION
CAPTION
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information & History Cover Page; Other Information
13. Investment Objectives and Policies Cover Page; Investment Restrictions;
Investment Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal N/A
Holders of Securities
16. Investment Advisory and Other Services of Northstar; the Subadvisers
Services and the Administrator
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices Allocation
18. Capital Stock and Other Purchases and Redemptions
Securities
19. Purchases, Redemptions and Net Asset Value; Purchases and
Redemptions
20. Tax Status Dividends, Distribution and Taxes
21. Underwriter Underwriter and Distribution Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C in the Registration Statement.
NORTHSTAR
HIGH-YIELD INVESTMENTS
PROSPECTUS
July 7, 1997
(photo of star with fund names appears here)
This prospectus contains important information about investing in four Northstar
Funds: Northstar High Yield Fund, Northstar High Total Return Fund II, Northstar
Strategic Income Fund and Northstar Balance Sheet Opportunities Fund. Please
read the prospectus carefully before you invest and keep it for future
reference. Your investment: is not a bank deposit, is not insured or guaranteed
by the FDIC, the Federal Reserve Board or any other government agency, is
affected by market fluctuations -- there is no guarantee that the funds will
achieve their objectives. Each of the funds has its own investment objective.
Some of the Funds described in this prospectus seek high income or high returns
while others may invest to a more limited extent in securities which may produce
higher returns. High yield investments are subject to greater risks. Like all
mutual funds, 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>
(This page intentionally left blank.)
<PAGE>
WHAT'S INSIDE
(Photo of bull's eye appears here)
OBJECTIVES
(Photo of compass appears here)
INVESTMENT
STRATEGY
(Photo of safe appears here)
HOLDINGS
(Photo of scales appears here)
RISKS
(Photo of penny appears here)
WHAT
YOU PAY
TO INVEST
(Photo of pile of dollars appears here)
HOW THE
FUND HAS
PERFORMED
These pages contain a description of each of the funds included in this
prospectus, including its objective, investment strategy, types of holdings,
risks and portfolio managers.
You'll also find:
WHAT YOU PAY TO INVEST. A list of the fees and expenses you pay -- both directly
and indirectly -- when you invest in the fund.
HOW THE FUND HAS PERFORMED. A chart that shows the fund's financial performance
for up to ten years, by share class.
HIGH YIELD FUND 4
HIGH TOTAL RETURN FUND II 6
STRATEGIC INCOME FUND 8
BALANCE SHEET OPPORTUNITIES FUND 10
MEET THE PORTFOLIO MANAGERS 12
YOUR GUIDE TO BUYING, SELLING AND 13
EXCHANGING SHARES OF NORTHSTAR FUNDS
MUTUAL FUND EARNINGS AND YOUR TAXES 16
THE BUSINESS OF MUTUAL FUNDS 18
THE RISKS OF INVESTING IN MUTUAL FUNDS 20
WHERE TO GO FOR MORE INFORMATION 22
<PAGE>
NORTHSTAR
HIGH YIELD
FUND
Registrant
Northstar High Yield Fund
Portfolio manager
Jeffrey Aurigemma
OBJECTIVE (Photo of bull's eye appears here)
This fund seeks high current income by investing primarily in long-term and
intermediate-term fixed income securities, with emphasis on high yield corporate
debt instruments of domestic and foreign issuers.
INVESTMENT
STRATEGY (Photo of compass appears here)
The fund invests mostly in high-yield bonds (junk bonds) to achieve high current
income.
HOLDINGS (Photo of safe appears here)
Under normal market conditions, the fund invests at least 65% of its assets in
high yield or junk bonds rated below investment grade. It can hold up to 100% of
its assets in debt securities rated as low as Ca by Moody's or CC by S&P or in
securities that aren't rated but Northstar considers to be of equivalent
quality, and up to 1% of its assets in bonds in the lowest rating categories. It
may invest up to 35% of its net assets in foreign issuers, but only 10% can be
in securities that are not listed on a U.S. securities exchange. The fund may
also hold up to 25% of its assets in equity or equity-related instruments, such
as preferred stocks, convertible securities and rights and warrants associated
with debt instruments. It may also invest in other higher-risk securities and
engage in other investment practices. These are described on page 36.
RISKS (Photo of scales appears here)
All income funds are affected by changes in interest rates. This fund is also
subject to the risks associated with investing in lower rated bonds that are
speculative in nature, and foreign securities. Please refer to the section
beginning on page 36, THE RISKS OF INVESTING IN MUTUAL FUNDS.
WHAT YOU PAY
TO INVEST (Photo of penny appears here)
There are two types of fees and expenses when you invest in mutual funds: fees,
including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the fund.
Fees you pay directly
Class A Class B Class C Class T
- ----------------------------------------------------------------------------
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none(1) 5.00(2) 1.00(2) 4.00(2)
Operating expenses paid each year by the fund
(as a % of average net assets)
Class A Class B Class C Class T
- ----------------------------------------------------------------------------
Management fee % 0.60 0.60 0.60 0.60
12b-1 fee(3) % 0.30 1.00 1.00 0.65(4)
Other expenses % 0.45 0.43 0.40 0.36
Total fund operating expenses % 1.35 2.03 2.00 1.61
Example
Here's an example of what you would pay in expenses if you invested $1,000,
reinvested all your dividends, the fund earned an average annual return of 5%,
and annual operating expenses remained at the current level. Keep in mind that
this is only an example -- actual expenses and performance may vary.
Year 1 Year 3 Year 5 Year 10
- ------------------------------------------------------------------------
Class A
with redemption $ 61 88 118 202
........................................................................
Class B
with redemption $ 71 94 129 218 (5)
without redemption $ 21 64 109 218 (5)
........................................................................
Class C
with redemption $ 30 63 108 233
without redemption $ 20 63 108 233
........................................................................
Class T
with redemption $ 56 71 88 184 (6)
without redemption $ 16 51 88 184 (6)
........................................................................
(1)Except for purchases of $1 million or more, when you sell any of the shares
within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) The Class T 12b-1 Plan provides for payments up to 0.95%.
(5) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
(6) Class T shares convert to Class A shares after year 8 or on June 2, 1998,
whichever is later. This figure uses Class A expenses for years 9 and 10.
4 High Yield Fund
<PAGE>
NORTHSTAR
HIGH YIELD
FUND
HOW THE FUND
HAS PERFORMED
The following chart shows the fund's financial performance by share class. The
1995 and 1996 figures have been audited by Coopers & Lybrand L.L.P., independent
accountants.
Audited by other independent accountants prior to 1995.
The fund's performance is also reported in national newspapers under these
trading symbols: HiYldB or HiYldT.
<TABLE>
<CAPTION>
Class A Class B Class C
Year ended December 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operating performance
Net asset value at the beginning of the period $ 8.56 8.68 8.57 8.68 8.57 8.68
Net investment income $ 0.76 0.48 0.71 0.44 0.72 0.44
Net realized and unrealized gain (loss) on
investments $ 0.44 (0.10) 0.43 (0.09) 0.42 (0.09)
TOTAL FROM INVESTMENT OPERATIONS $ 1.20 0.38 1.14 0.35 1.14 0.35
Dividends from net investment income $ (0.75) (0.50) (0.69) (0.46) (0.76) (0.46)
Dividends from capital $ (0.07) -- (0.07) -- (0.07) --
TOTAL DISTRIBUTIONS $ (0.82) (0.50) (0.76) (0.46) (0.76) (0.46)
NET ASSET VALUE AT THE END OF THE PERIOD $ 8.94 8.56 8.95 8.57 8.95 8.57
TOTAL INVESTMENT RETURN (2) % 14.74 4.48 13.94 4.17 13.93 4.17
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 13,146 7,466 79,199 29,063 14,275 3,410
Ratio of expenses to average net assets % 1.11 1.02(4) 1.81 1.71(4) 1.82 1.72 (4)
Ratio of expense reimbursement to average net assets % -- -- -- -- -- --
Ratio of net investment income to average net assets % 8.60 9.83(4) 7.88 9.18(4) 7.85 9.29 (4)
Average commissions per share $ 0.0777 -- 0.0777 -- 0.0777 --
Portfolio turnover rate % 128 103 128 103 128 103
<CAPTION>
Class T
Year ended December 31, 1996 1995 1994 1993 1992 1991 1990 1989(3)
- ----------------------------------------------------------------------------------------------------------------------------
Operating performance
Net asset value at the beginning of the period $ 8.56 8.29 9.31 9.09 7.94 6.27 8.55 10.00
Net investment income $ 0.73 0.84 0.81 0.85 0.92 1.08 1.12 0.60
Net realized and unrealized gain (loss) on
investments $ 0.45 0.26 (0.99) 0.80 1.19 1.67 (2.30) (1.45)
TOTAL FROM INVESTMENT OPERATIONS $ 1.18 1.10 (0.18) 1.65 2.11 2.75 (1.18) (0.85)
Dividends from net investment income $ (0.73) (0.83) (0.83) (0.83) (0.94) (1.08) (1.10) (0.60)
Dividends from net realized gain $ -- -- (0.01) (0.60) (0.02) -- -- --
Distributions from capital $ (0.07) -- -- -- -- -- -- --
TOTAL DISTRIBUTIONS $ (0.80) (0.83) (0.84) (1.43) (0.96) (1.08) (1.10) (0.60)
NET ASSET VALUE AT THE END OF THE PERIOD $ 8.94 8.56 8.29 9.31 9.09 7.94 6.27 8.55
Total investment return (2) % 14.49 13.71 (2.18) 18.89 27.57 46.49 (14.59) (8.81)
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 124,431 139,711 136,426 125,095 64,063 25,651 11,342 11,045
Ratio of expenses to average net assets % 1.31 1.33 1.34 1.40 1.50 1.50 1.44 1.35(4)
Ratio of expense reimbursement to average net assets % -- -- -- -- 0.05 0.46 0.81 1.30(4)
Ratio of net investment income (loss) to average
net assets % 8.43 9.69 9.08 8.84 10.30 14.84 15.15 11.44(4)
Average commissions per share $ 0.0777 -- -- -- -- -- -- --
Portfolio turnover rate % 128 103 86 176 122 57 156 40
</TABLE>
(1) Classes A, B & C commenced operations on June 5, 1995.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(3) Class T commenced operations on May 30, 1989.
(4) Annualized.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
High Yield Fund 5
<PAGE>
NORTHSTAR
HIGH TOTAL
RETURN FUND II
Registrant
Northstar Trust
Portfolio manager
Thomas Ole Dial
OBJECTIVE (Photo of bull's eye appears here)
This fund seeks high income and capital appreciation.
INVESTMENT
STRATEGY (Photo of compass appears here)
The fund invests primarily in higher-yielding, lower-rated bonds (junk bonds) to
achieve high current income with potential for capital growth.
HOLDINGS (Photo of safe appears here)
Under normal market conditions, the fund invests at least 65% of its
total assets in high-yielding, lower-rated U.S. dollar-denominated debt
securities of U.S. and foreign issuers. It may also invest up to 35% of its
total assets in securities denominated in foreign currencies. No more than 50%
of its assets can be in securities of foreign issuers, including 35% in emerging
market debt. Most of the debt securities the fund invests in are lower rated and
considered speculative, including bonds in the lowest rating categories and
unrated bonds. It can invest up to 10%, and can hold up to 25% of its assets in
securities rated below Caa by Moody's or CCCby S&P. It also holds debt
securities that pay fixed, floating or adjustable interest rates and may hold
pay-in-kind securities and discount obligations, including zero coupon
securities. The fund may also invest in equity or equity-related securities,
such as common stock, preferred stock, convertible securities and rights and
warrants attached to debt instruments. It may also invest in other higher-risk
securities and engage in other investment practices. These are described on page
36.
RISKS (Photo of scales appears here)
All income funds are affected by changes in interest rates. This fund is also
subject to the risks associated with investing in lower-rated bonds that are
speculative in nature and foreign securities. Please refer to the section
beginning on page 36, THE RISKS OF INVESTING IN MUTUAL FUNDS.
WHAT YOU PAY
TO INVEST (Photo of penny appears here)
There are two types of fees and expenses when you invest in mutual funds: fees,
including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the fund.
Fees you pay directly Class A Class B Class C
- ------------------------------------------------------------------------------
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none
Maximum deferred sales charge % none(1) 5.00(2) 1.00(2)
Operating expenses paid each year by the fund
(as a % of average net assets)
Class A Class B Class C
- ------------------------------------------------------------------------------
Management fee % 0.75 0.75 0.75
12b-1 fee(3) % 0.30 1.00 1.00
Other expenses(4) % 0.20 0.20 0.20
Total fund operating expenses
after reimbursement % 1.25 1.95 1.95
Example
Here's an example of what you would pay in expenses if you invested $1,000,
reinvested all your dividends, the fund earned an average annual return of 5%,
and annual operating expenses remained at the current level. Keep in mind that
this is only an example -- actual expenses and performance may vary.
Year 1 Year 3 Year 5 Year 10
- ------------------------------------------------------------------------------
Class A
with redemption $ 60 85 113 191
..............................................................................
Class B
with redemption $ 70 91 125 209 (5)
without redemption $ 20 61 105 209 (5)
..............................................................................
Class C
with redemption $ 30 61 105 227
without redemption $ 20 61 105 227
..............................................................................
(1) Except for purchases of $1 million or more, when you sell any of the shares
within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) These figures are after the adviser reimbursed certain expenses. Before
reimbursement, other expenses would have been 19.42% for Class A and 18.30%
for Class B and C. Total fund operating expenses would have been 20.47% for
Class A and 20.05% for Class B and C.
(5) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
6 High Total Return Fund II
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
HOW THE FUND
HAS PERFORMED (Photo of pile of dollars appears here)
The following chart shows the fund's financial performance by share class. These
figures are unaudited.
<TABLE>
<CAPTION>
Class A(1) Class B(1) Class C(1)
Three months ended April 30, 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operating performance(2)
Net asset value at the beginning of the period $ 5.00 5.00 5.00
Net investment income $ 0.07 0.07 0.07
Net realized and unrealized loss on investments $ (0.10) (0.11) (0.11)
TOTAL FROM INVESTMENT OPERATIONS $ (0.03) (0.04) (0.04)
Dividends from net investment income $ (0.06) (0.05) (0.05)
TOTAL DISTRIBUTIONS $ (0.06) (0.05) (0.05)
NET ASSET VALUE AT THE END OF THE PERIOD $ 4.91 4.91 4.91
Total investment return(3) % (0.54) (0.71) (0.71)
Ratios and supplemental data(2)
Net assets at the end of the period ($000s) $ 98 1 1
Ratio of expenses to average net assets % 1.50(4) 2.20(4) 2.20(4)
Ratio of expense reimbursement to average net assets % 18.97(4) 17.85(4) 17.85(4)
Ratio of net investment income to average net assets % 6.34(4) 5.29(4) 5.29(4)
Portfolio turnover rate % 23 23 23
</TABLE>
(1) Classes A, B and C commenced operations on January 31, 1997.
(2) Unaudited.
(3) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(4) Annualized.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827.
High Total Return Fund II 7
<PAGE>
NORTHSTAR
STRATEGIC INCOME
FUND
Registrant
Northstar Strategic Income Fund
Portfolio manager
Ryan Johanson
OBJECTIVE (Photo of bull's eye appears here)
This fund seeks high current income and a net asset value with limited
volatility by allocating substantially all of its assets among (i) U.S.
Government Securities, (ii) high yield securities, including preferred stocks,
convertible securities, zero coupon, pay-in-kind securities and lower-rated
foreign government securities, (iii) investment grade corporate debt securities,
and (iv) investment grade securities that Northstar determines to be of
equivalent quality) issued by foreign governments or their agencies or
instrumentalities, or supranational entities.
INVESTMENT
STRATEGY (Photo of compass appears here)
The portfolio manager rotates the allocation of assets between the four sectors
based on the economic outlook, to maximize current income without assuming undue
risk. To control risk, the fund will never allocate more than 60% of its assets
to a single sector.
HOLDINGS (Photo of safe appears here)
In addition to the securities listed above, the fund holds debt securities rated
as low as Ca by Moody's or CC by S&P or in securities that aren't rated but
Northstar considers to be equivalent quality (junk bonds). Up to 10% of the
assets allocated to the high yield sector can be in bonds in the lowest rating
categories (C by Moody's and D by S&P) including bonds in default. It may also
invest in other higher-risk securities and engage in other investment practices.
These are described on page 36.
RISKS (Photo of scales appears here)
All income funds are affected by changes in interest rates. This fund is also
subject to the risks associated with investing in junk bonds and foreign
securities, but the fund also attempts to limit these risks by investing in less
volatile securities. Please refer to the section beginning on page 36, THE RISKS
OF INVESTING IN MUTUAL FUNDS.
WHAT YOU PAY
TO INVEST (Photo of penny appears here)
There are two types of fees and expenses when you invest in mutual funds: fees,
including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the fund.
Fees you pay directly
Class A Class B Class C Class T
- -----------------------------------------------------------------------------
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none(1) 5.00(2) 1.00(2) 4.00(2)
Operating expenses paid each year by the fund
(as a % of average net assets)
Class A Class B Class C Class T
- -----------------------------------------------------------------------------
Management fee % 0.65 0.65 0.65 0.65
12b-1 fee(3) % 0.30 1.00 1.00 0.95(4)
Other expenses % 0.65 0.62 0.61 0.52
Total fund operating expenses % 1.60 2.27 2.26 2.12
Example
Here's an example of what you would pay in expenses if you invested $1,000,
reinvested all your dividends, the fund earned an average annual return of 5%,
and annual operating expenses remained at the current level. Keep in mind that
this is only an example -- actual expenses and performance may vary.
Year 1 Year 3 Year 5 Year 10
- ----------------------------------------------------------------------
Class A
with redemption $ 63 96 130 228
......................................................................
Class B
with redemption $ 73 101 142 243 (5)
without redemption $ 23 71 122 243 (5)
......................................................................
Class C
with redemption $ 33 71 121 260
without redemption $ 23 71 121 260
......................................................................
Class T
with redemption $ 62 86 114 232 (6)
without redemption $ 22 66 114 232 (6)
......................................................................
(1) Except for purchases of $1 million or more, when you sell any of the shares
within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) The Class T 12b-1 Plan provides for payments up to 1.00%.
(5) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10. (6)Class T shares convert to Class A
shares after year 8 or on June 2, 1998, whichever is later. This figure uses
Class A expenses for years 9 and 10.
8 Strategic Income Fund
<PAGE>
NORTHSTAR STRATEGIC INCOME FUND
HOW THE FUND
HAS PERFORMED (Photo of pile of dollars appears here)
The following chart shows the fund's financial performance by share class. The
1995 and 1996 figures have been audited by Coopers & Lybrand L.L.P., independent
accountants.
Audited by other independent accountants prior to 1995.
The fund's performance is also reported in national newspapers under these
trading symbols: StrIncA, StrIncB or StrInT.
<TABLE>
<CAPTION>
Class A Class B Class C
Year ended December 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Operating performance
Net asset value at the beginning of the period $ 12.40 12.24 12.39 12.24 12.38 12.24
Net investment income $ 0.93 0.63 0.85 0.55 0.85 0.55
Net realized and unrealized gain on investments $ 0.35 0.13 0.36 0.15 0.35 0.14
TOTAL FROM INVESTMENT OPERATIONS $ 1.28 0.76 1.21 0.70 1.20 0.69
Dividends from net investment income $ (1.01) (0.60) (0.93) (0.55) (0.93) (0.55)
TOTAL DISTRIBUTIONS $ (1.01) (0.60) (0.93) (0.55) (0.93) (0.55)
NET ASSET VALUE AT THE END OF THE PERIOD $ 12.67 12.40 12.67 12.39 12.65 12.38
Total investment return (2) % 10.88 6.40 10.18 5.89 10.11 5.81
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 17,293 21,790 30,733 22,143 4,222 2,172
Ratio of expenses to average net assets % 1.40 1.36(3) 2.10 2.06(3) 2.10 2.02 (3)
Ratio of expense reimbursement to average net assets % 0.05 0.07(3) 0.09 0.06(3) 0.11 0.06 (3)
Ratio of net investment income to average net assets % 7.55 7.03(3) 6.82 6.47(3) 6.79 6.48 (3)
Portfolio turnover rate % 130 153 130 153 130 153
<CAPTION>
Class T
Year ended December 31, 1996 1995 1994(4)
- -----------------------------------------------------------------------------------------
Operating performance
Net asset value at the beginning of the period $ 12.39 11.71 12.00
Net investment income $ 0.88 0.98 0.519
Net realized and unrealized gain (loss) on
investments $ 0.35 0.66 (0.25)
TOTAL FROM INVESTMENT OPERATIONS $ 1.23 1.64 0.26
Dividends from net investment income $ (0.95) (0.96) (0.49)
Dividends from net realized gain on investments sold $ -- -- (0.05)
Distributions from capital $ -- -- (0.01)
TOTAL DISTRIBUTIONS $ (0.95) (0.96) (0.55)
NET ASSET VALUE AT THE END OF THE PERIOD $ 12.67 12.39 11.71
Total investment return (2) % 10.39 14.54 2.14
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 27,350 30,228 25,252
Ratio of expenses to average net assets % 1.90 1.90 1.90 (3)
Ratio of expense reimbursement to average net assets % 0.09 0.28 0.63 (3)
Ratio of net investment income (loss) to average
net assets % 7.07 6.86 7.92 (3)
Portfolio turnover rate % 130 153 156
</TABLE>
(1) Classes A, B & C commenced operations on June 5, 1995.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(3) Annualized.
(4) Class T commenced operations on July 1, 1994.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
Strategic Income Fund 9
<PAGE>
NORTHSTAR
BALANCE SHEET
OPPORTUNITIES
FUND
Registrant
Northstar Balance Sheet
Opportunities Fund
Portfolio manager
Thomas Ole Dial
OBJECTIVE (Photo of bull's eye appears here)
This fund seeks income, with a secondary objective of capital appreciation,
primarily by investing in domestic debt and equity securities.
INVESTMENT
STRATEGY (Photo of compass appears here)
The portfolio manager reviews various factors relating to a potential issuer,
especially its financial statements, to determine which type of security -- debt
or equity -- offers the best potential for a high current income combined with
the potential for capital growth.
HOLDINGS (Photo of safe appears here)
Under normal market conditions, the fund invests at least 65% of its assets in
income producing securities. It may hold up to 50% of its assets in debt
securities rated as low as B by Moody's or S&P (junk bonds). Equity securities
include common stocks, preferred stocks, convertible securities and warrants and
other stock purchase rights. Income-producing securities have varying maturities
and pay fixed, floating or adjustable interest rates. The fund may also hold
pay-in-kind securities and discount obligations, including zero coupon
securities. The fund may invest up to 20% of its net assets in foreign issuers,
but only 10% of its net assets can be in securities that are not listed on a
U.S. securities exchange. It may also invest in other higher-risk securities and
engage in other investment practices. These are described on page 36.
RISKS (Photo of scales appears here)
All income and growth funds are affected by changes in interest rates. This fund
is also subject to the risks associated with investing in junk bonds and foreign
securities. Please refer to the section beginning on page 36, THE RISKS OF
INVESTING IN MUTUAL FUNDS.
WHAT YOU PAY
TO INVEST (Photo of penny appears here)
There are two types of fees and expenses when you invest in mutual funds: fees,
including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the fund.
Fees you pay directly Class A Class B Class C Class T
- -------------------------------------------------------------------------
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none(1) 5.00(2) 1.00 (2) 4.00(2)
Operating expenses paid each year by the fund
(as a % of average net assets)
Class A Class B Class C Class T
- -------------------------------------------------------------------------
Management fee % 0.65 0.65 0.65 0.65
12b-1 fee(3) % 0.30 1.00 1.00 0.75
Other expenses % 0.63 0.61 0.58 0.60
Total fund operating expenses % 1.58 2.26 2.23 2.00
Example
Here's an example of what you would pay in expenses if you invested $1,000,
reinvested all your dividends, the fund earned an average annual return of 5%,
and annual operating expenses remained at the current level. Keep in mind that
this is only an example -- actual expenses and performance may vary.
Year 1 Year 3 Year 5 Year 10
- ----------------------------------------------------------------------
Class A
with redemption $ 63 95 129 226
......................................................................
Class B
with redemption $ 73 101 141 242 (4)
without redemption $ 23 71 121 242 (4)
......................................................................
Class C
with redemption $ 33 70 119 256
without redemption $ 23 70 119 256
......................................................................
Class T
with redemption $ 60 83 108 222 (5)
without redemption $ 20 63 108 222 (5)
......................................................................
(1) Except for purchases of $1 million or more, when you sell any of the shares
within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
(5) Class T shares convert to Class A shares after year 8 or on June 2, 1998,
whichever is later. This figure uses Class A expenses for years 9 and 10.
10 Balance Sheet Opportunities Fund
<PAGE>
NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND
HOW THE FUND
HAS PERFORMED (Photo of pile of dollars appears here)
The following chart shows the fund's financial performance by share class. The
1995 and 1996 figures have been audited by Coopers & Lybrand L.L.P., independent
accountants.
Audited by other independent accountants prior to 1995.
The fund's performance is also reported in national newspapers under this
trading symbol: BaShOpT.
<TABLE>
<CAPTION>
Class A Class B Class C
Year ended December 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operating performance
Net asset value at the beginning of the period $ 12.53 12.77 12.51 12.77 12.52 12.77
Net investment income $ 0.56 0.43 0.50 0.35 0.49 0.38
Net realized and unrealized gain on investments $ 0.74 1.06 0.71 1.09 0.70 1.07
TOTAL FROM INVESTMENT OPERATIONS $ 1.30 1.49 1.21 1.44 1.19 1.45
Dividends from net investment income $ (0.57) (0.48) (0.50) (0.45) (0.48) (0.45)
Dividends from net realized gain on investments sold $ (1.48) (1.25) (1.48) (1.25) (1.48) (1.25)
TOTAL DISTRIBUTIONS $ (2.05) (1.73) (1.98) (1.70) (1.96) 1.70
NET ASSET VALUE AT THE END OF THE PERIOD $ 11.78 12.53 11.74 12.51 11.75 12.52
Total investment return (2) % 10.54 11.95 9.76 11.56 9.72 11.49
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 1,100 797 3,765 1,759 372 231
Ratio of expenses to average net assets % 1.40 1.27 (3) 2.10 1.95 (3) 2.10 1.91 (3)
Ratio of expense reimbursement to average net assets % 0.09 -- 0.07 -- 0.10 --
Ratio of net investment income to average net assets % 4.30 4.99 (3) 3.64 4.38(3) 3.61 4.49
(3)
Average commissions per share $0.0690 -- 0.0690 -- 0.0690 --
Portfolio turnover rate % 107 131 107 131 107
131
Class T
Year ended December 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------------------
Operating performance
Net asset value at the beginning
of the period $ 12.54 11.54 12.94 12.05 11.66 10.13 10.71 9.71 9.11 10.39
Net investment income $ 0.53 0.57 0.57 0.49 0.55 0.57 0.61 0.68 0.62 0.56
Net realized and unrealized gain (loss) on
investments $ 0.73 2.27 (1.25) 1.20 0.36 1.53 (0.54) 1.00 0.58 (1.04)
TOTAL FROM INVESTMENT OPERATIONS $ 1.26 2.84 (0.68) 1.69 0.91 2.10 0.07 1.68 1.20 (0.48)
Dividends from net investment income $ (0.53) (0.59) (0.54) (0.49) (0.52) (0.57) (0.63) (0.68) (0.60) (0.57)
Dividends from net realized gain on
investments sold $ (1.48) (1.25) (0.16) (0.31) -- -- -- -- -- (0.22)
Distributions from capital $ -- -- (0.02) -- -- -- (0.02) -- -- (0.01)
TOTAL DISTRIBUTIONS $ (2.01) (1.84) (0.72) (0.80) (0.52) (0.57) (0.65) (0.68) (0.60) (0.80)
NET ASSET VALUE AT THE END OF THE PERIOD $ 11.79 12.54 11.54 12.94 12.05 11.66 10.13 10.71 9.71 9.11
Total investment return (2) % 10.18 25.11 (5.33) 14.08 8.06 21.17 0.78 17.70 13.39 (5.35)
Ratios and supplemental data
Net assets at the end of the period ($000s) $ 59,490 72,472 73,764 80,841 56,823 49,367 44,750 58,006 57,425 58,772
Ratio of expenses to average net assets % 1.69 1.68 1.69 1.77 2.02 2.06 2.10 2.04 2.10 1.98
Ratio of expense reimbursement to
average net assets % 0.06 -- -- -- -- -- -- -- -- --
Ratio of net investment income to average
net assets % 3.99 4.44 4.36 3.99 4.73 5.21 5.73 6.38 6.30 5.70
Average commissions per share $ 0.0690 -- -- -- -- -- -- -- -- --
Portfolio turnover rate % 107 131 59 38 59 77 57 56 25 46
</TABLE>
(1) Classes A, B & C commenced operations on June 5, 1995.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges. Unaudited prior to 1992.
(3) Annualized.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
Balance Sheet Opportunities Fund 11
<PAGE>
MEET THE
PORTFOLIO
MANAGERS
JEFFREY AURIGEMMA
Jeffrey Aurigemma has managed the Northstar High Yield Fund since May 1997. He
joined Northstar in October 1993.
Mr. Aurigemma has over seven years of experience in the management of high-yield
fixed-income investments. From October 1993 through May 1997 he was a Senior
Credit Analyst for the Northstar High Total Return Fund. Before joining
Northstar, he was a Senior Analyst--Fixed Income for National Securities &
Research Corporation.
THOMAS OLE DIAL
Thomas Ole Dial has managed the Northstar High Total Return Fund II since its
inception, and has managed the Northstar Balance Sheet Opportunities Fund since
May 1997. He has managed the Northstar High Total Return Fund since its
inception in November 1993. Mr. Dial, who has over ten years of money management
experience, joined Northstar in October 1993.
Before joining Northstar, Mr. Dial was Executive Vice President, Chief
Investment Officer-Fixed Income of National Securities & Research Corporation,
and Senior Portfolio Manager of the National Bond Fund from August 1990 through
July 1993.
RYAN JOHANSON
Ryan Johanson has managed the Northstar Government Securities Fund since March
1997, and has managed the Northstar Strategic Income Fund since May 1997. He
joined Northstar in March 1997.
Mr. Johanson has over ten years of experience in fixed-income investments.
Before joining Northstar, he was Director of Global Market Risk Management--Asia
for Barclays Bank, Senior Manager of Banque Indosuez, and Chief Investment
Officer at Fidelity Federal Bank.
PERFORMANCE
PROFILE:
THOMAS OLE DIAL
These figures demonstrate Mr. Dial's historical track record. They do not
indicate how the Northstar High Total Return Fund II will perform in the future.
(a) Please note that the Northstar High Total Return Fund is closed to new
investors. Effective April 30, 1997, only investors who already own
shares of the Northstar High Total Return Fund are able to buy, sell or
exchange shares of the fund.
The charts below show the average annual returns for the Northstar High
Total Return Fund which has the same investment objectives, strategies and
policies as the Northstar High Total Return Fund II. Mr. Dial has managed the
Northstar High Total Return Fund since its inception.
Northstar High Lehman High
Total Return Yield Bond
Fund (%) Index (%)
One year, ended
April 30, 1997 7.65 11.56
Three years, ended
April 30, 1997 9.45 12.60
Cumulative total return 11.84 36.53
(graph appears here -- Client to supply plot points)
National Lehman High
Bond Fund Yield Bond
(%) Index (%)
One year, July 31, 1993 18.90 15.33
Three years, July 31, 1993 23.64 17.50
Cumulative total return
August 1990 to July 1993 89.03 62.22
(graph appears here Client to supply plot points)
Before joining Northstar in October 1993, Mr. Dial served as Executive Vice
President, Chief Investment Officer-Fixed Income of National Securities &
Research Corporation. He was Senior Portfolio Manager of the National Bond Fund
from August 1990 through July 1993 and had full discretionary authority for the
selection of the fund's investments. On July 31, 1993 the fund had $614.7
million in net assets.
The National Bond Fund had investment objectives, policies and strategies that
were substantially similar to those of the Northstar High Total Return Fund II,
which Mr. Dial now manages.
The chart shows the average annual returns for the National Bond Fund during the
period when Mr. Dial managed the fund.
These figures reflect changes in share prices and reinvestment of dividends and
distributions, and are after deduction of all fund fees and expenses.
Included for comparison are performance figures of the Lehman Brothers High
Yield Bond Index, an unmanaged index of fixed rate, publicly issued,
non-investment grade debt registered with the SEC. This index is considered to
be representative of the United States market for non-investment grade debt. It
has been adjusted to reflect reinvestment of dividends.
12
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
THERE ARE THREE STEPS TO TAKE WHEN YOU WANT TO BUY, SELL OR EXCHANGE SHARES OF
OUR FUNDS: o first, choose a share class
o second, open a Northstar account and make your first investment
o third, choose one of several ways to buy, sell or exchange shares.
CHOOSING A
SHARE CLASS
All Northstar funds are
available in Class A, Class B
and Class C shares.
The chart below summarizes the differences between the share classes--your
choice of share class will depend on how much you are investing and for how
long. Large investments qualify for a reduced Class A sales charge and avoid the
higher distribution fees of classes B and C. Investments in Class B and Class C
shares don't have a front-end sales charge but there is a restriction on the
amount you can invest at one time. Your financial adviser can help you, or feel
free to call us for more information.
Some of our funds also have Class T shares. You can no longer buy Class T shares
unless you are reinvesting income, or exchanging Class T shares you already own,
including Class T shares of The Cash Management Fund of Salomon Brothers
Investment Series (a money-market fund that's available through Northstar, but
isn't one of the Northstar funds).
We've listed actual expenses charged to the funds beginning on page 4.
Maximum Class A no limit
amount you Class B $500,000
can buy Class C $750,000
Class T can only be purchased by reinvesting income or
exchanging other Class T shares
==========================================================================
Front end Class A yes, varies by size of investment
sales charge Class B none
Class C none
Class T none
==========================================================================
Deferred Class A only on investments of $1 million or more if you
sell within 18 months
sales charge Class B yes, if you sell within 5 years
Class C yes, if you sell within 1 year Class T yes,
if you sell within 4 years
============================================================================
Service fee Class A 0.25% per year
Class B 0.25% per year
Class C 0.25% per year
Class T 0.25% per year
Distribution Class A 0.05% per year
fee Class B 0.75% per year
Class C 0.75% per year
Class T from 0.40% to 0.75% per year (varies by fund)
=============================================================================
Conversion Class B Class B shares convert to class A after 8 years
Class T Class T shares convert to class A after 8 years
or on June 2, 1998 (whichever is later)
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
13
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
FRONT-END SALES
CHARGES
(Class A shares only)
<TABLE>
<CAPTION>
Your investment Front-end sales charge Amount retained by dealers
- --------------------------------------------------------------------------------------------------------
as a percentage as a percentage as a percentage
of your net investment of offering price of offering price
<S> <C>
up to $99,999 4.99 4.75 4.00
$100,000 to $249,999 3.90 3.75 3.10
$250,000 to $499,999 2.83 2.75 2.30
$500,000 to $999,999 2.04 2.00 1.70
$1,000,000 and over -- -- --
</TABLE>
WAYS TO REDUCE FRONT-END SALES CHARGES
There are three ways you can reduce your sales charges.
1. Take advantage of purchases you've already made
Rights of accumulation let you combine the value of all the Class A shares
you already own with your current investment to calculate your sales charge.
2. Take advantage of purchases you intend to make
By signing a non-binding letter of intent, you can combine investments you
plan to make over a 13 month period to calculate the sales charge you'll pay
on each investment.
3. Buy as part of a group of investors You can combine your investments with
others in a recognized group when calculating your sales charge. The
following is a general list of the groups Northstar recognizes for this
benefit.
o you, your spouse and your children under
the age of 21
o a trustee or fiduciary for a single trust, estate or fiduciary account
(including qualifying pension, profit sharing and other employee benefit
trusts)
o any other organized group that has been in existence for at least six
months, and wasn't formed solely for the purpose of investing at a
discount.
4. You may not have to pay front-end sales charges or a CDSC if you are:
o an active or retired trustee, director, officer, partner or employee
(including immediate family) of
- Northstar or of any of its affiliated companies
- any Northstar affiliated investment company
- a dealer that has a sales agreement with the distributor
o a trustee or custodian of any qualified retirement plan or IRA established
for the benefit of anyone in the point above
o a dealer, broker or registered investment adviser who has entered into an
agreement with the distributor providing for the use of shares of the fund in
particular investment products such as "wrap accounts" or other similar
managed accounts for the benefit of your clients
o a service provided for Northstar, any Northstar affiliated company, or any
Northstar affiliated investment company
o a Brandes employee, officer or partner.
You won't pay a sales charge when you buy Class A shares of the fund through a
dealer by transferring the proceeds of the sale of another open-end fund, so
long as:
o you have held the shares in the fund you're selling for at least six months,
and you paid a sales charge when you bought them
o you send the proceeds of the sale directly to Northstar or our agent or hold
them in cash or a money market fund
o you buy the shares of the fund within 60 days of the sale, and
o the fund has the same or a similar investment objective.
Pension, profit sharing and other benefit plans created pursuant to a plan
qualified under Section 401 of the Code or plans under Section 456 of the Code
don't pay a front-end sales charge or a CDSC, as long as the shares are
purchased by an employer sponsored plan with at least 50 eligible employees.
If you think you might be eligible to reduce your sales charges using any of
these methods, please call us or consult the Statement of Additional Information
(SAI).
14
<PAGE>
DEFERRED SALES
CHARGES
(Classes A, B, C & T)
We deduct a contingent deferred sales charge (CDSC) from the proceeds when you
sell shares as indicated below. CDSC is charged on the current market value of
the shares, or on the price you paid for them, whichever is less. You aren't
charged a CDSC on shares you acquired by reinvesting your dividends, or on
amounts representing appreciation.
When you ask us to sell shares, we will sell those that are exempt from the CDSC
first, and then sell the shares you have held the longest. This helps keep your
CDSC as low as possible.
CLASS A SHARES
There is generally no CDSC on Class A shares, except for purchases of $1 million
or more, when you sell them within 18 months of when you bought them.
Your investment CDSC on shares being sold
First $1,000,000 to $2,499,999 1.00%
$2,500,000 to $4,999,999 0.50%
$5,000,000 and over 0.25%
CLASS B, C & T SHARES
Years after you Class B Class C Class T
bought the shares
1st year 5.00% 1.00% 4.00%
2nd year 4.00% none 3.00%
3rd year 3.00% none 2.00%
4th year 2.00% none 1.00%
5th year 2.00% none none
after 5 years none none none
WHEN THE CDSC MIGHT BE WAIVED
We may waive the CDSC for Class B and Class C shares if:
o the shareholder dies or becomes disabled
o you're selling your shares through our systematic withdrawal program
o you're selling shares of a retirement plan and you are over 70 1/2 years old
o you're exchanging Class B, C or T shares for the same class of shares of
another Northstar fund.
If you think you might be eligible for a CDSC waiver, please call us or consult
the SAI.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
15
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
OPENING A
NORTHSTAR
ACCOUNT
Once you've chosen the funds you would like to invest in and the share class you
prefer, you're ready to open an account.
First, determine how much money you want to invest. The minimum initial
investment for Northstar funds is:
o $2,500 for non-retirement accounts
o $250 for retirement accounts
o $25 if you are investing using our automatic investment plan (see page 30).
Next, open an account in one of two ways:
o give a check to your broker, who will open an
account for you, or
o complete the application enclosed with this prospectus and mail it to us,
along with your check, made payable to Northstar Funds.
TAX-SHELTERED RETIREMENT PLANS
Call or write to us about opening your Northstar account as any one of the
following retirement plans:
o IRAs,
o SEP-IRAs,
o retirement and profit sharing plans for self-employed persons (Keogh),
o and corporate retirement plans (401(k)).
BUYING, SELLING
AND EXCHANGING
Once you've opened an account and made your first investment, you can choose one
of three ways to buy, sell or exchange shares of Northstar funds:
o through your broker
o directly, by mail or over the telephone
o using one of our automatic plans.
We'll send you a confirmation statement every time you make a transaction that
affects your account balance, except when we pay distributions.
Instructions for each option appear in the chart on page 30, but here are a few
things you should know before you begin.
HOW SHARES ARE
PRICED
The price you pay or receive when you buy, sell or exchange shares is determined
by the fund's net asset value (NAV) per share and share class. NAV is calculated
each business day at the close of regular trading on the New York Stock Exchange
(usually 4:00 Eastern Standard Time) by dividing the net assets of each fund
class by the number of shares outstanding. To calculate NAV, we determine the
fair market value of the fund's portfolio securities using the method described
in the SAI.
When you're buying shares, you'll pay the NAV that is next calculated after we
receive your order in proper form, plus any sales charges that apply. When
you're selling shares, you'll receive the NAV that is next calculated after we
receive your order in proper form, less any deferred sales charges that apply.
SOME RULES FOR
BUYING
o The minimum amount of each investment after your first one is:
- $100 for non-retirement accounts
- $25 for retirement accounts
- $25 if you are investing using our automatic investment plan (see page 30).
o We record most shares on our books electronically. We will issue a
certificate if you ask us to in writing, however most of our shareholders
prefer not to have their shares in certificate form because certificated
shares can't be sold or exchanged by telephone or using the systematic
withdrawal program.
o We have the right to refuse a request to buy shares.
16
<PAGE>
SOME RULES FOR
SELLING
o Selling your shares may result in a deferred sales charge. Please refer to
the table on page 27.
o We'll pay you within three days from the time we receive your request to
sell, unless you're selling shares you recently paid for by check. In that
case, we'll pay you when your check has cleared, which may take up to 15
days.
o If you are a corporation, partnership, executor, administrator, trustee,
custodian, guardian or you are selling shares of a retirement plan, you'll
need to complete special documentation and give us your request in writing.
Please call us for information.
o You can reinvest part or all of the proceeds of any shares you sell without
paying a sales charge. You must let us know in writing 30 days from the day
you sold the shares, and buy the same class of shares you sold. We will
reimburse you for any CDSC you paid. Please see page 32 for information about
how this can affect your taxes.
o You won't pay a service charge when you sell your shares, but your dealer may
charge you fee.
o If selling shares results in the value of your account falling below $500, we
have the right to close your account, so long as your account has been open
for at least a year. We'll let you know 60 days in advance, and if you don't
bring the account balance above $500, we'll sell your shares, mail the
proceeds to you and close your account. We may also close your account if you
give us an incorrect social security number or taxpayer identification
number.
o In unusual circumstances, we may temporarily suspend the processing of
requests to sell.
SOME RULES FOR
EXCHANGING
o When you exchange shares, you are selling shares of one fund and using the
proceeds to buy shares of another fund. Please see page 32 for information
about how this can affect your taxes.
o Before you make an exchange, be sure to request and read the sections of the
prospectus of the fund you are exchanging.
o You can exchange shares of any fund for the same class of shares of any other
fund, or for shares of The Cash Management Fund without a sales charge. You
will, however, pay a sales charge if you buy shares of The Cash Management
Fund, and then exchange them for Class A shares of any of the funds.
o For the purposes of calculating CDSC, shares you exchange will continue to
age from the day you first purchased them, even if you're exchanging into The
Cash Management Fund.
o We'll let you know 60 days in advance if we want to make any changes to these
rules.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
17
<PAGE>
WAYS TO BUY, SELL OR EXCHANGE
- ------------------------------
Through your dealer
- ------------------------------
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
By mail
Please call us if you have any questions -- we can't process your request until
we have all of the documents we need.
- ------------------------------------------------------------------------------
By telephone
To sign up for this service, complete section 9 of the application or call us at
1-800-595-7827.
- --------------------------------------------------------------------------------
Automatic investment plan
To sign up for this service, complete section 9 of the application or call us at
1-800-595-7827.
- --------------------------------------------------------------------------------
Systematic withdrawal program
To sign up for this service, complete section 8 of the application or call us at
1-800-595-7827.
<PAGE>
WHEN TO USE THIS OPTION
o buy
o sell
o exchange
- ----------------------------
o buy
o sell
o exchange
- ----------------------------
o sell
o exchange
- ----------------------------
o buy
- ----------------------------
o sell
18
<PAGE>
HOW TO USE IT
If you're buying shares, make your check payable to Northstar Funds and give it
to your dealer, who will forward it to us.
When you're selling, give your written request to your dealer, who may charge
you a fee for this service.
Send your request to buy, sell or exchange in writing to:
Northstar Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5131
Westborough MA 01581-5131
Your letter should tell us:
o your account number
o your social security number or taxpayer identification number
o the name the account is registered in
o the fund name and share class you're buying or selling, and, for exchanges,
the fund name and share class you're exchanging to
o the dollar value or number of shares you want to buy, sell or exchange.
If you're buying include a check payable to Northstar Funds with your request.
If you're selling or exchanging, your request must be signed by all registered
owners of the account.
We'll ask you to guarantee the signatures if:
o you are selling more than $50,000 worth of shares
o your address of record has changed in the past 30 days
o you want us to send the payment to someone other than the registered owner,
to an address other than the address of record, or in any form other than by
check.
Signatures can be guaranteed by a bank, a member of the national stock exchange
or another eligible institution.
You can sell or exchange up to $50,000 of your shares by telephone.
Call us at 1-800-595-7827 between 8:30 a.m. and 4:00 p.m. Eastern Standard Time.
When you're calling with your request, we'll ask you for your name, social
security number, broker of record or other identification. If we don't ask for
these things and process an unauthorized telephone transaction, we are
responsible for any losses to your account.
Otherwise you are responsible for any unauthorized use of the telephone
transaction service.
We'll mail the proceeds of the sale to the address of record or wire $1,000 or
more to any commercial bank in the U.S. that is a member of the Federal Reserve
System. There is no fee for this service.
You can authorize us to automatically withdraw a minimum of $25 each month from
your bank account and use it to buy shares in Northstar funds.
There's no charge for this service, but your bank may charge you a small set-up
or transaction fee. You can cancel the program at any time. This program is not
available for Class T accounts.
You can ask us to automatically transfer money from your Northstar account into
your bank account.
We will sell shares or share fractions on your behalf monthly or quarterly, and
automatically deposit the proceeds into your bank account. There may be a sales
charge on shares we sell on your behalf.
You must have at least $5,000 worth of shares in your account to participate in
this program. The minimum transfer amount is $25.
It isn't to your advantage to buy and sell shares of the same fund at the same
time, so you can't set up a systematic withdrawal program for an account you've
already signed up on an automatic investment plan. This program is not available
for Class T accounts.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
19
<PAGE>
MUTUAL FUND
EARNINGS AND
YOUR TAXES
HOW THE FUNDS
PAY DISTRIBUTIONS
Each Northstar fund distributes virtually all of its net investment income and
net capital gains to shareholders at least annually in the form of dividends.
The funds pay dividends as follows:
Northstar High Yield Fund monthly
Northstar High Total Return Fund II
Northstar Strategic Income Fund
Northstar Balance Sheet quarterly
Opportunities Fund
As a shareholder, you are entitled to a share of the income and capital gains a
fund distributes. The amount you receive is based on the number of shares you
own.
DISTRIBUTION OPTIONS
You can take your distributions as cash or reinvest them in the same class of
shares of any of our funds. You specify your preference when you open your
account. Distribution options vary by share class, as follows. You can change
your distribution instructions at any time by notifying us by phone (if going to
the address of record), or in writing.
CLASS A, B & C SHARES
o reinvest both income dividends and capital gain distributions to buy
additional Class A, B or C shares of any fund you choose
o receive income dividends in cash and reinvest capital gain distributions to
buy additional Class A, B or C shares of any fund you choose
o receive both income dividends and capital gain distributions in cash.
If you don't specify how you would like to receive your distributions, we'll
automatically reinvest both income dividends and capital gain distributions in
additional shares of the same fund.
CLASS T SHARES
You must receive all distributions in the same way, either in cash or by
reinvesting them in additional shares of the same fund.
20
<PAGE>
HOW YOUR
DISTRIBUTIONS
ARE TAXED
Each Northstar fund intends to meet the requirements for being a tax-qualified
regulated investment company, which means they generally do not pay federal
income tax on the earnings they distribute to shareholders.
As a result, distributions that you receive will generally be considered to be
taxable in your hands. Income distributions, whether you take them as cash or
reinvest them, are taxable as ordinary income. Capital gain distributions are
taxable as long-term capital gains, regardless of how long you've held the
shares.
Distributions may also be subject to state, local or foreign taxes.
If income distributed to you includes dividends paid by U.S. corporations, part
of the dividends the fund pays may be eligible for the corporate
dividends-received deduction.
TIMING YOUR PURCHASE
If you buy shares of a fund just before it makes a distribution, you will pay
the full price but part of your investment will come back to you as a taxable
distribution. Unless you are investing in a tax- deferred account, such as an
IRA, this is not to your advantage because you'll pay tax on the dividend but
will not have shared in the increase in the net asset value of the fund.
WHEN DISTRIBUTIONS ARE DECLARED
For tax purposes, distributions declared by the fund in October, November or
December and paid to you in January are taxable in the calendar year in which
they were declared.
BACKUP WITHHOLDING TAX
We'll notify you each year of the tax status of dividends and distributions. If
we don't have your tax identification number, or if you have been told by the
IRS that you are subject to backup withholding tax, we may be required to
withhold U.S. federal income tax on any distributions at the rate of 31%.
WHEN YOU SELL YOUR SHARES
When you sell or exchange shares you will realize a capital gain or loss,
depending on the difference between what your shares cost you and what you
receive for them. A capital gain or loss will be long-term or short-term,
depending on the length of time you held the shares.
In your federal income tax return you report a capital gain as income and a
capital loss as a deduction.
CONSULT YOUR TAX ADVISER
The information above is general in nature. You should consult your tax adviser
to discuss how investing in Northstar funds affects your personal tax situation.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
21
<PAGE>
THE BUSINESS
OF MUTUAL
FUNDS
HOW THE FUNDS
ARE ORGANIZED
AND MANAGED
Each of the Northstar funds is a diversified mutual fund. The Northstar High
Total Return Fund II is a series of the Northstar Trust (formerly the Northstar
Advantage Trust), which is registered as an investment company with the SEC. All
of the other funds are trusts registered separately with the SEC.
The trustees of each SEC-registered trust oversee the business affairs of the
funds and are responsible for major decisions about each fund's investment
objectives and policies.
The funds do not hold regular shareholder meetings, but may hold special
meetings. A special meeting is called if investors holding at least 10% of the
outstanding shares of a fund request it. Certain objectives and policies of the
funds may only be changed by shareholder vote. A shareholder vote is required to
change the investment objective of a Northstar fund because the fund investment
objectives are fundamental.
The day-to-day management of the funds is handled by the following companies and
advisers appointed by the trustees:
INVESTMENT ADVISER
Provides advice and recommendations about each fund's investments. The
investment adviser is paid out of each fund's management fee, which are listed
beginning on page 4.
Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, CT 06830
ADMINISTRATOR
Provides administrative, compliance and accounting services to the funds. The
administrator receives an annual administrative services fee from each fund of
0.10% of the fund's average daily net assets, plus $5 per account per year.
Northstar Administrators Corporation
Two Pickwick Plaza
Greenwich, CT 06830
DISTRIBUTOR
Markets the funds and distributes shares through brokers and other financial
representatives.
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, CT 06830
CUSTODIAN
Holds all the funds' assets.
Custodian and fund accounting agent:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
TRANSFER AGENT
Handles shareholder record-keeping and statements, distribution of dividends and
processing of orders to buy and sell shares.
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 01581-5120
PORTFOLIO MANAGERS AND SUB-ADVISERS
You'll find profiles of the portfolio managers to the funds beginning on page
22.
22
<PAGE>
HOW DEALERS ARE
COMPENSATED
Dealers receive payment for selling shares of Northstar funds in three ways:
THEY RECEIVE A COMMISSION WHEN
YOU BUY SHARES
The amount of the commission depends on the amount you invest and the share
class you buy. Sales commissions are detailed in the chart below.
o Class A investments
(% of offering price)
Commission Amount
received by dealers paid by the
out of sales charges distributor
you pay
up to $99,999 4.00
$100,000 to $249,999 3.10
$250,000 to $499,999 2.30
$500,000 to $999,999 1.70
$1,000,000 to $2,499,999 0.00 1.00
$2,500,000 to $4,999,999 0.00 0.50
$5,000,000 and over 0.00 0.25
o Class B investments
Receives 4% of sale price from the distributor
o Class C investments
Receives 1% of sale price from the distributor
THEY ARE PAID A FEE BY THE DISTRIBUTOR
FOR SERVICING YOUR ACCOUNT
They receive a service fee depending on the average net asset value of the class
of shares their clients hold in Northstar funds. These fees are paid from the
12b-1 fee deducted from each fund class. In addition to covering the cost of
commissions and service fees, the 12b-1 fee is used to pay for other expenses
such as sales literature, prospectus printing and distribution and compensation
to the distributor and its wholesalers. You'll find the 12b-1 fees listed in the
fund information beginning on page 4. Service and distribution fee percentages
appear on page 25.
THEY MAY RECEIVE ADDITIONAL BENEFITS
AND REWARDS
Selling shares of Northstar funds may make dealers eligible for awards or to
participate in sales programs sponsored by Northstar. The costs of these
benefits and rewards are not deducted from the assets of the funds -- they are
paid from the distributor's own resource.
The distributor may also pay additional compensation to dealers including
Advest, Inc. out of its own resources for marketing and other services to
shareholders. All payments it receives for Class T shares are paid to Advest,
Inc.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
23
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
Risk is the potential that your investment will lose money or not earn as much
as you hope. The Northstar funds have varying degrees of risk, depending on the
securities they invest in. There is no guarantee that a fund will achieve its
investment objective.
You'll find a discussion of the risk factors associated with each fund beginning
on page 4.
This section provides information about the risks associated with different
kinds of securities. It also lists additional investment practices that may
involve elements of risk.
EQUITIES
o Give the buyer ownership rights in the issuer. Common and preferred stocks,
convertible securities and stock purchase rights are types of equities.
o The market value of an equity security may go up or down rapidly depending on
market conditions. This affects the value of the shares of a fund, and the
value of your investment.
o Securities of smaller companies may be subject to more abrupt or erratic
market movements because they are traded in lower volume and are subject to
greater changes in earnings and growth prospects.
DEBT SECURITIES
o Obligations to repay borrowed money within a certain time with or without
interest. Zero-coupon securities, pay-in-kind securities, discount
obligations, mortgage-backed securities, convertible securities and high
yield securities are types of debt securities.
o Debt securities are affected by changes in interest rates. In general, when
interest rates go up, the value of a debt security decreases; when interest
rates go down, the value of a debt security increases.
o There is also the risk that the borrower won't be able to fulfill its
obligation, resulting in loss or a lower price than anticipated.
LOWER-RATED OR JUNK BONDS
The funds discussed in this prospectus invest in high yield securities (junk
bonds). In addition to general risks listed above that are associated with debt
securities, junk bonds have special risks;
o They fluctuate more in value than higher rated securities.
o They are more subject to the risk that the borrower won't fulfill its
obligation.
o There may not be a market to sell them at a reasonable price, resulting in
loss or a lower price than anticipated.
o The fund's ability to achieve its investment objective may be more dependent
on Northstar's credit analysis than is the case for higher rated securities.
<TABLE>
<CAPTION>
Quality rating High Yield High Total Strategic Balance Sheet
Fund(1) Return Fund II(1) Income Fund(1) Opportunities Fund(1)
<S> <C>
Investment grade 2.0 XX 35.3 0.8
BB 38.2 3.8 32.8 9.5
B 51.8 55.2 20.9 30.7
CCC -- 2.7 2.2 1.1
CC -- -- -- --
C -- -- -- --
D -- -- -- --
Non-rated 1.6 23.7 4.3 11.3
U.S. Governments, equities & others 6.4 4.6 4.5 46.6
Total 100% 100% 100% 100%
- ------------------------------------------------------------------------------------------------------
(1) Data as of June 30, 1997.
</TABLE>
24
<PAGE>
FOREIGN
INVESTMENTS
o Securities issued by companies or governments of foreign countries. May
include equities and debt securities including sovereign debt obligations,
including Brady Bonds (securities issued to refinance foreign government bank
loans and other debt).
o Subject to all of the risks associated with equity and debt securities. There
are also other risks that can affect the value of a foreign investment:
- foreign markets may be less regulated, may have less volume and be less
liquid
- foreign securities may be less liquid and more
volatile
- the value of the securities is affected by changes in currency exchange
rates and exchange control regulations
- the value of foreign securities may be affected by adverse political and
economic developments, seizure or nationalization of foreign deposits, and
government restriction
- there is often less information available about foreign companies and many
countries do not have the accounting, auditing and financial reporting that
we have in the United States.
EMERGING MARKETS
o Investment in emerging markets have additional risks: developing countries
have economic structures that are less mature, have less stable political
systems and may have high inflation, rapidly changing interest and currency
exchange rates, and their securities markets are substantially less
developed.
OTHER, HIGHER
RISK SECURITIES
ILLIQUID SECURITIES -- FUNDS ARE LIMITED
TO 15% OF NET ASSET VALUE
o Securities that can't be sold quickly at a reasonable price, or that can't be
sold on the open market. Includes restricted securities and private
placements.
o Used to realize higher profits.
o There may be fewer market players which can result in lower prices, and sales
can take longer to complete.
o Following guidelines established by the trustees of each fund, Northstar may
consider a security than can't be sold on the open market to be liquid if it
can be sold to institutional investors (Rule 144A) or on foreign markets.
DERIVATIVE SECURITIES
o Securities that derive their value from the performance of an underlying
asset. Usually take the form of a contract to buy or sell an asset or
commodity either now or in the future, but mortgage and other asset-backed
securities are also generally considered derivatives. Types of derivative
securities include options, futures contracts, options on futures and forward
contracts.
o Used often to "hedge" or offset market fluctuations or changes in currency
exchange or interest rates. May also be used for speculative purposes to
increase returns.
o In addition to the risks associated with equities and debt securities, there
are several special risks associated with the use of derivatives:
- changes in the value of the derivative may not
match changes in the value of its underlying
asset
- hedging may not be successful, and may
prevent the fund from making other gains
- derivatives used for speculative purposes can result in gains or losses
that are substantially greater than the derivative's original cost.
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
25
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
INVESTMENT
PRACTICES
REPURCHASE AGREEMENTS -- FUNDS ARE
LIMITED TO 15% OF THEIR NET ASSET VALUE
o Buying a security from a bank or dealer who must buy it back at a fixed price
on a specified day. Repurchase agreements that mature after more than seven
days are considered to be illiquid investments. Investments in this type of
repurchase agreement can only be 5% of a fund's net asset value.
o Used for temporary defensive purposes or to generate income from cash
balances.
o The bank or dealer may not be able to buy back the security.
SHORT-TERM TRADING -- NO LIMIT
o Selling a security soon after you buy it.
o Used when the fund needs to be more liquid, in response to changes in
interest rates and economic or other developments, or when a security has
reached its price or yield objective.
o May result in higher costs for brokerage commissions, dealer mark-ups and
other transactions costs, as well as taxable capital gains.
TEMPORARY INVESTMENTS -- NO LIMIT
o Temporarily maintaining part or all of the fund's assets in cash or in U.S.
Government securities, commercial paper, banker's acceptances, repurchase
agreements and certificates of deposit.
o Used for temporary and defensive purposes in periods of unusual market
conditions.
o Provides lower returns.
WHEN ISSUED SECURITIES AND FORWARD COMMITMENTS--NO LIMIT
o A commitment to buy a security on a specific day in the future at a specified
price.
o Used to realize short-term profits.
o If made through a dealer, there is a risk that the dealer won't complete the
sale, and that the fund will lose out on a good yield or price.
o There is also risk that the value of the security will change before the
transaction is settled, resulting in short-term losses instead of gains.
26
<PAGE>
WHERE TO GO
FOR MORE
INFORMATION
You'll find more information about the Northstar family of funds in our:
ANNUAL REPORTS
The Annual reports contain information about fund performance, the financial
statements and the auditor's reports.
STATEMENT OF ADDITIONAL INFORMATION
The SAI contains complete information about the Northstar funds. The SAI is
legally part of this prospectus (it is incorporated by reference). A copy has
been filed with the Securities and Exchange Commission.
Please write or call for a free copy of the Annual reports or the current SAI:
The Northstar Funds
2 Pickwick Plaza
Greenwich, CT 06830
1-800-595-7827
(Photo of phone appears here)
If you have any questions,
please call 1-800-595-7827
27
<PAGE>
(This page intentionally left blank.)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
/ / GROWTH FUND $_______ / / GROWTH + VALUE FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
/ / SPECIAL FUND $_______ / / INTERNATIONAL VALUE FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
/ / INCOME AND GROWTH FUND $_______ / / BALANCE SHEET OPPORTUNITIES FUND $_______ / / HIGH YIELD 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 TOTAL RETURN FUND II $_______ / / STRATEGIC INCOME FUND $_______ / / GOVERNMENT SECURITIES 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*
______________________________________________________________________________________________________________________
/ / MONEY MARKET PORTFOLIO FUND $_______
(Money Market Account) Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
*Please reinvest my dividends from ________________ to ________________
(Name of Fund) (Name of Fund)
---------------------------------------------------------------------------------------------------------------------------------
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 Funds.
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
RIGHTS OF ACCUMULATION
If this account qualified 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 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.
---------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE
---------------------------------------------------------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
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 check here [ ].
Signature(s) ____________________________________________ Date __________________________________________________________________
Signature(s) ____________________________________________ 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 FUNDS,
c/o FIRST DATA, P.O. Box 5131, WESTBOROUGH, MA 01581-5131
SPECIAL ACCOUNT OPTION
---------------------------------------------------------------------------------------------------------------------------------
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 Funds to draw monthly drafts on your bank account number _________ and use the proceeds
($25 minimum) therefrom to purchase shares of Northstar ___________ _____________
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 Funds
or the purchaser upon 30 days written notice to the other.
The Northstar 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 WITHDRAW 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>
[LOGO OF NORTHSTAR]
STATEMENT OF ADDITIONAL INFORMATION
JULY 7, 1997
NORTHSTAR GROWTH FUND
NORTHSTAR GROWTH + VALUE FUND
NORTHSTAR SPECIAL FUND
NORTHSTAR INTERNATIONAL VALUE FUND
NORTHSTAR INCOME AND GROWTH FUND
NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND
NORTHSTAR HIGH YIELD FUND
NORTHSTAR HIGH TOTAL RETURN FUND II
NORTHSTAR STRATEGIC INCOME FUND
NORTHSTAR GOVERNMENT SECURITIES FUND
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-6200
(800) 595-7827
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectuses of
the Funds dated July 7, 1997, as each may be revised from time to time and the
current prospectus of the Northstar International Value Fund dated April 30,
1997 as amended from time to time. To obtain a copy of a Prospectus for the
Funds, please contact Northstar Investment Management Corporation at the address
or phone number listed above.
Northstar Investment Management Corporation ("Northstar" or the "Adviser")
serves as the Fund's investment adviser. Northstar has engaged Navellier Fund
Management, Inc. to serve as subadviser to the Northstar Growth + Value Fund and
Northstar Special Fund, subject to the supervision of Northstar. Northstar has
engaged Brandes Investment Partners, L.P. to serve as subadviser to the
Northstar International Value Fund. Northstar has engaged Wilson/Bennett Capital
Management, Inc. to serve as subadviser to the Northstar Income and Growth Fund.
Collectively, Navellier Fund Management, Inc., Brandes Investment Partners,
L.P., and Wilson/Bennett Capital Management, Inc. will be referred to as (the
"Subadvisers"). Northstar Distributors, Inc. (the "Underwriter") is the
underwriter to the Funds. Northstar Administrators Corporation (the
"Administrator") is the Funds' administrator. The Underwriter and the
Administrator are affiliates of Northstar.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT RESTRICTIONS...................................................................................... 2
INVESTMENT TECHNIQUES........................................................................................ 5
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION.............................................................. 11
SERVICES OF NORTHSTAR, THE SUBADVISERS AND THE ADMINISTRATOR................................................. 13
NET ASSET VALUE.............................................................................................. 15
PURCHASES AND REDEMPTIONS.................................................................................... 16
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................................................... 17
UNDERWRITER AND DISTRIBUTION SERVICES........................................................................ 20
TRUSTEES AND OFFICERS........................................................................................ 24
OTHER INFORMATION............................................................................................ 27
PERFORMANCE INFORMATION...................................................................................... 28
FINANCIAL STATEMENTS......................................................................................... 32
</TABLE>
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INVESTMENT RESTRICTIONS
NORTHSTAR GROWTH + VALUE FUND. The Fund has adopted investment restrictions
numbered 1 through 11 as fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended) of such Fund's outstanding voting
shares. Investment restrictions numbered 12 through 15 are not fundamental
policies and may be changed by vote of a majority of the Trust's Board members
at any time. The Fund may not:
1. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that it may: (a) borrow from banks 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 and other
transactions not deemed to involve the issuance of senior securities;
2. Underwrite the securities of others;
3. 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);
4. Deal in commodities or commodity contracts, except in the manner
described in the current Prospectus and SAI of the Fund;
5. Make loans to other persons (but the Fund may, however, lend portfolio
securities, up to 33% of net assets at the time the loan is made, to brokers or
dealers or other financial institutions not affiliated with the Fund or
Northstar, subject to conditions established by Northstar (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;
6. 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);
7. Sell short, except that these Funds may enter into short sales against
the box;
8. Invest more than 25% of its assets in any one industry or related group
of industries;
9. With respect to 75% of the Fund's assets, purchase a security (other
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;
10. Purchase a security if, as a result, more than 10% of any class of
securities, or more than 10% of the outstanding voting securities of an issuer,
would be held by the Fund;
11. Borrow money except to the extent permitted under the 1940 Act;
12. 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;
13. Make an investment for the purpose of exercising control over
management;
14. Invest more than 15% of its net assets in illiquid securities; or
15. Borrow any amount in excess of 10% of their respective assets, other
than for temporary emergency or administrative purposes. In addition,
the Fund will not make additional investments when its borrowings exceed 5% of
total assets.
NORTHSTAR INTERNATIONAL VALUE FUND. The Fund has adopted investment
restrictions numbered 1 through 6 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended) of the Fund's outstanding voting
shares. Investment restrictions numbered 7 through 12 are not fundamental
policies and may be changed by vote of a majority of the Trust's Board members
at any time. The Fund may not:
1. Issue senior securities, except to the extent permitted under the
Investment Company Act of 1940, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Act as underwriter (except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in its
investment portfolio);
3. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities), except that the Fund reserves the right to invest all of
its assets in shares of another investment company;
4. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Fund may purchase and sell securities which
are secured by real estate, securities of companies which invest or deal in real
estate and securities issued by real estate investment trusts);
5. Purchase or sell commodities or commodity futures contracts, except
that the Fund may purchase and sell stock index futures contracts for hedging
purposes to the extent permitted under applicable federal and state laws and
regulations and except that the Fund may engage in foreign exchange forward
contracts;
6. Make loans (except for purchases of debt securities consistent with the
investment policies of the Fund and except for repurchase agreements);
7. Make short sales of securities or maintain a short position, except for
short sales against the box;
8. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions;
9. Write put or call options, except that the Fund may (i) write covered
call options on individual securities and on stock indices; (ii) purchase put
and call options on securities which are eligible for purchase by the Fund and
on stock indices; and (iii) engage in closing transactions with respect to its
<PAGE>
options writing and purchases, in all cases subject to applicable federal and
state laws and regulations;
10. Purchase any security if as a result the Fund would then hold more
than 10% of any class of voting securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class), except that the Fund reserves the right to
invest all of its assets in a class of voting securities of another investment
company;
11. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal and state law, except that the Fund reserves the
right to invest all of its assets in another investment company;
12. Invest more than 15% of its net assets in illiquid securities.
NORTHSTAR INCOME AND GROWTH FUND AND NORTHSTAR HIGH TOTAL RETURN FUND II. The
Funds have adopted investment restrictions numbered 1 through 11 as fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority (as defined in the Investment Company Act of 1940, as amended) of
such Fund's outstanding voting shares. Investment restrictions numbered 12
through 17 are not fundamental policies and may be changed by vote of a majority
of the Trust's Board members at any time. The Funds may not:
1. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that it may: (a) borrow from banks 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 and other
transactions not deemed to involve the issuance of senior securities;
2. Underwrite the securities of others;
3. 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);
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<PAGE>
4. Deal in commodities or commodity contracts, except in the manner
described in the current Prospectus and SAI of the Fund;
5. Make loans to other persons (but the Funds may, however, lend portfolio
securities, up to 33% of net assets at the time the loan is made, to brokers or
dealers or other financial institutions not affiliated with the Funds or
Northstar, subject to conditions established by Northstar) (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;
6. Participate in any joint trading accounts;
7. 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);
8. Sell short, except that these Funds may enter into short sales against
the box;
9. Invest more than 25% of its assets in any one industry or related group
of industries;
10. Purchase a security (other 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;
11. Purchase a security if, as a result, more than 10% of any class of
securities, or more than 10% of the outstanding voting securities of an issuer,
would be held by the Fund;
12. 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;
13. 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;
14. 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 Northstar who each own beneficially more than 1/2 of 1% of its securities;
15. Make an investment for the purpose of exercising control over
management;
16. 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 not determined there is a 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
17. Invest in interests in oil, gas or other mineral exploration
development programs (including oil, gas or other mineral leases).
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, including those investment techniques which are regarded as a form
of borrowing, 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.
NORTHSTAR GROWTH, SPECIAL, BALANCE SHEET OPPORTUNITIES, HIGH YIELD, STRATEGIC
INCOME AND GOVERNMENT SECURITIES FUNDS. The Funds have adopted investment
restrictions numbered 1 through 12 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Fund's outstanding
voting shares. Investment restrictions numbered 13 through 21 are not
fundamental policies and may be changed by vote of a majority of the Trust's
Board members at any time. Each Fund may not:
1. 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;
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<PAGE>
2. 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;
3. 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;
4. 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);
5. 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;
6. 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;
7. 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;
8. Borrow money in excess of 5% of its total assets (taken at market
value);
9. 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);
10. Purchase more than 10% of the voting securities of any one issuer,
except U.S. Government Securities;
11. 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;
12. 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;
13. 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);
14. 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;
15. 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%);
16. Invest in securities of any issuer if any officer or trustee of the
Fund or any officer or director of Northstar 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;
17. 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);
18. 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;
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<PAGE>
19. 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;
20. Purchase warrants if, as a result, 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
21. 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.
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.
INVESTMENT TECHNIQUES
DERIVATIVE INSTRUMENTS. The Funds may invest in Derivative Instruments (as
defined in the Funds' Prospectus) for a variety of reasons, including to hedge
certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Fund to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (I.E., margin requirements) operated by
the clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each party
to an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, Northstar and the Subadvisers will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as they would review the credit quality of a security to be purchased by
a Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS -- IN GENERAL. A Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading opportunities or arbitrage
possibilities not available in the United States. Foreign markets, however, may
have greater risk potential than domestic markets. For example, some foreign
exchanges are principal markets so that no common clearing facility exists and
an investor may look only to the broker for performance of the contract. In
addition, any profits that the Fund might realize in trading could be eliminated
by adverse changes in the exchange rate, or the Fund could incur losses as a
result of those changes. Transactions on foreign exchanges may include both
commodities which are traded on domestic exchanges and those which are not.
Unlike trading on domestic commodity exchanges, trading on foreign commodity
exchanges is not regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the Fund
intends to purchase or sell futures contracts only if there is an active market
for such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with
5
<PAGE>
little or no trading, thereby preventing prompt liquidation of futures positions
and potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant market,
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate cash or high quality
money market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
SPECIFIC FUTURES TRANSACTIONS. The Funds may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures contract
multiplied by the difference between the settlement price of the contract on the
contract's last trading day and the value of the index based on the stock prices
of the securities that comprise it at the opening of trading in such securities
on the next business day.
The Funds may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price.
The Funds may purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.
The International Value Fund will engage in futures transactions only as
a hedge against the risk of unexpected changes in the values of securities
held or intended to be held by the International Value Fund. As a general rule,
the International Value Fund will not purchase or sell futures if, immediately
thereafter, more than 25% of its net assets would be hedged. In addition,
the International Value Fund will not purchase or sell futures or related
options if, immediately thereafter, the sum of the amount of margin deposits
on the International Value Fund's existing futures positions and premiums
paid for such options would exceed 5% of the market value of the International
Value Fund's net assets.
OPTIONS -- IN GENERAL. The Funds may purchase and write (I.E., sell) call
or put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period.
A covered call option written by a Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by a Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are placed in a segregated
account with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. The Fund receives a premium from writing covered
call or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. The Funds may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or traded
in the over-the-counter market. An option on a stock index is similar to an
option in respect of specific securities, except that settlement does not occur
by delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the
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exercise price of the option. Thus, the effectiveness of purchasing or writing
stock index options will depend upon price movements in the level of the index
rather than the price of a particular stock.
The Funds may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a price
which is expected to be lower or higher than the spot price of the currency at
the time the option is exercised or expires.
The Funds may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps in
pursuit of its investment objective. Interest rate swaps involve the exchange by
the Fund with another party of their respective commitments to pay or receive
interest (for example, an exchange of floating-rate payments for fixed-rate
payments) denominated in U.S. dollars or foreign currency. Equity index swaps
involve the exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Funds of options will be subject to the ability of
Northstar and the subadvisers to predict correctly movements in the prices of
individual stocks, the stock market generally, foreign currencies or interest
rates. To the extent the Manager's predictions are incorrect, the Funds may
incur losses.
SHORT SALES. A 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 the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short. When the 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.
PRIVATELY ISSUED COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS, INTEREST
OBLIGATIONS AND PRINCIPAL OBLIGATIONS. Each of High Total Return Fund II 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 Northstar 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 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,
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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 Northstar 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 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.
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. Northstar and the Subadvisers 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 (5% of the International Value 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 Northstar Trust and the Strategic Income Fund, 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. The Funds may
enter into reverse repurchase agreements and dollar roll agreements. Under a
reverse repurchase 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. At the
time the Fund enters into a reverse repurchase or 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). The Funds
do not account for dollar rolls as a borrowing.
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
8
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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 Northstar to be creditworthy under guidelines adopted by the
Trustees.
FIRM COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Fund, except the
Government Securities 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 Fund may dispose of a security prior to
settlement if Northstar 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 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.
9
<PAGE>
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
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.
Risks of International Investing
Investments in foreign securities involve special risks, including
currency fluctuations, political or economic instability in the country of issue
and the possible imposition of exchange controls or other laws or restrictions.
In addition, securities prices in foreign markets are generally subject to
different economic, financial, political and social factors than are the prices
of securities in U.S. markets. With respect to some foreign countries there may
be the possibility of expropriation or confiscatory taxation, limitations on
liquidity of securities of political or economic developments which could affect
the foreign investments of a Fund. Moreover, securities of foreign issuers
generally will not be registered with the SEC, and such issuers will generally
not be subject to the SEC's reporting requirements. Accordingly, there is likely
to be less publicly available information concerning certain of the foreign
issuers of securities held by the Fund than is available concerning U.S.
companies. Foreign companies are also generally not subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to U.S. companies. There may also be
less government supervision and regulation of foreign broker-dealers, financial
institutions and listed companies than exists in the U.S. These factors could
make foreign investments, especially those in developing countries, more
volatile. All of the above issues should be considered before investing in the
Fund.
Emerging Markets and Related Risks
The International Value Fund may invest up to 25% of its assets in
securities of companies located in countries with emerging securities markets.
Emerging markets are the capital markets of any country that in the opinion of
Brandes is generally considered a developing country by the international
financial community. Currently, these markets include, but are not limited to,
the markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic,
Greece, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Pakistan,
Peru, the Philippines, Poland, Portugal, Slovak Republic, Sri Lanka, Taiwan,
Thailand, Turkey, Venezuela and countries that comprise the former Soviet Union.
As opportunities to invest in other emerging markets countries develop, the Fund
expects to expand and diversify further the countries in which it invests.
Investing in emerging market securities involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume
than U.S. markets, securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause the Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in the Fund incurring additional costs and delays in
the transportation and custody of such securities.
ADDITIONAL INFORMATION ON FOREIGN SECURITIES. Each Fund, except Government
Securities Fund, may invest in securities of foreign issuers. Each of these
Funds other than International Value, High Yield, Strategic Income, and High
Total Return Fund II 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. Strategic Income may invest
up to 60% of its assets in securities of foreign issuers, High Total Return Fund
II may invest up to 50% and High Yield up to 35% of its total assets. The
International Value Fund may invest up to 100% of its total assets in securities
of foreign issuers. Eurodollar certificates of deposit are excluded for purposes
of this limitation for Strategic Income.
ADDITIONAL INFORMATION ON HIGH YIELD SECURITIES. Balance Sheet
Opportunities Fund, High Yield Fund, High Total Return Fund II, and Strategic
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 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 the Appendix for a description of a security.
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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 Northstar 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. Each Fund may invest in loan
participations and loan assignments. A Fund's investment in loan participations
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 borrower.
When a Fund purchases a loan assignment 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
Northstar, and Subadviser in the case of Growth + Value Fund, Special
Fund, and International Value 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
Northstar includes the Subadviser, but only with respect to Growth + Value Fund,
Special Fund, and International Value Fund. It is the practice of Northstar
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
Northstar, the rate is deemed by Northstar 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 Northstar after the transaction has been consummated. If
Northstar 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. Northstar 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. Over-the-counter purchases and sales are
transacted directly with principal market-makers, except in those circumstances
where, in the opinion of Northstar, better prices and execution are available
elsewhere.
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
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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 Northstar with a
diverse perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to Northstar and is available for
the benefit of other accounts advised by Northstar 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 Northstar, it does not reduce the Adviser's expenses by a
determinable amount. The extent to which Northstar makes use of statistical,
research and other services furnished by brokers is considered by Northstar in
the allocation of brokerage business, but there is no formula by which such
business is allocated. Northstar 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
Northstar 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, Northstar is able to supplement its research and
analysis with the views and information of other securities firms. During the
semi-annual period ended April 30, 1997 and the fiscal years ended October 31,
1996 and October 31, 1995 in the case of the Growth + Value, International
Value, Income and Growth, and High Total Return II Funds and the fiscal years
ended December 31, 1996 and December 31, 1995 for the Growth, Special, Balance
Sheet Opportunities, High Yield, Strategic Income and Government Securities
Funds, each of the Funds listed below paid the total brokerage commissions
indicated below, including, in the case of the Growth, Special, Balance Sheet
Opportunities, High Yield, Strategic Income and Government Securities Funds,
commissions to Advest, Inc. ("Advest"), an affiliate of the Funds' former
investment adviser.
BROKERAGE COMMISSIONS PAID DURING MOST RECENT SEMI-ANNUAL
PERIOD FOR THE NORTHSTAR TRUST AND FISCAL YEARS
ENDED OCTOBER 31, 1996 AND 1995 FOR THE
NORTHSTAR TRUST AND FISCAL YEARS ENDED DECEMBER 31, 1996
AND 1995 FOR THE FUNDS
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996 1995
<S> <C> <C> <C>
Growth + Value Fund...................................................................... $56,569 N/A N/A
International Value Fund (1)............................................................. $37,056 $ 46,650 $ 9,822
Income and Growth Fund.................................................................. $78,856 $507,638 $249,474
High Total Return Fund II................................................................ $ 0 N/A N/A
(1) Prior to April 21, 1997, the International Value Fund was operated as the
Brandes International Fund, a series of the Brandes Investment Trust, and
distributed by Worldwide Value Distributors, L.L.C.
<CAPTION>
DECEMBER 31,
1996 1995
Growth Fund.............................................................................. $124,024 $241,864
Special Fund............................................................................. $479,135 $ 87,375
Balance Sheet Opportunities Fund......................................................... $ 90,283 $ 88,151
High Yield Fund.......................................................................... $ 16,591 $ 12,763
Strategic Income Fund.................................................................... $ 0 $ 552
Government Securities Fund............................................................... $ 1,049 $ 0
</TABLE>
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 markups or
brokerage or underwriting 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 Northstar
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 or respond to economic or market events. A high
12
<PAGE>
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.
SERVICES OF NORTHSTAR, THE SUBADVISERS AND THE 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, Northstar, subject to the authority of the Trustees of the
Funds, and subject to delegation of certain responsibilities to Brandes
Investment Partners, L.P. as the subadviser for the International Value Fund,
Navellier Fund Management, Inc. as the subadviser for the Growth + Value Fund
and the Special Fund, and Wilson/Bennett Capital Management, Inc. as the
subadviser for the Income and Growth Fund, is responsible for furnishing
continuous investment supervision to the Funds and is responsible for the
management of each Fund's portfolio. Northstar oversees the investment
management of the Subadvisers for the Funds which are managed by a Subadviser.
Northstar is an indirect, majority-owned subsidiary of ReliaStar Financial
Corp. ("ReliaStar"). Combined minority interests in Northstar 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 ReliaStar Life Insurance Company ("ReliaStar Life") 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 Northstar is Two
Pickwick Plaza, Greenwich, Connecticut 06830. The address of ReliaStar is 20
Washington Avenue South, Minneapolis, Minnesota 55401.
Northstar charges a fee under each advisory agreement to Growth + Value
Fund, Growth Fund, Special Fund, International Value Fund, Balance Sheet
Opportunities Fund, High Yield Fund, High Total Return Fund II, Strategic Income
Fund and Government Securities Fund at an annual rate, after voluntary waivers
or expense reimbursements, of 1.00%, 0.75%, 0.75%, 1.00%, 0.65%, 0.60%, 0.75%,
0.65% and 0.50% of such Fund's average daily net assets, respectively. This fee
is accrued daily and payable monthly.
Northstar charges a fee to the 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
0.55% on the remaining aggregate daily net assets of each Fund in excess of $1
billion.
The Investment Advisory Agreement for the Income and Growth Fund
was originally approved by the Trustees of the Northstar Trust on October 23,
1993, and by the sole Shareholder of the Northstar Income and Growth 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 the Fund, including
a majority of the Disinterested Trustees, or (b) a majority of the outstanding
voting securities of each class of the Fund as defined in the 1940 Act.
The Investment Advisory Agreement for the Growth + Value Fund was approved
by the Trustees of the Northstar Trust on July 31, 1996. The Investment Advisory
Agreement will continue in effect for a period of two years and annually
thereafter if specifically approved annually by (a) the Trustees, acting
separately on behalf of the Fund, including a majority of the Disinterested
Trustees, or (b) a majority of the outstanding voting securities of each class
of the Fund as defined in the 1940 Act.
The Investment Advisory Agreement for the High Total Return Fund II was
approved by the Trustees of the Northstar Trust on October 29, 1996. The
Investment Advisory Agreement will continue in effect for a period of two
years and annually thereafter if specifically approved annually by (a) the
Trustees, acting separately on behalf of the Fund, including a majority of the
Disinterested Trustees, or (b) a majority of the outstanding voting securities
of each class of the Fund as defined in the 1940 Act.
The Investment Advisory Agreement for the International Value Fund was
approved by the Trustees of the Northstar Trust on January 23, 1997. The
Investment Advisory Agreement will continue in effect for a period of two years
and annually thereafter if specifically approved annually by (a) the Trustees,
acting separately on behalf of the Fund, including a majority of the
Disinterested Trustees, or (b) a majority of the outstanding voting securities
of each class of the 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 Northstar, the Trustees, or a majority
of the outstanding
13
<PAGE>
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 Northstar and Brandes
Investment Partners, L.P. ("Brandes"), dated February 28, 1997, Brandes acts as
Subadviser to the International Value Fund. In this capacity, Brandes, subject
to the supervision and control of Northstar and the Trustees of the Fund, will
manage the Fund's portfolio investments, consistently with the Fund's investment
objective, and will execute any of the 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 Northstar. As compensation
for its services, Northstar will pay Brandes at the annual rate of 50% of the
management fee that the Fund pays Northstar. Brandes' address is 12750 High
Bluff Drive, San Diego, California 92130. Charles Brandes, who controls the
general partner of Brandes, serves as one of the managing directors of Brandes.
The Subadvisory Agreement for the Fund was approved by the Trustees of the Fund
on January 23, 1997. The Subadvisory Agreement may be terminated without payment
of any penalty by Northstar, Brandes, the Trustees of the Fund, or the
shareholders of the 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 the Fund, or the vote of a
majority of the outstanding voting securities of the Fund, and the vote, cast in
person at a meeting duly called and held, of a majority of the Trustees of the
Fund who are not parties to the Subadvisory Agreement or "interested persons"
(as defined in the 1940 Act) of any such Party.
Pursuant to separate Subadvisory Agreements between Northstar and Navellier
Fund Management, Inc. ("Navellier"), dated July 31, 1996 and February 1, 1996,
Navellier acts as subadviser to Growth + Value Fund and Special Fund,
respectively. In this capacity, Navellier, subject to the supervision and
control of Northstar and the Trustees of such Funds, will manage the Funds'
portfolio investments, consistently with their investment objective, and will
execute any of the Funds' 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 Northstar. As compensation for its services,
Northstar will pay Navellier at the annual rate of 0.64% and 0.48% of the
average daily net assets of Growth + Value Fund and Special Fund, respectively.
Navellier is wholly-owned and controlled by its sole stockholder, Louis G.
Navellier. Navellier's address is: 1 East Liberty, Third Floor, Reno, Nevada,
89501. The Subadvisory Agreement for Growth + Value Fund was approved by the
Trustees of the Fund on July 31, 1996. The Subadvisory Agreement for Special
Fund 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. Each Subadvisory Agreement
may be terminated without payment of any penalty by Northstar, Navellier, 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, each
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 the applicable Fund, or the vote of a majority of the outstanding
voting securities of such Fund, and the vote, cast in person at a meeting duly
called and held, of a majority of the Trustees of such Fund who are not parties
to the Subadvisory Agreement or "interested persons" (as defined in the 1940
Act) of any such Party.
Pursuant to a Subadvisory Agreement between Northstar and Wilson/Bennett
Capital Management, Inc. ("Wilson/Bennett"), dated July 31, 1996, Wilson/Bennett
serves as subadviser with respect to the common stock portion of the Income and
Growth Fund. Northstar will make all determinations as to the allocation
of the Fund's assets, will direct all trades and will manage the portion of the
Fund's assets in convertible and fixed income securities. Wilson/Bennett's
principal address is Suite 250, 8260 Greensboro Drive, McLean, Virginia 22102.
Wilson/Bennett currently manages approximately $111 million of assets for
individuals, pension plans and corporations. For its services, Wilson/Bennett
will receive from Northstar, not the Funds, a monthly fee at an annual rate
equal to 0.20% of the first $125 million of average daily net assets of the Fund
managed by Wilson/Bennett, 0.25% of the next $125 million, and 0.30% for assets
in excess of $250 million. The Subadvisory Agreement for Income and Growth Fund
was approved by the Trustees of the Fund on April 25, 1996 , and by vote of the
shareholders of the Fund on July 15, 1996. The Subadvisory Agreement may be
terminated without payment of any penalty by Northstar, Wilson/Bennett, the
Trustees of the Fund, or the shareholders of the 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 the
Fund, or the vote of a majority of the outstanding voting securities of the
Fund, and the vote, cast in person at a meeting duly called and held, of a
majority of the Trustees of the 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 Northstar 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 Northstar for compliance with requirements under applicable law and
with the investment policies and restrictions of the Funds. The Administrator is
an affiliate of Northstar. 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 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 Administrative Services Agreement for the
Northstar Growth + Value Fund was approved by the Trustees of the Northstar
Trust on July 31, 1996 and will continue in effect from year to year thereafter,
provided such continuance is approved annually by a majority of the Trustees.
The Administrative Services Agreement for Northstar International Value
Fund was approved by the Trustees of the Northstar Trust on January 23, 1997
and will continue in effect from year to year thereafter, provided such
continuance is approved annually by a majority of the Trustees.
The Administrative Services Agreement for the Northstar High Total Return
Fund II was approved by the Trustees of the Northstar Trust on October 29,
1996 and will continue in effect from year to year thereafter, provided such
continuance is approved annually by a majority of the Trustees.
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 0.10% 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
by the Trustees of the particular Fund on March 1, 1995.
14
<PAGE>
and 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.
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
0.10% of each Fund's average daily net assets. In addition, the Administrator
charges an annual account fee of $5.00 for each account of beneficial
owners of shares in a Fund for providing certain shareholder services and
assisting broker-dealer shareholder accounts.
During the semi-annual period ended April 30, 1997 and the fiscal
years ended October 31, 1996 and 1995, or during the fiscal years ended
December 31, 1996, 1995, 1994 and 1993, the Funds listed below paid Northstar
and the Administrator the following investment advisory and
administrative fees, respectively:
TOTAL ADVISORY AND ADMINISTRATIVE FEES PAID
DURING SEMI-ANNUAL PERIOD ENDED APRIL 30, 1997
AND THE FISCAL YEAR ENDED OCTOBER 31,
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
APRIL 30, 1997 APRIL 30, 1997 1996 1996 1995 1995
ADVISORY FEES ADMIN. FEES ADVISORY FEES ADMIN. FEES ADVISORY FEES ADMIN. FEES
<S> <C> <C> <C> <C> <C> <C>
Growth + Value Fund.................$ 96,035 $ 9,604 N/A N/A N/A N/A
International Value Fund (1)........$ 194,134 $ 29,367 $ 259,033 $ 60,000 $ 34,019 $ 39,452
Income and Growth Fund..............$ 763,965 $ 118,926 $ 1,548,967 $242,294 $1,158,432 $154,457
High Total Return Fund II...........$ 177 $ 24 N/A N/A N/A N/A
</TABLE>
(1) Prior to April 21, 1997, the International Value Fund was managed by
Brandes Investment Partners L.P. The administrator for the Fund was the
Investment Company Administration Corporation.
TOTAL ADVISORY FEES PAID
DURING FISCAL YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994 1993
ADVISORY ADVISORY ADVISORY ADVISORY
FEES FEES FEES FEES
<S> <C> <C> <C> <C>
Growth Fund (2)...................................... 575,383 593,282 604,576 517,203
Special Fund (2)..................................... 1,146,789 287,311(4) 268,139 145,178
Balance Sheet Opportunities Fund (2)................. 464,088 477,095 519,729 447,631
High Yield......................................... .. 941,594 683,323 622,761 432,063
Strategic Income Fund (2)............................ 532,941 252,201 57,726 0
Government Securities Fund (2)(3).................... 923,929 678,996 747,846 767,370
</TABLE>
(1) Prior to June 5, 1995, the Growth, Special, Balance Sheet Opportunities,
High Yield, Strategic Income and Government Securities Funds were managed
by Boston Security Counselors, Inc. ("BSC") and did not utilize the services
of an administrator. During the fiscal years ended December 31, 1996, 1995,
1994 and 1993, the Funds listed above paid Northstar or BSC the above noted
investment advisory fees.
(2) Does not reflect expense reimbursement of $34,126 for the Growth Fund,
$20,615 for the Special Fund, $41,925 for the Balance Sheet Opportunities
Fund, $65,578 for the Strategic Income Fund for the year ended December 31,
1996 and $87,944 for the Strategic Income Fund for the year ended December
31, 1995 and $15,175 for the Government Securities Fund.
(3) Net of waiver of investment advisory fees of $284,286, $301,776, $332,370
and $341,054 for the years ended December 31, 1996, 1995, 1994 and 1993,
respectively.
(4) Does not reflect expense reimbursement of $733.
NET ASSET VALUE
For each Fund in the Northstar 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 Growth, Special, Balance Sheet Opportunities, 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.
15
<PAGE>
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
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 or Class I shares because of the higher
class specific expenses borne by each of the Class B, Class C and Class T
shares. 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)
Northstar 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 50 eligible employees and (e) service
providers of (i) Northstar or any of its affiliated companies or (ii) the
Funds or any Northstar affiliated investment company and (f) Brandes employees,
officers and partners. 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 sold with a sales load and 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.
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 in the
Prospectus.
REDEMPTIONS. The right to redeem shares may be suspended and payment
therefore 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.
16
<PAGE>
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 lumpsum 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 taxfree 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
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.
EXCHANGES. The following conditions must be met for all exchanges among the
Funds and the Money Market Portfolio: (i) the shares that will be acquired in
the exchange (the "Acquired Shares") are available for sale in the shareholder's
state of residence; (ii) the Acquired shares will be registered to the same
shareholder account as the shares to be surrendered (the "Exchanged Shares");
(iii) the Exchanged Shares must have been held in the shareholder's account for
at least 30 days prior to the exchange; (iv) 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 (v) a properly executed exchange request
has been received by the Transfer Agent.
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 Northstar
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, Northstar 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.
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) June 2,
1998.
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 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.
17
<PAGE>
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.
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 he 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
18
<PAGE>
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.
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
tax.
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 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
19
<PAGE>
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 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
dividends and capital gain distributions be paid to them through various options
listed in the "How Funds Pay Distributions--Distribution 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. 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.
UNDERWRITER AND DISTRIBUTION SERVICES
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.
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
20
<PAGE>
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 their assignment.
In addition to the amount paid to dealers pursuant to the sales charge
table in the 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.
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 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
Balance Sheet Opportunities Fund) and 0.65% (in the case of High Yield
Fund and Government Securities 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 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.
The Plans are designed to be compensation plans and therefore amounts spent
by the distributor in excess of plan limits are not carried over from year to
year for reimbursement. The Plans do, however, contemplate that amounts paid to
the distributor may compensate it for past distribution efforts without regard
to any particular time period.
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.
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
21
<PAGE>
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.
During their semi-annual period ended April 30, 1997 and fiscal year ended
October 31, 1996, 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:
<TABLE>
<CAPTION>
Six Months
Ended
April 30, 1997 1996
CLASS A CLASS B Class C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Growth + Value Fund.....................................$ 8,776 50,824 $ 15,952 N/A N/A N/A
International Value Fund................................$ 34,971 $ 75 $ 93,200 $ 51,858 N/A $110,222
Income and Growth Fund..................................$102,385 $363,286 $314,050 $242,908 $671,688 $583,906
High Total Return Fund II...............................$ 73 3 3 N/A N/A N/A
</TABLE>
For their semi-annual period ended April 30, 1997 and year ended October
31, 1996, expenses incurred by the Distributor for distribution related
activities with respect to each class of shares of each Fund listed below were
as follows:
<TABLE>
<CAPTION>
GROWTH + VALUE
Six Months
Ended
April 30, 1997 1996(1)
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Salaries/Overrides.....................................$28,356 $ 48,896 $ 16,656 N/A N/A N/A
Commissions Paid....................................... 0 $931,435 $ 82,856 N/A N/A N/A
Marketing, RMM & Convention Expense....................$17,507 $ 11,179 $ 2,901 N/A N/A N/A
Total..................................................$45,863 $991,510 $102,413 N/A N/A N/A
</TABLE>
(1) The Growth + Value Fund commenced operations on November 18, 1996.
<TABLE>
<CAPTION>
INTERNATIONAL VALUE (1)
Six Months
Ended
April 30, 1997 1996
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Salaries/Overrides.....................................$ 96,973 $ 86,545 $ 81,560 $163,336 N/A $121,036
Commissions Paid.......................................$ 23,267 $ 19,464 $ 83,011 $ 49,175 N/A $ 86,317
Marketing, RMM & Convention Expense....................$ 85,413 $ 36,728 $ 81,623 $130,806 N/A $ 91,558
Total..................................................$205,653 $142,737 $296,194 $343,317 N/A $298,911
</TABLE>
The International Value Fund commenced operations on April 21, 1997. Prior
to April 21, 1997, the Fund was operating as the Brandes International Fund,
a series of the Brandes Investment Trust and was distributed by Worldwide
Value Distributors, L.L.C.
<TABLE>
<CAPTION>
INCOME AND GROWTH
Six Months
Ended
April 30, 1997 1996
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Salaries/Overrides..................................... $ 97,403 $ 20,721 $ 11,691 $222,594 $ 29,916 $ 15,032
Commissions Paid....................................... $ 0 $243,257 $ 22,606 $ 0 $626,730 $ 83,415
Marketing, RMM & Convention Expense.................... $105,615 $ 22,161 $ 14,302 $210,884 $ 39,999 $ 24,168
Total.................................................. $203,018 $286,140 $ 48,599 $433,478 $ 696,645 $122,615
</TABLE>
<TABLE>
<CAPTION>
HIGH TOTAL RETURN FUND II (1)
Six Months
Ended
April 30, 1997 1996
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Salaries/Overrides..................................... N/A N/A N/A N/A N/A N/A
Commissions Paid....................................... N/A N/A N/A N/A N/A N/A
Marketing, RMM & Convention Expense.................... N/A N/A N/A N/A N/A N/A
Total.................................................. N/A N/A N/A N/A N/A N/A
</TABLE>
(1) The High Total Return Fund II commenced operations on January 31, 1997 but
was not available for purchase until July 4, 1997.
For their semi-annual period ended April 30, 1997 and fiscal year ended
October 31, 1996, the Distributor received the following amounts in sales
charges, after reallowance to Dealers:
<TABLE>
<CAPTION>
UNDERWRITING FEES
Six Months
Ended
April 30, 1997 1996
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Growth + Value Fund...................................... $ 58,482 $ 11,930 $ 203 N/A N/A N/A
International Value Fund (1)............................. $ 15,974 $ 0 $ 5,471 $ 30,396 N/A $ 5,774
Income and Growth Fund................................... $ 10,294 $141,768 $ 10,294 $ 25,657 $ 216,133 $ 4,049
High Total Return Fund II................................ $ 0 $ 0 $ 0 N/A N/A N/A
</TABLE>
(1) Prior to April 21, 1997, the International Value Fund was operated as the
Brandes International Fund, a series of the Brandes Investment Trust, and
was distributed by Worldwide Value Distributors, L.L.C.
During their fiscal year ended December 31, 1996, each class of shares of
the Funds listed below, paid the following 12b-1 distribution and service fees
pursuant to the Distribution Plan for each class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Growth Fund..................................... $ 4,665 $ 33,508 $ 2,365 $679,967
Special Fund.................................... $108,927 $630,676 $189,225 $328,758
Balance Sheet Fund.............................. $ 3,058 $ 30,311 $ 3,219 $502,693
High Yield Fund................................. $ 32,630 $575,358 $ 98,509 $851,368
Strategic Income Fund........................... $ 68,706 $273,868 $ 32,011 $270,759
Government Securities........................... $ 31,014 $ 59,149 $ 8,032 $813,064
</TABLE>
22
<PAGE>
During the fiscal year ended December 31, 1996, expenses incurred by the
Distributor (or Advest with respect to Class T Shares prior to June 2, 1995) for
certain distribution related activities with respect to each class of shares of
the Funds listed below were as follows:
<TABLE>
<CAPTION>
GROWTH FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $ 5,428 $ 5,267 $ 626 $0
Commissions Paid................................. $ 0 $ 94,654 $2,353 $0
Marketing/Convention/RMM Expense................. $ 5,167 $ 2,182 $ 118 $0
Total............................................ $10,595 $102,103 $3,097 $0
</TABLE>
<TABLE>
<CAPTION>
SPECIAL FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $202,492 $ 321,375 $103,940 $0
Commissions Paid................................. $ 0 $5,309,686 $425,317 $0
Marketing/Convention/RMM Expense................. $110,034 $ 41,232 $ 9,294 $0
Total............................................ $312,526 $5,672,293 $538,551 $0
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET OPPORTUNITIES FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $3,605 $ 4,924 $ 334 $0
Commissions Paid................................. $ 0 $86,309 $1,246 $0
Marketing/Convention/rmm Expense................. $2,855 $ 1,954 $ 153 $0
Total............................................ $6,460 $93,187 $1,733 $0
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $43,187 $ 124,358 $ 27,973 $0
Commissions Paid................................. $ 0 $2,165,191 $120,421 $0
Marketing/Convention/RMM Expense................. $30,923 $ 37,394 $ 4,709 $0
Total............................................ $74,110 $2,326,943 $ 44,724 $0
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $ 67,162 $ 27,186 $ 6,101 $0
Commissions Paid................................. $ 0 $513,641 $27,670 $0
Marketing/Convention/rmm Expense................. $ 61,783 $ 17,684 $ 1,520 $0
Total............................................ $128,945 $ 55,854 $35,291 $0
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $31,119 $ 16,558 $ 2,853 $0
Commissions Paid................................. $ 0 $284,212 $11,411 $0
Marketing/Convention/rmm Expense................. $30,446 $ 3,859 $ 378 $0
Total............................................ $61,565 $304,629 $14,642 $0
</TABLE>
23
<PAGE>
For the following Funds' fiscal year ended December 31, 1996, the
Distributor (or Advest) received the following amounts in sales charges, after
reallowance to Dealers:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Growth Fund..................................... $ 3,593 $ 7,731 $ 29 $ 95,746
Special Fund.................................... $381,500 $152,531 $39,451 $228,166
Balance Sheet Fund.............................. $ 2,436 $ 6,780 $ 406 $ 65,812
High Yield Fund................................. $ 9,722 $141,189 $ 9,752 $ 77,316
Strategic Income................................ $ 13,924 $105,239 $ 2,944 $205,047
Government Securities........................... $ 52,148 $ 19,375 $ 955 $234,689
</TABLE>
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 is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
ROBERT B. GOODE, JR., Trustee. Age: 66. Currently retired. From 1990 to
1991, Chairman of The First Reinsurance 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. Age: 63. President, Doherty, Wallace, Pillsbury
and Murphy, P.C., Attorneys. Director, Tambrands, Inc. Since October 1993,
Trustee of the Northstar affiliated investment companies.
DAVID W. WALLACE, Trustee. Age: 73. Chairman of Putnam Trust Company, Lone
Star Industries and FECO 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 President. Age: 48. Director, Chairman and
Chief Executive Officer of Northstar and Northstar, Inc. Director and
President of Northstar Administrators Corporation and Director and Chairman
of 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.
*JOHN G. TURNER, Trustee. Age: 57. Since May 1993, Chairman and CEO of
ReliaStar Financial Corporation and Northwestern NationalLife Insurance Co.
and Chairman of other ReliaStar Affiliated Insurance Companies since 1995.
Since October 1993, Director of Northstar and affiliates. Prior to May
1993, President and CEO of ReliaStar and Northwestern National.
ALAN L. GOSULE, Trustee. Age: 56. Partner, Rogers & Wells. Director, F.L.
Putnam Investment Management Co., Inc.
DAVID W.C. PUTNAM, Trustee. Age: 57. President, Clerk and Director of F.L.
Putnam Securities Company, 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.
*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act.
24
<PAGE>
JOHN R. SMITH, Trustee. Age: 74. From 1970-1991, Financial Vice President
of Boston College; President of New England Fiduciary Company (financial
planning) since 1991; Chairman of Massachusetts Educational Financing
Authority since 1987; Vice Chairman of Massachusetts Health and Education
Authority.
WALTER H. MAY, Trustee. Age: 61. Retired. Former Senior Executive for Piper
Jaffrey, Inc.
THOMAS OLE DIAL, Vice President. Age: 41. 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 and Research
Corporation, Vice President of National Affiliated Investment Companies,
and Vice President of NSR Asset Management Corporation. From 1988 to 1989,
President of Dial Captial Management.
GEOFFREY WADSWORTH, Vice President. Age: 54. Vice President of
Northstar. Former Vice President and Portfolio Manager with National
Securities & Research Corporation.
AGNES MULLADY, Vice President and Treasurer. Age: 39. Senior Vice President
and Chief Financial Officer of Northstar, Senior Vice President and
Treasurer of Northstar Administrators corporation, and Vice President and
Treasurer of Northstar Distributors, Inc. From 1987 to 1993, Vice President
and Treasurer of National Securities & Research Corporation.
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.
Mone Anathan, III, Dr. Loring E. Hart and Reverend Bartley MacPhaidin, 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 advice as the Board of
Trustees may request from time to time. The Advisory Board will have no
authority or control over the Funds. Northstar has agreed to assume all expenses
associated with the Advisory Board for three years commencing June 2, 1995.
As of December 31, 1996, 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 December 31, 1996,
no shareholder owned beneficially (b) or of record (r) more than 5% of a Fund's
outstanding shares, except as set forth below:
(1) Income and Growth Fund
A
Norwest Bank 28% (r)
Minneapolis, Minnesota
B
Merrill Lynch Pierce Fenner & Smith 28.4% (r)
Jacksonville, Florida
(2) Growth + Value Fund
A
Merrill Lynch Pierce Fenner & Smith 33.5% (r)
Jacksonville, Florida
Norwest Bank 47.4% (r)
Minneapolis, MN
C
Merrill Lynch 11.8% (r)
Jacksonville, Florida
Bear Stearns Securities 6.5% (r)
Brooklyn, New York
Mrs. Ruth A. Samuels Trustee 5.9% (b)
Laguna Hills, California
Merrill Lynch 23.2% (r)
Jacksonville, Florida
(3) Special Fund
A
Merrill Lynch Pierce Fenner & Smith 29.5% (r)
Jacksonville, Florida
B
Merrill Lynch Pierce Fenner & Smith 38.5% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 64.9% (r)
Jacksonville, Florida
(4) Growth Fund
A
NWNL Ins Co Retirement Plan Div 26.2% (r)
Lifestyle II Separate Acct 3
Greenwich, Connecticut
NWNL Ins Co Retirement Plan Div 28.7% (r)
Lifestyle I
Greenwich, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 15.8% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 15.3% (r)
Jacksonville, Florida
Gerald A. Mitchell 35.7% (b)
Ypsilanti, Michigan
Advest Inc. 6.4% (r)
Hartford, Connecticut
(5) Balance Sheet Opportunities Fund
A
Advest Inc 6.2% (r)
Hartford, Connecticut
Margaret M. Standring Trust 5.6% (b)
Weymouth, Massachusetts
Donaldson Lufkin Jenrette 6.4% (r)
Jersey City, New Jersey
Mildred J. Clark 10% (b)
Palatine, Illinois
Donaldson Lufkin Jenrette 6.5% (r)
Jersey City, New Jersey
Advest Inc 7.3% (r)
Hartford, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 9.3% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 5.1% (r)
Jacksonville, Florida
Louise H. Fitzgerald 53.5% (b)
So. Attleboro, Massachusetts
(6) Government Securities Fund
A
Merrill Lynch Pierce Fenner & Smith 8% (r)
Jacksonville, Florida
Donaldson Lufkin Jenrette 16.4% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 17% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 16.9% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 17.6% (r)
Jersey City, New Jersey
Order of St. Benedict of New Jersey 5.2% (b)
Morristown, New Jersey
Order of St. Benedict of New Jersey 9.8% (b)
Morristown, New Jersey
B
Merrill Lynch Pierce Fenner & Smith 7.4% (r)
Jacksonville, Florida
Advest Inc. 5.1% (r)
Hartford, Connecticut
C
Merrill Lynch Pierce Fenner & Smith 96% (r)
Jacksonville, Florida
(7) Strategic Income Fund
A
Norwest Bank 29.8% (r)
Minneapolis, Minnesota
NWNL Ins Co Retirement Plan Div. 5.5% (r)
Lifestyle III Separate Acct 3
Greenwich, Connecticut
NWNL Ins Co Retirement Plan Div 6.9% (r)
Lifestyle II Separate Acct 3
Greenwich, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 31.6% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 33.2% (r)
Jacksonville, Florida
(8) High Yield Fund
A
Merrill Lynch Pierce Fenner & Smith 15% (r)
Jacksonville, Florida
B
Merrill Lynch Pierce Fenner & Smith 40.3% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 58.5% (r)
Jacksonville, Florida
COMPENSATION TABLE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PENSION BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FROM ALL FUNDS IN
FUNDS FUND EXPENSES RETIREMENT NORTHSTAR COMPLEX(B)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr...................... (a)13,000 0 0 13,500
Paul S. Doherty.......................... (a)14,000 0 0 14,500
David W. Wallace......................... (a)14,000 0 0 14,500
Mark L. Lipson........................... (a) 0 0 0 0
John G. Turner........................... (a) 0 0 0 0
Alan L. Gosule........................... (a)14,000 0 0 14,500
David W.C. Putnam........................ (a)10,000 0 0 10,000
John R. Smith............................ (a)14,000 0 0 14,500
Walter H. May............................ (a)13,000 0 0 13,500
</TABLE>
(a) See table below for Fund specific compensation.
(b) Compensation paid by the Northstar Trust Funds, the Northstar Variable Trust
Funds and the remaining six funds, Northstar Growth, Special, Balance Sheet
Opportunities, High Yield, Strategic Income and Government Securities Funds
formerly advised by BSC.
26
<PAGE>
INDIVIDUAL FUND
FISCAL YEAR COMPENSATION TABLES
<TABLE>
<CAPTION>
GROWTH + INTERNATIONAL INCOME AND HIGH TOTAL
VALUE VALUE FUND GROWTH RETURN FUND II GROWTH(C) SPECIAL(C)
<S> <C> <C> <C> <C> <C> <C>
Robert B. Goode, Jr.................. N/A N/A 2,063 N/A 1,563 1,563
Paul S. Doherty...................... N/A N/A 2,313 N/A 1,646 1,646
David W. Wallace..................... N/A N/A 2,313 N/A 1,646 1,646
Mark L. Lipson....................... N/A N/A 0 N/A 0 0
John G. Turner....................... N/A N/A 0 N/A 0 0
Alan L. Gosule....................... N/A N/A 2,313 N/A 1,646 1,646
David W.C. Putnam.................... N/A N/A 2,063 N/A 1,188 1,188
John R. Smith........................ N/A N/A 2,312 N/A 1,646 1,646
Walter H. May....................... N/A N/A 2,000 N/A 1,583 1,583
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET GOVERNMENT
OPPORTUNITIES(C) HIGH YIELD(C) STRATEGIC INCOME(C) SECURITIES(C)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr.................................. 1,563 1,563 1,563 1,563
Paul S. Doherty...................................... 1,646 1,646 1,646 1,646
David W. Wallace..................................... 1,646 1,646 1,646 1,646
Mark L. Lipson....................................... 0 0 0 0
John G. Turner....................................... 0 0 0 0
Alan L. Gosule....................................... 1,646 1,646 1,646 1,646
David W.C. Putnam.................................... 1,188 1,188 1,188 1,188
John R. Smith........................................ 1,646 1,646 1,646 1,646
Walter H. May........................................ 1,583 1,583 1,583 1,583
</TABLE>
(c) Prior to June 2, 1995 the Trustees who were not interested persons, other
than David Putnam, 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. Mr. Putnam, former Chairman of these Funds, received a fee of
$30,000 per annum.
OTHER INFORMATION
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P. has been selected as the
independent accountants of the Northstar Trust and each of the remaining
Northstar Funds. Coopers & Lybrand L.L.P. audits the Funds' annual financial
statements and expresses an opinion thereon.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian, and fund accounting
agent for the Funds and the Northstar Trust.
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 Agency Agreement between Advest Transfer Services, Inc.
("ATS") and First Data, ATS serves as the subtransfer agent for the Funds
offering Class T shares, and, prior to June 5, 1995, ATS acted as transfer agent
to these Funds.
REPORTS TO SHAREHOLDERS. The fiscal year of the Northstar 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 semiannually. An annual report
containing financial statements audited by the independent accountants will be
sent to shareholders each year.
ORGANIZATIONAL AND RELATED INFORMATION. Growth Fund (formerly The Advantage
Growth Fund) was organized in 1986; Special Fund (formerly The Advantage Special
Fund) was organized in 1986; Balance Sheet Opportunities Fund (formerly The
Advantage Income Fund) was organized in 1986; High Yield Fund (formerly The
Advantage High Yield Bond Fund) was organized 1989, Strategic Income Fund
(formerly The Advantage Strategic Income Fund) was organized in 1994; and
Government Securities Fund (formerly The Advantage Government Securities Fund)
was organized in 1986.
27
<PAGE>
Northstar Trust (formerly Northstar Advantage Trust), and two of its series
Income and Growth Fund (formerly Northstar Advantage Income and Growth Fund) and
High Total Return Fund (formerly Northstar Advantage High Total Return Fund),
was organized in 1993. Growth + Value Fund and High Total Return Fund II
were organized in 1996. The International Value Fund commenced operations on
March 6, 1995 as the Brandes International Fund, a series of the Brandes
Investment Trust. It was reorganized on April 21, 1997 as the Northstar
International Value Fund, a series of the Northstar Trust.
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.
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.
AVERAGE ANNUAL 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
28
<PAGE>
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 and C of the Growth + Value Fund, Class A, B
and C of the Income and Growth Fund, and Class A, B and C of the High Total
Return Fund II, and Class A, B, C and T shares of the Growth, Special,
Balance Sheet Opportunities, High Yield, Strategic Income and Government
Securities Funds for the month ended April 30, 1997, and Class A, B and C
of the International Value Fund as of May 31, 1997 was as follows:
YIELD
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Growth + Value Fund........................................................ -0.65% -1.41% -1.40% N/A
International Value Fund(1)................................................ 4.08% 4.96% 3.55% N/A
Income and Growth.......................................................... 2.29% 1.76% 1.78% N/A
High Total Return Fund II.................................................. 9.02% 7.83% 7.83% N/A
Growth Fund................................................................ -0.25% -0.87% -0.85% -0.74%
Special Fund............................................................... 0.44% -0.23% -0.29% -0.03%
Balance Sheet Opportunities Fund........................................... 5.15% 4.75% 4.77% 5.09%
High Yield Fund............................................................ 7.73% 7.48% 7.48% 7.97%
Strategic Income Fund...................................................... 8.22% 7.94% 7.95% 8.13%
Government Securities Fund................................................. 6.25% 5.80% 5.87% 6.35%
(1) Due to the reorganization of the Brandes International Fund, a series of the
Brandes Investment Trust, into the Northstar International Value Fund, a
series of the Northstar Trust, on April 21, 1997, yield is being supplied
for the month ended May 31, 1997.
</TABLE>
NON-STANDARDIZED 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 ("Non-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 tables summarize the calculation of Standardized and
Non-Standardized Return for Class A, B and C shares of the Growth + Value
Fund, Class A and C shares of the International Value Fund, Class A, Class
B and Class C shares of the Income and Growth Fund and High Total Return
Fund II, series of the Northstar Trust, and for Class A, Class B, Class C
and Class T shares of the other Funds for the periods indicated.
29
<PAGE>
NORTHSTAR TRUST. The following table summarizes the calculation of
Total Return for the periods indicated through April 30, 1997, assuming
the contingent deferred sales load HAS been assessed:
<TABLE>
<CAPTION>
APRIL 30, 1997,
SINCE
ONE YEAR INCEPTION*
<S> <C> <C>
GROWTH + VALUE FUND
Class A......................................................... N/A -21.78%
Class B......................................................... N/A -12.48%
Class C......................................................... N/A -4.28%
INTERNATIONAL VALUE FUND
Class A......................................................... 11.16% 13.20%
Class B......................................................... N/A -66.67%
Class C......................................................... 15.14% 15.18%
INCOME AND GROWTH FUND
Class A......................................................... 9.20% 8.94%
Class B......................................................... 8.86% 7.95%
Class C......................................................... 12.92% 9.71%
HIGH TOTAL RETURN FUND II
Class A......................................................... N/A -0.82%
Class B......................................................... N/A -20.65%
Class C......................................................... N/A -6.59%
</TABLE>
The following table summarizes the calculation of Total Return for the
periods indicated through April 30, 1997, assuming the contingent deferred
sales load HAS NOT been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR INCEPTION*
<S> <C> <C>
GROWTH + VALUE FUND
Class A......................................................... N/A -12.85%
Class B......................................................... N/A -13.26%
Class C......................................................... N/A -13.26%
INTERNATIONAL VALUE FUND
Class A......................................................... 16.70% 15.79%
Class B......................................................... N/A 19.05%
Class C......................................................... 16.14% 15.18%
INCOME AND GROWTH FUND
Class A......................................................... 14.60% 10.48%
Class B......................................................... 13.86% 8.47%
Class C......................................................... 13.92% 9.71%
HIGH TOTAL RETURN FUND II
Class A......................................................... N/A -2.13%
Class B......................................................... N/A -2.81%
Class C......................................................... N/A -2.81%
</TABLE>
* The inception date for Class A, B and C shares of the Growth + Value Fund
is November 18, 1997. The inception date for Class B shares of the
International Value Fund is April 18, 1997; the inception date for Class A
and C shares of the International Value Fund is March 6, 1995. The
inception date of Class A, B and C shares of the Income and Growth Fund is
November 8, 1993, February 9, 1994 and March 21, 1994, respectively. The
inception date for Class A, B and C shares of the High Total Return Fund II
is January 31, 1997.
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 April 30, 1997, assuming the maximum sales charge HAS
been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION*
<S> <C> <C> <C> <C>
Growth Fund.......................................... 11.25% 11.31% 10.68% 11.77%
Special Fund......................................... -6.24% 11.99% 11.03% 9.55%
Balance Sheet Fund................................... 1.57% 10.13% 9.04% 9.34%
High Yield Fund...................................... 7.89% 11.51% N/A 10.71%
Strategic Income Fund................................ 3.19% N/A N/A 8.31%
Government Securities Fund........................... 2.42% 7.68% 7.35% 6.94%
</TABLE>
The following table summarizes the calculation of Total Return for
Class T shares of the remaining Funds for the periods indicated through
April 30, 1997, assuming the maximum sales charge HAS NOT been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION*
<S> <C> <C> <C> <C>
Growth Fund.......................................... 15.25% 11.31% 10.68% 11.77%
Special Fund......................................... -2.34% 11.99% 11.03% 9.55%
Balance Sheet Fund................................... 5.16% 10.13% 9.04% 9.34%
High Yield Fund...................................... 11.89% 11.51% N/A 10.71%
Strategic Income Fund................................ 7.17% N/A N/A 8.92%
Government Securities Fund........................... 6.41% 7.68% 7.35% 6.94%
</TABLE>
30
<PAGE>
*The inception date for Class T shares of Growth, Special, Balance Sheet
Opportunities and Government Securities 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 April 30, 1997, assuming the maximum sales charge HAS been
assessed:
<TABLE>
<CAPTION>
FUND CLASS OF SHARES ONE YEAR SINCE INCEPTION*
<S> <C> <C> <C>
Growth Fund Class A 10.39% 15.58%
Class B 10.10% 16.02%
Class C 14.10% 17.79%
Special Fund Class A -6.46% 11.43%
Class B -7.38% 11.69%
Class C -3.52% 13.54%
Balance Sheet Opportunities Fund Class A 0.39% 8.63%
Class B 0.21% 8.95%
Class C 3.75% 10.65%
High Yield Fund Class A 6.91% 7.91%
Class B 6.46% 8.04%
Class C 10.32% 9.91%
Strategic Income Fund Class A 2.70% 5.48%
Class B 2.00% 5.43%
Class C 6.07% 7.37%
Government Securities Fund Class A 1.56% 2.55%
Class B 0.98% 2.54%
Class C 4.97% 4.49%
</TABLE>
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
April 30, 1997, assuming the maximum sales charge HAS NOT been assessed:
<TABLE>
<CAPTION>
FUND CLASS OF SHARES ONE YEAR SINCE INCEPTION*
<S> <C> <C> <C>
Growth Fund
Class A 15.90% 18.56%
Class B 15.10% 17.84%
Class C 15.10% 17.79%
Special Fund
Class A -1.79% 14.31%
Class B -2.50% 13.57%
Class C -2.54% 13.54%
Balance Sheet Opportunities Fund
Class A 5.40% 11.44%
Class B 4.68% 10.68%
Class C 4.65% 10.65%
High Yield Fund
Class A 12.24% 10.69%
Class B 11.46% 9.98%
Class C 11.32% 9.91%
Strategic Income Fund
Class A 9.89% 9.31%
Class B 6.98% 7.40%
Class C 7.06% 7.37%
Government Securities Fund
Class A 6.63% 5.20%
Class B 5.98% 4.51%
Class C 5.97% 4.49%
</TABLE>
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 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, AND 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.
31
<PAGE>
FINANCIAL STATEMENTS
The Northstar Trust's unaudited financial statements dated April 30,
1997 are hereby incorporated herein by reference to the Semi-Annual Report
to Shareholders of the Northstar Trust for the six months ended April 30,
1997. The audited financial statements dated October 31, 1996 and the
report of the independent accountants, Coopers & Lybrand L.L.P. with
respect to such financial statements, are hereby incorporated herein by
reference to the Annual Report to Shareholders of the Northstar Trust for
the fiscal year ended October 31, 1996.
The audited financial statements of Growth, Special, Balance Sheet
Opportunities, High Yield, Strategic Income and Government Securities Funds
as of and for the fiscal period ended December 31, 1996 and the Report of
the Independent Accountants, Coopers & Lybrand L.L.P., with respect to such
financial statements are hereby incorporated herein by reference to the
Annual Report to Shareholders of The Northstar Funds for the fiscal year
ended December 31, 1996.
32
<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
known 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 made 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.
A-1
<PAGE>
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 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-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Included in Part A:
HIGH YIELD FUND: Financial Highlights for a share outstanding throughout
the period June 5, 1989 (commencement of operations) through December 31, 1996.
Incorporated by reference in Part B: The audited financial statements for
the year ended October 31, 1996 and the unaudited financial statements for the
six month period ended April 30, 1997 for the Northstar Trust, and for the year
ended December 31, 1996 for the Special, Growth, Balance Sheet Opportunities,
Government Securities, Strategic Income and High Yield, 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 for the
fiscal year ended October 31, 1996 and Semi-Annual Report to Shareholders for
the Trust for the six months ended April 30, 1997 and each Fund for the fiscal
year ended December 31, 1996. The incorporated financial information for the
year ended October 31, 1996 for the Trust and the six months ended April 30,
1997 for the Trust, and for the year ended December 31, 1996 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.
<PAGE>
(b) EXHIBITS - HIGH YIELD FUND
(1) Form of Amended and Restated Declaration of Trust (1)
(a) Amendment of Declaration of Trust (5)
(2) By-Laws (1)
(3) N/A
(4) N/A
(5) (a) Form of Investment Advisory Agreement (1)
(6) (a)-(d) Form of Underwriting Agreements for Classes A, B,
C and T Shares (1)
(e) Form of Special Dealer Agreement between Northstar
Distributors and Advest, Inc. (1)
(7) N/A
(8) Form of Custody Agreement (1)
(9) (a) Form of Transfer Agency Agreement (1)
(b) Form of Sub-Transfer Agency Agreement (1)
(c) Form of Administrative Services Agreement (1)
(d) Administration Agreement (3)
(10) Opinion of Counsel
(11) Consent of Independent Public Accountants
(12) Annual Report to Shareholders (5)
(13) N/A
(14) N/A
(15) Form of Distribution Plan for Classes A, B, C and T
Shares (1)
(16) Performance Information
(17) Powers of Attorney (2)
(18) Multiple Class Plan Pursuant to Rule 18f-3 (5)
(27) Financial Data Schedules (EX-27)
- ----------------------------------
NOTES TO EXHIBIT LISTING
(1). Previously filed as an Exhibit to the Registrant's Post-Effecitve
Amendment as follows and incorporated herein by reference: Government
Securities Fund - PEA No. 16; Income Fund - PEA No. 15; Growth Fund -
PEA No. 15; Special Fund - PEA No. 15; High Yield Fund - PEA No. 11;
Strategic Income Fund - PEA No. 7.
(2). The Power of Attorney executed by Walter May was filed as an Exhibit to
the Registrant's Post-Effective Amendment as follows and is
incorporated herein by reference: Government Securities Fund - PEA No.
18; Balance Sheet Opportunities Fund - PEA No. 17; Growth Fund - PEA
No. 17; Special Fund - PEA No. 17; High Yield Fund - PEA No. 13; and
Strategic Income Fund - PEA No. 9. All other powers of attorney
<PAGE>
were filed as an Exhibit to the Registrant's Post-Effective Amendment
as follows and are incorporated herein by reference: Government
Securities Fund - PEA No. 15; Balance Sheet Opportunities Fund - PEA
No. 14; Growth Fund - PEA No. 14; Special Fund - PEA No. 14; High Yield
Fund - PEA No. 10; and Strategic Income Fund - PEA No. 6.
(3). Previously filed as an Exhibit to the Registrant's Post-Effective
Amendment as follows and incorporated herein by reference: Government
Securities Fund - PEA No. 17; Balance Sheet Opportunities Fund - PEA
No. 16; Growth Fund - PEA No. 16; Special Fund - PEA No. 16; High Yield
Fund - PEA No. 12; and Strategic Income Fund - PEA 8.
(4). Previously filed as an Exhibit to the Special Fund's Post- Effective
Amendment No. 16 and incorporated herein by reference.
(5). Previously filed as an Exhibit to the Registrant's Post-Effective
Amendment No. 16 and incorporated herein by reference.
<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 April 30, 1997, the Registrant had the following number of record
security holders:
<TABLE>
<CAPTION>
Title of Class Fund Number of Shareholders
<S> <C> <C> <C> <C> <C>
Shares of
Benefical High Yield Fund (A) 611 (B) 2,992 (C) 292 (T) 7,389
Interest
</TABLE>
<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, acitons, 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.
<PAGE>
(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 shich 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 therof 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 Acto 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 that 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
Administrator" 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 January 31, 1994.
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL
INVESTMENT BUSINESS, PROFESSION
NAME ADVISER VOCATION OR EMPLOYMENT
- --------- --------------------------- --------------------------------------------
<S> <C> <C>
John Turner Director Chairman and CEO, ReliaStar
Financial Corp. and affiliates;
Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.
John Flittie Director President, ReliaStar Financial Corp.
and affiliates; Director, Northstar
Affilates.
Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar
Administrators Corp. and Northstar,
Inc. Trustee and President, Northstar
Affiliated Investment Companies.
Robert J. Adler Executive President Northstar Distributors, Inc.
Vice
President,
Sales &
Marketing
Thomas Ole Dial Executive Vice President, Northstar Affiliated
Vice Investment Companies, and
President - Principal, TD Associates Inc.
Chief Investment Officer
Fixed Income
<PAGE>
Geoffrey Wadsworth Vice President- Vice President - Northstar Affiliated
Investments Investment Companies.
and Portfolio
Manager
Ryan Johanson Vice President- Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager, Director of Global Market
Risk Management, and Senior Manager of
Banque Indosuez
Jeffrey Aurigemma Vice Vice President - Northstar Affiliated
President - Investment Companies.
Investments
Michael Graves Vice Vice President - Northstar Affiliated
President Investment Companies
Investments
Agnes Mullady Sr. Vice Vice President & Treasurer of
President Northstar Affiliates and the Northstar
and CFO Affiliated Investment Companies
Gertrude Purus Vice Vice President Northstar Distributors
President - and Northstar Administrators Corp.
Operations
Stephen Vondrak Vice Vice President - Northstar
President - Distributors, Inc., Former Regional
Sales & Marketing Marketing Manager with Roger
Engemann and Associates from
1991-1994.
Mark Sfarra Vice Vice President - Northstar
President - Distributors, Inc.
Marketing
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) See "HOW THE FUNDS ARE ORGANIZED AND MANAGED", "MEET THE PORTFOLIO MANAGERS"
and "YOUR GUIDE TO BUYING, SELLING AND EXCHANGING SHARES OF NORTHSTAR FUNDS"
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
<PAGE>
otherwise indicated, the principal business address for each person is c/o
Northstar, Two Pickwick Plaza, Greenwich, CT 06830.
<TABLE>
<CAPTION>
(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- ------------------ -------------------- --------------------
<S> <C> <C>
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN
John Flittie Director None
20 Washington Ave. South
Minneapolis, MN
Mark L. Lipson Chairman & Director Trustee and President
Robert J. Adler President None
Mark Blinder Reg. Vice President None
Scott Casselberry Reg. Vice President None
Richard Frances Reg. Vice President None
Rick Galloway 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
</TABLE>
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
State Street Bank and Trust Co. maintains such records as Custodian and Fund
Accounting Agent for the Growth, Special, Balance Sheet Opportunities, High
Yield, Strategic Income and Government Securities Funds and the Northstar Trust:
(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.
(4) Fund Accounting Records.
First Data Investor Services Group, ("First Data") maintains the following
records at One Exchange Place, 11th Floor, Boston, Massachusetts, 02109, as
Transfer Agent and Blue Sky Administrator for the Funds and the Northstar Trust.
(1) Shareholder Records;
(2) Share accumulation accounts: Details as to dates and number of shares
of each accumulation, price of each accumulation.
(3) Fund Accounting Records
(4) State Securities Regisitration Records
All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830.
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 Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certified that it meets
all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933, and 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 2nd day of July, 1997.
REGISTRANT
By: MARK L. LIPSON
------------------------------
Mark L. Lipson, President
SIGNATURES TITLE DATE
JOHN G. TURNER Chairman and July 2, 1997
John G. Turner* Trustee
MARK L. LIPSON Trustee July 2, 1997
Mark L. Lipson*
JOHN R. SMITH Trustee July 2, 1997
John R. Smith*
PAUL S. DOHERTY Trustee July 2, 1997
Paul S. Doherty*
DAVID W. WALLACE Trustee July 2, 1997
David W. Wallace*
ROBERT B. GOODE, JR. Trustee July 2, 1997
Robert B. Goode, Jr.*
ALAN L. GOSULE Trustee July 2, 1997
Alan L. Gosule*
DAVID W.C. PUTNAM Trustee July 2, 1997
David W.C. Putnam*
WALTER H. MAY, JR. Trustee July 2, 1997
Walter H. May, Jr.**
AGNES MULLADY Principal Financial July 2, 1997
Agnes Mullady and Accounting Officer
<PAGE>
By: AGNES MULLADY*
Agnes Mullady
Attorney-in-fact
* Executed pursuant to powers of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 6; Northstar Government Securities Fund - PEA
No. 15; Northstar Balance Sheet Opportunities Fund - PEA No. 14; Northstar
Growth Fund - PEA No. 14; Northstar Special Fund - PEA No. 14; and Northstar
High Yield Fund - PEA No.10.
** Executed pursuant to power of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 8; Northstar Government Securities Fund - PEA
No. 17; Northstar Balance Sheet Opportunities Fund - PEA No. 16; Northstar
Growth Fund - PEA No. 16; Northstar Special Fund - PEA No. 16; and Northstar
High Yield Fund - PEA No. 12 .
<PAGE>
INDEX TO EXHIBITS
---------------------
HIGH YIELD FUND
<TABLE>
<CAPTION>
Exhibit No. Under
Part C of Form N1-A Name of Exhibit Page Number Herein
- ----------------- -------------- -----------------
<S> <C> <C>
Exhibit 10 Opinion of Counsel
Exhibit 11 Consent of Independent Public Accountants
Exhibit 16 Performance Information
Exhibit 27 Financial Data Schedules
</TABLE>
- -------------------------
<PAGE>
LAW OFFICES OF
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, DC 20005-1208
TELEPHONE: (202) 626-3300
FAX: (202) 626-3334
Exhibit 10
July 2, 1997
Northstar High Yield Fund
Two Pickwick Plaza
Greenwich, Connecticut 06830
Ladies and Gentlemen:
As counsel to the Northstar High Yield Fund (the "Fund"), we are familiar
with the Fund's registration under the Investment Company Act of 1940 and
with the registration statement relating to its shares of beneficial interest
under the Securities Act of 1933 (File No. 33-20506) (the "Registration
Statement"). We have also examined such other corporate records, agreements,
documents and instruments as we deemed appropriate.
On the basis of the foregoing, we are of the opinion that the shares of
beneficial interest of the Fund being registered under the Securities Act
of 1933 in the Registration Statement will be legally and validly issued,
fully paid and non-assessable by the Fund.
We hereby consent to the filing of this opinion with and as part of the
Registration Statement.
Very truly yours,
/s/ Dechert Price & Rhoads
<PAGE>
Coopers Coopers & Lybrand, L.L.P.
& Lybrand
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------
We consent to the incorporation by reference in this Post-Effective
Amendment No. 17 to the Registration Statement of Northstar High Yield
Fund on Form N-1A (File No. 33-20506) of our reports dated
December 6, 1996 and January 31, 1997, on our audits of the financial
statements and financial highlights of Northstar Trust and Northstar Funds,
respectively, which reports are included in the Annual Report to Shareholders
for the years ended October 31, 1996 and December 31, 1996, which are also
incorporated by reference in this Post-Effective Amendment to the Registration
Statement.
We also consent to the reference to our firm under the caption "Financial
Highlights" in the Prospectus and under the captions "Other Information"
and "Financial Statements" in the Statement of Additional Information.
(Signature of Coopers & Lybrand L.L.P.)
Coopers & Lybrand L.L.P.
New York, New York
July 2, 1997
Coopers & Lybrand L.L.P., a registered limited liability partnership,
is a member firm of Coopers & Lybrand (International).
Northstar High Yield Fund A
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 9.0394 110.627 110.627 952.50
5/24/96 8.6100 111.493 0.067 7.46 0.000 0.00 0.866 959.95
6/25/96 8.5200 112.376 0.067 7.52 0.000 0.00 0.883 957.44
7/26/96 8.5300 113.258 0.067 7.52 0.000 0.00 0.882 966.09
8/27/96 8.6200 114.141 0.067 7.61 0.000 0.00 0.883 983.90
9/25/96 8.7200 115.022 0.067 7.68 0.000 0.00 0.881 1,002.99
10/25/96 8.7400 115.910 0.067 7.76 0.000 0.00 0.888 1,013.05
11/26/96 8.8700 116.790 0.067 7.81 0.000 0.00 0.880 1,035.93
12/27/96 8.9200 117.670 0.067 7.85 0.000 0.00 0.880 1,049.62
12/31/96 8.9400 117.670 1,051.97
1/28/97 9.0000 118.554 0.068 7.96 0.000 0.00 0.884 1,066.99
2/26/97 9.1000 119.374 0.063 7.46 0.000 0.00 0.820 1,086.30
3/26/97 8.9100 120.218 0.063 7.52 0.000 0.00 0.844 1,071.14
4/25/97 8.7900 121.079 0.063 7.57 0.000 0.00 0.861 1,064.28
4/30/97 8.8300 121.079 1,069.13
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 6.91%
ERV = Ending Redeemable Value: $1,069.13 Overall Total Return: 6.91%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund A
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 9.1444 109.357 109.357 952.50
6/22/95 8.5400 110.267 0.071 7.77 0.000 0.00 0.910 941.68
7/25/95 8.6700 111.170 0.071 7.83 0.000 0.00 0.903 963.84
8/24/95 8.6200 112.086 0.071 7.90 0.000 0.00 0.916 966.18
9/26/95 8.6400 113.007 0.071 7.96 0.000 0.00 0.921 976.38
10/25/95 8.6000 113.941 0.071 8.03 0.000 0.00 0.934 979.89
11/22/95 8.5100 114.892 0.071 8.09 0.000 0.00 0.951 977.73
12/29/95 8.5600 115.853 0.072 8.23 0.000 0.00 0.961 991.70
12/31/95 8.5600 115.853 991.70
1/26/96 8.7100 116.802 0.071 8.27 0.000 0.00 0.949 1,017.35
2/23/96 8.7500 117.755 0.071 8.34 0.000 0.00 0.953 1,030.36
3/26/96 8.6100 118.724 0.071 8.34 0.000 0.00 0.969 1,022.21
4/25/96 8.5800 119.661 0.068 8.04 0.000 0.00 0.937 1,026.69
5/24/96 8.6100 120.598 0.067 8.07 0.000 0.00 0.937 1,038.35
6/25/96 8.5200 121.552 0.067 8 13 0.000 0.00 0.954 1,035.62
7/26/96 8.5300 122.506 0.067 8.14 0.000 0.00 0.954 1,044.98
8/27/96 8.6200 123.461 0.067 8.23 0.000 0.00 0.955 1,064.23
9/25/96 8.7200 124.414 0.067 8.31 0.000 0.00 0.953 1,084.89
10/25/96 8.7400 125.374 0.067 8.39 0.000 0.00 0.960 1,095.77
11/26/96 8.8700 126.327 0.067 8.45 0.000 0.00 0.953 1,120.52
12/27/96 8.9200 127.279 0.067 8.49 0.000 0.00 0.952 1,135.33
12/31/96 8.9400 127.279 1,137.87
1/28/97 9.0000 128.236 0.068 8.61 0.000 0.00 0.957 1,154.12
2/26/97 9.1000 129.123 0.063 8.07 0.000 0.00 0.887 1,175.02
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund A
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/26/97 8.9100 130.035 0.063 8.13 0.000 0.00 0.912 1,158.61
4/25/97 8.7900 130.967 0.063 8.19 0.000 0.00 0.932 1,151.20
4/30/97 8.8300 130.967 1,156.44
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 7.91%
ERV = Ending Redeemable Value: $1,156.44 Overall Total Return: 15.64%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.855 0.063 7.29 0.000 0.00 0.846 1,007.29
6/25/96 8.5300 117.715 0.063 7.34 0.000 0.00 0.860 1,004.11
7/26/96 8.5400 118.571 0.062 7.31 0.000 0.00 0.856 1,012.60
8/27/96 8.6300 119.426 0.062 7.38 0.000 0.00 0.855 1,030.65
9/25/96 8.7300 120.273 0.062 7.39 0.000 0.00 0.847 1,049.98
10/25/96 8.7500 121.126 0.062 7.46 0.000 0.00 0.853 1,059.85
11/26/96 8.8800 121.971 0.062 7.50 0.000 0.00 0.845 1,083.10
12/27/96 8.9300 122.818 0.062 7.56 0.000 0.00 0.847 1,096.76
12/31/96 8.9500 122.818 1,099.22
1/28/97 9.0100 123.670 0.063 7.68 0.000 0.00 0.852 1,114.27
2/26/97 9.1100 124.453 0.058 7.13 0.000 0.00 0.783 1,133.77
3/26/97 8.9200 125.257 0.058 7.17 0.000 0.00 0.804 1,117.29
4/25/97 8.8000 126.081 0.058 7.25 0.000 0.00 0.824 1,109.51
4/30/97 8.8400 126.081 1,114.56
4/30/97 Less: 5.0% Contingent Deferred Sales Charge 50.00
4/30/97 Net Ending Redeemable Value 1,064.56
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 6.46%
ERV = Ending Redeemable Value: $1,064.56 Overall Total Return: 6.46%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 8.7100 114.811 114.811 1,000.00
6/22/95 8.5500 115.698 0.066 7.58 0.000 0.00 0.887 989.22
7/25/95 8.6700 116.578 0.066 7.63 0.000 0.00 0.880 1,010.73
8/24/95 8.6300 117.469 0.066 7.69 0.000 0.00 0.891 1,013.76
9/26/95 8.6500 118.365 0.066 7.75 0.000 0.00 0.896 1,023.86
10/25/95 8.6100 119.272 0.066 7.81 0.000 0.00 0.907 1,026.93
11/22/95 8.5200 120.196 0.066 7.87 0.000 0.00 0.924 1,024.07
12/29/95 8.5700 121.131 0.067 8.01 0.000 0.00 0.935 1,038.09
12/31/95 8.5700 121.131 1,038.09
1/26/96 8.7200 122.054 0.066 8.05 0.000 0.00 0.923 1,064.31
2/23/96 8.7600 122.980 0.066 8.11 0.000 0.00 0.926 1,077.30
3/26/96 8.6200 123.920 0.066 8.10 0.000 0.00 0.940 1,068.19
4/25/96 8.5900 124.828 0.063 7.80 0.000 0.00 0.908 1,072.27
5/24/96 8.6200 125.738 0.063 7.84 0 000 0.00 0.910 1,083.86
6/25/96 8.5300 126.664 0.063 7.90 0.000 0.00 0.926 1,080.44
7/26/96 8.5400 127.584 0.062 7.86 0.000 0.00 0.920 1,089.57
8/27/96 8.6300 128.504 0.062 7.94 0.000 0,00 0.920 1,108.99
9/25/96 8.7300 129.416 0.062 7.96 0.000 0.00 0.912 1,129.80
10/25/96 8.7500 130.334 0.062 8.03 0.000 0.00 0.918 1,140.42
11/26/96 8.8800 131.243 0.062 8.07 0.000 0.00 0.909 1,165.44
12/27/96 8.9300 132.153 0.062 8.13 0.000 0.00 0.910 1,180.13
12/31/96 8.9500 132.153 1,182.77
1/28/97 9.0100 133.071 0.063 8.27 0.000 0.00 0.918 1,198.97
2/26/97 9.1100 133.913 0.058 7.67 0.000 0.00 0.842 1,219.95
3/26/97 8.9200 134.777 0.058 7.71 0.000 0.00 0.864 1,202.21
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/25/97 8.8000 135.663 0.058 7.80 0.000 0.00 0.886 1,193.83
4/30/97 8.8400 135.663 1,199.26
4/30/97 Less: 4.0% Contingent Deferred Sales Charge 40.00
4/30/97 Net Ending Redeemable Value 1,159.26
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 8.04%
ERV = Ending Redeemable Value: $1,159.26 Overall Total Return: 15.93%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.855 0.063 7.29 0.000 0.00 0.846 1,007.29
6/25/96 8.5300 117.715 0.063 7.34 0.000 0.00 0.860 1,004.11
7/26/96 8.5400 118.571 0.062 7.31 0.000 0.00 0.856 1,012.60
8/27/96 8.6200 119.427 0.062 7.38 0.000 0.00 0.856 1,029.46
9/25/96 8.7300 120.272 0.062 7.38 0.000 0.00 0.845 1,049.97
10/25/96 8.7500 121.121 0.062 7.43 0.000 0.00 0.849 1,059.81
11/26/96 8.8800 121.964 0.062 7.49 0.000 0.00 0.843 1,083.04
12/27/96 8.9200 122.810 0.062 7.55 0.000 0.00 0.846 1,095.47
12/31/96 8.9500 122.810 1,099.15
1/28/97 9.0000 123.660 0.062 7.65 0.000 0.00 0.850 1,112.94
2/26/97 9.1100 124.443 0.058 7.13 0.000 0.00 0.783 1,133.68
3/26/97 8.9200 125.246 0.058 7.16 0.000 0.00 0.803 1,117.19
4/25/97 8.8000 126.070 0.058 7.25 0.000 0.00 0.824 1,109.42
4/30/97 8.8300 126.070 1,113.20
4/30/97 Less: 1.0% Contingent Deferred Sales Charge 10.00
4/30/97 Net Ending Redeemable Value 1,103.20
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 10.32%
ERV = Ending Redeemable Value: $1,103.20 Overall Total Return: 10.32%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 8.7100 114.811 114.811 1,000.00
6/22/95 8.5400 115.699 0.066 7.58 0.000 0.00 0.888 988.07
7/25/95 8.6700 116.579 0.066 7.63 0.000 0.00 0.880 1,010.74
8/24/95 8.6300 117.470 0.066 7.69 0.000 0.00 0.891 1,013.77
9/26/95 8.6500 118.366 0.066 7.75 0.000 0.00 0.896 1,023.87
10/25/95 8.6100 119.273 0.066 7.81 0.000 0.00 0.907 1,026.94
11/22/95 8.5100 120.198 0.066 7.87 0.000 0.00 0.925 1,022.88
12/29/95 8.5700 121.133 0.067 8.01 0.000 0.00 0.935 1,038.11
12/31/95 8.5700 121.133 1,038.11
1/26/96 8.7100 122.055 0.066 8.03 0.000 0.00 0.922 1,063.10
2/23/96 8.7600 122.979 0.066 8.09 0.000 0.00 0.924 1,077.30
3/26/96 8.6200 123.921 0.066 8.12 0.000 0.00 0.942 1,068.20
4/25/96 8.5900 124.831 0.063 7.82 0.000 0.00 0.910 1,072.30
5/24/96 8.6200 125.741 0.063 7.84 0.000 0.00 0.910 1,083.89
6/25/96 8.5300 126.667 0.063 7.90 0.000 0.00 0.926 1,080.47
7/26/96 8.5400 127.589 0.062 7.87 0.000 0.00 0.922 1,089.61
8/27/96 8.6200 128.510 0.062 7.94 0.000 0.00 0.921 1,107.76
9/25/96 8.7300 129.420 0.062 7.94 0.000 0.00 0.910 1,129.84
10/25/96 8.7500 130.334 0.062 8.00 0.000 0.00 0.914 1,140.42
11/26/96 8.8800 131.242 0.062 8.06 0.000 0.00 0.908 1,165.43
12/27/96 8.9200 132.152 0.062 8.12 0.000 0.00 0.910 1,178.80
12/31/96 8.9500 132.152 1,182.76
1/28/97 9.0000 133.068 0.062 8.24 0.000 0.00 0.916 1,197.61
2/26/97 9.1100 133.910 0.058 7.67 0.000 0.00 0.842 1,219.92
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/26/97 8.9200 134.774 0.058 7.71 0.000 0.00 0.864 1,202.18
4/25/97 8.8000 135.660 0.058 7.80 0.000 0.00 0.886 1,193.81
4/30/97 8.8300 135.660 1,197.88
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 9.91%
ERV = Ending Redeemable Value: $1,197.88 Overall Total Return: 19.79%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.898 0.066 7.66 0.000 0.00 0.889 1,007.66
6/25/96 8.5200 117.804 0.066 7.72 0.000 0.00 0.906 1,003.69
7/26/96 8.5300 118.716 0.066 7.78 0.000 0.00 0.912 1,012.65
8/27/96 8.6200 119.626 0.066 7.84 0.000 0.00 0.910 1,031.18
9/25/96 8.7200 120.532 0.066 7.90 0.000 0.00 0.906 1,051.04
10/25/96 8.7500 121.442 0.066 7.96 0.000 0.00 0.910 1,062.62
11/26/96 8.8800 122.345 0.066 8.02 0.000 0.00 0.903 1,086.42
12/27/96 8.8900 123.253 0.066 8.07 0.000 0.00 0.908 1,095.72
12/31/96 8.9400 123.253 1,101.88
1/28/97 9.0100 124.155 0.066 8.13 0.000 0.00 0.902 1,118.64
2/26/97 9.1000 124.988 0.061 7.58 0.000 0.00 0.833 1,137.39
3/26/97 8.9100 125.844 0.061 7.63 0.000 0.00 0.856 1,121.27
4/25/97 8.8000 126.716 0.061 7.67 0.000 0.00 0.872 1,115.10
4/30/97 8.8300 126.716 1,118.90
4/30/97 Less: 4.0% Contingent Deferred Sales Charge 40.00
4/30/97 Net Ending Redeemable Value 1,078.90
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 7.89%
ERV = Ending Redeemable Value: $1,078.90 Overall Total Return: 7.89%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/92 1,000.00 8.7000 114.943 114.943 1,000.00
6/1/92 8.7500 115.942 0.076 8.74 0.000 0.00 0.999 1,014.49
6/30/92 8.7400 116.950 0.076 8.81 0.000 0.00 1.008 1,022.14
7/31/92 8.9000 117.949 0.076 8.89 0.000 0.00 0.999 1,049.75
8/31/92 8.8600 118.960 0.076 8.96 0.000 0.00 1.011 1,053.99
9/30/92 8.9500 119.970 0.076 9.04 0.000 0.00 1.010 1,073.73
11/2/92 8.8300 121.003 0.076 9.12 0.000 0.00 1.033 1,068.46
11/30/92 9.0200 122.023 0.076 9.20 0.000 0.00 1.020 1,100.65
12/28/92 9.0600 123.348 0.076 9.27 0.022 2.73 1.325 1,117.53
12/31/92 9.0900 123.348 1,121.23
2/1/93 9.2400 124.269 0.069 8.51 0.000 0.00 0.921 1,148.25
3/1/93 9.1700 125.204 0.069 8.57 0.000 0.00 0.935 1,148.12
3/31/93 9.3200 126.131 0.069 8.64 0.000 0.00 0.927 1,175.54
4/30/93 9.1900 127.078 0.069 8.70 0.000 0.00 0.947 1,167.85
6/1/93 9.4300 128.008 0.069 8.77 0.000 0.00 0.930 1,207.12
6/30/93 9.6900 128.919 0.069 8.83 0.000 0.00 0.911 1,249.23
7/30/93 9.8100 129.826 0.069 8.90 0.000 0.00 0.907 1,273.59
8/31/93 9.8100 130.767 0.069 8.96 0.002 0.27 0.941 1,282.82
8/31/93 9.8100 130.872 0.000 0.00 0.008 1.03 0.105 1,283.85
9/30/93 9.8200 131.792 0.069 9.03 0.000 0.00 0.920 1,294.20
11/1/93 9.9500 132.706 0.069 9.09 0.000 0.00 0.914 1,320.42
11/30/93 9.9400 133.628 0.069 9.16 0.000 0.00 0.922 1,328.26
12/29/93 9.2800 143.186 0.074 9.89 0.590 78.81 9.558 1,328.77
12/31/93 9.3100 143.186 1,333.06
1/31/94 9.5400 144.222 0.069 9.88 0.000 0.00 1.036 1,375.88
2/28/94 9.5600 145.263 0.069 9.95 0.000 0.00 1.041 1,388.71
3/31/94 9.2100 146.351 0.069 10.02 0.000 0.00 1.088 1,347.89
4/29/94 8.9300 147.482 0.069 10.10 0.000 0.00 1.131 1,317.01
5/31/94 8.8600 148.631 0.069 10.18 0.000 0.00 1.149 1,316.87
6/30/94 8.7600 149.802 0.069 10.26 0.000 0.00 1.171 1,312.27
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/29/94 8.7500 150.984 0.069 10.34 0.000 0.00 1.182 1,321.11
8/31/94 8.7200 152.179 0.069 10.42 0.000 0.00 1.195 1,327.00
9/13/94 8.6800 152.276 0.000 0.00 0.006 0.84 0.097 1,321.76
9/30/94 8.6500 153.491 0.069 10.51 0.000 0.00 1.215 1,327.70
10/31/94 8.6000 154.722 0.069 10.59 0.000 0.00 1.231 1,330.61
11/30/94 8.3700 155.998 0.069 10.68 0.000 0.00 1.276 1,305.70
12/28/94 8.2800 157.298 0.069 10.76 0.000 0.00 1.300 1,302.43
12/31/94 8.2900 157.298 1,304.00
1/31/95 8.3200 158.602 0.069 10.85 0.000 0.00 1.304 1,319.57
3/1/95 8.4500 159.897 0.069 10.94 0.000 0.00 1.295 1,351.13
4/3/95 8.4400 161.204 0.069 11.03 0.000 0.00 1.307 1,360.56
4/28/95 8.6100 162.496 0.069 11.12 0.000 0.00 1.292 1,399.09
5/31/95 8.6700 163.789 0.069 11.21 0.000 0.00 1.293 1,420.05
6/22/95 8.5400 165.112 0.069 11.30 0.000 0.00 1.323 1,410.06
7/25/95 8.6700 166.426 0.069 11.39 0.000 0.00 1.314 1,442.91
8/24/95 8.6200 167.758 0.069 11.48 0.000 0.00 1.332 1,446.07
9/26/95 8.6400 169.098 0.069 11.58 0.000 0.00 1.340 1,461.01
10/25/95 8.6000 170.455 0.069 11.67 0.000 0.00 1.357 1,465.91
11/22/95 8.5100 171.837 0.069 11.76 0.000 0.00 1.382 1,462.33
12/29/95 8.5600 173.223 0.069 11.86 0.000 0.00 1.386 1,482.79
12/31/95 8.5600 173.223 1,482.79
1/26/96 8.7100 174.595 0.069 11.95 0.000 0.00 1.372 1,520.72
2/23/96 8.7600 175.971 0.069 12.05 0.000 0.00 1.376 1,541.51
3/26/96 8.6200 177.379 0.069 12.14 0.000 0.00 1.408 1,529.01
4/25/96 8.5900 178.742 0.066 11.71 0.000 0.00 1.363 1,535.39
5/24/96 8.6200 180.111 0.066 11.80 0.000 0.00 1.369 1,552.56
6/25/96 8.5200 181.507 0.066 11.89 0.000 0.00 1.396 1,546.44
7/26/96 8.5300 182.911 0.066 11.98 0.000 0.00 1.404 1,560.23
8/27/96 8.6200 184.311 0.066 12.07 0.000 0.00 1.400 1,588.76
9/25/96 8.7200 185.705 0.066 12.16 0.000 0.00 1.394 1,619.35
</TABLE>
Continued on Page 3
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/25/96 8.7500 187.106 0.066 12.26 0.000 0.00 1.401 1,637.18
11/26/96 8.8800 188.497 0.066 12.35 0.000 0.00 1.391 1,673.85
12/27/96 8.8900 189.896 0.066 12.44 0.000 0.00 1.399 1,688.18
12/31/96 8.9400 189.896 1,697.67
1/28/97 9.0100 191.287 0.066 12.53 0.000 0.00 1.391 1,723.50
2/26/97 9.1000 192.571 0.061 11.68 0.000 0.00 1.284 1,752.40
3/26/97 8.9100 193.890 0.061 11.75 0.000 0.00 1.319 1,727.56
4/25/97 8.8000 195.233 0.061 11.82 0.000 0.00 1.343 1,718.05
4/30/97 8.8300 195.233 1,723.91
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 11.51%
ERV = Ending Redeemable Value: $1,723.91 Overall Total Return: 72.39%
n = Number of Time Periods: 5.00
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/30/89 1,000.00 10.0000 100.000 100.000 1,000.00
6/30/89 9.9100 100.444 0.044 4.40 0.000 0.00 0.444 995.40
7/31/89 9.7800 101.389 0.092 9.24 0.000 0.00 0.945 991.58
8/31/89 9.7400 102.347 0.092 9.33 0.000 0.00 0.958 996.86
9/29/89 9.4100 103.348 0.092 9.42 0.000 0.00 1.001 972.50
10/31/89 8.8500 104.423 0.092 9.51 0.000 0.00 1.075 924.14
11/30/89 8.7000 105.528 0.092 9.61 0.000 0.00 1.105 918.09
12/22/89 8.5600 106.662 0.092 9.71 0.000 0.00 1.134 913.03
12/31/89 8.5500 106.662 911.96
2/1/90 8.0100 107.887 0.092 9.81 0.000 0.00 1.225 864.17
2/28/90 7.7300 109.172 0.092 9.93 0.000 0.00 1.285 843.90
3/30/90 7.8400 110.453 0.092 10.04 0.000 0.00 1.281 865.95
4/30/90 7.5200 111.687 0.084 9.28 0.000 0.00 1.234 839.89
5/31/90 7.6800 112.908 0.084 9.38 0.000 0.00 1.221 867.13
6/29/90 7.8200 114.120 0.084 9.48 0.000 0.00 1.212 892.42
7/31/90 7.9000 115.334 0.084 9.59 0.000 0.00 1.214 911.14
8/31/90 7.3400 116.654 0.084 9.69 0.000 0.00 1.320 856.24
9/28/90 6.6700 118.123 0.084 9.80 0.000 0.00 1.469 787.88
10/31/90 6.2900 119.700 0.084 9.92 0.000 0.00 1.577 752.91
11/30/90 6.3100 121.293 0.084 10.05 0.000 0.00 1.593 765.36
12/27/90 6.2800 124.229 0.152 18.44 0.000 0.00 2.936 780.16
12/31/90 6.2700 124.229 778.92
1/31/91 6.3300 125.878 0.084 10.44 0.000 0.00 1.649 796.81
2/28/91 6.6700 127.463 0.084 10.57 0.000 0.00 1.585 850.18
3/28/91 7.0200 128.989 0.084 10.71 0.000 0.00 1.526 905.50
4/30/91 7.4800 130.438 0.084 10.84 0.000 0.00 1.449 975.68
5/31/91 7.4500 131.909 0.084 10.96 0.000 0.00 1.471 982.72
6/28/91 7.4100 133.404 0.084 11.08 0.000 0.00 1.495 988.52
7/31/91 7.5700 134.885 0.084 11.21 0.000 0.00 1.481 1,021.08
8/30/91 7.5800 136.380 0.084 11.33 0.000 0.00 1 495 1,033.76
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 7.6300 137.882 0.084 11.46 0.000 0.00 1.502 1,052.04
10/31/91 7.9200 139.344 0.084 11.58 0.000 0.00 1.462 1,103.60
11/29/91 7.8800 140.829 0.084 11.70 0.000 0.00 1.485 1,109.73
12/26/91 7.8300 143.706 0.160 22.53 0.000 0.00 2.877 1,125.22
12/31/91 7.9400 143.706 1,141.03
1/31/92 8.5100 145.124 0.084 12.07 0.000 0.00 1.418 1,235.01
2/28/92 8.7600 146.516 0.084 12.19 0.000 0.00 1.392 1,283.48
3/31/92 8.7000 147.931 0.084 12.31 0.000 0.00 1.415 1,287.00
4/30/92 8.6800 149.226 0.076 11.24 0.000 0.00 1.295 1,295.28
6/1/92 8.7500 150.522 0.076 11.34 0.000 0.00 1.296 1,317.07
6/30/92 8.7400 151.831 0.076 11.44 0.000 0.00 1.309 1,327.00
7/31/92 8.9000 153.128 0.076 11.54 0.000 0.00 1.297 1,362.84
8/31/92 8.8600 154.442 0.076 11.64 0.000 0.00 1.314 1,368.36
9/30/92 8.9500 155.754 0.076 11.74 0.000 0.00 1.312 1,394.00
11/2/92 8.8300 157.095 0.076 11.84 0.000 0.00 1.341 1,387.15
11/30/92 9.0200 158.419 0.076 11.94 0.000 0.00 1.324 1,428.94
12/28/92 9.0600 160.140 0.076 12.04 0.022 3.55 1.721 1,450.87
12/31/92 9.0900 160.140 1,455.67
2/1/93 9.2400 161.336 0.069 11.05 0.000 0.00 1.196 1,490.74
3/1/93 9.1700 162.550 0.069 11.13 0.000 0.00 1.214 1,490.58
3/31/93 9.3200 163.754 0.069 11.22 0.000 0.00 1.204 1,526.19
4/30/93 9.1900 164.984 0.069 11.30 0.000 0.00 1.230 1,516.20
6/1/93 9.4300 166.191 0.069 11.38 0.000 0.00 1.207 1,567.18
6/30/93 9.6900 167.375 0.069 11.47 0.000 0.00 1.184 1,621. 86
7/30/93 9.8100 168.552 0.069 11.55 0.000 0.00 1.177 1,653.50
8/31/93 9.8100 169.773 0.069 11.63 0.002 0.35 1.221 1,665.47
8/31/93 9.8100 169.909 0.000 0.00 0.008 1.33 0.136 1,666.81
9/30/93 9.8200 171.102 0.069 11.72 0.000 0.00 1.193 1,680.22
11/1/93 9.9500 172.289 0.069 11.81 0.000 0.00 1.187 1,714.28
11/30/93 9.9400 173.485 0.069 11.89 0.000 0.00 1.196 1,724.44
</TABLE>
Continued on Page 3
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/29/93 9.2800 185.894 0.074 12.84 0.590 102.32 12.409 1,725.10
12/31/93 9.3100 185.894 1,730.67
1/31/94 9.5400 187.239 0.069 12.83 0.000 0.00 1.345 1,786.26
2/28/94 9.5600 188.590 0.069 12.92 0.000 0.00 1.351 1,802.92
3/31/94 9.2100 190.003 0.069 13.01 0.000 0.00 1.413 1,749.93
4/29/94 8.9300 191.471 0.069 13.11 0.000 0.00 1.468 1,709.84
5/31/94 8.8600 192.962 0.069 13.21 0.000 0.00 1.491 1,709.64
6/30/94 8.7600 194.481 0.069 13.31 0.000 0.00 1.519 1,703.65
7/29/94 8.7500 196.015 0.069 13.42 0.000 0.00 1.534 1,715.13
8/31/94 8.7200 197.567 0.069 13.53 0.000 0.00 1.552 1,722.78
9/13/94 8.6800 197.693 0.000 0.00 0.006 1.09 0.126 1,715.98
9/30/94 8.6500 199.270 0.069 13.64 0.000 0.00 1.577 1,723.69
10/31/94 8.6000 200.869 0.069 13.75 0.000 0.00 1.599 1,727.47
11/30/94 8.3700 202.525 0.069 13.86 0.000 0.00 1.656 1,695.13
12/28/94 8.2800 204.212 0.069 13.97 0.000 0.00 1.687 1,690.88
12/31/94 8.2900 204.212 1,692.92
1/31/95 8.3200 205.906 0.069 14.09 0.000 0.00 1.694 1,713.14
3/1/95 8.4500 207.588 0.069 14.21 0.000 0.00 1.682 1,754.12
4/3/95 8.4400 209.285 0.069 14.32 0.000 0.00 1.697 1,766.37
4/28/95 8.6100 210.962 0.069 14.44 0.000 0.00 1.677 1,816.38
5/31/95 8.6700 212.641 0.069 14.56 0.000 0.00 1.679 1,843.60
6/22/95 8.5400 214.359 0.069 14.67 0.000 0.00 1.718 1,830.63
7/25/95 8.6700 216.065 0.069 14.79 0.000 0.00 1.706 1,873.28
8/24/95 8.6200 217.795 0.069 14.91 0.000 0.00 1.730 1,877.39
9/26/95 8.6400 219.535 0.069 15.03 0.000 0.00 1.740 1,896.78
10/25/95 8.6000 221.297 0.069 15.15 0.000 0.00 1.762 1,903.15
11/22/95 8.5100 223.091 0.069 15.27 0.000 0.00 1.794 1,898.50
12/29/95 8.5600 224.889 0.069 15.39 0.000 0.00 1.798 1,925.05
12/31/95 8.5600 224.889 1,925.05
</TABLE>
Continued on Page 4
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
Maximum Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/26/96 8.7100 226.671 0.069 15.52 0.000 0.00 1.782 1,974.30
2/23/96 8.7600 228.456 0.069 15.64 0.000 0.00 1.785 2,001.27
3/26/96 8.6200 230.284 0.069 15.76 0.000 0.00 1.828 1,985.05
4/25/96 8.5900 232.053 0.066 15.20 0.000 0.00 1.769 1,993.34
5/24/96 8.6200 233.830 0.066 15.32 0.000 0.00 1.777 2,015.61
6/25/96 8.5200 235.641 0.066 15.43 0.000 0.00 1.811 2,007.66
7/26/96 8.5300 237.464 0.066 15.55 0.000 0.00 1.823 2,025.57
8/27/96 8.6200 239.282 0.066 15.67 0.000 0.00 1.818 2,062.61
9/25/96 8.7200 241.093 0.066 15.79 0.000 0.00 1.811 2,102.33
10/25/96 8.7500 242.911 0.066 15.91 0.000 0.00 1.818 2,125.47
11/26/96 8.8800 244.716 0.066 16.03 0.000 0.00 1.805 2,173.08
12/27/96 8.8900 246.533 0.066 16.15 0.000 0.00 1.817 2,191.68
12/31/96 8.9400 246.533 2,204.01
1/28/97 9.0100 248.339 0.066 16.27 0.000 0.00 1.806 2,237.53
2/26/97 9.1000 250.005 0.061 15.16 0.000 0.00 1.666 2,275.05
3/26/97 8.9100 251.718 0.061 15.26 0.000 0.00 1.713 2,242.81
4/25/97 8.8000 253.462 0.061 15.35 0.000 0.00 1.744 2,230.47
4/30/97 8.8300 253.462 2,238.07
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 10.71%
ERV = Ending Redeemable Value: $2,238.07 Overall Total Return: 123.81%
n = Number of Time Periods: 7.92
</TABLE>
<PAGE>
Northstar High Yield Fund A
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6100 116.144 116.144 1,000.00
5/24/96 8.6100 117.053 0.067 7.83 0.000 0.00 0.909 1,007.83
6/25/96 8.5200 117.979 0.067 7.89 0.000 0.00 0.926 1,005.18
7/26/96 8.5300 118.905 0.067 7.90 0.000 0.00 0.926 1,014.26
8/27/96 8.6200 119.832 0.067 7.99 0.000 0.00 0.927 1,032.95
9/25/96 8.7200 120.757 0.067 8.07 0.000 0.00 0.925 1,053.00
10/25/96 8.7400 121.689 0.067 8.15 0.000 0.00 0.932 1,063.56
11/26/96 8.8700 122.613 0.067 8.20 0.000 0.00 0.924 1,087.58
12/27/96 8.9200 123.537 0.067 8.24 0.000 0.00 0.924 1,101.95
12/31/96 8.9400 123.537 1,104.42
1/28/97 9.0000 124.466 0.068 8.36 0.000 0.00 0.929 1,120.19
2/26/97 9.1000 125.328 0.063 7.84 0.000 0.00 0.862 1,140.48
3/26/97 8.9100 126.214 0.063 7.89 0.000 0.00 0.886 1,124.57
4/25/97 8.7900 127.118 0.063 7.95 0.000 0.00 0.904 1,117.37
4/30/97 8.8300 127.118 1,122.45
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 12.24%
ERV = Ending Redeemable Value: $1,122.45 Overall Total Return: 12.24%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund A
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 8.7100 114.811 114.811 1,000.00
6/22/95 8.5400 115.765 0.071 8.15 0.000 0.00 0.954 988.63
7/25/95 8.6700 116.713 0.071 8.22 0.000 0.00 0.948 1,011.90
8/24/95 8.6200 117.675 0.071 8.29 0.000 0.00 0.962 1,014.36
9/26/95 8.6400 118.643 0.071 8.36 0.000 0.00 0.968 1,025.08
10/25/95 8.6000 119.623 0.071 8.43 0.000 0.00 0.980 1,028.76
11/22/95 8.5100 120.621 0.071 8.49 0.000 0.00 0.998 1,026.48
12/29/95 8.5600 121.630 0.072 8.64 0.000 0.00 1.009 1,041.15
12/31/95 8.5600 121.630 1,041.15
1/26/96 8.7100 122.628 0.071 8.69 0.000 0.00 0.998 1,068.09
2/23/96 8.7500 123.629 0.071 8.76 0.000 0.00 1.001 1,081.75
3/26/96 8.6100 124.645 0.071 8.75 0.000 0.00 1.016 1,073.19
4/25/96 8.5800 125.629 0.068 8.44 0.000 0.00 0.984 1,077.90
5/24/96 8.6100 126.613 0.067 8.47 0.000 0.00 0.984 1,090.14
6/25/96 8.5200 127.615 0.067 8.54 0.000 0.00 1.002 1,087.28
7/26/96 8.5300 128.616 0.067 8.54 0.000 0.00 1.001 1,097.09
8/27/96 8.6200 129.618 0.067 8.64 0.000 0.00 1.002 1,117.31
9/25/96 8.7200 130.619 0.067 8.73 0.000 0.00 1.001 1,139.00
10/25/96 8.7400 131.627 0.067 8.81 0.000 0.00 1.008 1,150.42
11/26/96 8.8700 132.627 0.067 8.87 0.000 0.00 1.000 1,176.40
12/27/96 8.9200 133.626 0.067 8.91 0.000 0.00 0.999 1,191.94
12/31/96 8.9400 133.626 1,194.62
1/28/97 9.0000 134.630 0.068 9.04 0.000 0.00 1.004 1,211.67
2/26/97 9.1000 135.562 0.063 8.48 0.000 0.00 0.932 1,233.61
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund A
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/26/97 8.9100 136.520 0.063 8.54 0.000 0.00 0.958 1,216.39
4/25/97 8.7900 137.498 0.063 8.60 0.000 0.00 0.978 1,208.61
4/30/97 8.8300 137.498 1,214.11
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 10.69%
ERV = Ending Redeemable Value: $1,214.11 Overall Total Return: 21.41%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.855 0.063 7.29 0.000 0.00 0.846 1,007.29
6/25/96 8.5300 117.715 0.063 7.34 0.000 0.00 0.860 1,004.11
7/26/96 8.5400 118.571 0.062 7.31 0.000 0.00 0.856 1,012.60
8/27/96 8.6300 119.426 0.062 7.38 0.000 0.00 0.855 1,030.65
9/25/96 8.7300 120.273 0.062 7.39 0.000 0.00 0.847 1,049.98
10/25/96 8.7500 121.126 0.062 7.46 0.000 0.00 0.853 1,059.85
11/26/96 8.8800 121.971 0.062 7.50 0.000 0.00 0.845 1,083.10
12/27/96 8.9300 122.818 0.062 7.56 0.000 0.00 0.847 1,096.76
12/31/96 8.9500 122.818 1,099.22
1/28/97 9.0100 123.670 0.063 7.68 0.000 0.00 0.852 1,114.27
2/26/97 9.1100 124.453 0.058 7.13 0.000 0.00 0.783 1,133.77
3/26/97 8.9200 125.257 0.058 7.17 0.000 0.00 0.804 1,117.29
4/25/97 8.8000 126.081 0.058 7.25 0.000 0.00 0.824 1,109.51
4/30/97 8.8400 126.081 1,114.56
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 11.46%
ERV = Ending Redeemable Value: $1,114.56 Overall Total Return: 11.46%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 8.7100 114.811 114.811 1,000.00
6/22/95 8.5500 115.698 0.066 7.58 0.000 0.00 0.887 989.22
7/25/95 8.6700 116.578 0.066 7.63 0.000 0.00 0.880 1,010.73
8/24/95 8.6300 117.469 0.066 7.69 0.000 0.00 0.891 1,013.76
9/26/95 8.6500 118.365 0.066 7.75 0.000 0.00 0.896 1,023.86
10/25/95 8.6100 119.272 0.066 7.81 0.000 0.00 0.907 1,026.93
11/22/95 8.5200 120.196 0.066 7.87 0.000 0.00 0.924 1,024.07
12/29/95 8.5700 121.131 0.067 8.01 0.000 0.00 0.935 1,038.09
12/31/95 8.5700 121.131 1,038.09
1/26/96 8.7200 122.054 0.066 8.05 0.000 0.00 0.923 1,064.31
2/23/96 8.7600 122.980 0.066 8.11 0.000 0.00 0.926 1,077.30
3/26/96 8.6200 123.920 0.066 8.10 0.000 0.00 0.940 1,068.19
4/25/96 8.5900 124.828 0.063 7.80 0.000 0.00 0.908 1,072.27
5/24/96 8.6200 125.738 0.063 7.84 0.000 0.00 0.910 1,083.86
6/25/96 8.5300 126.664 0.063 7.90 0.000 0.00 0.926 1,080.44
7/26/96 8.5400 127.584 0.062 7.86 0.000 0.00 0.920 1,089.57
8/27/96 8.6300 128.504 0.062 7.94 0.000 0.00 0.920 1,108.99
9/25/96 8.7300 129.416 0.062 7.96 0.000 0.00 0.912 1,129.80
10/25/96 8.7500 130.334 0.062 8.03 0.000 0.00 0.918 1,140.42
11/26/96 8.8800 131.243 0.062 8.07 0.000 0.00 0.909 1,165.44
12/27/96 8.9300 132.153 0.062 8.13 0.000 0.00 0.910 1,180.13
12/31/96 8.9500 132.153 1,182.77
1/28/97 9.0100 133.071 0.063 8.27 0.000 0.00 0.918 1,198.97
2/26/97 9.1100 133.913 0.058 7.67 0.000 0.00 0.842 1,219.95
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund B
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/26/97 8.9200 134.777 0.058 7.71 0.000 0.00 0.864 1,202.21
4/25/97 8.8000 135.663 0.058 7.80 0.000 0.00 0.886 1,193.83
4/30/97 8.8400 135.663 1,199.26
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 9.98%
ERV = Ending Redeemable Value: $1,199.26 Overall Total Return: 19.93%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.855 0.063 7.29 0.000 0.00 0.846 1,007.29
6/25/96 8.5300 117.715 0.063 7.34 0.000 0.00 0.860 1,004.11
7/26/96 8.5400 118.571 0.062 7.31 0.000 0.00 0.856 1,012.60
8/27/96 8.6200 119.427 0.062 7.38 0.000 0.00 0.856 1,029.46
9/25/96 8.7300 120.272 0.062 7.38 0.000 0.00 0.845 1,049.97
10/25/96 8.7500 121.121 0.062 7.43 0.000 0.00 0.849 1,059.81
11/26/96 8.8800 121.964 0.062 7.49 0.000 0.00 0.843 1,083.04
12/27/96 8.9200 122.810 0.062 7.55 0.000 0.00 0.846 1,095.47
12/31/96 8.9500 122.810 1,099.15
1/28/97 9.0000 123.660 0.062 7.65 0.000 0.00 0.850 1,112.94
2/26/97 9.1100 124.443 0.058 7.13 0.000 0.00 0.783 1,133.68
3/26/97 8.9200 125.246 0.058 7.16 0.000 0.00 0.803 1,117.19
4/25/97 8.8000 126.070 0.058 7.25 0.000 0.00 0.824 1,109.42
4/30/97 8.8300 126.070 1,113.20
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 11.32%
ERV = Ending Redeemable Value: $1,113.20 Overall Total Return: 11.32%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/5/95 1,000.00 8.7100 114.811 114.811 1,000.00
6/22/95 8.5400 115.699 0.066 7.58 0.000 0.00 0.888 988.07
7/25/95 8.6700 116.579 0.066 7.63 0.000 0.00 0.880 1,010.74
8/24/95 8.6300 117.470 0.066 7.69 0.000 0.00 0.891 1,013.77
9/26/95 8.6500 118.366 0.066 7.75 0.000 0.00 0.896 1,023.87
10/25/95 8.6100 119.273 0.066 7.81 0.000 0.00 0.907 1,026.94
11/22/95 8.5100 120.198 0.066 7.87 0.000 0.00 0.925 1,022.88
12/29/95 8.5700 121.133 0.067 8.01 0.000 0.00 0.935 1,038.11
12/31/95 8.5700 121.133 1,038.11
1/26/96 8 7100 122.055 0.066 8.03 0.000 0.00 0.922 1,063.10
2/23/96 8.7600 122.979 0.066 8.09 0.000 0.00 0.924 1,077.30
3/26/96 8.6200 123.921 0.066 8.12 0.000 0.00 0.942 1,068.20
4/25/96 8.5900 124.831 0.063 7.82 0.000 0.00 0.910 1,072.30
5/24/96 8.6200 125.741 0.063 7.84 0.000 0.00 0.910 1,083.89
6/25/96 8.5300 126.667 0.063 7.90 0.000 0.00 0.926 1,080.47
7/26/96 8.5400 127.589 0.062 7.87 0.000 0.00 0.922 1,089.61
8/27/96 8.6200 128.510 0.062 7.94 0.000 0.00 0.921 1,107.76
9/25/96 8.7300 129.420 0.062 7.94 0.000 0.00 0.910 1,129.84
10/25/96 8.7500 130.334 0.062 8.00 0.000 0.00 0.914 1,140.42
11/26/96 8.8800 131.242 0.062 8.06 0.000 0.00 0.908 1,165.43
12/27/96 8.9200 132.152 0.062 8.12 0.000 0.00 0.910 1,178.80
12/31/96 8.9500 132.152 1,182.76
1/28/97 9.0000 133.068 0.062 8.24 0.000 0.00 0.916 1,197.61
2/26/97 9.1100 133.910 0.058 7.67 0.000 0.00 0.842 1,219.92
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund C
Total Return Calculation Since 6/5/95
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/26/97 8.9200 134.774 0.058 7.71 0.000 0.00 0.864 1,202.18
4/25/97 8.8000 135.660 0.058 7.80 0.000 0.00 0.886 1,193.81
4/30/97 8.8300 135.660 1,197.88
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 9.91%
ERV = Ending Redeemable Value: $1,197.88 Overall Total Return: 19.79%
n = Number of Time Periods: 1.91
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/96
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/96 1,000.00 8.6200 116.009 116.009 1,000.00
5/24/96 8.6200 116.898 0.066 7.66 0.000 0.00 0.889 1,007.66
6/25/96 8.5200 117.804 0.066 7.72 0.000 0.00 0.906 1,003.69
7/26/96 8.5300 118.716 0.066 7.78 0.000 0.00 0.912 1,012.65
8/27/96 8.6200 119.626 0.066 7.84 0.000 0.00 0.910 1,031.18
9/25/96 8.7200 120.532 0.066 7.90 0.000 0.00 0.906 1,051.04
10/25/96 8.7500 121.442 0.066 7.96 0.000 0.00 0.910 1,062.62
11/26/96 8.8800 122.345 0.066 8.02 0.000 0.00 0.903 1,086.42
12/27/96 8.8900 123.253 0.066 8.07 0.000 0.00 0.908 1,095.72
12/31/96 8.9400 123.253 1,101.88
1/28/97 9.0100 124.155 0.066 8.13 0.000 0.00 0.902 1,118.64
2/26/97 9.1000 124.988 0.061 7.58 0.000 0.00 0.833 1,137.39
3/26/97 8.9100 125.844 0.061 7.63 0.000 0.00 0.856 1,121.27
4/25/97 8.8000 126.716 0.061 7.67 0.000 0.00 0.872 1,115.10
4/30/97 8.8300 126.716 1,118.90
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 11.89%
ERV = Ending Redeemable Value: $1,118.90 Overall Total Return: 11.89%
n = Number of Time Periods: 1.00
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/1/92 1,000.00 8.7000 114.943 114.943 1,000.00
6/1/92 8.7500 115.942 0.076 8.74 0.000 0.00 0.999 1,014.49
6/30/92 8.7400 116.950 0.076 8.81 0.000 0.00 1.008 1,022.14
7/31/92 8.9000 117.949 0.076 8.89 0.000 0.00 0.999 1,049.75
8/31/92 8.8600 118.960 0.076 8.96 0.000 0.00 1.011 1,053.99
9/30/92 8.9500 119.970 0.076 9.04 0.000 0.00 1.010 1,073.73
11/2/92 8.8300 121.003 0.076 9.12 0.000 0.00 1.033 1,068.46
11/30/92 9.0200 122.023 0.076 9.20 0.000 0.00 1.020 1,100.65
12/28/92 9.0600 123.348 0.076 9.27 0.022 2.73 1.325 1,117.53
12/31/92 9.0900 123.348 1,121.23
2/1/93 9.2400 124.269 0.069 8.51 0.000 0.00 0.921 1,148.25
3/1/93 9.1700 125.204 0.069 8.57 0.000 0.00 0.935 1,148.12
3/31/93 9.3200 126.131 0.069 8.64 0.000 0.00 0.927 1,175.54
4/30/93 9.1900 127.078 0.069 8.70 0.000 0.00 0.947 1,167.85
6/1/93 9.4300 128.008 0.069 8.77 0.000 0.00 0.930 1,207.12
6/30/93 9.6900 128.919 0.069 8.83 0.000 0.00 0.911 1,249.23
7/30/93 9.8100 129.826 0.069 8.90 0.000 0.00 0.907 1,273.59
8/31/93 9.8100 130.767 0.069 8.96 0.002 0.27 0.941 1,282.82
8/31/93 9.8100 130.872 0.000 0.00 0.008 1.03 0.105 1,283.85
9/30/93 9.8200 131.792 0.069 9.03 0.000 0.00 0.920 1,294.20
11/1/93 9.9500 132.706 0.069 9.09 0.000 0.00 0.914 1,320.42
11/30/93 9.9400 133.628 0.069 9.16 0.000 0.00 0.922 1,328.26
12/29/93 9.2800 143.186 0.074 9.89 0.590 78.81 9.558 1,328.77
12/31/93 9.3100 143.186 1,333.06
1/31/94 9.5400 144.222 0.069 9.88 0.000 0.00 1.036 1,375.88
2/28/94 9.5600 145.263 0.069 9.95 0.000 0.00 1.041 1,388.71
3/31/94 9.2100 146.351 0.069 10.02 0.000 0.00 1.088 1,347.89
4/29/94 8.9300 147.482 0.069 10.10 0.000 0.00 1.131 1,317.01
5/31/94 8.8600 148.631 0.069 10.18 0.000 0.00 1.149 1,316.87
6/30/94 8.7600 149.802 0.069 10.26 0.000 0.00 1.171 1,312.27
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/29/94 8.7500 150.984 0.069 10.34 0.000 0.00 1.182 1,321.11
8/31/94 8.7200 152.179 0.069 10.42 0.000 0.00 1.195 1,327.00
9/13/94 8.6800 152.276 0.000 0.00 0.006 0.84 0.097 1,321.76
9/30/94 8.6500 153.491 0.069 10.51 0.000 0.00 1.215 1,327.70
10/31/94 8.6000 154.722 0.069 10.59 0.000 0.00 1.231 1,330.61
11/30/94 8.3700 155.998 0.069 10.68 0.000 0.00 1.276 1,305.70
12/28/94 8.2800 157.298 0.069 10.76 0.000 0.00 1.300 1,302.43
12/31/94 8.2900 157.298 1,304.00
1/31/95 8.3200 158.602 0.069 10.85 0.000 0.00 1.304 1,319.57
3/1/95 8.4500 159.897 0.069 10.94 0.000 0.00 1.295 1,351.13
4/3/95 8.4400 161.204 0.069 11.03 0.000 0.00 1.307 1,360.56
4/28/95 8.6100 162.496 0.069 11.12 0.000 0.00 1.292 1,399.09
5/31/95 8.6700 163.789 0.069 11.21 0.000 0.00 1.293 1,420.05
6/22/95 8.5400 165.112 0.069 11.30 0.000 0.00 1.323 1,410.06
7/25/95 8.6700 166.426 0.069 11.39 0.000 0.00 1.314 1,442.91
8/24/95 8.6200 167.758 0.069 11.48 0.000 0.00 1.332 1,446.07
9/26/95 8.6400 169.098 0.069 11.58 0.000 0.00 1.340 1,461.01
10/25/95 8.6000 170.455 0.069 11 67 0.000 0.00 1.357 1,465.91
11/22/95 8.5100 171.837 0.069 11.76 0.000 0.00 1.382 1,462.33
12/29/95 8.5600 173.223 0.069 11.86 0.000 0.00 1.386 1,482.79
12/31/95 8.5600 173.223 1,482.79
1/26/96 8.7100 174.595 0.069 11.95 0.000 0.00 1.372 1,520.72
2/23/96 8.7600 175.971 0.069 12.05 0.000 0.00 1.376 1,541.51
3/26/96 8.6200 177.379 0.069 12.14 0.000 0.00 1.408 1,529.01
4/25/96 8.5900 178.742 0.066 11.71 0.000 0.00 1.363 1,535.39
5/24/96 8.6200 180.111 0.066 11.80 0.000 0.00 1.369 1,552.56
6/25/96 8.5200 181.507 0.066 11.89 0.000 0.00 1.396 1,546.44
7/26/96 8.5300 182.911 0.066 11.98 0.000 0.00 1.404 1,560.23
8/27/96 8.6200 184.311 0.066 12.07 0.000 0.00 1.400 1,588.76
9/25/96 8.7200 185.705 0.066 12.16 0.000 0.00 1.394 1,619.35
</TABLE>
Continued on Page 3
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/1/92
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/25/96 8.7500 187.106 0.066 12.26 0.000 0.00 1.401 1,637.18
11/26/96 8.8800 188.497 0.066 12.35 0.000 0.00 1.391 1,673.85
12/27/96 8.8900 189.896 0.066 12.44 0.000 0.00 1.399 1,688.18
12/31/96 8.9400 189.896 1,697.67
1/28/97 9.0100 191.287 0.066 12.53 0.000 0.00 1.391 1,723.50
2/26/97 9.1000 192.571 0.061 11.68 0.000 0.00 1.284 1,752.40
3/26/97 8.9100 193.890 0.061 11.75 0.000 0.00 1.319 1,727.56
4/25/97 8.8000 195.233 0.061 11.82 0.000 0.00 1.343 1,718.05
4/30/97 8.8300 195.233 1,723.91
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 11.51%
ERV = Ending Redeemable Value: $1,723.91 Overall Total Return: 72.39%
n = Number of Time Periods: 5.00
</TABLE>
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/30/89 1,000.00 10.0000 100.000 100.000 1,000.00
6/30/89 9.9100 100.444 0.044 4.40 0.000 0.00 0.444 995.40
7/31/89 9.7800 101.389 0.092 9.24 0.000 0.00 0.945 991.58
8/31/89 9.7400 102.347 0.092 9.33 0.000 0.00 0.958 996.86
9/29/89 9.4100 103.348 0.092 9.42 0.000 0.00 1.001 972.50
10/31/89 8.8500 104.423 0.092 9.51 0.000 0.00 1.075 924.14
11/30/89 8.7000 105.528 0.092 9.61 0.000 0.00 1.105 918.09
12/22/89 8.5600 106.662 0.092 9.71 0.000 0.00 1.134 913.03
12/31/89 8.5500 106.662 911.96
2/1/90 8.0100 107.887 0.092 9.81 0.000 0.00 1.225 864.17
2/28/90 7.7300 109.172 0.092 9.93 0.000 0.00 1.285 843.90
3/30/90 7.8400 110.453 0.092 10.04 0.000 0.00 1.281 865.95
4/30/90 7.5200 111.687 0.084 9.28 0.000 0.00 1.234 839.89
5/31/90 7.6800 112.908 0.084 9.38 0.000 0.00 1.221 867.13
6/29/90 7.8200 114.120 0.084 9.48 0.000 0.00 1.212 892.42
7/31/90 7.9000 115.334 0.084 9.59 0.000 0.00 1.214 911.14
8/31/90 7.3400 116.654 0.084 9.69 0.000 0.00 1.320 856.24
9/28/90 6.6700 118.123 0.084 9.80 0.000 0.00 1.469 787.88
10/31/90 6.2900 119.700 0.084 9.92 0.000 0.00 1.577 752.91
11/30/90 6.3100 121.293 0.084 10.05 0.000 0.00 1.593 765.36
12/27/90 6.2800 124.229 0.152 18.44 0.000 0.00 2.936 780.16
12/31/90 6.2700 124.229 778.92
1/31/91 6.3300 125.878 0.084 10.44 0.000 0.00 1.649 796.81
2/28/91 6.6700 127.463 0.084 10.57 0.000 0.00 1.585 850.18
3/28/91 7.0200 128.989 0.084 10.71 0.000 0.00 1.526 905.50
4/30/91 7.4800 130.438 0.084 10.84 0.000 0.00 1.449 975.68
5/31/91 7.4500 131.909 0.084 10.96 0.000 0.00 1.471 982.72
6/28/91 7.4100 133.404 0.084 11.08 0.000 0.00 1.495 988.52
7/31/91 7.5700 134.885 0.084 11.21 0.000 0.00 1.481 1,021.08
8/30/91 7.5800 136.380 0.084 11.33 0.000 0.00 1.495 1,033.76
</TABLE>
Continued on Page 2
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 7.6300 137.882 0.084 11.46 0.000 0.00 1.502 1,052.04
10/31/91 7.9200 139.344 0.084 11.58 0.000 0.00 1.462 1,103.60
11/29/91 7.8800 140.829 0.084 11.70 0.000 0.00 1.485 1,109.73
12/26/91 7.8300 143.706 0.160 22.53 0.000 0.00 2.877 1,125.22
12/31/91 7.9400 143.706 1,141.03
1/31/92 8.5100 145.124 0.084 12.07 0.000 0.00 1.418 1,235.01
2/28/92 8.7600 146.516 0.084 12.19 0.000 0.00 1.392 1,283.48
3/31/92 8.7000 147.931 0.084 12.31 0.000 0.00 1.415 1,287.00
4/30/92 8.6800 149.226 0.076 11.24 0.000 0.00 1.295 1,295.28
6/1/92 8.7500 150.522 0.076 11.34 0.000 0.00 1.296 1,317.07
6/30/92 8.7400 151.831 0.076 11.44 0.000 0.00 1.309 1,327.00
7/31/92 8.9000 153.128 0.076 11.54 0.000 0.00 1.297 1,362.84
8/31/92 8.8600 154.442 0.076 11.64 0.000 0.00 1.314 1,368.36
9/30/92 8.9500 155.754 0.076 11.74 0.000 0.00 1.312 1,394.00
11/2/92 8.8300 157.095 0.076 11.84 0.000 0.00 1.341 1,387.15
11/30/92 9.0200 158.419 0.076 11.94 0.000 0.00 1.324 1,428.94
12/28/92 9.0600 160.140 0.076 12.04 0.022 3.55 1.721 1,450.87
12/31/92 9.0900 160.140 1,455.67
2/1/93 9.2400 161.336 0.069 11.05 0.000 0.00 1.196 1,490.74
3/1/93 9.1700 162.550 0.069 11.13 0.000 0.00 1.214 1,490.58
3/31/93 9.3200 163.754 0.069 11.22 0.000 0.00 1.204 1,526.19
4/30/93 9.1900 164.984 0.069 11.30 0.000 0.00 1.230 1,516.20
6/1/93 9.4300 166.191 0.069 11.38 0.000 0.00 1.207 1,567.18
6/30/93 9.6900 167.375 0.069 11.47 0.000 0.00 1.184 1,621.86
7/30/93 9.8100 168.552 0.069 11.55 0.000 0.00 1.177 1,653.50
8/31/93 9.8100 169.773 0.069 11.63 0.002 0.35 1.221 1,665.47
8/31/93 9.8100 169.909 0.000 0.00 0.008 1.33 0.136 1,666.81
9/30/93 9.8200 171.102 0.069 11.72 0.000 0.00 1.193 1,680.22
11/1/93 9.9500 172.289 0.069 11.81 0.000 0.00 1.187 1,714.28
11/30/93 9.9400 173.485 0.069 11.89 0.000 0.00 1.196 1,724.44
</TABLE>
Continued on Page 3
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/29/93 9.2800 185.894 0.074 12.84 0.590 102.32 12.409 1,725.10
12/31/93 9.3100 185.894 1,730.67
1/31/94 9.5400 187.239 0.069 12.83 0.000 0.00 1.345 1,786.26
2/28/94 9.5600 188.590 0.069 12.92 0.000 0.00 1.351 1,802.92
3/31/94 9.2100 190.003 0.069 13.01 0.000 0.00 1.413 1,749.93
4/29/94 8.9300 191.471 0.069 13.11 0.000 0.00 1.468 1,709.84
5/31/94 8.8600 192.962 0.069 13.21 0.000 0.00 1.491 1,709.64
6/30/94 8.7600 194.481 0.069 13.31 0.000 0.00 1.519 1,703.65
7/29/94 8.7500 196.015 0.069 13.42 0.000 0.00 1.534 1,715.13
8/31/94 8.7200 197.567 0.069 13.53 0.000 0.00 1.552 1,722.78
9/13/94 8.6800 197.693 0.000 0.00 0.006 1.09 0.126 1,715.98
9/30/94 8.6500 199.270 0.069 13.64 0.000 0.00 1.577 1,723.69
10/31/94 8.6000 200.869 0.069 13.75 0.000 0.00 1.599 1,727.47
11/30/94 8.3700 202.525 0.069 13.86 0.000 0.00 1.656 1,695.13
12/28/94 8.2800 204.212 0.069 13.97 0.000 0.00 1.687 1,690.88
12/31/94 8.2900 204.212 1,692.92
1/31/95 8.3200 205.906 0.069 14.09 0.000 0.00 1.694 1,713.14
3/1/95 8.4500 207.588 0.069 14.21 0.000 0.00 1.682 1,754.12
4/3/95 8.4400 209.285 0.069 14.32 0.000 0.00 1.697 1,766.37
4/28/95 8.6100 210.962 0.069 14.44 0.000 0.00 1.677 1,816.38
5/31/95 8.6700 212.641 0.069 14.56 0.000 0.00 1.679 1,843.60
6/22/95 8.5400 214.359 0.069 14.67 0.000 0.00 1.718 1,830.63
7/25/95 8.6700 216.065 0.069 14.79 0.000 0.00 1.706 1,873.28
8/24/95 8.6200 217.795 0.069 14.91 0.000 0.00 1.730 1,877.39
9/26/95 8.6400 219.535 0.069 15.03 0.000 0.00 1.740 1,896.78
10/25/95 8.6000 221.297 0.069 15.15 0.000 0.00 1.762 1,903.15
11/22/95 8.5100 223.091 0.069 15.27 0.000 0.00 1.794 1,898.50
12/29/95 8.5600 224.889 0.069 15.39 0.000 0.00 1.798 1,925.05
12/31/95 8.5600 224.889 1,925.05
</TABLE>
Continued on Page 4
<PAGE>
Northstar High Yield Fund T
Total Return Calculation Since 5/30/89
$1,000.00 Investment
Dividends Reinvested
No Sales Charge Included
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends per Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares Share Dividends per Share Capital Gains Shares Market Value
---- ------ --------- --------- ---------- ------------- ---------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/26/96 8.7100 226.671 0.069 15.52 0.000 0.00 1.782 1,974.30
2/23/96 8.7600 228.456 0.069 15.64 0.000 0.00 1.785 2,001.27
3/26/96 8.6200 230.284 0.069 15.76 0.000 0.00 1.828 1,985.05
4/25/96 8.5900 232.053 0.066 15.20 0.000 0.00 1.769 1,993.34
5/24/96 8.6200 233.830 0.066 15.32 0.000 0.00 1.777 2,015.61
6/25/96 8.5200 235.641 0.066 15.43 0.000 0.00 1.811 2,007.66
7/26/96 8.5300 237.464 0.066 15.55 0.000 0.00 1.823 2,025.57
8/27/96 8.6200 239.282 0.066 15.67 0.000 0.00 1.818 2,062.61
9/25/96 8.7200 241.093 0.066 15.79 0.000 0.00 1.811 2,102.33
10/25/96 8.7500 242.911 0.066 15.91 0.000 0.00 1.818 2,125.47
11/26/96 8.8800 244.716 0.066 16.03 0.000 0.00 1.805 2,173.08
12/27/96 8.8900 246.533 0.066 16.15 0.000 0.00 1.817 2,191.68
12/31/96 8.9400 246.533 2,204.01
1/28/97 9.0100 248.339 0.066 16.27 0.000 0.00 1.806 2,237.53
2/26/97 9.1000 250.005 0.061 15.16 0.000 0.00 1.666 2,275.05
3/26/97 8.9100 251.718 0.061 15.26 0.000 0.00 1.713 2,242.81
4/25/97 8.8000 253.462 0.061 15.35 0.000 0.00 1.744 2,230.47
4/30/97 8.8300 253.462 2,238.07
FORMULA -- Average Annual Total Return: ERV = P(1 + T)^n
Overall Total Return: ERV/P - 1
Where: P = Initial Investment: $1,000.00 T = Average Annual Total Return: 10.71%
ERV = Ending Redeemable Value: $2,238.07 Overall Total Return: 123.81%
n = Number of Time Periods: 7.92
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000830477
<NAME> NORTHSTAR HIGH YIELD FUND
<SERIES>
<NUMBER> 1
<NAME> NORTHSTAR HIGH YIELD CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 189867426
<INVESTMENTS-AT-VALUE> 201446822
<RECEIVABLES> 4357771
<ASSETS-OTHER> 25939270
<OTHER-ITEMS-ASSETS> 22601
<TOTAL-ASSETS> 231766464
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 714745
<TOTAL-LIABILITIES> 714745
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<OVERDISTRIBUTION-GAINS> (9567462)
<ACCUM-APPREC-OR-DEPREC> 11579396
<NET-ASSETS> 231051719
<DIVIDEND-INCOME> 337730
<INTEREST-INCOME> 19999495
<OTHER-INCOME> 0
<EXPENSES-NET> 3058407
<NET-INVESTMENT-INCOME> 17278818
<REALIZED-GAINS-CURRENT> (813290)
<APPREC-INCREASE-CURRENT> 11649652
<NET-CHANGE-FROM-OPS> 28115180
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17297029)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (1706413)
<NUMBER-OF-SHARES-SOLD> 73147596
<NUMBER-OF-SHARES-REDEEMED> (39383908 )
<SHARES-REINVESTED> 8526557
<NET-CHANGE-IN-ASSETS> 51401983
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (37974)
<OVERDIST-NET-GAINS-PRIOR> (8735961)
<GROSS-ADVISORY-FEES> 941594
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3058407
<AVERAGE-NET-ASSETS> 10876802
<PER-SHARE-NAV-BEGIN> 8.56
<PER-SHARE-NII> 0.76
<PER-SHARE-GAIN-APPREC> 0.44
<PER-SHARE-DIVIDEND> (0.75)
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<RETURNS-OF-CAPITAL> (0.07)
<PER-SHARE-NAV-END> 8.94
<EXPENSE-RATIO> 1.11
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<TABLE> <S> <C>
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<NAME> NORTHSTAR HIGH YIELD FUND
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<NAME> NORTHSTAR HIGH YIELD CLASS B
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<INVESTMENTS-AT-VALUE> 201446822
<RECEIVABLES> 4357771
<ASSETS-OTHER> 25939270
<OTHER-ITEMS-ASSETS> 22601
<TOTAL-ASSETS> 231766464
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 714745
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<APPREC-INCREASE-CURRENT> 11649652
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<DISTRIBUTIONS-OTHER> (1706413)
<NUMBER-OF-SHARES-SOLD> 73147596
<NUMBER-OF-SHARES-REDEEMED> (39383908)
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<NET-CHANGE-IN-ASSETS> 51401983
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (37974)
<OVERDIST-NET-GAINS-PRIOR> (8735961)
<GROSS-ADVISORY-FEES> 941594
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3058407
<AVERAGE-NET-ASSETS> 57535789
<PER-SHARE-NAV-BEGIN> 8.57
<PER-SHARE-NII> 0.71
<PER-SHARE-GAIN-APPREC> 0.43
<PER-SHARE-DIVIDEND> (0.69)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.07)
<PER-SHARE-NAV-END> 8.95
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
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<CIK> 0000830477
<NAME> NORTHSTAR HIGH YIELD FUND
<SERIES>
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<NAME> NORTHSTAR HIGH YIELD CLASS C
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<INVESTMENTS-AT-COST> 189867426
<INVESTMENTS-AT-VALUE> 201446822
<RECEIVABLES> 4357771
<ASSETS-OTHER> 25939270
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 714745
<TOTAL-LIABILITIES> 714745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229039785
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
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<ACCUM-APPREC-OR-DEPREC> 11579396
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<INTEREST-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 8.57
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<TABLE> <S> <C>
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<CIK> 0000830477
<NAME> NORTHSTAR HIGH YIELD FUND
<SERIES>
<NUMBER> 4
<NAME> NORTHSTAR HIGH YIELD CLASS T
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
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